Download 1 Chapter 1 An Overview of the Building Materials Industry in China

China Business Guide
中 国 商 务 指 南
2009
（The Building Materials Industry）
China Council for the Promotion of International Trade
Editorial Board of China Business Guide
Chief Editor
 Mr. Zhang Wei
(Vice Chairman, CCPIT/CCOIC)
Deputy Chief Editor
 Mr. Zhao Xiaodi
(Director General, Economic Information Department, CCPIT/CCOIC)
 Mr. Hu Youyi
(Vice Chairman, Building Materials Sub-council, CCPIT/CCOIC)
 Mr. Li Peisong
(Director, Research Office of China National Light Industry Council)
 Mr. He Liming
(Executive Vice Chairman, China Federation of Logistics & Purchasing/Vice Chairman, Logistics
Sub-council, CCPIT/CCOIC)
 Ms. Gu Dongfang
(Vice Chairman, CCPIT/CCOIC Light Industry)
 Mr. Wang Yanguo
(Chairman, Mining Branch-CCPIT/CCOIC)
 Mr. Sun Xitian
(Vice Chairman, Machinery Sub-council, CCPIT/CCOIC)
 Mr. Li Baosheng
(Executive Vice Chairman, Electronics & Information Industry Sub-council, CCPIT/CCOIC)
 Mr. Zhang Yankai
(Executive Vice Chairman, Sub-Council of Textile Industry, CCPIT/CCOIC)
 Mr. Wang Xia
(Vice Chairman, Automotive Sub-Council, CCPIT/CCOIC)
 Mr. Lin Ning
(Deputy Director General, Economic Information Department, CCPIT/CCOIC)
 Mr. Yan Libing
(Deputy Director General, Economic Information Department, CCPIT/CCOIC)
Editor
 Mr. Cheng Hai
(Researcher, Market Research Division, Economic Information Department, CCPIT/CCOIC)
 Mr. Bai Yongru
(Director, MEICon of Information Center, China Machinery Industry Federation)
 Ms. Liu Qiong
(Building Materials Sub-council, CCPIT/CCOIC)
 Ms. Zhang Ming
(Director, Membership Department, China Federation of Logistics & Purchasing/Director, Law &
Arbitration Department, Logistics Sub-council, CCPIT/CCOIC)
 Ms. Guo Xuping
(Deputy Director, Administrative Department, Machinery Sub-council, CCPIT/CCOIC)
 Ms. Zhang Junqing
(Deputy Director, Membership Department, Electronics & Information Industry Sub-council,
CCPIT/CCOIC)
 Mr. Xiong Wang
(Administrative Director, Automotive Sub-Council, CCPIT/CCOIC)
 Mr. Liu Yanwei
(Deputy Director, Information Department, Sub-Council of Textile Industry, CCPIT/CCOIC)
 Mr. Gao Guangbin
(Director, Administrative Department, Mining Branch-CCPIT/CCOIC)
 Mr. Zhang Xiaogeng
(CCPIT/CCOIC Light Industry)
 Ms. Gu Xiaohong
(Project Manager, Market Research Division, Economic Information Department, CCPIT/CCOIC)
Foreword
China is the largest developing country with a great popularity and a vast territory. During 30
years' reform and opening-up, China's economy has seen rapid and steady growth. In this process,
the thriving of foreign trade, the tidal wave of foreign investment and introduction of advanced foreign
technology played important roles.
As the largest promotion authority for foreign trade and investment, China Council for the
Promotion of International Trade (CCPIT)/China Chamber of International Commerce (CCOIC) has
always been dedicated to the development of Sino-foreign economy and trade. China Business
Guide is one part of our promotion series. It is regularly edited and published to introduce China's
foreign economy and trade as well as business environment to commercial and industrial circles at
home and abroad. China Business Guide has won wide popularity since its first edition in 1996.
From 2008 on, we released five sub-volumes for China Business Guide including Machinery,
Automobile, Textile, Electronics Information and Mining, which mainly presented their latest
developments in China. In 2009, we added another five sub-volumes including Light Industry,
Building Materials, Logistics, Energy and Aerospace about the latest situation of these five industries.
We have so far introduced the developments of ten major industries in China's traditional industrial
economy to the world in English version so that the global business circles can have a better
understanding about the development of China and the great changes of its major industries and
sectors.
China will gain more vitality in the transform. China means new opportunities to everybody who
pays close attention to China's economy. I hope China Business Guide sub-volume series will further
help business circles at home and abroad.
Wan Jifei
Chairman
China Council for the Promotion of International Trade
China Chamber of International Commerce
Preface
Mr. Sun Xiangyuan
Party Secretary and Standing Vice-Chairman of China Building
Materials Federation
Sept. 3rd, 2009
Published by China Council for the Promotion of International Trade and China Chamber
of International Commerce, Building Material Volume of China Business Guide is an important
approach to providing a systematic and all-round introduction of the development of China’s
building material industry at present, and it also helps business partners at home and abroad gain
a wider knowledge of business environment and prospect of the industry. As one of the volumes
of China Business Guide, Building Material Volume provides an overall introduction of China’s
building material industry in terms of achievement, development, international position and
influence, and policies and regulations concerning investment and operation in the industry.
As an important part of China’s industrial economy, building material industry is also basic
industry for the development of economy and society of China. Besides providing various
building materials for activities in economy and social life and meeting the constantly increasing
demands of Chinese people, building material industry has also been playing an important role in the promotion and
development of employment, farmers’ income, international trade, related industries and regional economy. The vast population
and rapid development of economy constitute long-term vigorous demand in China for building materials. Ever since 1985, the
production of major products in the industry such as cement, plate glass and building ceramics as well as sanitary ceramics have
ranked world No.1 in succession, which also makes China become “a big country for building material production and
consumption’. China’s building material industry plays a vital role in the international market, and its continually strengthening
international competitiveness brings about greater impact on the development of global building material industry. In view of
these, Building Material Volume of China Business Guide is launched by China Council for the Promotion of International Trade
to offer a complete introduction to building material industry-a key industry in China as well as in the whole world.
Based on objective, full and accurate data, Building Material Volume of China Business Guide makes an all-round analysis
and introduction of the development of the industry, its role and position in the national economy, the development trend of the
global building material industry and the global position of China’s building material industry. Meanwhile, an analysis of the
external development environment of China’s building material industry is also made with the introduction of macro-economy in
China, industry policies, technology development, the present situation and development of upstream and downstream industries
including real estate, building and steel. Based on a large amount of data and diagrams, the Volume makes a detailed
introduction to the general scope, distribution, production and sales, cost and expense, profit and production and sales in some
specific regions of China’s building material industry and the related sub-industries in 2008, which provides readers with a
complete and profound knowledge of the latest development of the overall industry of related sub-industries. In accordance to
the strategy of “Going Global” advocated by the State, the Volume also makes in introduction to the situation of export of
China’s building material industry, the situation and the trend of overseas investment. Furthermore, there is also an introduction
to the leading enterprises and characteristic regions in the manufacturing of cement, glass, ceramics, paint and other new
materials. On the whole, the content of this book is to bridge communication between practitioners of the field at home and from
abroad.
The publication of English version of the Volume provides a more convenient means for our international partners with a
wider knowledge of our achievements in the optimization and upgrading of industrial structure focusing on independent
innovation, energy-saving and emission-reduction with the continual implementation of the Scientific Outlook on Development,
especially the achievements gained by China’s building material industry in reinforcing eco-environment protection, in
developing and promoting advanced and practical technology in the conservation, substitute and recycling of energy resource,
and in boosting the utilization rate of energy resource. This book also points out the impact of the global financial crisis on
China’s building material industry and the active efforts taken by them.
Founded in 1985, China Building Materials Federation is a non-profitable nationwide association founded in 1985
voluntarily by enterprises, institutions, social organizations and individuals of various regions and departments. With a number
of more than 1,500 members and more than 13,000 indirect members, the Federation is now the most representative large-size
comprehensive social association in the fields of manufacturing, engineering, logistics, research and education in China’s
building material industry. The Federation administers 11 direct subsidiary institutions and 15 branches, and it also holds the fort
of 23 associations. The key tasks of China Building Materials Federation are as follows: provide services to industries,
enterprises and governments, safeguard the legal rights and interests of enterprises, strengthen self-discipline of the industry,
maintain daily orders of the market, boost the development of advanced productivity, promote scientific advance as well as
structure optimization, reinforce international cooperation, promote friendly exchanges, collaborate with governments in
industry management, and enhance the healthy development of enterprises as well as the industry.
China Building Materials Federation will keep close cooperation with building material enterprises, continue to collaborate
with governmental bodies in the implementation of industry policies, and exert to push the strategic adjustment of industrial
structure as well as the transformation and upgrading of enterprises. Active efforts will also be made by China Building
Materials Federation in the collaboration with governmental bodies to eliminate backward productivity, support transformation
and upgrading of small medium-sized enterprises and thus accelerate the smooth withdrawal of backward productivity.
Meanwhile, the Federation will continue to strive for support from the state on building material industry in both policy and the
approval of projects, e.g. policy support in terms of export rebates, foreign trade expansion funds, and financial discount in
industries such as cement, glass, glass fiber, ceramics and non-metal minerals. Moreover, the Federation will continue to keep
concerned on energy-saving and emission-reduction in industries of cement, plate glass, building ceramics and sanitary ceramics,
trace and guide the implementation of energy-saving and emission-reduction in key energy-consuming building material
enterprises, make further efforts in pushing the implementation of the National Award Projects in Energy-Saving in the industry
so as to make the key energy-saving model projects in building material industry play a more powerful role in being example
and leader.
Faces both opportunities and challenges China Building Materials Federation hopes that more focus will be placed on
China’s building material industry for the realization of the significant transformation of the industry “From Large to Powerful”
The Building Materials Industry
Comments on the Development of Building Material Industry in China
Zhang Renwei
Chairman of China Building Materials Federation
The past three decades witnessed three different stages of the development of China’s building
material industry in 1980s’, 1990s’ and in the new century, during which the industry has been
firmly sticking to the focus of development, exploring and innovating to new stage according to
the practical situation of the industry ...................................................................................................................... I
The implementation of reform and opening up in the past three decades ends the history
of China’s building material industry that characterized by inadequate products, backward
techniques, old-fashioned equipment, monotonous structure and lack of vigor as well as meets the
continually growing requirements of the development of national economy, construction in urban
and rural areas, and people’s life. Glorious achievements have been realized in china’s building
material industry in terms of both material civilization and moral civilization ............................................... III
The great achievements attained by china’s building material industry in the past three decades
are worth thinking and concluding. According to the scientific outlook on development, we provide
five points of comments that are of universal guiding significance on the development of the industry. ....... VI
The past three decades witnessed tremendous changes and promotion of our country in politics, economy, culture and
society and historic progress of the country with the implementation of reform and opening up, and it also saw the striking
development of China’s building material industry. Guided by Deng Xiaoping’s Theories and the Important Thought of the
Three Represents as well as with a thorough implementation of the Scientific Outlook on Development, the development of
China’s building material industry has always been taking the responsibility of providing services to the construction of national
economy and improving people’s living standards. Under the correct leadership of the Central Committee of CPC as well as
governments at all levels, party committees of departments of the industry and Ministry of Building Materials, glorious
achievements and historic leap have been attained under the continual efforts by more than 10 million cadres and employees of
the industry, e.g. great development of advanced productivity, continually optimized industrial structure, continual innovation of
the systems and the strengthened dynamics with the liberation of thought, aggressive reform and innovation.
The past three decades witnessed three different stages of the development of China’s building
material industry in 1980s’, 1990s’ and in the new century, during which the industry has been firmly
sticking to the focus of development, exploring and innovating to new stage according to the practical
situation of the industry
To focus on the development of the industry to solve the conflict between greater demand and less
supply to meet the requirements of the development of national economy during the 1980s’
The historic decision of implementing reform and opening up made during the third Plenary Session of the Eleventh
Central Committee of CPC brought about a recovery of national economy as well as a brand-new situation of all-round
development, which consequently produced tough demands for various kinds of building materials and hence an extreme
shortage of major building material products. To cope with this situation, the State Council timely pointed out that the
development of building material industry should be the priority in developing the national economy. Therefore, greater
investment began to be put on building material industry to accelerate the expansion of productivity of the industry to solve the
seriously imbalanced relationship between supply and demand.
By reinforcing leadership as well as making unified plan and rational distribution, the Party Groups of CPC of departments
the Ministry of Building Materials accelerated the construction of state-invested key projects, and then accomplished the
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construction of three introduced cement projects in Jidong of Hebei Province, Ningguo of Anhui Province and Huaihai of
Jiangsu Province in the case of extreme tension of capitals.
However, the construction of state-invested projects could not meet the rapidly growing market demand. In 1985, National
Program for the Development of Building material industry was promulgated by State Administration of Building Materials
under the guidance of The Decisions on the Reform of Economic System by the Central Government, which aroused enthusiasm
of investing in the building material industry and consequently solved the conflict between greater demand and short supply in
the market of major products such as cement and glass.
Meanwhile, Luoyang Float Glass Technique, which was of independent knowledge property right, was verified and
promoted; more than ten items of internationally advanced manufacturing techniques for the equipment used in new Dry Method
Cement Producing were introduced to China; and innovation in wall painting materials was initiated, which laid the initial
foundation for the development of China’s building material industry into a new stage.
To Push Industrial Upgrading by Transforming Economic Growth Pattern in the 1990s’
The balance between supply and demand began to be realized in the 1990s’ and an important transformation from the
seller’s market to buyer’s market was being conceived. However, the parallel development of advanced productivity and
backward productivity caused increasingly sharp conflict in the structure of the industry and the continually deepening conflict
between industrial development and energy capacity. Therefore, the promotion of industrial upgrading became the top priority of
the period.
To cope with the changes in the development of the industry, State Administration of Building Materials set “Structure,
Energy Saving and Export” as the key task during the “Eighth Five-Year Plan”, and then four key construction projects to push
the technical progress of the whole industry, e.g. Jidong (East of Hebei Province) New Dry Method Cement Assembly Line with
daily production of 4,000 tons, Tai’an 10,000-ton Tank Furnace Assembly Line for Glass Fibre. The cement development
strategy along the rivers and seas entitled “T Shape” was also made to meet the requirements on cement brought about by the
flourishing economic development in eastern regions of China.
In accordance to the requirement on two fundamental transformations promulgated by the Fifth Plenary Session of the
Fourteenth Central Committee, the Party Group of State Administration of Building Materials put forward the development
scheme for the new period on the basis of a careful analysis of the practical situation of China’s building material industry: while
approaching the new century, the focus for the development of China’s building material industry should be transformed from
production growth to the promotion of intensified production, techniques and equipment level, quality and auxiliary capacity, i.e.
developing the industry into modern raw material and products industry of international competitiveness with the focus on
improving economy operation quality and economic benefit. Under the direct guidance of leaders from the State Council,
experts in and out of the industry as well as the vast members of employees in the industry collaborated to make a profound
probe into the nature of “Large but not Powerful” of the China’s building material industry, and then designed the century
development strategy of “From Large to Powerful by Innovation” in 1995, which has become the outline for the development of
the industry.
In the mid-1990s’ and late-1990s’, great efforts were taken on the development of advanced productivity in new method dry
cement, float glass and new building materials, but meanwhile under the principle of “Control of the General Amount of
Production and Restructuring”, the policy of “Initiation of Large Project and Reform on Small Project” was implemented on
cement industry, the policy of “To Limit, Eliminate, Innovate and Improve” was implemented on small cement projects, the
target of “Striving out of Difficult Situation” for state-owned enterprises was initiated, and the battle of eliminating “Small
Cement Project and Small Glass Project” was carried out. In order to break through the bottleneck of excessive investment in
developing new-method dry cement projects, the nationwide cement designing institutes and cement enterprises were organized
to make research, and finally “Low Investment and Localization” was realized in the new-method dry cement projects in
Shanshui and Hailuo Baimashan ( with a daily production of 2,000 tons). Meanwhile, new inorganic nonmetal materials and
nonmetal mineral materials and products were set as the new economic growth point during this period. The designing and
implementation of these policies and measures will play a significant role in boosting industrial upgrading and the
transformation of economic growth pattern.
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The Building Materials Industry
To Implement Scientific Outlook on Development and New Industrialization in the New Century
It was put forward in the 16th Central Committee of CPC that China should implement new industrialization. In order to
implement this goal, building material industry has accordingly taken great efforts in promoting the development pattern of
cyclic economy and marched towards new industrialization with restructuring as well as with energy-saving and
emission-reduction as the breakthrough.
The acceleration of restructuring carried out in China’s building material industry in the new century promoted an all-round
development of the industry. The realization of “Low Investment and Localization” in cement industry and the rapid promotion
of new-method dry cement technique brought about an annual growth of cement production of more than 100 million tons from
2004 to 2007, the production by the new technique in 2007 amounted to 54% of the total cement production, and the elimination
of approximately 200 million tons of backward cement productivity during the period from 2001 to 2007. Advanced productivity
has been leading the industries in cement, plate glass, building and sanitary ceramics, glass fiber, etc. Meanwhile, obvious
achievements have also been realized in energy-saving and emission-reduction.
Active efforts have been taken on the research in the industry and on the promotion of cyclic economic development pattern,
which involve not only profound theoretical research but also beneficial practice. Building material industry has been listed into
the key industries of developing cyclic economy, and a number of enterprises in the industry, namely Beijing Cement Factory,
Wulan Cement Group, Yatai Cement Group and Mengxi Hi-tech Industrial Park, have been listed into the first models for cyclic
economy.
The three decades of great development from small to large and from large to powerful has laid a solid foundation for the
realization of modernization in China’s building material industry by the mid-21st century.
The implementation of reform and opening up in the past three decades ends the history of China’s
building material industry that characterized by inadequate products, backward techniques, oldfashioned equipment, monotonous structure and lack of vigor as well as meets the continually
growing requirements of the development of national economy, construction in urban and rural areas,
and people’s life. Glorious achievements have been realized in china’s building material industry in
terms of both material civilization and moral civilization
World No. 1 Production Scale Makes China a Real Power of Building Materials Production
The productions of major building material products such as cement, plate glass, building ceramics and sanitary ceramics
have ranked into world No. 1 in succession. In 2007, the production of cement, plate glass, sanitary ceramics, building ceramics
and glass fiber are respectively 1,360 million tons, 5,50 million weight cases, 1,59 million items, 5,600 million square meters,
1,61 million tons, amounting 21 times, 31 times, 68 times, 1,026 times and 39 times of those in the year of 1978 respectively.
Presently, nearly half of the cement, plate glass and building ceramics of the world are produced in China.
There have also been a notable promotion of product quality, more and more abundant types, and a remarkable
reinforcement of auxiliary capacity. The goal in the 1980s’ was to meet the requirements for construction of a Three-Star Hotel
in types, quality and auxiliary capacity, but presently we are providing building materials for Five-Star hotels as well as special
materials for aviation, defense industry and Hi-tech industry.
A remarkable reinforcement of independent innovation capability and a realization of
internationally advanced level or quasi-internationally advanced level in product, technology and
equipment
The past three decades witnessed the development of the features of major building materials industries from introduction
and digestion, combination of introduction and independent innovation, and finally to independent innovation. The main
technology and equipment has reached or almost reached internationally advanced level, which not only meets the domestic
demand but also realizes export of the products.
171 new-method dry cement assembly lines with a daily production of 4,000 tons have been established in China, and four
assembly lines with a daily production of 10,000 tons have been operated successfully in Hailuo for many years. The
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China Business Guide
localization ratio of the equipment in assembly lines with a daily cement production of about 4,000 tons to 6,000 tons has
achieved 90%. Luoyang Float Glass technology, which is of independent knowledge property rights, has become more and more
sophisticated, e.g. establishment of many assembly lines with a daily production of 900 tons of float glass, the significant
technological breakthrough in the manufacturing of extra-thick and extra-thin float glass. The 0.55mm and 0.70mm extra-thin
float glass applied in electronic industry have gained independent knowledge property right, and the quality has reached
internationally advanced level. Our success in the independent development of 7,800-ton brick molding press ended the history
of our long-term dependent on import, and R & D on extra-large and extra-thin ceramic plate and poly-silicon quartz ceramic
crucible has been accomplished and industrialization has been realized. Technology in large-tonnage glass plate tank furnace and
oxy-fuel has reached internationally advanced level. There has also been remarkable promotion of craftsmanship, technology
and equipment in industries such as new building materials, resin glass fiber reinforced compound materials, concrete and
related products, non-metal mineral materials and inorganic non-metal materials and related products. Meanwhile, projects of
2.0 megawatt wind power generator glass fiber reinforced plastic blades and carbon fiber have already been operated.
The gradual realization of an organic integration between informatization and building and substantial results have been
achieved with the application and promotion of computer-aided R & D, computer-aided design, distributed control system of
manufacturing process, enterprise resource planning system, office automation and E-business in the industry, especially in some
large enterprises and groups.
Abundant achievements have been gained in the research of the industry, which can be indicated by the various awards won
during the past three decades, e.g. 10 items of Secondary National Invention Prize, 11 items of Third National Invention Prize,
five items of First Prize of Scientific Progress, 54 items of Second Prize of Scientific Progress, and 36 items of the First
Scientific Progress Prize, 199 items of the Second Scientific Prize and 406 items of Scientific Prize awarded by Ministry-level
Organizations of the building material industry.
Continual Optimization of Enterprise Organization and Regional Structure with the Forming of
Diversified Investment Structure Brings
The implementation of reform and opening up has made a breakthrough in both ideologies and systems, and stimulated the
initiatives to invest for the development of building material industry among various circles of society. Besides the development
of state-owned enterprises and collective enterprises, there has also been a rapid development in enterprises of various kinds of
ownership systems, e.g. joint ventures, solely foreign-funded enterprises, township enterprises, private-owned enterprises,
shareholding enterprises, etc. Meanwhile, more and more enterprises, e.g. large building materials multinationals such as
Lafarge, Holcim, Heidelberg Cement, PPG, Saint-Gobain and Pilkongton as well as enterprises from Taiwan and HKSAR like
China Resources, Taiwan Cement, Asia Cement, Chia Hsin Cement and Taiwan Glass, have also entered the domestic industry.
The expansion of financing channel as well as the participation of financial capitals into the merging and reorganization of
building material enterprises have brought about great promotion for optimization and upgrading of industrial structure,
technological progress, and the level in operation and management for enterprises.
