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China revisited.

During the past year there have been substantial changes in the nonwovens marketplace of China. These changes can be defined in the context of economic and technological issues.

The preceding 10 months have seen a retrenchment and a rethinking of the goals that were set in the previous five year plan. Despite press and public announcements, there have been few positive initiatives taken at building or constructing modern nonwoven plants and literally none have been ordered in the past year.

Beginning in January of 1992, there was a flurry of activity to expedite and order equipment with delivery for the first quarter of 1993. All of the major producers of nonwovens equipment were besieged by requests for quotations in that period. This exercise diminished to a trickle by March of 1993 and has been non-existent since June.

Most observers would question the dramatic change. However, in China, this is the norm and not the exception.

Economic Issues

The Peoples Republic of China (PRC) formulates five year plans according to the direction and need of services and export commodities. These schedules reflect perceived trends both internally and globally. The five year plan also represents an agenda for purchases.

It is critical to note that the determination of project viability or possible purchase of equipment is dependent upon what period of time the acquisition occurs on the calendar of the plan. In the economic environment of the PRC, the buying itinerary can be classified in terms of events over a period of five years. These are:

Year 1: This is frequently a year of planning. The schedules and monies have been determined by the Peoples Congress during sessions of the previous year. The last occurrence of a year of planning was in 1989.

During this stage money is typically not spent. There are formulations of business plans and marketing studies. Alliances with financial institutions are likewise established. This institutional support will involve officials from either the local, provincial or ministerial level of the government. We must remember that in almost all instances the monetary guarantees are made by the government.

For the funding to be approved, the factory must provide the land, human resources and skills, as well as the assurance of its ability to market the finished commodities.

It is not at all rare for companies or collectives to form joint ventures or pool their resources if a form of synergy exists. This was most recently the case when the Ministry of Building Materials formed a relationship with a factory in the south.

With construction and infrastructure improvement activity burgeoning, there has been an impressive need for geotextiles. The ministry could not make the material but could provide the conduit for material usage. The mill did not have a buyer, although they did have the expertise with geotextiles. Hence, a project.

Year 2 and 3: These years mark the primary buying and implementation phase. It is during this interval when most capital equipment purchases are made. Generally projects are approved and consummated even if moderate risk is involved.

Since the money supply is great, remember the PRC does not believe in deficit spending), it is fairly easy to obtain funding. What is even more significant is the desire to repeat successes.
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Title Annotation:a look at nonwoven fabrics manufacturers
Author:Harmon, Jerry
Publication:Nonwovens Industry
Date:Nov 1, 1993
Previous Article:Locating the right people.
Next Article:The Chinese nonwovens industry marches towards the year 2000.

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