According to approximate statistics, over 50 billion RMB has been raised by nearly sixty listed building material
enterprises in SZSE and SSE, and the capital raised by listed cement enterprises amounted to approximately RMB35 billion,
which made a powerful push to the development of enterprises as well as for merging and reorganization in the industry. Among
the enterprises of all kinds of ownership systems in the industry, the proportion of the assets of private-run enterprises and
private-shareholding enterprises among the total assets of the industry achieves 50.9%, foreign-funded enterprises and
enterprises held by HKSAR, Macau and Taiwan enterprises 18.8%, and state-owned and collective enterprises 30.3%.
The past three decades also witnessed the establishment and flourishing of a large number of backbone large enterprises
like China National Building Material Group, Sinoma (China National Materials Group), Anhui Conch, Lafarge Ruian, Jiangsu
Farun, CSG (China South Glass in Guangdong Province), Hebei Huida, Guangdong New-pearl and Guangdong Dongpeng.
After rapid progress and expansion via rolling development internally and merging externally, they have developed into leading
enterprises in the field, play significant role in the optimization of enterprise structure and the promotion of enterprise
competitiveness.
The booming of large enterprises in the industry has promoted the level of centralized production. By the end of 2007, the
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The Building Materials Industry
production of cement clinker at 17 large-size cement enterprise groups ( an average annual production of over 10 million tons of
cement amounting to 10 million tons) occupied 27% of the total in the whole industry, the production of plate glass at six
large-size enterprise groups ( an average annual production of over 20 million weight cases of plate glass) 31%, the production
at three large-size glass-fiber 52%, and the production at five large-size plasterboard groups amounted to 41% of the total
production in the whole industry. The rapid expansion of large-size enterprise groups in China’s building material industry has
provided effective promotion for the centralization of industries, thereby leading to optimized resource allocations and smoother
and healthier regional competition.
The distribution of regional productivity has taken on some astonishing changes with the implementation of the national
strategies for the Development of West-China and the Rise of Middle-China. Furthermore, the transfer of capitals and
technologies in building industry from eastern regions to western regions and middle regions since 2004 has accelerated the
development of these regions. The growth rate of industry realized by building material industry in western regions and middle
regions in 2007 exceeded that in the eastern regions by more than 20%, which also contributed nearly 40% of the total growth
rate of the national building material industry.
Significant structural promotion in foreign trade and a new highlight in general contracting service
for overseas projects
The total amount involved in the import and export of building material products in 2007 in China achieved 23,100 million
Yuan in 2007, 71.3 times of the figures in 1981. The most astonishing fact is the significant promotion in the structure of export,
which is characteristic of the transfer from sole trade on products to various aspects including products, technology, and
equipment, especially the general contracting services for overseas projects that was initiated and made rapid growth.
The exports of technology and equipment as well as the provision of general contracting services for overseas projects
constitute the most shining highlight of foreign trade in building material industry during the 30 years’ reform and opening up.
China’s enterprises have gained a large number of success stories in the contracting services for overseas projects in more than
forty countries and regions in Europe, America and many new economies, e.g. the assembly line for new-method dry cement
with a daily production of more than 10, 000 tons, float glass assembly line that melts 900 tons of glass. The market share gained
by China National Materials Group in the international cement projects market amounted to 25% in the year of 2007, ranking
No.2 in the world. Presently, we have gained the capabilities of exporting whole set of technological equipment and providing
general contracting services to any country or region in the world.
Remarkable achievements in energy-saving and emission-reduction and steady promotion on the
development of cyclic economy
Great achievements in energy-saving and emission-reduction have been realized via restructuring and technological
progress in China’s building material industry since the implementation of reform and opening up, e.g. the ratio of energy
consumption per RMB10,000 Yuan industrial growth reduced by 48% compared to the figure in 2000, and wide margin decrease
was also realized in the emission of sulfur dioxide and dust.
Astonishing achievements have also been realized in China’s building material industry in terms of promoting the
development of cyclic economy in recent years, and a large amount of beneficial exploration and contribution have been made in
the utilization of solid industrial waste, mill tailings, building waste and poisonous and hazard waste. In 2007, the
comprehensive utilization rate of coal ash in building material industry exceeded 30% of the national amount, the utilization rate
of coal gangue was over 50%, and the total amount of the utilization of solid waste achieved 560 million tons, being two times
of the figure in 2000. Ninety-two sets of pure low temperature waste heat generators have been built in cement industry, with a
total installing capacity of 740 MW and an annual generating power of 49,600 million degrees, which means a conservation of
18,200,000 tons of standard coal and a reduction of 2,473 tons of carbon monoxide. It has been proven by practice and it is
absolutely possible for the realization of energy-conserving and environment-friendly industry in China’s building material
industry.
The remarkable achievements in China’s building material industry during the past three decades are the results of powerful
guidance of the policies of reform and opening up since the Third Plenary Session of the Eleventh Central Committee of CPC,
the continual hard working of officials and workers in the whole industry as well as the continual efforts taken in the
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emancipation of mind, great devotion and aggressive exploration of scientific and technological staff and work models, and the
strengthening efforts in party building and in socialist cultural and ethical progress
The great achievements attained by china’s building material industry in the past three decades are
worth thinking and concluding. According to the scientific outlook on development, we provide five
points of comments that are of universal guiding significance on the development of the industry.
1. We should stick to the orientation of the demand of the market, especially the of the building
industry, to promote rational development of the industry.
The first requirement in persisting in the orientation of market demand is that the development of the industry should be
under the guidance of the nation’s industry policies and programs, which are promulgated by the state on the basis of an overall
view of the general domestic and international situation in politics, economy and social development and are of great
significance in perspective guidance. Therefore, it is essential to follow the policies and programs of the state for the rational
development of an industry.
Secondly, activities in the industry should be oriented at meeting the demand in building industry, including infrastructure
construction, civil engineering and real estate industry. Building material industry is indispensable in the development of
building industry, and meanwhile the development of building material industry should be oriented at meeting the demand of the
latter, which is because 70% of the building material products are applied in building industry. It has been revealed by research
findings that the ratio of urbanization in China is 44.9%, which is lower thatn the average level of developing countries. By 2020,
there would be nearly 200 million people entering cities and town, which is calculated on the basis of 1% growth rate. The
increase of each urban citizen involves an amount of RMB 60,000 Yuan in the investment in housing, public facilities and
municipal facilities. This is just where the largest market lies for building material of tomorrow.
The orientation of meeting the demand in building industry calls for our research not only on the specific demands in urban
building material but also on the various market demands in building market in rural areas as well as those brought about by the
construction of new villages. The construction of a conservative society has become the latest issue; therefore, the requirements
for building material industry in the research of energy-saving of buildings should also be focus. The energy consumption in
building industry has achieved 28% of the total energy consumption in China, and twenty years by now it is to exceed 40%,
making China the largest end-energy consumer. Consequently, the promotion of building energy conservation has become the
most urgent task, and many more researches have to be carried out on a series of materials, e.g. new walling materials, doors and
windows, glass, roof foil insulation, heating facilities and other new materials and compound materials, so as to make achieve
better results in meet the requirement of building energy conservation.
Besides the persistence in the orientation at the demand in building industry, research has also to be made on the changes,
trends and opportunities in the demands brought about to building material industry by the international market as well as by the
development of related industries such as automobile, chemical, refining, new energy, aviation and defense. Emphasis should
also be put on finding demands, exploring demands and guiding demands so as to fully meet the demands brought about by the
national economic construction and the continually rising living standards of the people.
The realization of rational development of the industry also calls for coordinative relationship among speed, quality and
benefit. The relatively low requirement in capital for the admission to building material industry may also lead to excessive
development of a certain industry in response to temporary demand. Overheated market cannot last long, which has been
indicated by the pains of repeated construction suffered by the industry for many times in history. Therefore, we should always
keep a clear recognition that careful thinking is necessary in times of overheated market demand. Meanwhile, we should make a
rational balance between “large” and “powerful”, and between speed and benefit. We should avoid excessive pursuit of scale and
speed and the consequent fall into the trap of the market. We are at the new start of the transformation of economy and society,
and after experiencing the process from the sellers’ market to the buyers’ market by many industries including building material
industry, rapid growth is to become a story of the past and a period of steady-growth is coming. Large-size enterprises should
take the overall situation into consideration and play an active role in leading the rational development of the whole industry.
Only when we follow the rules of market and keep the orientation at market demand can we make a more effective
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promotion for the rational and healthy development of China’s building material industry. It has been proven by practice that any
violation of market rule or any orientation away from market demand, and any kind of backward development or excessively
preceding development, will lead to problems for the development of the industry and thus the impossibility of healthy
development of the industry.
2. Restructuring should be focused on energy conservation so as to promote an energy-saving
development of the whole industry.
Source materials come from mineral resources, just as manufacturing needs furnaces. “Mining industry plus Furnace
industry” features the fundamental industry of building material industry, i.e. the development of building material industry
would become “A Meal without Food” without resources and energy. The long-term obsession of “Being small, scattered and
bad” on the industry has always been along with the excessive consumption of resources and energy. It is no exaggeration that
the 30-year development of building material industry is just an adjusting process of industrial structure centering on the
conservation of energy, and a process of continual trials and experiments on how to promote energy-saving development of the
industry.
We have been sticking to the technological restructuring that centers on energy conservation, which has also promoted the
energy-saving development of the industry. If there had not been the transformation from high energy-consuming wet-method
technique to new-method dry cement technique, cement industry and cement enterprises would become unsustainable with the
restraint of bottleneck in both resources and energy, and the energy consumption for a value growth of RMB10, 000Yuan would
not be kept under five tons of standard coal, let alone energy-saving development. In order to achieve a practical implementation
of energy-saving development, we should continue to strive for independent innovations in the development of new
craftsmanship and new technologies, insist on technological restructuring, and accelerate the development of energy-saving
techniques and the elimination of backward techniques,
More tasks are ahead for the realization of energy-saving development, e.g. expansion of product-processing industry, the
optimization of internal structure of industrial systems, the promotion of the industry into the trend of low energy consumption
and high added value.
Our achievements gained during the implementation of energy-saving development seem to be dwarfed while being
compared with the advanced level in the world. Due to some historical reasons, some high energy-consumption machines and
equipment are still in operation, people’s poor awareness of energy conservation, weak management on energy conservation, and
the obvious gap in energy conservation per unit of building material product between ours and that of internationally advanced
level. For instance, the average energy consuming rate in the large cement enterprises with new-method dry cement technique
and that in float glass production exceed the internationally advanced levels by approximately 20%. Furthermore, more than
40% of the cement production is still provided by backward techniques such as shaft kiln,, more than 10% of the total
production is provided by small and backward glass makers, nearly 60% of the walling materials are from solid paste bricks, and
there are a good number of backward enterprises of high energy consumption and heavy pollution in industries in building
ceramics, sanitary ceramics, tiles, glass fiber and so on. Therefore, the essential task in energy conservation is to push the
development of energy conservation and eliminate backward techniques and productivities.
The energy-saving development of building material industry involves various processes including material exploitation,
transportation, manufacturing and market. In response to the great efforts in pushing the transformation of economic developing
pattern, low-carbon economy should be set as the orientation for the development of the industry, which should become a wide
recognition among the whole industry, i.e., to grasp opportunities and to persistently push the sustainable development of
building material industry that are in coordination with resource, energy and environment.
3. Great efforts should be taken on development product industry persistently so as to push the
coordinative development of the whole industry.
The statement and guidance made by leaders from the State Council that the development of building material industry in
the past focused on manufacturing, production instead of on processing and application, of which the latter should be the trend
of development, have been well proven by our achievements during the past three decades.
Building material industry has gone far beyond the concept of producing of pure raw materials. Coordination among its
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own industry chains is indispensable to the healthy development of cement, glass or ceramics industry, each of which is a
relatively independent system. The enormous changes in cement industry during the past three decades have been closely related
to the rapid development of other chain industries such as cement grinding, bulk cement and concrete, which are also
indispensable processes for the expansion and market application of cement manufacturing industry. It would be unimaginable
for the development of plate glass industry if there had not been the development of deep glass-processing industry such as
industrial technical glass, the carrier of the former. The end of No.1 industry of the whole building material industry, e.g. the
proportion of industrial added value by cement manufacturing industry among the total decreased to 30% in 2007, is the result of
the development of other branches in the whole industry, especially the result of the rapid development of product processing
industry. The flourishing spectacle of present building material industry comes from our persistent cultivation on the
coordinative development of the whole industry.
The characteristic of “Mining plus Furnace” does not represent the entire connotation of building material industry. Besides
raw material processing, the extended industry chains of building material industry also include product processing, logistics,
business, which all constitute a rather complete system. In every business of this system, techniques and product structure of
low-end, intermediate, and high-end have been formed; and mutual matching and coordinative development among the
correspondingly formed enterprise organizations. All of them have different distinctions of tasks and diversified focuses, but are
complementary and coordinative in development, forming a rather complete system of building material industry. This new
pattern promotes the coordinative development of the industry, creates healthy cooperation as well as competition, and also fully
meets the demands of different levels of consumers from different markets.
Under the new situation that is characteristic of more and more sophisticated social divisions of labor and consuming
market, more experiments and practice on extension, crossing and division of industry chains should be carried out in building
material industry so as to create a new industry development pattern featuring complementary advantages and all-round
coordination. Greater efforts should be taken on developing product processing industry such as parts and components so as to
make it move toward the trend of standardization and OEM supply. Application research should be strengthened for better
application of new products so as to fully meet the requirements for building materials by national economy and social life. Of
course, coordinative development of an industry is a long and dynamic process, which cannot be accomplished all of a sudden.
The rules for the development of the industry should be followed, economic situation has to be taken into consideration, and
there should be coordination with resources, energy and environment, especially the coordination with market demand and the
development level of society, economy, culture and ecosystem.
The progress from raw material manufacturing to product processing indicates a significant promotion. An industry that is
confined to manufacturing and ignores developing processing will inevitably come across “Long-board Effect” or “Short-board
Effect”, and this kind of “soloist” obviously cannot provide a fascinating performance. Green leaves make red flowers more
beautiful, and the coordinating idea of persisting in developing product processing industry will not only benefit the reform of
the traditional pattern with the sole pursuit of scale and amount but also provide the entire industry with greater competitiveness
so as to realize the coordinative development of the industry.
4. We should persist in cyclic economy pattern and push sustainable development of the industry
Building material industry is a typical resource-consuming and energy-consuming industry, so the support of resource and
energy is indispensable to its development. The rapid development of building material industry has caused greater consumption
of resources and energy as well as heavier burden on environment. Although great achievements have been realized under our
continual efforts in the conservation of resource and energy and the reduction of pollution emission during the 30 years of
development, stern reality is still troubling us, urging us to realize that great hindrance will appear in for the sustainable
development of the industry without the acceleration of the development of cyclic economy.
As one of the industries that made the earliest efforts in the research of cyclic economy development, building material
industry has made abundant beneficial practice in the integration of theories and industrial practice and gained remarkable
achievements, which can be well indicated by the small-size cycle for the utilization of waste water, exhaust gas, used heat and
waste residue produced by building material enterprises, the medium-size cycle between building material industry and other
industries such as chemical, power and building industries, e.g. the substitute of natural resources as raw materials with the use
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of industry slag such as fly ash and blast-furnace slag, producing plaster boards with the use of desulfurized plaster, and the
substitute of sand rocks and skeletal materials with the use of building waste, and finally the large cycle between building
material industry and the whole society, e.g. the consumption and utilization of waste produced by industries and people’s life
and other poisonous and hazardous wastes, the conservation of resources, and the utilization of heat energy.
There are unique advantages as well as bright prospect for the development of cyclic economy in building material industry.
The bright prospect derives from the implementation of various activities in the industry, e.g. the efforts in reducing the
consumption of resources and energies as well as in boosting the utilization rate of them, the wide-range re-utilization of various
kinds of wastes, the improvement of quality and life span of products as well as the promotion of performance, and the
deepening promotion of the re-utilization of building waste. Meanwhile, the development of cyclic economy in building material
industry can be implemented actively and effectively in the related fields of the upstream, middle-stream and downstream
industry. The approaching of cyclic economy era gives no time for building material industry to wait, so the only choice is to
make greater efforts in developing cyclic economy in the filed, strengthen researches, make thorough practice, and follow the
development pattern of “Minimizing, Reutilization and Cyclic”. The present situation raises tough challenge for building
material industry as well as significant opportunity to make greater development, therefore, we should transform the pressure
into motivation and create larger space for development during the implementation of cyclic economy pattern.
5. We should persist in independent innovation and push the scientific development of the industry
The long-term underdevelopment and incapability in developing of China’s building material industry in the past results not
only from the restraint in capitals and market, but also from the hindrance caused by our poor innovation capability and
backward situation in craftsmanship, technology and equipment. One of the experiences for the success of the industry gained
during the 30-year development is that the strengthened capability in independent innovation can make a breakthrough from the
bottleneck of the backward situation in industry craftsmanship, technology and equipment. Take the development of cement
industry for example, by focusing on solving the main conflict between high investment and low benefit after the introduction,
digestion and absorbing of advanced technologies, the pattern of low investment and accelerated development has been realized
with the implementation of the key measures that are entitled “Scientific innovation, design optimization, localized equipment
and proprietor-responsible”. Many core technologies with independent knowledge property rights have been mastered by the
industry, contributing a lot to the realization of restructuring and upgrading the building material industry. It has been indicated
by the experience gained in the 30 years’ development that the key to the realization of scientific development is to insist on
independent innovation and implement the strategy of “Science and Education Boom Building Material Industry”.
According to the theory of economic growth, too intense reliance on the increase of factor inputs may lead to tough
restraint on economic growth with the gradual decrease of marginal returns, and finally the stagnation of economic growth.
Stable and continual development is fundamentally realized via reinforced independent innovation capacity and technological
progress. The common problem concerning building material industry in the past entitled “Large and not powerful” was mainly
due to the poor capacity for independent innovation. Therefore, the promotion “From Large to Powerful” can only be realized by
making innovations in techniques, equipment, products, ideas and mechanisms. In a word, capacity for independent innovation
is the momentum for the realization of scientific development as well as the development from Large to Powerful.
After 30 years’ development, the independent innovation system based on enterprises has been forming shape in building
material industry. The realization of the development “From Large to Powerful” involves the establishment of enterprise-based
and market-oriented technology innovation system with the combination of manufacturing; learning and research, which also
make enterprises become the subject of the input on R & D, technological innovation and the application of innovation
achievements. Large enterprises have replaced the role of research institutes and universities in providing technology
achievements for industry, institutes of research and design are developing closer cooperation with industries after they were
transformed into science-based enterprises, and small and medium-size enterprises have begun to provide achievements by
independent innovation regularly. This kind of situation for promising development should be reinforced so as to strengthen the
capacity of building material industry for independent innovation, thereby laying a solid technological foundation for sustainable,
fully coordinative and scientific development of the entire industry.
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Contents
Chapter 1 An Overview of the Building Materials Industry in China .......................................................... 1
1.1 An overview of the development of the Chinese building materials industry ........................................... 1
1.1.1 The early stages of Chinese building materials industry ................................................................. 1
1.1.2 The building materials industry after China implemented the reform and opening-up policy ........ 2
1.2 The role of the building materials industry in China's national economy ................................................. 3
1.2.1 The building materials industry is part of the national economy and a fundamental industry laying
down a strong foundation for social development .............................................................................. 3
1.2.2 The building materials industry is a fundamental and prioritized one in China's economic
development ........................................................................................................................................ 3
1.3 The role of the building materials industry in national economy .............................................................. 3
1.3.1 The building materials industry provide a material foundation for fixed assets investment ........... 3
1.3.2 The building materials industry provides material support for better livelihood for the people ..... 4
1.3.3 Building material industry is a key industry that utilizes recycled materials .................................. 4
Chapter 2 The status of world building materials industgry ......................................................................... 5
2.1 The cement-manufacturing industry .......................................................................................................... 5
2.2 Stone material manufacturing industry ...................................................................................................... 6
2.3 Glass and glass products industry.............................................................................................................. 7
2.4 Refractory material manufacturing industry .............................................................................................. 8
2.5 Coating industry ........................................................................................................................................ 9
2.6 The Chinese building materials industry’s position in the world ............................................................ 10
Chapter 3 Development Environment for China’s Building Material Industry ........................................ 12
3.1 Economic Environment ........................................................................................................................... 12
3.1.1 China’s Economic Environment .................................................................................................... 12
3.1.2 Global Economic Environment ..................................................................................................... 12
3.2 Policy Environment ................................................................................................................................. 13
3.2.1 Comprehensive Scheme for Energy Conservation and Emission Reduction ................................ 13
3.2.2 Clean Production Assessment Index System ................................................................................. 14
3.3 Industrial Plans ........................................................................................................................................ 15
3.3.1 Development Outline for Building Material Industry ................................................................... 15
3.3.2 Intensify the Support to Key Enterprises ....................................................................................... 17
3.3.3 Market Access Mechanism for Glass Industry .............................................................................. 17
3.3.4 Accelerate the Elimination of Outdated Production Capacity ....................................................... 18
3.4 Technological Environment ..................................................................................................................... 19
3.4.1 Technological Development .......................................................................................................... 19
3.4.2 Gap with International Level ......................................................................................................... 19
3.4.3 Technological Development Goals of Building Material Industry ................................................ 20
3.4.4 Priorities and Key Tasks of Technological Development .............................................................. 20
3.4.5 Technological Development Plan of the Building Material Industry ............................................ 21
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3.4.6 Suggestions for Technological Advance ........................................................................................ 21
Chapter 4 Conditions of Industries Relating to Building Materials in 2008 .............................................. 23
4.1 Real Estate ............................................................................................................................................... 23
4.1.1 Landscape ...................................................................................................................................... 23
4.1.2 Fluctuation in International Financial Market Indirectly Affects China’s Real Estate Market ...... 24
4.1.3 Economic Growth Decelerated ..................................................................................................... 24
4.1.4 Monetary Policy Grew from Continuously Tightened to Moderately Loosened........................... 24
4.1.5 Market Demand Can Hardly Recover in Short Term .................................................................... 25
4.1.6 Increase in Development Investment Will Further Decline .......................................................... 25
4.1.7 Development of Policies Governing Real Estate Market .............................................................. 25
4.2 Steel ......................................................................................................................................................... 26
4.2.1 Production ..................................................................................................................................... 27
4.2.2 The Sales Performance of Steel industry Declined ....................................................................... 28
4.2.3 Revenues of Steel Makers Increased but Profit Declined .............................................................. 28
4.2.4 Import and Export Declined Dramatically .................................................................................... 28
4.2.5 The Market Will Maintain a Weak Balance .................................................................................. 29
4.2.6 Domestic Production Capacity and Supply Are Excessive ........................................................... 30
4.2.7 Returns of the Industry Grew at a Low Rate ................................................................................. 31
4.2.8 Development of Steel Industry Policies ........................................................................................ 31
4.3 Construction ............................................................................................................................................ 33
4.3.1 Landscape of China’s Construction Industry .................................................................................... 33
4.3.2 Impact of Fluctuating International Financial Market on China’s Construction Industry ................. 34
4.3.3 Both Sales Amount and Price Fell ..................................................................................................... 34
4.3.4 Investment Is Increased in China’s Construction Industry ................................................................ 35
4.3.5 Prospect in 2009 ................................................................................................................................ 35
Chapter 5 Development of Building Material Industry in 2008 .................................................................. 38
5.1 Overview ................................................................................................................................................. 38
5.1.1 Overall Size and Distribution ........................................................................................................ 38
5.1.2 Output and Sales............................................................................................................................ 38
5.1.3 5.1.3 Cost ...................................................................................................................................... 39
5.1.4 5.1.4 Profit ..................................................................................................................................... 39
5.1.5 Region-specific Production and Sales ........................................................................................... 39
5.2 Cement, Lime and Gypsum Manufacturing Industry .............................................................................. 40
5.2.1 Overall Size and Distribution ........................................................................................................ 40
5.2.2 Output and Sales............................................................................................................................ 41
5.2.3 Cost ............................................................................................................................................... 41
5.2.4 Profit.............................................................................................................................................. 42
5.2.5 Product Yield ................................................................................................................................. 42
5.2.6 Industrial Operational Performance .............................................................................................. 43
5.2.7 Region-specific Production and Sales ........................................................................................... 43
5.3 Cement and Gypsum Product Industry .................................................................................................... 44
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5.3.1 Overall Size and Distribution ........................................................................................................ 44
5.3.2 Output and Sales............................................................................................................................ 45
5.3.3 Cost ............................................................................................................................................... 45
5.3.4 Profit.............................................................................................................................................. 46
5.3.5 Product Yield ................................................................................................................................. 46
5.3.6 Industrial Operational Performance .............................................................................................. 47
5.3.7 Region-specific Production and Sales ........................................................................................... 47
5.4 Brick, Tile, Stone and Other Building Materials ..................................................................................... 48
5.4.1 Overall Size and Distribution ........................................................................................................ 48
5.4.2 Output and Sales............................................................................................................................ 49
5.4.3 Cost ............................................................................................................................................... 49
5.4.4 Profit.............................................................................................................................................. 49
5.4.5 Product Yield ................................................................................................................................. 50
5.4.6 Industrial Operational Performance .............................................................................................. 50
5.4.7 Region-specific Production and Sales ........................................................................................... 51
5.5 Glass and Glass Product Industry ............................................................................................................ 52
5.5.1 Overall Size and Distribution ........................................................................................................ 52
5.5.2 Output and Sales............................................................................................................................ 53
5.5.3 Cost ............................................................................................................................................... 53
5.5.4 Profit.............................................................................................................................................. 53
5.5.5 Product Yield ................................................................................................................................. 54
5.5.6 Industrial Operational Performance .............................................................................................. 54
5.5.7 Region-specific Production and Sales ........................................................................................... 55
5.6 Ceramics Industry.................................................................................................................................... 56
5.6.1 Overall Size and Distribution ........................................................................................................ 56
5.6.2 Output and Sales............................................................................................................................ 56
5.6.3 Cost ............................................................................................................................................... 57
5.6.4 Profit.............................................................................................................................................. 57
5.6.5 Product Yield ................................................................................................................................. 58
5.6.6 Industrial Operational Performance .............................................................................................. 58
5.6.7 Region-specific Production and Sales ........................................................................................... 58
5.7 Refractory Industry.................................................................................................................................. 59
5.7.1 Overall Size and Distribution ........................................................................................................ 59
5.7.2 Output and Sales............................................................................................................................ 60
5.7.3 Cost ............................................................................................................................................... 60
5.7.4 Profit.............................................................................................................................................. 61
5.7.5 Product Yield ................................................................................................................................. 61
5.7.6 Industrial Operational Performance .............................................................................................. 61
5.7.7 Region-specific Production and Sales ........................................................................................... 62
5.8 Coating and Similar Product Industry ..................................................................................................... 63
5.8.1 Overall Size and Distribution ........................................................................................................ 63
5.8.2 Output and Sales............................................................................................................................ 63
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5.8.3 Cost ............................................................................................................................................... 64
5.8.4 Profit.............................................................................................................................................. 64
5.8.5 Product Yield ................................................................................................................................. 65
5.8.6 Industrial Operational Performance .............................................................................................. 65
5.8.7 Region-specific Production and Sales ........................................................................................... 65
Chapter 6 Development of China’s Building Material Industry in Recent Five Years ............................. 67
6.1 Cement, Lime and Gypsum Industry ....................................................................................................... 67
6.2 Cement and Gypsum Product Industry .................................................................................................... 69
6.3 Brick, Tile, Stone and Other Building Material Industry ......................................................................... 73
6.4 Glass and Glass Product Industry ............................................................................................................ 77
6.5 Ceramics Industry.................................................................................................................................... 79
6.6 Refractory Industry.................................................................................................................................. 82
Chapter7 “Going International” of Chinese Building Material Makers .................................................... 84
7.1 Fruitful Rewards ...................................................................................................................................... 84
7.2 Chinese Government Unveiled Encouragement Policies for Business Internationalization ................... 84
7.3 Landscape of China’s Overseas Direct Investment in 2008 .................................................................... 85
7.4 Export of China’s Building Material Industry ......................................................................................... 88
7.4.1 Import and Export ......................................................................................................................... 88
7.4.2 Characteristics of “Going out” of China’s Building Material Industry ......................................... 90
Chapter 8 Dominant Building Material Makers in China ........................................................................... 91
8.1 Dominant Cement Makers ....................................................................................................................... 91
8.1.1 Anhui Conch Cement Company Limited ...................................................................................... 91
8.1.2 Huaxin Cement Co., Ltd................................................................................................................ 91
8.1.3 Hebei Provincial Jidong Cement Group Co., Ltd. ......................................................................... 92
8.1.4 Shandong Yizhou Cement Group Corp. ........................................................................................ 94
8.1.5 China Resources Cement Holdings Limited (CRC) ...................................................................... 94
8.2 Dominant Glass Makers .......................................................................................................................... 95
8.2.1 Fuyao Glass Industry Group Co., Ltd. .......................................................................................... 95
8.2.2 CSG Holding Co., Ltd. .................................................................................................................. 95
8.2.3 Shandong Blue Star Glass Group Co., Ltd .................................................................................... 96
8.2.4 China Yaohua Glass Group Corporation ....................................................................................... 97
8.2.5 China Luoyang Float Glass Group Co., Ltd. ................................................................................. 97
8.3 Dominant Ceramics Makers .................................................................................................................... 98
8.3.1 Tangshan Huida Ceramics (Group) Co., Ltd. ................................................................................ 98
8.3.2 CIMIC ........................................................................................................................................... 99
8.3.3 Chongqing Swell Holding (Group) Co., Ltd. ................................................................................ 99
8.3.4 Jiangsu Gaochun Ceramics Co., Ltd. ............................................................................................ 99
8.3.5 Huasheng Jiangquan Group......................................................................................................... 100
8.4 Dominant Coating Makers .................................................................................................................... 100
8.4.1 Northwest Yongxin Chemical Co., Ltd. ...................................................................................... 100
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8.4.2 Chongqing Sanxia Paints Co., Ltd. ............................................................................................. 101
8.5 Dominant New Building Material Makers ............................................................................................ 102
8.5.1 China National Building Material Group Corporation (CNBM) ................................................. 102
8.5.2 Shandong Luyang Share Co., Ltd................................................................................................ 102
Chapter 9 Dominant Building Material Cities in China ............................................................................ 103
9.1 Dacheng of Hebei-China’s Capital of Green Insulating Building Materials ......................................... 103
9.2 Nanzhuang Town of Foshan-China’s No. 1 Building Ceramics Town .................................................. 103
9.3 Jingdezhen, Ceramics Capital in Southern China .................................................................................. 104
9.4 Zichuan of Shandong-Ceramics Capital North to the Yangtze River .................................................... 105
9.5 Qingyuan of Guangdong-China’s Cement Capital ................................................................................ 105
Chapter 10 Policies and Regulations on Building Material Industry ....................................................... 107
10.1 Industrial Development Policies .......................................................................................................... 107
10.1.1 Cement Industry Development Policy....................................................................................... 107
10.1.2 Development Policy for Refractory Industry ............................................................................ 108
10.2 Market Regulation ............................................................................................................................... 109
10.2.1 Market Access Conditions for Plate glass Industry ................................................................... 109
10.2.2 Access Conditions for Fiberglass Industry ................................................................................ 110
10.3 Trade and Investment .......................................................................................................................... 111
10.3.1 Measures for Overseas Investment Management ...................................................................... 111
10.3.2 Catalogue for the Guidance of Foreign Investment Industries .................................................. 111
10.3.3 Catalogue for the Guidance of Industrial Structure Adjustment ................................................ 112
10.4 Taxation Policy .................................................................................................................................... 115
10.4.1 Corporate VAT ........................................................................................................................... 115
10.4.2 Export Duty Drawback .............................................................................................................. 115
10.5 New Industrial Standards..................................................................................................................... 116
Chapter 11 Future Prospects of China’s Building Material Industry ....................................................... 119
11.1 Cement Product Industry ..................................................................................................................... 119
11.2 Glass Product Industry......................................................................................................................... 120
11.3 Stone Industry ...................................................................................................................................... 120
11.4 Ceramics Industry ................................................................................................................................ 121
11.5 Coating Industry .................................................................................................................................. 121
Chapter 12 Enterprise Name List in Chinese Building Materials Industry (Omitted: For more informa
tion, please visit CCPIT's website: www.ccpit.org)
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1 Chapter 1 An Overview of the Building Materials Industry in China
1.1 An overview of the development of the Chinese building materials industry
1.1.1
The early stages of Chinese building materials industry
China's building materials industry is a key provider of fundamental raw materials, which include building materials,
non-metal minerals and their products, inorganic non-metal new materials. These three categories are then grouped under more
than 80 kinds and 1,400 products.
China's building materials industry dates back to the Xia and Shang dynasties. Then, the walls of some houses were
plastered with lime. During the Warring States, Qin and Han dynasties, bricks and tiles emerged. In the Liao, Ming and Qing
dynasties, the main structures of Chinese pagodas and temples were constructed with bricks and tiles. In 1900, asbestos deposits
were discovered in Northeast China and later adopted by China's building materials industry. Before the People's Republic was
founded in 1949, most Chinese building materials companies, which could only manufacture very few kinds of products, were
privately held and run and suffered out-of-date production and technologies.
Before 1949, China's cement production was only 660,000 tons, ranking the 26th of the world; and flat glasses only 912,000
weight cases. Local industries of brick and tiles and stones suffered even more weak capacity, backward technologies and
unstable production. Though China was a country with abundant deposits of non-metal mineral resources, the country only had a
dozen of mines, most of which completely or partially halted their production before the Liberation. Therefore, China's building
materials industry was a very weak one in 1949.
Diagram 1-1 China's cement production output from 1949-1958
Unit: 10,000 tons
1000
930
900
800
686
700
639
600
500
450
1954
1955
388
400
286
300
249
200
100
460
141
66
0
1949
1950
1951
1952
1953
1956
1957
1958
After the People's Repubic of China was founded in 1949, the country's building materials industry soon resumed
production and the output and number of product types increased significantly. Large-scale construction of the building materials
industry occurred as planned and required by the development of national economy. Existing factories were renovated and
expanded before a large number of new ones were constructed according to a production capacity location plan. Thus, a greater
production capacity was quickly established. In 1956, the newly established Ministry of Building Materials brought all building
materials except for steel, iron and timber under administration. Non-metal mineral and their products and inorganic non-metal
new materials also fell under the regulation of the Ministry of Building Materials. As production expands, the building materials
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China Business Guide
industry had grown from a mere provider of traditional building materials for infrastructure construction to a fundamental
industry player that supplied building materials, non-metal mineral products and inorganic non-metal new materials to each
sector of the Chinese national economy.
1.1.2
policy
The building materials industry after China implemented the reform and opening-up
The Chinese government has set great store by the building materials industry ever since China adopted the reform and
opening-up policy in 1979. In January 1979, China Strategy Institute of Building Materials (CSIBM) was founded; in the next
month, the State Council approved Several Measures to Speed up the Development of the Building Material Industry by the State
Construction Commission and the State Administration of Building Materials, requiring that local authorities support the
development of the building materials industry and help it solve problems; and in April 2009, the Chinese government
established the Ministry of Building Materials. Though China's government organization has undergone several reforms, the
Communist Party of China and the Chinese Government has always prioritized support for the building materials industry and
ensured a solid foundation for its continued development.
Today, the building materials industry is a large-scale and internationally important provider of diversified and
internationally competitive raw materials and finished products. It has built a self-contained system providing products
complementary to each other. As of 2008, the industry provided 80 categories of products under more than 1,400 types and
specifications, employed 10.34 million people, and had 110,000 industrial companies with an annual sales income is more than
one million yuan, including more than 1,300 large-and medium-sized ones. Of them, 26 large-scale building materials
enterprises are listed among China's Top 520 Companies. Since 1985, China has seen its outputs of cement, flat glasses,
structural ceramics, sanitary ceramics, graphite, steatite, and other key building materials rise to the top positions of the world
and stay this way for many years running. China has grown to be a giant producer and consumer of building materials. China
accounts for half of the world's cement output and more than 60% of the world's outputs of paint, flooring, decorated boards,
sanitary fittings, hardware and other key building materials.
Diagram 1-2 China's cement output from 2000-2008
(In 10,000 tons)
150000
140000
135412
138838
130000
120412
120000
110000
103830
100000
93369
90000
81195
80000
66104
70000
72500
59700
60000
50000
2000
2001
2002
2003
2004
2005
2006
2007
2008
China's building materials industry keeps on growing rapidly in size and its economic efficiency has improved significantly
with increasingly optimized industrial structure. The whole industry will maintain robust growth in the years to come. In the
early 1990s, cement output replaced that of bricks, tiles and lime as the biggest sector of the building materials industry.
However, in the 21st century, the outputs of cement, bricks, tiles, lime and other traditional building materials that are
energy-consuming to produce account for increasingly smaller proportions of the building materials industry. In contrast, cement
products, building and industrial glasses, building sanitary ceramics, glass fibers and their products, glass fiber-ehanced plastics,
building stones are now more important industry players. The structure of the building materials industry now enjoys extended
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The Building Materials Industry
industry chain, high added values, and energy efficiency. Overall, China's building materials industry boasts of products,
technologies, and quality that are close to world standards or world-leading. However, there is room for improvement in areas of
product types, industry integration, energy efficiency, resource recycling, and environmental protection.
Since 1979 when China adopted reform and opening-up policy, the export market of the building materials industry has
become diversified. China's building materials industry maintains multi-dimensional, multi-layered trading, encompassing, and
close ties with more than 130 countries and regions in the world. The building materials industry engages in overseas project
contracting, technical services, labor collaboration. China is a leading exporter of building materials. They include natural stones,
glass fiber yarns, flat glasses, and others (40%-60% of the world's total outputs); and cement and clinker, processed glass, kaolin,
and others (20%-30%). China has established a strong presence in the global building materials market thanks to its lower
builing materials export prices (only 1/3 or one half of developed countries).
China's building material industry is one of Chinese industries where market plays a key role. On the market, large
State-owned enterprises (e.g. CNBM and SINOMA) and privately held companies with a more than one hundred million yuan
and even multi-billion business business co-exist. As the industry's structural adjustment continues, large-size company groups
emerge and have increased their market shares.
1.2 The role of the building materials industry in China's national economy
1.2.1 The building materials industry is part of the national economy and a fundamental
industry laying down a strong foundation for social development
The building materials industry is part of the national economy and a fundamental industry laying down a strong foundation
for social development. It can not only meet greater domestic needs, but contribute a great deal to job creation, income growth
for farmers, capital accumulation, export, market growth, development of relevant industries, and regional economic
development. In the 1990s, the leading elastic co-efficient reached 1.5. Thanks to the development of national economy, the
building materials industry has developed ahead of most other industries and offers great support for the overall development of
national economy by supplying a great quantity of building materials needed by the economy. In 2006, the total industrial output
of the building materials industry accounted for 3.71% of the total national industrial output.
1.2.2 The building materials industry is a fundamental and prioritized one in China's economic
development
The building materials industry is a fundamental, prioritized one in China's national economy. Social and economic
development can only happen when social production activities in any country are all expanded reproduction on a larger scale
instead of simple reproduction based on the original size. Expanded reproduction entails greater productivity, i.e. investment in
fixed assets. Therefore, investment in fixed assets is a very important component of national economies, particularly so for
China that is rapidly developing.
1.3 The role of the building materials industry in national economy
1.3.1
The building materials industry provide a material foundation for fixed assets investment
According to Chinese statistics, during the Ninth Five-Year period, the Chinese building materials industry provide 2.69
billion tons of cement, 864 million weight boxes of flat glass, 3.19 million tons of sanitary ceramics, 3.09 billion square meters
of glazed tiles, 4.67 billion square meters of wall and flooring tiles, 2.52 trillion bricks, 232.9 billion tiles, 25.37 million cubic
meters of aerated concretes, and 456 million square meters of plasterboards. These building materials are needed by
insfrastructure construction and provide a strong material foundation for fixed assets investment. China's building materials
industry provides material support for the country's economic and social developmentl.
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China Business Guide
1.3.2
people
The building materials industry provides material support for better livelihood for the
As China's economy continues to grow and its people have higher incomes, their consumption is undergoing structural
changes. As seen form developed countries, as incomes increase, consumers will experience two stages. The first one was in the
1820s – 40s, which was represented by a dropping share of food spending and an increasing share of clothing and housing. The
second stage was in the 1920s-40s, which continues today and is represented by a continuing drop of food spending shares and
of clothing shares while housing, travel and cultural spending increases in shares.
With China's reform and market-oriented economy taking shape, the country's levels of economic and social development
keep improving. The Chinese people now earn more as they come closer to realizing a well-off society. After they have gained
access to better food and clothes, they start to desire better housing conditions. That's why housing boom is happening in rural
China. There is a greater demand for commercial housing as the country reforms its housing system. In 2003, the country has a
total of 3.44 billion m2 houses under construction, of which 1.30 m2 has been completed. A great quantity of building materials
are thus needed to supply this huge need. Also, the Chinese people now want more spacious, comfortable, environmentalfriendly housing with their individual tastes, which creates huge demands for more and better water-proof, insulated, and
furnishing materials. Therefore, the building materials industry provides material support for people's wish for better lives.
1.3.3
Building material industry is a key industry that utilizes recycled materials
As the world's population continues to grow, with developing economy and larger scale of production, more daily life and
industrial wastes are generated and have seriously polluted the environment and damaged the resources.
One of the key ways to utilize wastes is to turn them into building materials. Coal stone, slags, fly-ashes and other waste
materials can be turned into cement and materials for building walls. In 1989, the building materials industry transformed 6
million ton fly-ashes, together with other materials, into 10 million ton cement, slags into 3 billion bricks, concrete blocks, brick
blocks and porcelain granules. Mine slags, steel slags, coal stones, and fly-ashes were used as mixed materials for manufacturing
cement. Today, the building material industry each year uses 3/4 of the country's total slags and is expected to use even more.
Calculating the output of materials used for building walls, if the slag conversion ratio increase by 1%, 700,000-900,000 tons of
industrial slags can be recycled and 400-500 mu farming land is saved from being destroyed and 850-1,000 mu land is saved
from stroing these slags. This greatly benefits the environmental protection. Currently, the building material industry mainly uses
solid wastes, including industrial slags, fly-ashes, coal gangue and has just started to burn life refuse and urban wastes. The
industry's utilization of industrial slags, fly-ashes and coal gangue can be turned into a limited number of product types, thus not
much prospect. Therefore, new grounds must be opened for utilizing solid wastes if the industry wants to utilize more solid
wastes and need more investment. If this is not done in conjuction with increasing companies' capacity, they will not find
incentives. The current environment policy is still "Enterprises polute and the Government picks up the bill for the polution".
Building material companies need to pay transport expenses when utilizing solid industrial wastes. The Chinese government has
changed from subsidizing companies to charging companies for their pollution, which minimizes the generation of wastes and
makes the building materials industry a business that recycles resources.
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The Building Materials Industry
2 Chapter 2 The status of world building materials industgry
2.1 The cement-manufacturing industry
Cement is considered as the foundation of the construction industry all over the world. Though its price is low, it accounts
for a major part of construction cost. At present, the cement industry has been globalized to a certain degree. The world cement
industry is expected to grow at 3% annually. As the current cement consumption keeps a stable growth rate close to world
economic development, the world cement output is estimated at around 2.2 billion tons, of which China accounts for 44%.
The year of 2008 witnessed a cement output decline in most regions in the world. Global cement demand fell because of the
economic crisis. This year, East Europe's output fell by 12%, Russia's by 25%, North America's by 20%. The Brazil market kept
positive growth. The Middle East's output was up by 5%, Africa's by 0.5%. China, Australia and Japan had seen cement output
growth. In the 1st quarter of 2009, West Europe's output dropped by 24%, East Europe's by 33%, the USA's by 17% and Russia's
by 35%.
Regions such as Southeast Asia which developed pretty well before also slowed down in their development pace.
In terms of cement consumption, China ranks the first, followed by India and the USA. As the most important cement
market in this industry, the USA imports 30% of the total exported cement all over the world. In 2007, the USA cement demand
went down by 2-3%. Cement manufacturers have small room for price increases. Cement output in a few developed regions
grows much faster than most mature markets in North America and Europe. It's safe to say that cement is a sunrise industry in
developing countries but subject to a periodic development in developed countries.
The Middle East/North Africa: Attracted by favourable profits and possible fast development in the Middle East and the
Persion Gulf region, world cement leaders are expected to enter the Gulf market very soon. By now some representitives of
multinationals have come to Lebanon, and North African countries such as Egypt, Morroco and Tunis.
With an annual output of over 115 million tons, the Middle East produces 6% of the world total. The cement output in
Egypt, Iran and Saudi Arabia accounts for 77% of this region. What's worth mentioning, the cement consumption in the Gulf
region grew by over 13% annually from 2000 to 2004. The Gulf Cooperation Council (GCC) countries are among the world
largest cement consumers in the world. Consumption per capita each year exceeds 1000kg.
Algeria and Morroco in North Africa are drawing more investment. The crude oil price rise and introduction of
privatization drive the development of the cement industry in Algeria. Production capacity of newly founded Algeria Cement
Company has reached 5 million tons. Algeria is 7th largest country in natural gas reserves and the 14 th largest in oil reserves in
the world. Oil-based economic development provides a large amount of cash reserves. The country now undertakes national
infrastructure projects and creat a great demand of cement. Therefore, Algeria's cememt industry is expected to further develop
in the next few years. In Morroco, cement consumption sees rapid growth driven by the development of infrastructure
construction, tourism and private residence. It requires some main cement manufacturers' investment to improve their facilities.
Asia: Economists predict that China and India will soon become world economic leaders. It's said that the third economic
power in Asia-Pacific area, India, following the USA and China, will take the Japan's place to be the world third economic
power in the coming ten years. Economic development and cement demands are usually interrelated to a large extent because of
the positive relativity of GDP and cement demand.
India's cement output has recentlyreached 126 million tons , up by 100% from 64 million tons ten years before. If the
growth of cement equals economic growth, India's cement industry still needs to add 10 to 12 million tons of production capacity.
The current cement projects under construction will only add 6 million ton of production capacity in the coming two years.
In the long run, in the next five years, if the cement industry is to grow at 8%, 60 million tons productivity is required to
achieve this growth rate. That's why the cement market needs investment. One fact is that Holcim enters India for the first time
and established a strategic union with Gujurat Ambuja to form the second largest cement group in India.
South America: During the past 30 years, cement production growth in South America was too pale compared to other
emerging markets (especially Asia). Its cement consumption accounted for a very small proportion of total output in the world.
So the market potential in this region will continue to attract foreign investment. Among all world cement leaders, Cemex is the
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China Business Guide
biggest investor in South America, followed by Holcim and Lafarge. In the 1990s, South America stood out as the fastest
growing company in the cement industry development. However, political coups d'etat and economic problems dragged down its
growth. The market did not go back to normal until 2003, but still fell short of the record levels.
Eastern Europe: The world-leading cement producers - Lafarge, Holcim, Heidelberg and other privately held companies are heavily involved in modernizing the cement industry and operating upgrade projects in some countries in this regions since
the end of last century, including Hungary, Poland, Czech, Slovakia, Slovenia, Bosnia, Croatia, Serbia, Romania, and Bulgaria.
In May 2005, the EU increased its population by 15% and area by 25% after absorbing new members including Poland, Hungary,
Czecho, Slovakia, Slovenia, and Estonia, Latvia and Lithuania along the Baltic Sea, Cyprus, and Malta. Romania and Bulgaria
might join the EU in 2007. The cement market will be full of competition.
The EU expansion is good news to the cement manufacturers in Europe. Because Central Europe will become a "giant
building site" with 220 billion euro investment projects planned by the European Commission during the coming 20 to 30 years.
For instance, new freeway and railway will be built in the new EU member countries. Environmental protection is an important
modernization course to which cement factories in Europe are dedicated. It includes more use of alternative fuel, reducing
energy consumption and equipping with the most advanced control system.
Since the economic crisis in 1998, the country with remarkable cement growth is Russia. Due to the recovery of residential
and industrial construction industry, most of the areas in this country demand more cement. In the past few years, cement output
grew at an annual speed of 7%. By 2010, the buildings will increase two times as planned by Russia, which will translate into a
need for 90 million ton cement. It's a big challenge to achieve this goal in just four years since the current output is 58 million
ton. Russia's cement producer Europe Cement plans to invest around US$ 588 million during 2005 to 2007, of which 560
million will be in the Russia market and for the rest in Ukraine. The group plans to increase production capability by 5.2 million
tons, productivity of each worker by 35%, and reduce gas consumtion by 9%.
2.2 Stone material manufacturing industry
In the 100 years since the beginning of last century, the world’s stone material industry got a boom especially when the
need for stone material is increasing yearly with the rise of world's construction industry after the Second World War. In 2006,
the world’s need for decorative stone material is about 1.2 billion square meters per year calculated on the basis of the standard
2-cm thick stone material. The total volume of these stone materials is more than 40 millions cubic meters. These decorative
stone materials coupled with construction stone material as well as deformed stone material to form a global yearly stone
material total consumption of over 735 millions cubic meters. The weight these stone material is 140 millions tons. In the stone
material manufacturing, the world’s top five countries are China, India, Italy, Spain, and Portuguese. Total volume of stone
material in the international trade is more than 20 millions cubic meters which valued at $35 billions. It should be noted that, as
a big power in stone material manufacturing, China has risen from the 27th place to the first place on the world’s ranking list.
The yields of the top 10 countries in stone material manufacturing in 2006 is listed in table 6.
The U.S. domestic stone material market is the biggest one of the world with its throughput account for about 20% of the
world’s stone material consuming market. Because of the underdevelopment of the U.S. stone material industry and the
limitation by the relevant U.S. laws, most of its needs for stone material are met by import. For many years, the U.S. has been
the first place of the world in terms of stone material import. 80% of the U.S. needs for stone material are met by import. In
2008, the total import of granite, marble, slate, and other materials reached $2.2 billions which is 18.06% down as compared to
the $2.2 billions in 2007.
In the middle of 1990s, the prosperity of British construction industry resulted in a huge revenue of the stone material
industry. But now, the British stone material industry is facing the stress of mortgage credit for the whole construction industry
as well as the recession in construction demand. According to the government’s statistics, the business volume of those private
construction companies had dropped by 21% in the first quarter of 2007. The business in the second quarter dropped even
further to 27% and the business continued to drop in the third quarter. This had never happened before 1992 – 1993.
France is not a big power in stone material manufacturing. The French natural stone material companies are not as
prominent as those of Italy and Germany. But the yields of the semi-finished as well as finished plate stone material in France
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The Building Materials Industry
are more than those of Germany. With the fast development in the past years, the stone material industry in France was growing
stronger and stronger on a yearly basis and was entering the list of the world’s big powers in stone material gradually. In the past
several years, France was having an obvious change in the use of natural stone material. In the past, the natural stone material is
only used as the gravestones and the cornerstones in France. However, France is using these natural stone materials for
building’s interior decorations now.
Nowadays, in France, the uses of natural stone material per year are 24.5 millions square meters which ranks at the eighth
place all over the world. The usage per capita in every year is about 0.4 square meters. Although this number is far less than
those of Germany and Italy, it is far more than the one before. As predicted by the industry analysts, France will continue to walk
on the way of becoming a big power in stone material in the coming years. In this developing period, the potential of its market
is very large.
From the respective of the world’s market, the stone material industry is flourishing. It has over $15 billions of fixed capital
with a yearly trade volume of more than $6 billions. In the past ten years, the Chinese stone material industry is developing very
fast with a yearly yield of over tens of millions tons. China is becoming a giant in stone material manufacturing which is second
to Italy. But the products structure of the Chinese stone material industry is quite unreasonable; the price of Chinese stone
material is not competitive at all on the international market. Japan, Korea, Hong Kong, Taiwan and the Southeast Asia area are
the main buyers of Chinese stone material. The sales in these countries and area account for 88% of the total volume of the
Chinese stone material export. The sales of the Chinese stone material in the Europe and America is very limited, in other words,
the Chinese stone material has almost not entered the Europe and America markets.
2.3 Glass and glass products industry
In terms of the quality of plate glass, the world’s top four countries are China, the U.S., Germany, and Japan. The float glass
yields in these countries are among the highest. Only a few manufacturers around the world have the technologies in
high-quality glass manufacturing. As reported on the ranking list of global glass quality, nearly two thirds of high-quality float
glass all over the world is manufactured by the four top multinational corporations including Nippon Sheet Glass (NSG),
Saint-Gobain, Asahi Glass, and Guardian Industries. The three glass giants, including NSG, Saint-Gobain, and Asahi Glass,
produce 78% of the world’s car glass.
Pilkington produces the best float glass in the world. The pinhead-size bubble in their glass products is no more than one
per 40 square meters. Pilkington’s car glass has the world-class quality with a total productivity of 93.3%. The number of their
non-conforming products is less than 2 ppm. The U.S. is the second largest producer of plate glass with an annual yield of about
5.4 millions tons. 80% of the glass from the U.S. is used for residential houses, commercial buildings, and cars while the
remainder is used for other applications such as mirrors, furniture, and meters etc.
Today, the world’s glass market is monopolized by the five glass giants. They produce 61% of the world’s glass, among
them, 18% are from the Japanese Asahi Glass; 12% are from the British Pilkington; 11% are from the American PPG; 11% are
from the French Saint-Gobain; and 9% are from the American Guardian Industries. The Japanese Asahi Glass and the French
Saint-Gobain have ranked in the list of the world’s top 500 companies with their powerful comprehensive strength. Asahi Glass
became one of the world’s top 500 companies all by its glass business.
The Japanese Asahi Glass ranks the first among all these five glass giants. Apart from the 5 float glass production lines in
Japan, the company has 27 float glass production lines across the Europe, Asia, South America, and North America. The
ownerships of these production lines (one of them is located in China) are attained by acquisition, share holding, sole
proprietorship, and joint venture. Asahi Glass produces 20% of the world’s float glass and has an annual sale of up to $2.4
billions.
The British Pilkington is second only to Asahi Glass and has about 33 float glass production lines at home and abroad. The
company has 3 joint venture float glass production lines in China and one of them is under construction. In 2001, the acquisition
of Guangdong float glass company, which had originally joint ventured with PPG, made Pilkington a multinational corporation
with 4 float glass production lines in China.
The U.S. is one of the largest industrial countries in the world in terms of glass manufacturing. Today, the U.S. has totally
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China Business Guide
45 float glass production lines, among them, 18 lines are of PPG's; 20 lines belong to Guardian Industries; Ralf and Ford possess
the rest lines. In the five glass giants, PPG ranks the third and Guardian Industries is the fifth. PPG’s yearly sale once has
reached the highest $2.52 billions in its history. Guardian Industries has a yearly sale of about $2 billions. Founded in 1665,
Saint-Gobain is today’s second largest glass company in the Europe with a yearly sales of about $2 billions and 15 float glass
production lines in which there are 10 lines Saint-Gobain held abroad.
The total production of glass made by the 27 countries in the EU is 37.5 millions tons in 2007. This makes the EU the
biggest production base of the world (with 1/3 of the world’s market shares). These glass worth 39 billions euros calculated by
the market values and account for 1/3 of the world’s glass total output value (the US’ glass total output value is a no more than
3/4 of that of the EU; Japan’s glass total output value equals 2/3 of that of the EU). With recombination, merger, cooperation and
acquisition, many companies increase their investments. They begin to invest in the central Europe and the Eastern Europe.
Right now, they mainly invest in Asia but the production suffers slow growth, or even stop and decrease. This is especially
notable in the UK.
2.4 Refractory material manufacturing industry
In the past several years, there had been a significant change happened in the world’s refractory material space. On the one
hand, the consumption of refractory materials was decreasing year by year because of the advances of the industrial technologies,
changes of the processes and machinery equipments (e.g. the increase of steel-making with electric furnace), as well as the
improvements of refractory materials themselves. In the past 20 years, the consumption of refractory material for every one ton
of steel per year has decreased by about 5 kilograms. On the other hand, with the globalization of the whole market and the
increasingly fierce competition, refractory materials are diversified and get a significant improvement in their performance and
quality. Additionally, refractory material manufacturers become more conscious of “serving for the customers” and can provide
better services.
The global refractory material market is facing the fact of severe oversupply, showing the development trends of yield
decrease, company reorganization, intensified competition, enhanced R&D and innovative ability, as well as better
consciousness and ability of serving for the customers. On the one hand, the main application areas of refractory materials such
as steel, cement, glass, and nonferrous metal all get advances in both technology and management. This results in the decrease in
the consumption of refractory materials and poses a higher demand for the performance of refractory materials. On the other
hand, because of the fierce competition on the market, these application areas need to cut down the consumption of refractory
materials and want them to be cheaper and have longer service life. This makes refractory material manufacturers have to cut
down the cost of raw materials and manufacturing, and invest more to accelerate the development and promotion of new
technologies and products at the same time. Refractory materials are on the way of longer service life, energy conservation,
green, and multi-functionalization in order to meet the growing needs of their application areas.
Overall speaking, the world’s refractory materials industry is facing the fact of oversupply. This phenomenon is especially
prominent in China and Russia and won’t be any better in the coming years. However, a few countries and areas are in short
supply including Middle East area, Iran, Turkey, and some countries in Southeast Asia and Africa. Due to the needs of economic
construction (post-war reconstruction in some cases) , these countries and areas are seeing or will see the bloom of the industries
like steel, cement, glass, and nonferrous metal. But these countries and areas are lack of refractory material resources,
technologies, and equipments. Refractory materials import is a must way for them to go.
According to the statistics from the Technical Association of Refractories, Japan (TARJ), the domestic market of refractory
material in Japan has been recovering steadily in both yields and demand in the past several years. Although Japan’s refractory
material yield had been decreased by 8.6% from 1998 to 2007, it had increased by 4.7% from 2003 to 2007 (increased from
1.1735 million tons in 2003 to 1.2296 million tons in 2007). The yield of refractory brick had dropped by 17% from 1998 to
2007, while the unshaped refractory materials had only dropped by 2.8% in the same period. The unshaped refractory materials
have increased by 6.2% in yields since 2003, while refractory brick has only increased by 2.3%. In one word, the production of
the unshaped refractory materials is more than that of the refractory brick in the Japanese refractory market (refractory brick
accounts for 36.5%, while the unshaped refractory materials account for 63.5% ).
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The world’s giants in the refractory material space with sales amount of more than $100 millions are ranked as follows:
Radex-Her-Klith Industrial Aktiengesellschaft (RHIAG) (Wien, Austria)
The company’s main business is refractory material, high-temperature engineering, and thermic insulant. It mainly serves
for the industrial fields such as steel, cement, lime, and glass. RHIAG had sales revenue of $2.1 billions in 2000. Among them,
refractory material accounted for 76% ($1.6 billions); thermic insulant and high-temperature engineering accounted for 17%
($357 millions); others accounted for 7% ($147 millions).
2. Saint-Gobain (Paris, France)
Saint-Gobain is one of the top 100 business giants in the world and has offices in more than 40 countries and areas. The
company had a sales revenue of $27.1 billions in 2000. Among them, advanced ceramic material, refractory material, and
grinding medium accounted for 17% ($4.607 billions); glass accounted for 39% ($10.57 billions); housing architectural material
accounted for 44% ($11.92 billions).
3、VESUVIUS (Brussels, Belgium)
The company is a subsidiary of the London-based Cook-Son Group PLC. Its main products are ceramic material and
refractory material. VESUVIUS serves for the industrial fields such as steel, glass, and others. Its revenue in 2000 are $1.2
billions.
2.5 Coating industry
Today, the world’s total output of coating is about 28 millions tons. Among them, architectural coating is about 11 to 14
millions tons, accounting for 40% to 50%. In the developed industrial countries, architectural coating is the most consumed kind
of coating that accounts for half of the total output. The yearly output of the architectural coating in the U.S. has been keeping at
level of about 2.7 millions tons in the past ten years. This accounts for 52% of the total coating output. Among them, three
quarters are waterborne coating; one quarter is solvent-based coating. The percentages of the architectural coating out of the total
coatings in other developed countries are very high: 57% in Italy, 55% in Germany, 55% in France, 33% in Japan. In the U.S.,
45% of the building external wall is decorated with coating. Japan is another world’s giant in coating manufacturing with an
output ranked the third around the world. The Japanese output of architectural coating is about 1 million ton per year. This
accounts for about 40% of the total coating output. The consumption of architectural coating per capita in the developed
industrial countries like the U.S. are more than 10kg, while this number in China is no more than 1kg. we can see that the
difference is significant, but we think this is reasonable when taking the difference of the industrial output value per capita
between the two countries into consideration.
Today, the notable features of the world’s coating industry are that the world-class giants are trying to make their global
operations reasonable. This is achieved by strategic acquisition, cooperation and joint ventures, reasonable manufacturing and
marketing. In doing so, the markets are integrated into a big one; the coating industry is going collectivized, large-scale, and
specialized. The world’s top 10 coating giants output one thirds of all the world’s coating and hold 60% of the market shares.
This developing trend is extending into those developing countries.
The developing speed of the global coating market is significantly slowed down in 2008. It is estimated that this speed is to
keep flat or slightly go down. The global revenue for the paint and coating industry is about $93 billions in 2008. The total sales
volume is more than 27 billions liters. In the world’s coating industry, decorative coating makes up the largest portion,
accounting for about 51% in output and 43% in values.
APAC is becoming the largest coating manufacturing base with over 35% of the world’s output. The Europe is the second
largest manufacturing area with nearly 30% of the entire world’s output. North America output 21% of the world’s coating,
while the remainder is from Latin America and other areas of the world. The world’s coating value is not evenly distributed on
the basis of the distribution of market shares.
The Europe holds the most coating output value around the world, accounting for about 35% of the global market shares.
APAC is second to the Europe with about 31% of the world’s output value. North America is the third largest area in terms of
output value, holding about 24% of the world’s market shares. Latin America and other areas hold 10% of the market shares.
Construction activities have a direct impact on some of the end-use markets. So they are the important power to drive the
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needs for coating materials. Apart from decorative coating, industrial maintenance, coil coating, and wood coating are all widely
used in constructions. These end-use sectors form 70% of the overall needs for coating. After many years of dramatic expansion,
the global construction market is not hot any more. Specifically, it is expected that the leading Western countries will see an
economic slow-down in construction markets in 2009. The North American construction market is estimated to drop by 9%; the
Japanese construction is expected to decrease by 7%, and the Europe is to suffer a 2% decrease.
The North America shows the largest coating demand per capita and the Europe is second to it. There are more and more
acquisitions done by the top companies in paint and coating industry. They are accelerating the development of Asian markets
especially the Chinese market. Thanks to the acquisition of Imperial Chemical Industries (ICI), Akzo Nobel firmly holds the
leading position and ranks the first in the world although it has sold out the Crown coating company in the UK. PPG has further
cemented its leading position by acquiring SigmaKalon. RPM puts much effort into the integration of the internal brands. After
the acquisition of Four Seasons Paint and Davis-Frost, Diamond Paint’s rank climbs up to the ninth place in the world.
2.6 The Chinese building materials industry’s position in the world
After several decades of development, The Chinese building materials industry has evolved into an important raw material
and finished products industry with a great variety of goods, a large scale, a complete system, the robust ability to to provide the
auxiliary items, and a dramatic international competitiveness. Now, it plays a critical role in the international market. The output
of the main products from the Chinese building materials industry such as cement, plate glass, structural ceramics, and sanitary
ceramics all have became number one in the world since 1985. China has become the real big power in both manufacturing and
consuming building materials. China output about half of the world’s cement and more than 60% of the world’s key building
materials including coating, floor, decorated board, ceramic tile, sanitary appliance, and hardware products. China is a big
country to manufacture and consume building materials in the world. Many of its products like cement, glass, structural
ceramics, sanitary ceramics, and wall materials all have been the number one in the world for several years. However, it is not a
powerful country in the manufacturing of building materials. The performance, quality, grade, material consumption, energy
consumption, and environmental friendliness of its product are still no match for those of the developed countries.
Cement products industry: The Chinese cement industry has been developing fast since the inception of the new country
in 1949. As compared to the output of 620 thousands tons in 1949, the output of cement were 1.24 billions tons in 2006. The
Chinese cement industry has continuously won the first place in both output and consumption since 1985. From 1970s on, the
time when China began to develop the equipments with new dry process cement technology, the Chinese cement technologies
and equipments have grown fast with the help of the government in the fast developing global cement industry. In terms of a
variety of energy consumption specifications, the China-made cement has reached the world’s advanced level. Chinese
companies have continuously secured orders for entire production lines from overseas. The Chinese consumption of cement in
2004 accounts 40% of the world’s total consumption. China holds two thirds of the entire Asian cement market. China output
1.39 billions tons of cement in 2008, increasing by 2% as compared to the 1.36 billions tons in 2007. The Chinese cement
industry has suffered a month-over-month decrease in output since 2008.
Glass industry: After the downturn in 2006, the Chinese glass industry saw an obvious recovery in 2007 with great
improvement in the relations between supply and demand. The boom of the industry continued in 2008 with a fast developing
speed and an ever-increasing productivity. However, the glass industry is facing a more fierce competition, the market’s gradual
saturation, and the slowdown of the development. Excessive growth of glass productivity is still the main stress on the glass
industry.
Refractory material: The refractory material industry steadily developed in 2008 with a yearly yield of 24.17 millions tons.
Total volume of imports and exports for the Chinese refractory raw material was $2.3 billions. Among them, exports were $2.15
billions and imports were $140 millions. The reform and opening of 1979 had accelerated the optimization and upgrade of the
refractory material industry structure. Aimed at the top international standards, the Chinese refractory material industry got some
outstanding results. The industry not only got the ability to provide the world’s advanced complete set of refractory material for
modern large integrated iron and steel works by introducing, absorbing, digesting, porting, and innovating, but also developed
new products including Fused zirconia series, fused cast AZS zirconia corundum series, fused cast alumina series, abrasive brick,
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and premium silica brick. The Chinese refractory material industry saw a qualitative leap, assuring the supply of these special
refractory materials needed in the high-temperature industry like large diameter cement kiln and float glass production line. With
a yield ranked number 1 in the world, the current products from the Chinese refractory material manufacturers not only meet the
needs of domestic high-temperature industry in both types and total quantity, but also enjoy a yearly increasing export. China
exports these products to 150 countries and areas including Southeast Asia, America, EU, Russia, and others.
Ceramics Industry: The Chinese ceramics industry is the one that has a low threshold and is mainly comprised of
midrange and small enterprises. They are large in quantity but not powerful in terms of overall competitiveness. The ceramics
industry is a typical resource-consuming, energy-hungry, and heavy-polluting industry. Midrange and low-end ceramics products
account for a large proportion in the Chinese architectural and sanitary ceramics products. Unlike China, foreign countries like
Japan and Italy mainly produce and sell midrange and high-end ceramics products. So we would like to say that China is a big
country rather than a powerful country in terms of ceramics products. China is the biggest ceramics production country in the
world.
Stone material industry: Stone material industry is a blooming industry around the world. The world’s stone material
industry has over $15 billion fixed capital and an annual trade value of over $6 billion. With an annual output of more than tens
of millions tons right now, the Chinese stone material industry has been developing fast. China is now a stone power which is
only second to Italy. After 20 years of developing with low cost, the Chinese stone material industry has entered a high-cost
developing era as the world’s economic situation changes and the government adjusts its policies. Business strategy adjustment,
concept refresh, accurate market positioning are the top urgent tasks for the Chinese stone material companies to do. America's
subprime crisis caused the financial tsunami, and then resulted in the global economic crisis. In the international market, there
has been a sign of decrease in both price and bulk orders in North America, Europe, and even Japan and Southeast Asia markets
since 2007. Trade friction caused by price and understanding of criterions happens constantly. Among these countries and areas,
Japan, traditionally a great power in tombstone export, is changed even more remarkably. Stone material is the most important
architectural and decorative material for China and the entire human society. The gross output value of stone material from
domestic-scale enterprise is more than 100 billion yuan in 2008. Today, China is the world’s #1 great power in stone material in
terms of gross output, consumption, and trade volume.
Coating industry: The annual output of the Chinese architectural coating are 1.34 millions tons, 1.55 millions tons, and 1.8
millions tons respectively from 2005 to 2007, with a yearly increase of 0.2 to 0.3 millions tons. In 2008, the overall Chinese
coating market has nearly 2 millions tons. Today, China is the world’s second big power in both coating production and
consumption with over 2 millions tons coating produced and consumed per year. The capacity of the Chinese coating market is
more than 20 billions yuan and this number is increased by 20% to 30% every year. Because coating production doesn’t need the
producer to invest much money and it will get quick returns, many township enterprises, private enterprises, and some foreign
companies quickly enter the Chinese coating industry as China’s national economy develops. There has been an increasing fierce
competition in the Chinese architectural coating market. Foreign brands like Dulux and NIPPON PAINT which came to China
early all have achieved great success and accounted for a large market share. The Chinese domestic brands like Huarun,
CARPOLY, TAIHO, Maydos, SUPE, and Hongchang are gaining momentum. A new competition is emerging on the Chinese
coating market.
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China Business Guide
3 Chapter 3 Development Environment for China’s Building Material Industry
3.1 Economic Environment
3.1.1
China’s Economic Environment
In 2008, despite the strong impact of the world financial crisis and the rapidly-deteriorating global economic environment,
China’s economy still maintained a fairly fast growth rate which stood at 9%. The annual added-value of industry amounted to
RMB30.0670 trillion, and the economic aggregate reached RMB30 trillion. The agricultural production continued to grow
steadily and the output of grain increased for five years in a row, which totaled 528.50 million tons in 2008, 269.0 million tons
higher and up 5.4% year on year. The growth of industrial production slowed down and the enterprise profit rose at a decelerated
pace. In 2008, the added-value of industry of enterprises above designated size rose by 12.9% and the growth rate dropped by
5.6 percentage points over the previous year. Investment and industry in China’s central and western regions grew faster than in
the east. The regional economy was restructured and optimized. In 2008, the energy consumption per RMB10,000 GDP dropped
by 4.21% over 2007. Much progress was made in the construction of an energy-efficient, resource-conserving and environmentfriendly society.
The investment maintained a rapid growth and the investment structure was improved. In 2008, the investment in fixed
assets totaled RMB17.23 trillion, up 25.5% over 2007 and 0.7 percentage point faster year on year. The Import and export
registered stable and fairly fast growth, and the growth rate fell considerately in the fourth quarter. The import and export totaled
US$2.56 trillion, up 17.8% over 2007. The total paid-in foreign investment reached US$92.4 billion in 2008, up 23.6% year on
year. The trade surplus amounted to US$295.5 billion and the reserve of foreign exchange increased to US$1.95 trillion. The
broad money supply grew at an accelerated rate. In 2008, the net quantity of cash put into circulation amounted to RMB384.4
billion, and there was a significant increase in loans.
The sales in domestic market grew fast and consumption was vigorous in both urban and rural areas. In 2008, the total retail
sales of consumer goods amounted to RMB10.85 trillion, up 21.6% and 4.8% percentage points higher than in 2007. Job
opportunities maintained a stable growth in urban areas. The income of urban residents continued to grow. In 2008, the per
capita disposable income of urban residents reached RMB15,781, representing an increase of 14.5% and an actual rise of 8.4%
year on year. The price rise first accelerated and then decelerated, which returned to normal in the second year half. In 2008, the
consumer price went up by 5.9%, 1.1 percentage points higher than the previous year. The factory price of industrial products
rose by 6.9% year on year, and dropped by 1.1% in December over the same period of 2007. The growth margin was 3.8
percentage points higher than in 2007.
2008 marked a turning point in the growth of China’s economy, which resulted from external and internal factors. China’s
economy was subject to the tests of restructuring, cyclic fluctuation of economy and world economic crisis. In 2009, the growth
target of China’s economy is set to be 8% in GDP. China’s takes the expansion of domestic demand as the fundamental approach
to sustain the growth. Moreover, the policy support that the government renders to the real estate industry also provides an
opportunity for the growth of building material industry.
3.1.2
Global Economic Environment
In 2008, the world economy only grew by 3.4% year on year, 1.8 percentage points lower than the growth rate in 2007,
marking the largest drop since 2001. In 2009, the world economy maintains the downturn. Amongst, developed economies will
enter a recession, emerging and developing economies will report significant adjustments, adding to the risks.
In the past year, the growth rate of advanced economies dropped to around 1%. Some countries and regions even reported
recession. In the second half of 2008, the U.S. economy registered an accelerating contraction: The slide of GDP growth rate
accelerated, the consumer confidence index hit a record low, the retail sales at the end year demonstrated the largest drop since
1993, the year-end unemployment rate reached the highest level in the past 16 years, and the industrial output presented the first
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contraction since 2002. Consumers in the U.S. are experiencing a change in their consumption concepts, resulting in the
gloomiest holiday sales in 2008. IMF predicted that the U.S. GDP would drop by 1.6% year on year. The U.S. Federal Reserve
predicted that the GDP would report a contraction in 2009. According to the U.S. Securities Industry and Financial Markets
Association, the recession in the U.S. would continue to the middle of 2009, and predicted that the U.S. GDP would drop by 1%
in 2009.
A major non-governmental think thank in Japan estimated the contraction of Japan’s GDP in the fourth quarter of 2008 to
be 12.1% year on year, the largest drop in Japan’s GDP in 34 years. In December of 2008, Japan’s indices of industrial and
mining production fell by 9.6% sequentially, the largest drop since the Japanese government began to count these indices in
1953. In December, the unemployment rate spiraled to 4.4%, the largest rise in 42 years. The sales in the month dropped by
2.7%, marking the largest decline in 4 years. In December, the total household consumption descended by 4.6%, making
December the 10th consecutive month that reported contraction in Japan’s total household consumption. According to an IMF
report, Japan’s economy dropped by 0.3% in 2008 and would further fall by 2.6% in 2009.
According to the statistics released by the EU Commission, the consumer confidence in Euro zones fell to the lowest in 15
years in November. In December, manufacturing and service activities in Euro zones declined at the rapidest pace at least in 10
years. Retail sales in Euro zones in the month fell for the 7th consecutive month. Retailers in EU zones reduced the staff for the
9th consecutive month by the largest margin in more than 4 years. The unemployment rate which stood at 8% also hit the highest
in two years. In November, industrial production in Euro zones continued to fall by 1.6% sequentially and 7.7% year on year.
According to IMF, the economy in Euro zones would drop by about 2% in 2009.
Due to the significant decline in world trade volume, dramatic falls in the price of primary products, and major contractions
in international investment and financing, emerging and developing economies will experience a considerable adjustment, and
some countries and regions will even suffer a recession. However, in general, emerging and developing economies will continue
to grow at a rate higher than the world average. According to IMF, Chinese economy will grow by only 6.7% in 2009, India’s
economy will rise by 5.1%, and the economy of five ASEAN member countries will go up by 2.7%. In contrast, the economy of
Russia, which is significantly affected by the descending oil price, will slide by 0.7% in the year.
The world economic situation is still unclear in 2009. Developed countries may even suffer a serious recession, imposing
some pressure on the export of China’s building material industry. At the same time, as a result of deteriorating world economy,
people’s income will shrink, creating a golden opportunity for the export of China’s inexpensive but good-quality building
materials.
3.2 Policy Environment
3.2.1
Comprehensive Scheme for Energy Conservation and Emission Reduction
In 2007, the Comprehensive Scheme for Energy Conservation and Emission Reduction, which was drafted by the National
Development and Reform Commission (NDRC) with relevant departments, and issued by the State Council, specified the
objectives and general requirements for energy conservation and emission reduction by 2010. The scheme pointed out that by
2010, China’s energy consumption per RMB10,000 GDP will drop by around 20%, from 1.22 tons of standard coal in 2005 to
less than 1 ton.
Water consumption per unit industrial added value will fall by 30%. During the 11th Five-year-plan period, the
total emission/discharge of major pollutants will decrease by 10%. By 2010, the emission of sulfur dioxide will fall from 25.49
million tons in 2005 to 22.95 million tons, and chemical oxygen demand (COD) will be reduced from 14.14 million tons to
12.73 million tons. The urban sewage treatment rate will be no less than 70%, and the general utilization rate of industrial solid
waste will be increased to more than 60%.
According to the scheme, China will check the excessive growth of high-energy-consuming and high-polluting industries.
The government will strictly control new high-energy-consuming and high-polluting projects. It will apply stringent land and
credit measures to raise the market access standards for energy-saving and environment-friendly projects. It will also launch the
second batch of pilot projects for circular economy, and support the construction of some key projects. Moreover, it will
organize the draft of plans for the promotion of circular economy in steel, non-ferrous metal, coal, electricity, chemical, building
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material and sugar-making industries.
The scheme requires that China should intensify the elimination of outdated production capacity. According to it, China
will accelerate the elimination of outdated production capacity, and enhance the elimination in electricity, steel, building material,
electrolytic aluminum, ferroalloy, calcium carbide, coke, coal, and plate glass industries. During the 11th five-year-plan period,
energy consumption will be cut by 118 million tons of standard coal, and the emission of sulfur dioxide will be reduced by 2.40
million tons.
Table 3-1 List of outdated production capacity to be eliminated in the 11 th five-year-plan period
11th five-year-plan
Industry
Content
Unit
2007
period
Build large fire power generation projects and close small fire power
Electricity
10,000kW
194.71
123.36
generation projects.
Iron
Blast furnaces whose capacity is less than 300m3
10,000t
150
0
Steel
Small converters and small electric furnaces whose annual capacity is less
than 2,010,000t
10,000t
315
195
Electrolytic
Pre-baked cells
aluminum
10,000t
0
0
Ferroalloy Submerged arc furnaces whose power is less than 6,300 kva
10,000t
0
0
10,000t
2.3
0
Calcium
Calcium carbide production facilities whose power is less than 6,300kva
carbide
Coke
Cement
Paper
Alcohol
Small coking enterprises whose coking chambers are less than 4.3m in height 10,000t
45
0
Eliminate outdated cement production capacity
10,000t
955
200
10,000t
36.8
3.5
10,000t
0
0
10,000t
0
0
10,000t
0
0
Straw pulp production facilities whose annual capacity is less than 34,000t,
chemical pulping lines whose annual capacity is less than 17,000t and paper
mills which use waste paper as raw material, fail to meet the discharge
standards and whose annual output is less than 11,000t
Outdated alcohol production technology and enterprises whose annual
capacity is less than 30,000t (except those producing molasses alcohol)
Monosodiu
m glutamate MSG producers whose annual production capacity is less than 30,000 tons.
(MSG)
Citric acid Citric acid producers which fail to meet the environmental standards
Source: Comprehensive Scheme for Energy Conservation and Emission Reduction issued by the State Council
China is the world’s largest building material producer and consumer. The building material industry consumes a large
amount of energy, making it the third largest energy consumer among China’s industries. It is a key area to which China attaches
great importance. Energy conservation and emission reduction will be the top priority for China’s building material industry.
3.2.2
Clean Production Assessment Index System
In April of 2007, NDRC released the 11th five-year Energy Development Plan, according to which, by 2010, the
environmental standards and energy consumption per unit of major products of key energy-consuming industries will reach or
get close to international advanced level at the beginning of this century, the energy efficiency of major energy-consuming
equipment will reach the international advanced level in the middle of the 1990’s, and the energy efficiency of some vehicles
and household appliances will reach the international advanced level.
To promote clean production, improve energy utilization efficiency and reduce or avoid the generation and emission of
pollutants, in 2007, NDRC released clean production assessment index systems for some industries. The index systems
concerning the building material industry include the Clean Production Assessment Index System for Ceramic Industry (Interim),
Clean Production Assessment Index System for Cement Industry (Interim), and Clean Production Assessment Index System for
Coatings Industry (Interim).
Clean production includes process control throughout the production and product lifecycle. For the production process,
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clean production includes the conservation of raw materials and energy, elimination of toxic and hazardous raw materials, and
minimization of the emission and toxicity of emissions and waste before they leave the production process. For products, clean
production aims to reduce the impact on human beings and the environment in the whole lifecycle of products from material
extraction to final disposal of products. Clean production is a relative concept, whose index system will be revised once every
3-5 years in line with technological advance and development.
The establishment of a clean production assessment system and the qualitative and quantitative assessment of enterprises
will facilitate the development of energy-conservation, pollution reduction and efficiency improvement technologies, the
elimination of outdated technologies, processed and equipment, reduction of energy consumption and increase of comprehensive
competitiveness in the building material industry.
Table 3-2 Planned unit energy consumption of major products
Designation
Unit
2005
2010
2020
Net coal consumption rate
g standard coal /kWh
377
360
320
Comprehensive energy consumption per ton steel
kg of standard coal /t
760
730
700
Comparable energy consumption per ton steel
kg of standard coal/t
700
685
640
Comprehensive energy consumption of 10 non-ferrous metals
ton of standard coal /t
4.665
4.595
4.45
Comprehensive energy consumption of aluminum
ton of standard coal /t
9.595
9.471
9.22
Comprehensive energy consumption of copper
ton of standard coal /t
4.388
4.256
4
kg of standard oil /t•factor
13
12
10
Oil refining unit energy factor consumption
Comprehensive energy consumption of ethylene
kg of standard oil /t
700
650
600
Comprehensive energy consumption of large synthetic ammonia
kg of standard coal/t
1210
1140
1000
Comprehensive energy consumption of caustic soda
kg of standard coal/t
1503
1400
1300
kg of standard coal/t
159
148
129
kg of standard coal/weight case
26
24
20
9.9
9.2
7.2
9.65
9.4
9
Comprehensive energy consumption of cement
Comprehensive energy consumption of plate glass
Comprehensive energy consumption of building ceramics
kg of standard
Comprehensive energy consumption of railway transport
coal/m2
ton of standard coal /million t km
Source: National Development and Reform Commission
3.3 Industrial Plans
3.3.1
Development Outline for Building Material Industry
To carry out the scientific outlook on development, accelerate the restructuring of the building material industry and the
transition of economic growth pattern, better facilitate the sustainable, sound and coordinated development of the building
material industry, China Building Materials Industry Association unveiled the 11th Five-year Development Outline for Building
Material Industry in March of 2007. The outline specified the guiding concepts, development targets, key areas of development
and major tasks.
Table 3-3 Development milestones for China’s building material industry during the 11th five-year-plan period
Category
Index
Overall target Annual growth of industrial value added (%)
Proportion of NSP cement (%)
Total eliminated cement production capacity (100 million t)
Development
Average production capacity of cement makers (10,000t)
and restructuring
Average production capacity of top 10 cement makers (10,000t)
targets
Production concentration of top 10 cement makers (%)
Production concentration of top 50 cement makers (%)
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2005
2010
10
August 10
40
70
0.5
2.5
20
40
1600
>3000
15
30
24.1
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China Business Guide
Proportion of float glass production capacity (%)
85
>90
Proportions of quality float glass and special glass (%)
23
40
Plate glass further processing rate (%)
25
>40
Production concentration of top 10 glass makers (%)
50
70
Average production capacity of top 10 glass makers (10,000 weight
cases/year)
1935
>3000
Proportion of DM fiber production (%)
69.5
90
Rate of finished products of DM fiber production lines (%)
88-93
94
Melting rate of DM fiber producers (t/m2·d)
1.1-1.9
1.2-2.7
>40
60
Production proportion of new all materials (%)
Reduction in energy consumption per RMB10,000 of added value of
the industry (%)
20
Up to the level of medium
developed countries
Energy consumption indicator of NSP cement makers
Comprehensive energy consumption of cement production of large
NSP cement lines whose capacity is over 4,000t/d (kWh)
Comprehensive energy consumption of clinker production of large
NSP lines whose capacity is over 4,000t/d (KJ/KG)
Proportion of NSP cement production lines which use waste heat for
power generation (%)
Energy-conserva Reduction in comprehensive energy consumption of plate glass (%)
tion target
Average energy consumption of float glass (KJ/KG)
<95
<740
40
20
7500
Energy consumption of 700t float glass production lines (KJ/KG)
6000
Proportion of float glass production lines that adopt advanced energy
conservation technologies (%)
Reduction in comprehensive energy consumption of per unit of
building and sanitary ware (%)
Unit energy consumption of DM production lines (ton standard coal/
1.3-1.5
ton yarn)
Reduction in standard coal consumption per 10,000 standard bricks
(%)
Environmental
target
Environmental indicators of NSP cement makers
Fume emitted by glass furnaces
Amount of industrial waste residue by the industry annually (100
>50
20
1
>15
The emission of dust, exhaust
and other pollutants should meet
the standards
Up to the level of medium
developed countries
Up to Grade-II requirements
specified in GB9078-1996
Pollutants emitted by building material makers above designated size
million tons)
Resource
conservation and
Resource utilization rate of NSP cement makers
utilization targets
Utilization rate of limestone resource (%)
<6500
4.2
>5
Up to the level of medium
developed countries
60
80
Source: National Development and Reform Commission
During the 11th five-year-plan period, the development goals of the building material industry are as follows: focus on
energy and resource conservation and environmental protection, lay stress on cement and wall materials, aim to improve
utilization efficiency of resources and solid waste and lower the emission of pollutants, and build the building material industry
into a resource-saving and environment-friendly industry; accelerate the product restructuring and optimization, vigorously
develop advanced productivity and speed up the elimination of outdated production capacity; constantly replace obsolete
technologies with advanced technologies; accelerate technological advance, promote industrial upgrading and increase the
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production concentration and extensiveness of the whole industry.
It is predicted that by 2010, the cement demand will total 1.4 billion tons in China, among which the demand of cement
produced with NSP process accounts for 70%. The demand of plate glass will reach around 500 million weight cases, among
which the demand of quality float glass and special tempered glass will take up 40% of the total. The demand of wall materials
will amount to 850 billion standard bricks, among which the demand of new wall materials will total 510 billion standard bricks.
The general demand of building and sanitary ware is developing toward middle and high end.
3.3.2
Intensify the Support to Key Enterprises
In 2007, NDRC, the Ministry of Land Resources and the People’s Bank of China jointly issued the Notice on Issuing the
List of Large Enterprises (Groups) to Which the Government Renders Major Support for Restructuring the Cement Industry. All
the enterprises included in the list are large cement producers that generally comply with the national industrial policies and
development plan of the cement industry, mainly adopt NSP process, feature large sizes, strong regional market control ability,
operation performance and sound development prospects. Amongst, 12 cement producers including Anhui Conch, Shandong
Shanshui and Zhejiang Sanshi are designated as national key enterprises. 12 cement producers including Inner Mongolia Volan
Cement Group, Hebei Luquan Dongfang Dingxin Cement Co., Ltd., and Shanxi Shitou are designated as regional key
enterprises. The notice requires that investment, reorganization and merger should be carried out for large cement producers
listed as key enterprises. Relevant parties should give priority to them in terms of project approval, land approval and credit
grant.
NDRC released this list for the purpose of increasing the production concentration, optimizing the resources distribution
and facilitating the restructuring of the cement industry through merger, reorganization and partnership. Currently, the
concentration degree of top 10 cement producers in China is around 15%. According to the Special Development Plan for the
Cement Industry and the Development Policy for the Cement Industry previously issued by NDRC, the restructuring target of
the cement industry is that by 2010, the anticipated output of cement will be 1.25 billion tons, among which NSP cement
accounts for over 70%, 250 million tons of outdated production capacity will be phased out, and by 2020, the cement industry
will be basically modernized and feature strong international competitiveness, NSP cement clinker will be controlled to around
700 million tons, the number of enterprises will be reduced from 5,000 to 2,000, the number of producers whose capacity is over
30 million tons will be 10, the number of producers whose capacity is more than 5 million tons will be 40, and the concentration
of top 10 producers will be 50%. According to the Eleventh Five-Year Development Outline of China’s Building Material
Industry, by 2010, the average production scale of top 10 cement producers is estimated to be over 30 million tons, the
concentration will be 30% for top 10 producers and over 50% for top 50 producers. Obviously, the release of list of key
enterprises will accelerate the increase of industrial concentration.
3.3.3
Market Access Mechanism for Glass Industry
To regulate investment in the plate glass industry, prevent blind investment and repeated construction, promote structural
adjustment, and achieve coordination and sustainability, NDRC and relevant departments formulated the Access Conditions of
Fiberglass Industry and Access Conditions of Plate glass Industry which put forth stricter conditions for market access of new
enterprises in terms of producer distribution, technology and equipment, energy consumption, environmental protection,
supervision and management. Moreover, relevant departments are required to strictly follow the access conditions at time of
approval of plate glass projects, documentation, land approval, environmental impact assessment, credit and financing, product
quality certification and business registration.
The establishment of the market access mechanism for glass industry plays an important role in checking the low-level and
repeated construction in the industry, accelerating the transformation of economic growth pattern, speeding up the R&D and
popularization of advanced energy-conservation technologies, and achieving energy conservation and emission reduction targets.
It also provides an important policy environment for the sustainable and coordinated expansion of China’s glass industry.
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China Business Guide
3.3.4
Accelerate the Elimination of Outdated Production Capacity
Since the beginning of 2007, the conflict between the supply and demand of energy in China, especially electricity, has
been generally alleviated. However, the blind expansion of high energy-consuming industries recurred in some areas. Some local
governments even contravened industrial policies by unveiling some preferential policies to encourage the development of high
energy-consuming industries, and prioritizing high energy-consuming projects when attracting investment. As a result, the
output of major high energy-consuming products grew for more than 20% in the first quarter of the year, and the growth of
investment in some high energy-consuming industries remained high, adding to the difficulty in energy conservation and
emission reduction. To cope with this, NDRC issued the Urgent Notice on Accelerating Industrial Restructuring to Check the
Blind Expansion of High Energy-consuming Industries, demanding strict compliance with the Notice of the General Affairs
Office of the State Council on Circulating the Opinions of the National Development and Reform Commission and Other
Departments on Strengthening the Regulation of Investment in Fixed Assets and Control of New Projects. It was also stipulated
that the investment in the industries whose production capacity is excessive, especially in high energy-consuming products,
should be strictly controlled, including steel, electrolytic aluminum, copper smelting, ferroalloy, calcium carbide, coke, cement,
coal and electricity. Moreover, the national industrial policies, relevant laws and regulations should be observed, industrial
restructuring should be promoted, access standards should be further raised, and high energy-consuming and high-polluting
production capacity should be phased out.
For the building material industry, NDRC mainly issued the following two documents:
1. Glass industry: Notice of the General Affairs Office of the National Development and Reform Commission on
Elimination of Outdated Plate glass Production Capacity
The notice requires that during the 11th five-year-plan period, plate glass production lines which adopt colburn process and
are small in size, high in energy consumption, poor in quality and cause serious environmental pollution should be phased out in
accordance with related laws, regulations and industrial policies.
The notice specifies the standards for elimination of outdated glass producers (production lines): Producers and production
lines included in the list of to-be-eliminated ones after the issue of the notice coded Guo Ban Fa [1999]49, which were revived
in recent years. According to NDRC Decree 2005 No. 40--Catalogue for Guidance of Industrial Structure Adjustment (2005
Edition), flat drawn sheet glass production lines with 6 or less vertical drawing machines, plate glass production lines which
adopt ordinary colburn process and Graverbel colburn process production lines whose daily melting capacity is less than 100t
should be phased out. Provinces, autonomous regions and municipalities where conditions are mature should eliminate all the
cement production lines which adopt colburn process (including Glaverbel process).
The notice also preliminarily specifies the quantitative indexes for the elimination of outdated plate glass production
capacity during the 11th five-year-plan period. In 2007, more than 12 million weight cases of outdated plate glass production
capacity would be eliminated, and more than 6 million weight cases of capacity would be eliminated annually between 2008 and
2010. In total, more than 30 million weight cases of glass production capacity would be phased out during the 11th five-year-plan
period.
2. Cement industry: List of Outdated Cement Producers That Should Be Eliminated In 2007 (1,066 in total)
To fulfill the target of eliminating 250 million tons of outdated cement production capacity during the 11th five-year-plan
period as set forth in the Notice of the State Council on the Issue of the Comprehensive Scheme for Energy Conservation and
Emission Reduction (Guo Fa [2007]15), the list of outdated cement producers that should be shut down in 2007 was unveiled.
Cement producers included in the list should phase out their outdated production lines as scheduled. Industrial and commercial
authorities and quality inspection departments should resolutely investigate and shut down uncertified cement producers, and
electricity suppliers should cut off the power supply to them. The production permit of cement producers that have production
permits but fail to fulfill the elimination tasks should not be renewed. NDRC requires that all the local governments should
supervise and check the elimination of outdated production capacity by local cement producers, and media and all walks of life
should be invited to supervise the elimination.
From the notice issued by the NDRC, we can see that the government is very resolute in this round of elimination.
Moreover, it joined hands with industrial and commercial, quality inspection, and power supply authorities in investigating the
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irregular production of outdated capacity. They made public the outdated cement producers and production lines, and also
introduced a social supervision mechanism.
In 2007, around 70 million tons of outdated cement production capacity was eliminated in China, higher than the target of
50 million tons set by the NDRC and the 50 million tons anticipated by market.
During the 11th five-year-plan period, the building material industry should focus on energy and resource conservation, and
environmental protection, lay stress on cement and wall material industries, aim at the improvement of resource and solid waste
utilization and the reduction of pollutant emission. It should adopt a model of circular economy and build into a
resource-conserving and environment-friendly industry. Moreover, a scientific development strategy of circular economy should
be formulated, a technology support system for circular economy should be established and improved, energy and
resource-saving products vigorously developed to improve resource and energy utilization efficiency, promote clean production,
and boost resource conservation, environmental protection and resource utilization.
3.4 Technological Environment
Weak independent R&D ability is the fundamental reason behind the low competitiveness and lack of development stamina
of China’s building material industry. The technologies that are introduced can’t be the most advanced. Consequently, even if we
master all the introduced technologies and produce products or equipment that meet the market demand, we still don’t own the
intellectual property rights. Once there is a change in market demand, we will have to introduce other technologies. Moreover,
technologies are updated at an accelerated pace and the commercial life of products gets increasingly short. As a result, before
the introduced technologies are completely absorbed and the products hit the market, they may become outdated. In addition, the
development of China’s building material industry is highly bottlenecked by resources and environment. Therefore, the industry
must strengthen independent development and innovation, and prioritize the research on how to break the bottleneck of resource
and environment, earnestly improve resource utilization, ensure safe resource supply, protect the ecological environment and
speed up the construction of a resource-conserving and environment-friendly society.
3.4.1
Technological Development
Based on the introduction and absorption of advanced technologies in the 1980’s and 1990’s, China’s building material
industry is rapidly narrowing its gap with the world’s advanced level in terms of production technologies and equipment.
In addition to the most competitive cement and glass industries, in the ceramics industry, the building ceramics segment
which is closely related to buildings is able to provide a spectrum of products featuring multiple specifications and functions.
Water-saving ceramics sanitary ware is put in public and household application. Building materials, including wall material, roof
material, insulation material, coating and various decoration materials are becoming diversified as a result of technological
advance. The product quality, grade and function are significantly improved to meet the demand of different buildings. The
pollution of decoration materials, to which much attention is paid in recent years, has been technologically solved. Moreover, as
the advantages that China boast in equipment manufacturing and labor are exerted, the situation in which China’s building
material industry lags far behind has been considerably improved. New products which are up to the internationally advanced
level are constantly launched, providing a material condition for the promotion of energy-conserving buildings in China.
Along with the rapid expansion of the construction industry, the problem of safe energy and resource supply becomes
increasingly severe. In accordance with the scientific outlook of development and concept of circular economy, China’s building
material industry needs to improve the resource development and utilization efficiency, solid waste utilization efficiency and
reduce pollutant emission. It should, relying on technological advance and in line with the development model of circular
economy, build itself into a resource-saving industry.
3.4.2
Gap with International Level
The technological gap between China’s building material industry and international level mainly includes the following
aspects: significant gap in key technological equipment and product quality, large outdated production capacity and weak
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independent innovation ability, posing a daunting task to restructure the industrial technologies.
In general, China’s building material industry still hasn’t got rid of the extensive model of completely relying on quantity
expansion and low-level repeated construction. The consumption of energy and resources is too high and inadequate attention is
paid to environmental protection. There is still a large gap between the building material industry of China and that of advanced
countries in terms of overall technological level.
According to statistics, China’s energy consumption per unit of floor space is 2-3 times higher than that of developed
countries. Amongst, wall material and door/window components are one of the key factors that affect the energy efficiency of
buildings. Although the energy consumption of buildings is not entirely caused by building materials, it has become an
inevitable trend that the development of energy-saving buildings will pose an increasingly strict requirement of energy-saving
building materials. The shortage of technological equipment and low product quality of building materials should be addressed
as soon as possible. The proportion of non-metal and non-mineral materials in building materials is too small, failing to meet the
requirements of new technologies and materials.
The development of China’s building material industry once relied on the introduction of technologies and purchase of
equipment packages, which affected the development of independent innovation of the industry. The self-owned technologies
and equipment most resulted from the secondary development, imitation or partial innovation on the basis of introduced
technologies. Currently, independently-developed and integrated technologies only account for a small proportion, and the
independent innovation ability is weak, severely restricting the ability of China’s building material industry to compete in
international market.
3.4.3
Technological Development Goals of Building Material Industry
During the 11th five-year-plan period, the general technological development goals of building material industry include the
following: base on fundamental research, focus on the research of industrial generic technologies, highlight conservation and
high-efficiency utilization of resource and energy and sustainability, increase the investment in scientific research, intensify
R&D and technological upgrade, deepen innovation, develop green building material products which can lower environmental
load and are conducive to health, improve the product quality, diversify the products, install large equipment for intensive
production, preserve the environment and rationalize the industrial structure.
In addition, according to the characteristic of building material diversification, specific technological development goals are
made as follows: build a self-owned NSP cement production technology system, equipment package and information
management system whose technological and economic indexes reach the international level; increase the proportion of NSP
cement clinker to 70% and the average strength of clinker to over 65MPa in the 11th five-year-plan period; develop green and
energy-saving building material, building envelope material, component and accessory manufacturing technologies.
During the 11th five-year-plan period, the building material industry will carry out fundamental research, ecological
material research, make and revise building material standards, conduct forefront research on industrial generic technologies on
strength of the 973 National Basic Research Program and Project 985. Moreover, it will revise the mandatory national standards
(such as the general cement standard) in a timely manner, revise and make the industrial and national standards for building
materials, and carry out research on technologies to assess product performance and nature of waste.
3.4.4
Priorities and Key Tasks of Technological Development
The cement industry should accelerate the localization of large equipment packages whose capacity is over 10,000t/d,
mainly including the high-efficiency clinker burning system, high-efficiency and energy-saving grinding equipment, new
generation of cooler, large and high-efficiency dust collecting equipment. NSP cement production technologies should be
developed, stress should be laid on innovative powder processing technology, and technologies and equipment which use waste
as cement material and fuel should be developed to create conditions for China to embark on a road of circular economy and
sustainability.
The glass industry should improve the economic and technological level of Luoyang float glass production line, strengthen
the development of pure-oxygen combustion technology for float glass production, try float glass surface modification and PDP
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glass substrate production technologies (float glass formation technologies).
The priorities of the ceramics industry include water conservation, material saving, reduction of environmental load,
environmental protection, resource utilization, development of green and new products, development of key equipment,
information-based production control and model design.
The priorities of the building material industry include the development of technologies to produce sound,
environment-friendly, energy-conserving, light-weight, safe, durable, low-VOC and bacteria-resistant building materials and the
promotion of new wall materials made from solid waste.
The building material industry is an industry based on mining and kiln industries, which must develop in coordination with
the construction industry and other industries. The building material industry is also an industry which digests various industrial
waste and domestic garbage. The six segments of the building material industry have their own characteristics and common
technological problems. Therefore, attention should be paid to the following fundamental technological problems during the 11th
five-year-plan period.
3.4.5
Technological Development Plan of the Building Material Industry
Optimize the allocation and use of technological resources, set store by innovation by enterprises, especially large building
material producers, build an effective innovation system integrating enterprises, universities and research institutions on strength
of the 973 National Basic Research Program and Project 985; expand the coverage of the “Technological Award of Building
Materials” and put in place a technological achievement assessment system; establish an innovation reward system for building
material producers in support of the “Technological Award of Building Materials” and facilitate technological advance of
building material producers; carry out international exchange and make full use of the technological resources of developed
countries to increase independent innovation ability.
Pay attention to the formulation of technological regulations and development of proprietary technologies. As a result of
backward technologies, Chinese enterprises are in an unfavorable position in domestic and foreign markets. Moreover, the low
technological standards lead to low technological access standards. Due to poor performance, some so-called new building
materials cause low construction quality, deteriorating the reputation of new building materials and affecting the survival and
development of some new building material producers and even the whole industry.
Make universal national cement standards. Only in this way can they facilitate the technological advance of enterprises.
Make and revise industrial and national standards, and market access standards for products. Formulate the definition,
assessment and demonstration systems for green building materials. Make specifications for clean production of building
materials. Due to institutional reasons, there are still some problems in the formulation of standards and technological
regulations of the building material industry. It is suggested that the administrative authorities (such as NDRC, Ministry of
Science and Technology, Ministry of Construction, State Environmental Protection Administration and General Administration
of Quality Supervision, Inspection and Quarantine) should make full use of the experience that the building materials
associations, researchers, designers and producers have accumulated in years and make relevant technological regulations,
standards and specifications in national interest. This can not only facilitate the technological advance of the building material
industry, but also further standardize the effective operation of the building material market.
3.4.6
Suggestions for Technological Advance
Chinese government and relevant building material associations should: make laws and regulations to encourage
enterprise-dominant innovation, increase input on technological research, and intensify legislation and enhance the macro
regulation on the industry; speed up the elimination of outdated production capacity, and encourage specialization-orientation
construction of bases (groups), such as building material manufacturing and raw material producing facilities; increase the input
and construct large national industrial research centers for major, generic and key technologies on basis of large research
institutions; build international exchange and achievement promotion and conversion platforms on strength of industrial
associations to make advanced technologies serve industrial production; strengthen the support to environmental building
materials, establish relevant funds and establish construction technology policies and preferential taxation policies; make
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policies and regulations governing the pre-treatment of waste to create conditions for utilization of waste to make building
materials; strengthen the revision and formulation of product technology standards to improve the product quality system; put in
place a standardized green building material assessment and demonstration system; intensify the cultivation of innovative talents,
well treat the talents and develop the human resources.
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4 Chapter 4 Conditions of Industries Relating to Building Materials in 2008
4.1 Real Estate
Since it began to get warm in 2003, China’s real estate market had been growing for nearly four years in a row until it
reached the peak in 2007. Due to the overheated investment in real estate market, the investment in real estate in the first year
half continued to grow for slightly over 30% year on year since last year. But now, the whole market is returning to normal. The
macro regulation has become significantly effective. In the second year half, due to the international financial crisis, the
overlapping domestic policies intended to check the overheating, advance of housing security system and economic adjustment,
the growth begins to slow down.
In 2008, the year-on-year growth rate of real estate development investment in China slid from 33.5% in January-June to
20.9% in January-December. Despite the significantly lowered growth rate in the second year half, the absolute value of growth
was still over 20%. This showed that because of the policies intended to ensure growth, there was no dramatic fluctuation in the
investment in real estate which still maintained a relatively stable growth rate.
It is predicted that in 2009, the real estate industry will continue to be adjusted. The growth rate of investment may slide to
less than 10%. To avoid the over-adjustment of the market, macro control policies for the industry in 2009 should still focus on
“maintaining stability”, reasonably guide the real estate market and stabilize the market expectation to prevent too dramatic
declines in housing price and promote the stable development of the real estate market.
4.1.1
Landscape
In 2008, the investment in fixed investment totaled RMB 14.82 trillion, up 26.1% and 0.3 percentage point higher year on
year. Amongst, the investment in real estate development amounted to RMB3.06 trillion, up 20.9% and 9.3 percentage points
higher year on year.
In January-December of 2008, the investment in real estate development in China totaled RMB3.06 trillion, up 20.9% year
on year and 1.8 percentage points lower than that in January-November. Amongst, the investment in commercial residential
buildings totaled RMB2.21 trillion, up 22.6% year on year and down 2.6 percentage points, accounting for 72.2% of the total
investment in real estate industry.
In January-December of 2008, the floor space under construction totaled 2.74 billion square meters, up 16.0% year on year.
The floor space of houses newly started reached 980 million square meters, up 2.3%, and floor space of houses completed stood
at 590 million square meters, down 3.5%. Amongst, floor space of residential buildings completed totaled 480 million square
meters, down 4.2%. Real estate developers purchased 370 million square meters of land, down 8.6%, and completed the
development of 260 million square meters of land, down 5.6% year on year.
In January-December of 2008, the floor space of commercial residence that was sold amounted to 620 million square
meters, down 19.7% year on year. Amongst, the area of commercial housing that was sold dropped by 20.3%. The sales of
commercial housing amounted to RMB2.41 trillion, down 19.5% year on year. Amongst, the sales of commercial residential
buildings fell by 20.1%. As of the end of December, the floor space of unsold commercial buildings reached 164 million square
meters, up 21.8% year on year and the growth rate was 6.5 percentage points higher than that in January-December. Amongst,
the floor space of unsold commercial residential buildings stood at 90.69 million square meters, up 32.3% year on year and the
growth rate was 9.4 percentage points higher than that in January-December.
In January-December of 2008, the annual fund of real estate developers amounted to RMB3.81 trillion, up 1.8% year on
year. Amongst, domestic loans reached RMB725.7 billion, up 3.4%; fund raised by developers totaled RMB1.5081 trillion, up
28.1%, and fund from other sources reached RMB1.5082 trillion, down 16.4% year on year. Amongst, individual mortgage loans
reached RMB357.3 billion, down 29.7%. Presently, the real estate market is still stagnant, and in some areas, the housing price
has dropped significantly. This shows that the era of huge profit in real estate market has come to an end, and China’s real estate
market has begun to return to normal after more than one decade of spiraling housing price.
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4.1.2
Market
Fluctuation in International Financial Market Indirectly Affects China’s Real Estate
In April of 2007, the bankruptcy of New Century Financial Corporation, the second largest subprime lender in the U.S.,
marked the outbreak of the subprime lending crisis. In March of 2008, Bear Stearns Cos., the fifth largest U.S. investment banks,
was acquired by JP Morgan Chase& Co for US$240 million. Later on, the subprime lending crisis grew in intensity and got out
of control. In September of 2008, five independent investment banks in Wall Street collapsed. American International Group
(AIG), the largest insurance company, was plunged into a cash crisis. Some local banks were also closed. The subprime loans
and its derivatives in the U.S. have formed a global market, which are held by people around the world. Some large U.S.
financial institutions became multinationals. Therefore, the impact of tumult in the financial market spawned by the subprime
lending crisis went beyond the U.S. The stock markets, bond markets, exchange markets and various derivative markets in other
countries were also affected, giving rising to a worldwide financial storm.
The financial crisis in the U.S. will inevitably affect the real estate market in China. As a result of the subprime lending
crisis, the U.S. economy experienced a significant contraction. In August, the industrial production in the U.S., including
manufacturing, mining and public utility industries dropped by 1.1%, marking a decline for two months in a row. The retail sales
in the U.S. fell by 0.5% in July and 0.3% in August. The impact of the world economy will exacerbate the slowdown and
restructuring of China’s economy that may suffer a risk of too rapid decline, which in turn, may affect China’s stock market and
real estate market.
4.1.3
Economic Growth Decelerated
In 2008, China’s macro economy began to be restructured, which is ridden with a risk of too rapid decline. Firstly, the
growth of world economy slowed down, and the declining momentum has basically formed for China’s export. Secondly, due to
the falling export growth, tightened monetary policy and stagnant capital market, the fund chain of many enterprises got
tightened, and investment-oriented demand in the market became weak. In August, the industrial added value of enterprises
above designated size grew by 12.8% year on year, down 5 percentage points over March. As the industrial production
decelerated, the profits of industrial enterprises also dropped. Since May of 2008, as the growth of CPI fell, PPI also rose by a
small margin. Due to the scissors difference in PPI and CPI, the profits of enterprises were generally unoptimistic. In addition,
due to the snowstorm and frost, earthquakes and serious loss in overseas financial assets in 2008, the pressure of economic
downturn also increased. Against this backdrop, the real estate market was also significantly affected, and industrial climate
began to fall. Since 2008, the real estate climate Index also dropped from 106.11 at the beginning of the year to 96.46 in
December.
4.1.4
Monetary Policy Grew from Continuously Tightened to Moderately Loosened
To maintain the sound and stable growth of the macro economy, prevent excessive liquidity and overheated investment
from causing inflation and triggering overheated economy and even crisis, China began to adopt tightened monetary policies,
raise the interest rate and deposit reserve ratio and intensify the issue of central bank notes, control the growth rate of bank credit
and improve the excessive monetary supply in 2006. The effect of the tightened monetary policy began to show in 2008. Due to
the restraint of supply and demand, the investment in real estate market shrank, the consumption demand declined and the
market transaction fell. Firstly, the loosening of monetary supply caused declining demand in the real estate market. Currently,
real estate developers in China are highly dependent on bank loans. The rise in interest rate makes it difficult for real estate
developers, especially small and medium-sized developers to get funds from loans, and increases the financing cost of them. The
tightened fund chain of developers results in declining investment in real estate market and newly-added supply. Secondly, the
rise in interest rate and the policy implemented in September of 2007 to increase the down payment and mortgage loan interest
rate for the second house capped the demand in real estate market, especially the investment, speculation and some demands
intended for improvement. This led to falling demands. Checked by supply and demand, the rise in housing price also reported a
significant drop.
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4.1.5
Market Demand Can Hardly Recover in Short Term
The depression in real estate market in 2008 will continue in 2009. From the perspective of demand, the purchase for some
demands intended for improvement and investment will be postponed. House hunters will exit the market due to the falling
speculation ability. People who buy the first house for living purposes will become more prudent. From the perspective of
demand structure, the demand will concentrate on small and medium-sized houses. From the perspective of product demand,
people remaining in the market who really need to buy houses will have higher requirements for housing products. Therefore,
the market competition will become more intensified in the future.
As it is difficult to spur the demand and the fund chain of suppliers becomes strained, some small and medium-sized real
estate developers with inadequate funds may be forced to exit the market because of the failure to raise funds. The real estate
developers will experience a round of “reshuffle”. Institutions, including real estate agencies, designers and agents, brokers,
assessors and warrantors, will undergo a round of restructuring and integration. Along with the elimination, merger and
reorganization, the development goals and strategies of developers will also be adjusted accordingly. Developers will pay more
attention to the quality of products and provide differentiated products to secure a favorable position in the market competition.
According to the current market landscape, real estate markets in most Chinese cities are very sensitive to prices. Many
estates, because of the rational pricing, are almost sold out immediately after the sales begin. Against this backdrop, rational
developers will inevitably return to the market trend, adjust their prices to a reasonable level and intensify the promotion. It is
predicted that in 2009, the transaction in real estate market will rise and the price will continue to return to a rational level.
4.1.6
Increase in Development Investment Will Further Decline
As the sales are lower than the investment, in 2009, real estate developers will suffer more strained fund chains. Most key
developers will have a profound understanding of the domestic and international situations. Although they see a rosy prospect of
the real estate market for the long run, they also realize that the market does not look optimistic in the short run. Therefore, they
will downturn their investment plans. For instance, Vanke pointed out in its Q3 report that on the basis of reducing the annual
plan of building construction and completion outlined in the semi-yearly report, the company “decided to further reduce the
floor space of buildings newly started by around 1.1 million square meters to about 5.7 million square meters to better
accommodate the marketing.” It is estimated that the growth of investment in real estate development will further decline in
2009, but there will not be a negative growth.
On December 13 of 2008, the General Affairs Office of the State Council issued the Several Opinions on Facilitating
Economic Development with Finance. It stipulated that we should “expand the issue of bonds, actively develop corporate bond,
short-term financial bill, mid-term note and other debt financing instruments”. In 2008, some large estate developers adopted
various measures to increase the funds they had to prevent their fund chains from breaking up. For instance, Vanke and Gemdale
issued corporate bonds, and Financial Street completed the offerings in 2007. The issue of corporate bonds has become an
important way for developers to raise funds. In 2009, the government will intensify the issue of corporate bonds. The interest
rate of corporate bond is generally higher than that of bank loans. They are also safer, making themselves ideal low-risk
investment options for real estate investors. As a result, they will be favored in the market. The capital-intensive real estate
industry should address this good opportunity and secure adequate funds by issuing corporate bonds. However, some small and
medium-sized real estate developers do not have the qualifications and ability to raise funds in the stock market. Moreover,
financial institutions strengthen their management on loans to these developers to avoid risks. In 2009, these developers will
suffer more strained fund chains. The real estate industry will be further integrated and the situation in which small players will
be merged by larger ones will be unavoidable.
4.1.7
Development of Policies Governing Real Estate Market
1. Ameliorate the supply and demand structure, and improve the housing security policy
To address the low proportion of investment in small properties whose floor space is less than 90 square meters (This
proportion is 27.6% in Jan.-Aug. of 2008) and the inadequate supply of low/medium-priced and small/small-sized properties,
local governments should, from the perspectives of plan approval and land supply, ensure the investment in small/medium-sized
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and low/medium-priced houses, improve the supply structure to ensure the fulfillment of the “90/70” policy targets.
To address the low proportion of investment in economically-affordable housing and inadequate supply of security housing,
local governments should control the projects and land supply, arrange projects of economically-affordable housing, and even
stipulate a certain proportion of economically-affordable housing in commercial housing. To mobilize the enthusiasm of local
governments in ensuring housing security, it is suggested that the performance assessment indicators for local governments
should be adjusted to incorporate the performance of housing security system into the assessment indicator system so as to urge
local governments to implement the construction plans of economically-affordable and ordinary housing projects.
2. Intensify the support to living-oriented demand
Housing consumption is the most significant hotspot in upgrading the consumption structure of urban residents in China. It
is also the most important source demand in this round of economic prosperity cycle. To protect the housing consumption is the
key to the expansion of consumption demand and extension of the economic prosperity cycle. Therefore, while checking the
speculative demand, China should also protect and support people’s living-oriented demand.
3. Ameliorate the housing credit policy and prevent financial risks
To prevent rising non-performing loans in real estate industry in some hotspot cities and mortgage default rate, to
effectively avoid risks, the credit departments should strengthen the approval and regulation of qualifications for housing credit,
control the housing risks and lower the ratio of non-performing loans. To solve the problem of fake income statements, financial
institutions can cooperate with taxation authorities to verify applicants’ income through their personal income tax. At the same
time, to prevent extreme situations, financial institutions should, in addition to preventing risks, vigorously support projects that
comply with the national control targets and market demand, and support the satisfaction of living-oriented demand.
4. Accelerate the diversification of fund-raising models for real estate industry
To address the situation in which they rely too much on banks for financing, developers must accelerate the diversification
of fund sources. Firstly, they should reduce the reliance of real estate projects on banks by increasing and expanding the
fund-raising channels and models in real estate industry, including IPO, equity, private placement and trust, and improve the
ability to raise funds and develop. Secondly, China should introduce credit companies, funds, investment banks, real estate
operators and other strategic partners to improve the ability to develop and manage real estate projects.
5. Establish scientific housing consumption models and advocate both rental and purchase
In the current system, property ownership and household registration is closely related to the education of children, which
virtually restricts the development of housing rental business. To make full use of the real estate stock in a reasonable manner
and promote the mutual supplementation between housing rental and sales, in addition to guiding a correct housing consumption
concept, China must also put in place and improve supportive measures for housing rental, including household registration,
education and social security, put an end to the traditional systems which fetters and restricts the housing rental business to get
rid of people’s worries.
4.2 Steel
Steel industry is an important pillar industry in China’s national economy, which contributes 8.8% of the total GDP. It has
many associated upstream and downstream industries, playing an important role in China’s general plan of economic
revitalization. Specifically, China’s steel industry involves iron ore, coal, petroleum and natural gas, and ferroalloy industries
upstream, and covers real estate, construction, automobile, ship making, household appliance, light industry, petroleum and
chemical industries downstream. In 2007, the industrial value added of steel enterprises above a designated size reached
RMB993.6 billion, and the profits totaled RMB243.6 billion, accounting for 9% of the total profits of industrial enterprises. 3.58
million people are directly involved in steel production.
China is a major steel producer and consumer, whose output of crude steel ranks the first for more than 10 years in a row.
In the 21st century, China’s steel industry witnesses a rapid development, with the output of crude steel growing by more than
20% on average annually. In 2008, the output of crude steel totaled 500 million tons, accounting for 38% of the world’s total. In
the year, China consumed 450 million tons of crude steel, and its direct export of crude steel totaled 60 million tons, which
represented 15% of the world’s total steel trade. However, China’s steel industry is haunted by a host of problems, including
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excessive production capacity, irrational production distribution, low concentration level, low added value of products, and weak
resource control. In particular, due to the ongoing financial crisis, the world economic recession has spread to China.
Consequently, the export prospect of steel is not good, and the situation of domestic demand is worrisome.
Despite the crisis, China’s steel industry still faces great potential opportunities. On the one hand, the RMB4 trillion
stimulus investment by Chinese government is concentrated on capital construction, machinery manufacturing and automobile
industries, which will indirectly increase the demand of steel and improve the situation for the steel industry. On the other hand,
according to relevant research, China’s steel production capacity is “relatively” excessive. The supply of high-quality steel
products is still inadequate, and a large quantity of them needs to be imported. To support the Plan for Adjusting and
Restructuring Steel industry issued by the government, China will intensify the development of steel products. Therefore, there
is a huge potential demand for high-end products. If enterprises dedicate themselves to increasing the technological contents in
their products through R&D or international cooperation, they will have wide development space. For instance, through the
strategic cooperation with Mittal Steel, Valin obtained many core technologies and indirectly possessed resource control.
On the other hand, in accordance with the guideline to build competitive large steel enterprises as outlined in the plan,
domestic steel giants in China such as Baosteel, have carried out horizontal strategic mergers, expanded their market shares
through regional integration and taken part in downstream industrial projects through shareholding or strategic alliance,
accelerating the connection with downstream manufacturing industry, establishing a sustainable and stable industrial chain to
resist the cyclic fluctuation in the industry.
To sum up, amidst the world economic depression and imbalance between supply and demand at home, China’s steel
enterprises will experience an unavoidable transition journey. If they make good use of the industry revitalization policies,
optimize their own operation structure and give play to the advantages of industrial integration, they will be able to build up
first-class international competence and eventually promote the upgrading of China’s steel industry.
4.2.1
Production
In 2008, China’s output of steel totaled 500.49 million tons, up 1.13% year on year; the output of pig iron reached 359.89
million tons, down 0.16% year on year; the output of continuous casting billet amounted to 483.72 million tons, up 1.25% year
on year; the output of rolled steel stood at 581.77 million tons, up 3.56% year on year; the output of coke reached 824.01 million
tons, up 20.74% year on year; the output of iron ore totaled 824.01 million tons, up 20.74% year on year, and the output of
ferroalloy amounted to 18.25 million tons, up 3.90% year on year. The growth rates indicate that China’s output of steel, iron,
materials and ore rose continuously in 2008, but the growth rate decelerated significantly. Amongst, between September and
December, the output of pig iron and rolled steel witnessed a continuous year-on-year decline which was unseen for years. The
output of crude steel dropped by up to 17.00% in October, 12.38% year on year in November, and 10.52% in December. The
output of rolled steel fell by 12.40% year on year in October, 11.00% in November and 1.69% in December. The problem of
excessive steel production capacity gets increasingly severe in China.
From the perspective of output proportion, the output of steel, iron and rolled steel by key enterprises covered in statistics in
China accounts for 78.34%, 76.46% and 62.15% of the national total respectively, and the output of other enterprises takes up
21.66%, 23.54% and 37.85% of the national total respectively. From the perspective of increment, in terms of relative number,
the output of steel, iron and rolled steel by key enterprises rose by 0.09%, 1.68% and 1.07% over the previous year respectively.
The growth rates of other enterprises represented by private enterprises are 5.08%, -5.70% and 7.93% respectively, which are
4.99 percentage points higher, 7.38 percentage points lower and 6.86 percentage points lower than that of key SOEs. In terms of
absolute increment, the output of crude steel and rolled steel of other enterprises is 14.10 and 3.23 times higher than that of key
enterprises respectively. This shows that in 2008, China’s output of steel, iron and rolled steel fell dramatically. This is mainly
caused by state-owned and private enterprises.
In terms of daily output, in 2008, China’s daily output of crude steel, continuous casting billet, pig iron, rolled steel, coke,
iron ore and ferroalloy amounted to 1.2191 million tons, 1.18 million tons, 1.17 million tons, 1.57 million tons, 0.72 million tons,
1.97 million tons and 0.04 million tons respectively. Amongst, the daily output of steel, iron and rolled steel by key enterprises
covered in statistics reached 0.95 million tons, 0.89 million tons and 0.89 million tons respectively. Among major steel products,
the output of reinforcing steel bar totaled 97.09 million tons, down 3.9% over the previous year; the output of wire (coil rod)
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reached 80.24 million tons, up 1.2%; the output of steel bar reached 46.70 million tons, up 2.2%; the turnout of medium plate
was 35.27 million tons, up 14.1% and the output of HR plate reached 5.59 million tons, down 15.4%. In terms of increase rate,
the growth witnessed a fallback, and the output of most products in September-December declined year on year.
4.2.2
The Sales Performance of Steel industry Declined
Currently, eight industries dominated the consumption of steel, including construction, machinery, automobile, ship making,
railway and road construction, petroleum and petrochemical, household appliance and container, which contributed 80% of the
total rolled steel consumption. In 2008, China’s investment in fixed assets in urban areas grew by 26.10%. Amongst, the
completed investment in real estate development went up by 20.9%, down 9.3 percentage points over the same period of the
previous year. China’s industrial added value of enterprises above designated size rose by 5.7% year on year, down 11.7
percentage points over the same period of the previous year. In particular, the production of steel-consuming industries dropped
dramatically. The output growth of automobiles, steel ships, metallurgical equipment, industrial boilers, internal-combustion
engines, washing machines, refrigerators and air conditioners decelerated and even reported negative growth. As a result of the
declining growth of steel-consuming industries, the consumption of downstream industries went sluggish. This severely
restrained the domestic demand of steel.
In 2008, China produced 581.77 million tons of rolled steel, up 3.56% year on year, and 20 million tons more than the
previous year. Amongst, key enterprises covered in statistics produced 337.96 million and sold 336.20 million tons of rolled
steel. The sales/output ratio of steel was 99.48%. In 2008, China exported 59.18 million tons of rolled steel, down 5.5% year on
year, and imported 15.38 million tons of rolled steel, down 8.8% year on year. The net export of rolled steel amounted to 43.80
million tons. By the end of the report period, the rolled steel inventory of China’s key enterprises covered in statistics amounted
to 6.84 million tons, 0.85 million tons less than the 7.69 million tons in November, and 0.22 million tons more than the
inventory at the beginning of the period.
4.2.3
Revenues of Steel Makers Increased but Profit Declined
In November of 2008, the loss of key domestic steel enterprises (71 in number) totaled RMB12.78 billion, a record high in
history. Between January and November, their revenues reached RMB2.43 trillion, up 30% year on year. Their profits amounted
to RMB114.21 billion, down 16.33% year on year.
Unlike in 2007 when their profits went up significantly, the growth of profits of steel enterprises decelerated in 2008.
Revenues of steel enterprises above designated size in January-November went up by 34.50% over the same period of the
previous year. But the total profits declined by 13.70% year on year. The growth rate fell by 27.4 percentage points over the
same period of 2007. The losses rose significantly, which amounted to RMB18.71 billion in January-November, up 304.86%
year on year. In contrast, the losses went down by 17.97% in 2007 over the same period of 2006.
4.2.4
Import and Export Declined Dramatically
In 2008, China imported 15.38 million tons of rolled steel, down 8.8% and 1.49 million tons year on year. Between 2007
and the first half of 2008, China’s monthly import of rolled steel remained to be 1.3-1.6 million tons. As the replacement ability
of homemade steel intensifies, China’s import of rolled steel gradually decreases. In the second half of 2008, due to the impact
of the international financial crisis, China’s demand of rolled steel shrank. The import declined the most significantly, which fell
from 1.44 million tons in July of 2008 to 0.93 million tons in December, less than 1 million tons for the first time since January
of 2002, down 30.4% month on month.
In 2008, Guangdong imported 6.15 million tons of rolled steel, down 18.9%, accounting for 39.9% of China’s total import.
Jiangsu imported 2.06 million tons, up by 0.4% and accounting for 13.4% of China’s total import. Shanghai imported 1.54
million tons, down 5.4% and taking up 10% of the national total. The total import of the three provinces took up 63.2% of
China’s import in the same period.
In 2008, China’s export of rolled steel totaled 59.18 million tons, down 5.5% and 3.46 million tons over the same period of
2007. In August of 2008, China’s export of rolled steel reached 7.68 million tons, followed by consecutive dramatic falls in
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following months. In November, the export dropped to 2.94 million tons, a record low of monthly export since 2007. In
December, the export rebounded slightly to 3.17 million tons, down 33.7% over the same period of 2007 and up 7.6%
sequentially. The average export price was US$1,240.44/t in the month, up 57.6% over the same period of 2007 and down 6.3%
sequentially.
In 2008, the export of rolled steel by Jiangsu, Liaoning and Hebei reached 10.09, 7.45 and 6.32 million tons, up 7.9%, 6.2%
and 10.7% respectively. The total export of the three provinces accounted for 40.3% of the national total in the year.
4.2.5
The Market Will Maintain a Weak Balance
According to the boost of demand by economy, China’s steel industry faces a severe situation both at home and abroad.
The demand of rolled steel will report a negative increase in 2009. As the global economic growth further decelerates, if the
current export policy remains unchanged, 2009 will witness a major decline in the export of China’s steel industry, as compared
with 2008. On the one hand, this is because that the price at home and abroad will be gradually tightened. On the other hand,
some emerging destination countries such as Vietnam and Indonesia will enhance the protection of their own steel industries and
adopt stricter import policies due to sliding domestic economy. Although from December 1 of 2008, China turned up the export
drawback rates for some high-tech steel products and cancelled the export duty for some products, the stimulus impact on export
is still quite limited as the world economy demonstrates poor performance. Moreover, in the middle and long run, more trade
frictions and protectionism will be triggered. In 2009, the deteriorating international economic environment will exert a major
impact on China’s export of steel products. 2009 will be a difficult year for the export of the steel industry. It is expected that
China’s export of rolled steel will total 45 million tons in 2009, representing a decline of up to 25%.
Except for government investment, the situation for enterprise investment, consumption and export will not be rosy.
Although the financial crisis has only a limited direct impact on China’s financial market, its influence on China’s real economy
becomes increasingly obvious. China’s export-oriented enterprises are severely affected. The demand of rolled steel will register
a negative increase in 2009.
In this round of cyclic economic depression, Chinese economy will face a more severe challenge than in 1998. A
quantitative comparison shows that the deterioration of foreign demand is more significant than in 1998. The Asian financial
crisis which occurred in 1998 only saw its impact in Asia. Many countries that suffered the crisis were China’s export rivals.
China’s main trading partners such as the U.S. and the EU were still in the prosperity of IT bubbles, which partly alleviated the
sliding foreign demand for China. This time, however, the global financial crisis happened in the U.S. and Europe, the most
important export destinations for China. The economy of Europe and the U.S. is in full recession, and China’s reliance on export
rose from 18% in 1998 to 37%. The impact of sliding foreign demand on China’s economy is more significant. According to the
study report by Ha Jiming, chief economist of the China International Capital Corporation Limited and the Macro Economy
Research Team of the Institute of World Economy and Politics of the Chinese Academy of Social Sciences, the growth rate of
China’s export will decline to zero next year.
Although Chinese government has launched a RMB4 trillion investment plan to stimulate domestic demand, the “multiplier
effect” of government investment in capital construction is far less obvious than that in 1998, and the policy effect is quite
limited. In 1998, the investment made by Chinese government in infrastructure had an inducement effect on private investment.
There were several main reasons behind this: (i) infrastructure in China was very weak at that time. The economic and social
returns of highway and other infrastructure projects were very high. Therefore, the government only needed to invest some funds
to boost social investment; (ii) China launched the reform on housing system. Subsequently, the huge investment made by the
government in infrastructure also drove the development of commercial housing by private sector. It was estimated that during
1998 and 2002, government investment attracted 3.2 times more social investment. In contrast, the infrastructure is now
saturated and the real estate industry can no longer play a pillar role. Therefore, the multiplier effect is not as significant as it
was. According to international comparison, China’s road mileage is saturated relative to the total number of automobiles, and
the number of automobiles per kilometer is far smaller than that of developed countries. As a result of road saturation, the
economic returns of newly-constructed roads see a major decline. China’s real estate market will soon be adjusted. 2008 saw a
year-on-year drop in the floor space of marketable housing sold. From June of 2008, the newly-added floor space of buildings
under construction began to fall as compared with the same period of 2007, and the vacant floor space of commercial building
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rose rapidly. It will take at least 27 months to digest the stock of commercial houses in major cities. Consequently, government
investment in capital construction this time can hardly spawn a “multiplier effect” as in 1998. In 2009, China’s economic
situation will be rather severe. It is a rather difficult task to maintain an economic growth rate of 8%. China’s economy will not
come to the bottom in the year. It will take several years before external environment and domestic investment demand begin to
rebound.
Firstly, the U.S. and European economy will fully recess in 2009. Consequently, the foreign demand will get the worst for
China, which will not rebound dramatically in 2010. Moreover, the deterioration of orders in 2009 will affect the export in 2010.
Secondly, after many years of expansion, China’s investment in export-oriented manufacturing and real estate industries begin to
shrink. It will take a long time to digest the excessive production capacity and stock of commercial houses. Lastly, according to
China’s economic cycles in the past three decades, each deceleration in economic growth will last more than 3 years. Therefore,
even according to the most optimistic judgment, this round of economic cycle will not come to the bottom before the end of
2010.
On November 5 of 2008, the State Council issued 10 measures to boost domestic demand, according to which RMB4
trillion will be invested before the end of 2010 to accelerate the construction of infrastructure in rural areas, social security
housing, railways, roads and airports, and post-disaster construction in earthquake-hit areas. However, we don’t think that the
boosted investment in fixed assets by proactive fiscal policies in 2009 is adequate to offset the negative impact of shrinking
investment in fixed assets by enterprises and decreasing investment in real estate. Because of the stagnant domestic and foreign
demand, the manufacturing industry will be plunged into depression. Therefore, the demand of steel products will register a
negative growth.
From the impact of specific steel products, the stimulus fiscal policies will increase the demand of steel for construction
purposes (deformed steel bars, steel wires, H-shaped steel and bridge plates), steel for railroads (light rail steel, heavy rail steel,
profiles and accessories) and steel pipes. The impact on the demand of plates is insignificant.
4.2.6
Domestic Production Capacity and Supply Are Excessive
2008 witnessed a spiraling growth rate of investment in fixed assets in the steel industry. Some short-term investment
projects will be put into operation. Between January and October of 2008, steel enterprises in China invested a total of RMB
250.509 billion, up 26.4% over the same period of 2007, and nearly 12 percentage points higher than the growth rate of the same
period of 2007, representing the highest level in three years. The further accelerating investment in steel industry shows that the
production capacity is still expanding. In 2009, the problem of excessive supply in China’s steel industry gets more severe.
According to the production capacity of 470 million tons of crude steel, China’s production capacity of rolled steel is highly
excessive. Calculated in accordance with the daily output in June, China’s annual production capacity of pig iron, crude steel
and rolled steel totals 530 million, 570 million and 650 million tons respectively. Plus the projects that are completed in the year,
the production capacity of pig iron, crude steel and rolled steel will be increased by around 30 million tons respectively.
According to the production capacity that is being built and put into operation, by 2010, China’s production capacity of rolled
steel will reach 665 million tons. Therefore, if calculated according to the production capacity in 2009 which amounts to 470
million tons, the utilization efficiency of China’s steel production capacity is only 78.4% in 2009, and the excessive production
capacity may total 130 million tons.
As for a long time, China’s steel industry pursues excessively high “ratio of plate to pipe” regardless of domestic
consumption structure, most key steel producers rushed to launch plates, especially RH plate production lines. As a result, the
production capacity of plates rose rapidly. According to statistics, the annual increase rate of plate products is up to 30% in
recent years, while that of wire and other long steel products is less than 10%. Therefore, as the demand shrinks dramatically,
the pressure of excessive production capacity of plate products intensifies. Comparatively, deformed steel bar and other billet
products are being pressured or eliminated in recent years. A large quantity of long steel products is needed for the boost of
domestic demand, expansion of infrastructure, post-disaster construction and construction in rural areas. In 2009, the excessive
production capacity of deformed steel bar and wire is alleviated. In terms of price, the performance of billet is better than that of
plates. In 2009, the demand of China’s construction of infrastructure and social security housing is mainly for billet. At the same
time, the rapid slide in the growth of automobile and household appliance industries which use plates will result in more
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pressure on the excessive production capacity of plates.
In general, due to the intensifying contradiction between supply and demand, the steel industry will maintain a weak
balanced pattern in which the demand is slightly dominant. It is estimated that the annual steel output will reach about 500
million tons in 2009, roughly flat with that of 2008.
4.2.7
Returns of the Industry Grew at a Low Rate
After months of measures to limit the production to hold the price adopted by steel producers, the inventory is now at a low
level. Consequently, the price began to get stable in late October. In 2009, the price of steel will continue to drop in the weak
market balance, but the drop will be relatively moderate. There are several major factors behind the continuous fall of steel price.
Firstly, it is brought down by the downturn of steel price in the international market. Secondly, the supply is generally larger
than demand in the market. Thirdly, the drop of material price also contributed to the fall. Calculated according to time it took
for the steel price in China to drop from the peak and the margin of the drop during the economic recession between 2001 and
2003, and in view of the tail-raising factor in 2008, the general steel price will fall by around 30% in 2009 over 2008. Despite
the price decline trend, and the further drop of production and sales, due to the sliding material price, it is estimated that the
profit rate of steel producers will continue to fall. This fall will result in intensified polarization of Chinese steel producers in
2009. Some small steel producers which adopt backward technology and equipment, and suffer high costs will report severe
losses or even be forced to exit from the market. However, it should be noted that, as the gap between the prices offered in
long-term iron ore contacts and the spot price has almost disappeared, the cost advantages that large steel producers used to
enjoy are gone, which is conducive to the competition between small/medium-sized and large steel producers in terms of cost
and price. Small/medium-sized enterprises mainly produce billet products. The proactive fiscal and monetary policies have a
more significant stimulus impact on the demand of billet products. Some small/medium-sized enterprises which are good at cost
control will enjoy better market opportunities in 2009. The boost to the demand of plates is not notable. As the demand of
international market shrinks and the domestic production capacity is released in recent two years, the competition in the plate
product market will intensify. For large enterprises which produce ordinary plate materials and are not good at cost control, 2009
will be a cold winter.
4.2.8
Development of Steel Industry Policies
(1) The revitalization plan for the steel industry is approved
It seems that the steel industry walks to full losses from booming prosperity within a flash. From the beginning of 2008 to
June, steel price in China rose by a total of 26.85%. However, in the second year half, as the demand shrank, steel price has
dropped by 40% from June of last year to the present. On November 26 of 2008, Chinese government held an executive meeting,
and decided to hammer out revitalization plans for nine industries including steel, automobile, ship making and petrochemical.
According to some sources, the administrative meeting of the State Council will deliberate the revitalization plans for steel and
automobile industries. The Revitalization Plan for the Steel Industry will be released around the Spring Festival, which will
cover the establishment of perfect exit mechanism, elimination of outdated production capacity, reduction of export taxes,
encouragement of technical renovation by enterprises and intensification of industrial integration.
The Revitalization Plan for the Steel Industry to be released will align with the adjustment to national economy. On the one
hand, it will accommodate the long-term development goals stipulated in the Development Policies of the Steel Industry released
in 2005. On the other hand, it will help steel enterprises get out of difficult situation. The plan will require the combination of
construction of new production capacity and elimination of outdated production capacity. For instance, Guangdong plans to
build a 10-million ton steel production base at Zhanjiang city. We must eliminate more than 10 million tons of outdated
production capacity in the province. A subsidy standard should be provided for those which exit from the market so as to
restructure the steel industry through policy guidance, market means and administrative measures. Because many small and
medium-sized steel producers made large investments when entering the market, and the steel products they make meet some of
the market demands, if the current market pattern is optimized and adjusted, some enterprises choose to exit, an appropriate
compensation mechanism should be established for the investment cost and opportunity cost.
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(2) National Mineral Resources Plan (2008-2015) was issued
The National Mineral Resources Plan (2008-2015) which aims to boost the sustainable utilization of mineral resources and
improve the supply of mineral resources for socio-economic development was officially adopted by the State Council in January
of 2009, and implemented by the Ministry of Land and Resources.
The National Mineral Resources Plan (2008-2015) is of significance for the implementation of national resource
conservation and environmental protection policies, the establishment of a new mechanism for securing and promoting
technology development, boosting resource utilization and management, improving the guaranty of mineral resources for socioeconomic development and boosting stable and fairly fast economic growth.
According to the plan, the total exploitation of special minerals, gross mineral resource recovery rate, utilization rate of
associated minerals, rate of mine geological environment restoration and treatment, reclamation rate of mining areas and some
other important indicators for tungsten, tin, antimony, and rare earth which are subject to stipulated protective exploitation are
binding indicators. The plan clearly stipulates that we should increase the output of important mineral products by finding more
resource reserves and establishing some medium and large-sized mineral bases. By 2015, the yield of coal, oil and natural gas
will reach more than 3.3 billion tons, 200 million tons and 160 billion cubic meters respectively. The surface development of
coal bed methane will reach 100??. The self-sufficiency of iron, copper, bauxite ore, sylvite and other important minerals will
remain at current level or get improved.
According to the plan, China’s utilization and protection of mineral resources will be significantly improved. The total
exploitation of important mineral products will be effectively controlled, and the development pattern of mineral resources will
be constantly optimized. By 2015, the proportion of medium/large mines will reach over 10%, about 50 important mine reserves
will be found, gross mineral resource recovery rate and utilization rate of associated minerals will be increased by about 5
percentage points respectively. The geological environment and land reclamation conditions will be significantly improved. By
2015, the geological environment of mines that are newly built and in operation will be thoroughly controlled. The restoration
and treatment rate of mine geological environment will be 35% and land reclamation rate of mining areas will be up to 30%.
While encouraging the exploitation of minerals which are closely related to socio-economic development whose domestic
supply is insufficient, the plan stipulates that the exploitation of tungsten, tin, antimony, and rare earth which are subject to
stipulated protective exploitation should be restricted. Annual exploitation control indicators should be adopted, macro control
over exploitation and export intensified, and resources protected to safeguard national economic interest and strategic position of
dominant resources. A reserve and protection mechanism should be established for mineral resources. Reserves of producing
areas and products for oil, special coal and minerals subject to protective exploitation should be established to lay a solid
foundation for market regulation, emergency and secure national resource supply.
(3) Overseas investment more than US$100 million in amount are subject to the approval of the Ministry of Commerce
In January of 2009, the Ministry of Commerce began to solicit online opinions on the Measures for Overseas Investment
Management which is intended to promote and regulate overseas investment. The Measures for Overseas Investment
Management required that China’s overseas investment more than US$100 million in amount should be subject to the approval
of the Ministry of Commerce.
The Measures for Overseas Investment Management specifies that overseas investments in countries which do not have
diplomatic relations with China, countries (or regions) that have high-level risk, and overseas investments whose value is more
than US$100 million, on infrastructure and for the establishment of companies with special purposes should be submitted to the
approval of the Ministry of Commerce. Overseas investments whose value is more than US$10 million but less than 100 million,
on energy and mineral, shopping malls and real estate should be submitted to provincial commerce authority for approval.
The Measures for Overseas Investment Management requires that commerce authority should establish and improve a
system to guide, promote and serve overseas investments and intensify public service with other competent authorities. For their
part, enterprises should objectively estimate their own conditions, abilities and investment environment in host countries. They
should also carry out various personnel and property security measures, put in place a contingency warning system and
emergency plan.
Multinational capital operation is a link to globalization. It is very necessary for the Ministry of Commerce to regulate
overseas investment management. This is of significance for national economic security and intensified investment management
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against the backdrop of globalization. However, the Measures for Overseas Investment Management sets more store by
management and restriction to enterprises, but attaches inadequate importance to the protection of overseas investment,
maintenance of domestic order and safeguarding of business brands.
4.3 Construction
According to the standards made by the National Bureau of Statistics for industry classification of the national economy,
the construction industry mainly consists of four segments, i.e. housing and civil engineering, installation, decoration and other
industries. Amongst, civil engineering comprises railway, road, tunnel and bridge engineering.
The chain of construction industry is relatively complex. In terms of connotation, investment in fixed assets is mainly
realized through construction industry. Therefore, construction industry is closely related to the secondary and tertiary industries.
To put it simple, upstream industries of the construction industry mainly include steel, cement, glass and other building material
industries. The downstream industries mainly consist of infrastructure and real estate industries. Construction industry is one of
the important pillars of China’s national economy, and the “weatherglass” of the economy. Construction covers infrastructure
(road, bridge, port and power stations), industrial facility, public building and residential building. Construction and capital
investment are two parts of investment in fixed assets, and pillars of the national economy.
Construction industry provides products and boosts the demand. One the one hand, water conservancy, traffic, energy and
other infrastructure provided by the construction industry creates a sound environment and foundation for the development of
production, which are conducive to the improvement of productivity. On the other hand, products of the construction industry
create room for the increase of demand. As China’s economy continues to grow, the size of the construction industry is on the
expansion. Although the added value of construction industry grows at a fluctuating rate, the general growth trend is not
changed. Since 1991, the proportion of added value of the construction industry in GDP has remained above 5%.
4.3.1
Landscape of China’s Construction Industry
China is now experiencing a rapid economic growth. In recent years, it has invested in a number of eye-catching major
projects. Some projects have been put into operation, such as the Three Gorges Project, Xiaolangdi Hydro Project, West-East
natural gas transmission project, Shanghai magnetic suspension railroad traffic project, South -North water diversion project and
Qinghai-Tibet Railway. Some projects are under construction, such as the West-East electricity transmission project and
Beijing-Shanghai High-speed Railway. The construction of these projects facilitates the rapid growth the construction market.
Moreover, some other projects, including energy, traffic, communication, water conservancy, urban infrastructure, environmental
renovation, commercial centers in urban areas, housing projects, satellite cities and small towns, drive China’s construction
market which is now under rapid growth.
Construction industry is an important material production sector in national economy, which is closely related to the
development of national economy and improvement of people’s living standard. China is now transiting from a low-income
country to a middle-income country. In this process, construction industry grows at a rapid pace and making great contributions
to the economic growth. Since 1978, the output of China’s construction industry has grown for more than 20 times, and the
proportion of the added value of the construction industry in GDP rose from 3.8% to 5.6% in 2006. In the ranking of proportion
of added-values of different sectors of national economy in GDP, the proportion of GDP ranks the fourth. Construction industry
has become an important engine that drives the rapid growth of national economy.
In 2006, the total output of China’s construction industry reached RMB 4.1 trillion, RMB 642.3 billion more than the
previous year, up 18.6%. The value of completed construction reached RMB 2.61 trillion, 218.5 billion more than the previous
year, up 9.2%. The added value of the construction industry amounted to RMB818.24 billion, up 18.6% year on year.
In 2007, the output of China’s construction industry totaled RMB 5 trillion, up 20.4% over 2006. The floor space of
building under construction reached 4,733 million square meters, up 15.4% over 2006. The value of concluded contracts totaled
RMB 8.03 trillion, representing a year-on-year increase of 19.5%. At the end of 2007, there were 59,256 constructors, down
1.5% over 2006.
Between January and September of 2008, the output of constructors in China totaled RMB 3.76 trillion, up 22.8% year on
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year. In the same period, the floor space of building construction of China’s constructors reached 4.37 billion square meters, up
15.6% over the same period of 2007. The total revenues of constructors in China amounted to RMB 3,4379 trillion, up 24.5%
year on year. The profit of constructors totaled RMB83.5 billion, up 26.8% year on year.
In 2008, the turmoil in the international financial market also added to the risk of the construction industry around the globe.
The international financial crisis has a direct impact on the real estate industry. The real estate industry in the U.S. has first
plummeted. Consequently, it will have a negative impact on the construction industry. There will be more uncertain factors that
affect the economic growth, and the environment will get more complicated and volatile. However, because China’s investment
in fixed assets remains at a high level, i.e. the government has adequate fund guaranty, China’s construction industry will still
remain on track. In addition, between January and October of 2008, the contract price of overseas projects amounted to
US$42.92 billion, up 46.4% year on year. The value of newly-signed contracts totaled US$81.65 billion, representing a
year-on-year growth of 57.9%.
In the next five decades, China’s urbanization rate will be increased to more than 76%, and the contribution rate of urban
areas to national economy will be up to 95%. The development of metropolis circle, city cluster, city belt and central city
predicts the rapid growth of China’s urbanization rate, and also the advent of a brighter future for the construction industry.
4.3.2
Impact of Fluctuating International Financial Market on China’s Construction Industry
In September of 2008, the U.S. financial sector experienced a fluctuation rarely seen in the history, which later affected the
international financial market. This will inevitably add to the risk to global construction industry. Contracting of foreign projects
is subject to risks of both interest rate and exchange rate.
In 2008, against the international background, China was unavoidably affected by the international financial crisis, with the
uncertainties for economic growth increasing. However, by the end of October of 2008, China’s construction industry had
maintained stable growth. In the first three quarters of the year, the total output of China’s construction industry totaled RMB
3.76 trillion, up 22.8% over the same period of the previous year. The total profit of China’s construction industry reached
RMB83.5 billion, a year-on-year growth of 26.8%. Between January and October of 2008, the revenues of China’s foreign
project contracting business amounted to US$42.92 billion, up 46.4% year on year. The value of newly-signed contracts reached
US$81.65 billion, representing a year-on-year growth of 57.9%. It seems that the financial crisis has not exerted a negative
impact on the operation of Chinese constructors both at home and abroad.
The wide-spread impact of international financial crisis on China’s construction industry has yet to come. 40% of China’s
GDP relies on export. The financial crisis has affected China’s export. The orders received by exporters at the Pearl River Delta
witnessed a sudden decline. In view of the time lag, the impact of the financial crisis on the construction industry will also be
far-reaching. The financial crisis directly resulted in declining housing price, and hindered the investment growth of global
construction industry and related industries. Moreover, consumers’ demand also shrank, obstructing domestic economic growth.
Therefore, the proportion of trend and strategic investment should be appropriately increased for the construction industry which
is characterized by strong investment periodicity. In addition, when undertaking overseas projects, domestic constructors should
be more cautious. Crises are also accompanied by opportunities. Chinese constructors can also make transitions at an appropriate
time to avoid risks and change crises into opportunities.
4.3.3
Both Sales Amount and Price Fell
In 2008, many statistical items of China’s real estate industry were not satisfactory. The market saw the fall in both sales
amount and price. In January-August, the sales of houses in more than 20 provinces dropped. Although the real estate industry
grew slowly in 2008, new investment was not affected, which also boosted the development of construction industry. In
January-August, China’s investment in real estate development reached RMB 1.84 trillion, up 29.1% year on year. The
investment in houses amounted to RMB 1.34 trillion, up 31.7%. The decline in investment caused by fluctuating real estate
market as feared by industry outsiders did not occur. In addition, the added value of construction industry is one of the leading
indicators of future economic growth. The demand of increasing investment and production will also be gradually released along
with the development of construction industry.
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The Building Materials Industry
From the second half of 2008, due to domestic and international factors, the real estate market in most parts of China
entered the restructuring and transition period except for a few areas where the real estate market started to develop at a later
time remained stable. Despite changes in the development direction, the fundamental of China’s real estate market is still good.
4.3.4
Investment Is Increased in China’s Construction Industry
From the beginning of 2008, the total and monthly growth rate of investment in railroads began to speed up dramatically,
and investment in railroads began to accelerate. In January-September of 2008, China’s railroad industry completed RMB211.7
billion of investment in fixed assets, up 54% and 74.2 billion over the same period of 2007. The investment in infrastructure was
RMB169.9 billion, up 70.6 billion and 71.1% over the same period of 2007.
In October of 2008, the impact of financial crisis spread to China’s real economy. China’s demand of electricity, coal and
steel fell dramatically. On October 21 of 2008, the executive meeting of the State Council, after deliberation, decided to enhance
the construction of infrastructure, and approved some new infrastructure projects, including roads, airports, nuclear power
stations and pumped storage power stations.
By October 31 of 2008, the investment in railroads approved by the State Council had amounted to RMB2 trillion, much
more than the budget for railroads in the 11th five-year-plan period which stood at RMB1.25 trillion. The large scale of railroad
construction becomes an engine that boosts domestic demand. Moreover, at the end of October of 2008, the Ministry of
Railways indicated that it would strive to finish RMB50 billion more infrastructure investment in the year, with the target for Q4
being RMB150 billion, and annual investment is estimated to be RMB350 billion. In 2009, the investment in railroad
infrastructure is set to be RMB600 billion. In the next three years, China plans to invest more than RMB3.5 trillion in railroads.
On November 5 of 2008, the State Council held an executive meeting and adopted 10 measures to further boost domestic
demand for stable and fairly fast economic growth, deciding to accelerate the construction of major infrastructure projects
including railways, roads and airports, build some passenger lines, coal lines and trunk railroads in the west, improve the
highway network, and speed up the construction of major water conservancy projects, such as the South-North Water Diversion
Project.
By the end of 2010, various policy investment to boost domestic demand will total RMB4 trillion. According to these
policies, investment and consumption will become the major “engines” to drive economic growth in the next two years, which
will also become an efficient instrument for China to ward off the global economic depression.
4.3.5
Prospect in 2009
In 2009, China’s construction will maintain a fairly fast growth. The RMB4 trillion government investment packages will
unavoidably boost infrastructure construction, which in turn will directly affect the development of China’s construction industry.
Moreover, the preferential policies that Chinese government adopts will benefit the whole construction industry. Therefore,
construction industry will continue to grow at a fairly fast pace in 2009.
1. Positive factors create space for future development of construction industry
(1) Investment in fixed assets will still remain high.
China’s investment in fixed assets will still play a dominant role in boosting GDP. In January-August of 2008, China’s
urban investment in fixed assets reached RMB8.49 trillion, up 27.4% year on year and 27% in January-September over the same
period of 2007. As the economic growth decelerates, there is still much potential for continuous investment growth because there
is adequate funding guaranty. China’s foreign exchange reserve reaches US$1.9 trillion, bank savings grow steadily, and the
balance of deposits stands at RMB20 trillion. Moreover, the profit from foreign trade constantly grows, and the fiscal revenues
rise. At the end of September of 2008, the fiscal revenues were RMB1 trillion higher than in the same period of 2007, up 25.8%.
It is fair to say that China’s national strength is significantly increased. All these guarantee the funds necessary for investment,
creating much space for future development of construction industry.
(2) There is much room for growth in the west and northeast
Since 2008, the real estate market in the northeast has been stagnant. Moreover, after the Olympic Games, the construction
market in the urban areas of Beijing will be greatly affected. Due to the international conditions, the construction industry in the
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China Business Guide
south such as Guangdong province is also likely to shrink. Against this background, in January-August of 2008, China’s
investment in real estate development still reached RMB1.84 trillion, up 29.1% year on year. Actually, in the east, due to
developed economy, the real estate market is overheated and the housing price is unreasonably high in recent years. It is falls in
housing price will be unavoidable. In the west and northeast, as the base of housing price is still low, there is still room for the
housing price to go up, presenting favorable conditions for the further growth of construction industry.
(3) Foreign investment goes from tier-1 cities to tier-2 cities, bringing business opportunities for construction industry
Beijing, Shanghai, Wuxi, Hangzhou, Chongqing and Wuhan are cities where multinational companies are active. Now in
these cities, in addition to the price of industrial products, housing price is also going up. Therefore, foreign investors are more
willing to move to tier-2 cities. In fact, many foreign businesses choose to locate their regional head offices in important cities
such as Beijing and Shanghai, and set up their production and processing facilities in low-cost tier-2 cities. The reasons are
simple. Firstly, the land price is very low. Secondly, the labor cost is low, and thirdly, the taxation policies are preferential. This
shows that Chinese constructors should pay attention to both tier-1 and tier-2 cities. They should grasp the opportunities in tier-1
markets while paying close attention to the development of construction markets in tier-2 markets. To relocate their production
and processing facilities to tier-2 cities, foreign companies must build factories, office buildings and dormitories, creating
business opportunities for constructors.
(4) Post-disaster reconstruction presents a large market
After the Wenchuan earthquake, the prefab houses donated by other regions are temporary. Sichuan province needs to build
more than 4.5 million units of houses and thousands of medical institutions. This requires a large amount of fund. China will
raise about RMB1 trillion through different channels for post-disaster reconstruction. As the funds are guaranteed, post-disaster
reconstruction market will become the focus of the whole construction industry.
(5) The urbanization accelerates
In the future, China’s urbanization rate will be increased to more than 76%, and the contribution rate of urban areas to
national economy will be up to 95%. The development of metropolis circle, city cluster, city belt and central city predicts the
rapid growth of China’s urbanization rate, and also the advent of a brighter future for the construction industry.
Currently, the gap between urban and rural areas is still quite significant. The requirement put forth by CPC central
committee to build new socialist countryside is quite necessary. To meet this requirement, many construction projects should be
completed. From industrial development, construction of infrastructure, to the construction of medical, healthcare, education,
cultural and social security projects, everything can’t do without construction industry. These projects require a total of RMB18
trillion. Although there is much gap in the supply, due to policy implementation, central and local fiscal funds and various social
funds are injected for the construction of new countryside, constructors will develop vigorously.
2. The total output of construction industry will exceed RMB7 trillion in 2009
60% of the investment in fixed assets is contributed by installation projects, and 60%-70% of the investment in installation
projects is directly converted into the output of construction industry. Therefore, the future size and growth rate of investment in
fixed assets will directly decide the demand of the construction industry.
In 2009, the growth rate of investment in fixed assets will decelerate somewhat, but not completely. It is estimated that the
growth rate of urban investment in fixed assets will reach 21%.
From the second half of 2008, CPI dropped dramatically, and PPI also began to fall after reaching the peak in the third
quarter of 2008. As the global economic growth decelerates, the price of energy and primary products continues to fall. In the
cost composition of construction projects, raw materials account for about 55%, labor cost 35%, and other expenses no more
than 10%. In construction costs, cement takes up about 45%, steel about 40%, glass and timber about 15%. According to the cost
allocation of constructors, in 2009, there will be room for a 15%-18% decline in construction cost. Although real estate and other
downstream industries will be the final beneficiaries of cost reduction, the price reduction of steel and other major building
materials will also help increase the gross profit of the construction industry. According to estimate, the gross profit rate will be
increased by 0.4-0.6 percentage point in the future.
In November of 2008, the Ministry of Transport indicated that it would increase the investment in infrastructure. Seen from
a host of railway and traffic investment plans, future investment in infrastructure is likely to be much higher than anticipation.
According to the current investment in infrastructure, after the crowding out effect is eliminated, it is estimated that as a result of
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The Building Materials Industry
investment increase, the total output of the construction industry will be increased by RMB200 billion. It is anticipated that the
total output of the construction industry will reach about RMB7.2 trillion in 2009, up 16%.
The future profit of the construction industry can be calculated through multiplying the total output of the construction
industry by ratio of profit to gross output value. Since 2002, the ratio of profit to gross output value of the construction industry
has remained above 2%, which has been going up year by year. The growth in the ratio of profit to gross output value of the
construction industry accords with the previous economic cycle.
The increase in ratio of profit to gross output value mainly comes from the high-speed growth in the investment in real
estate and infrastructure since 2002. As the growth of demand for downstream construction slows down, ratio of profit to gross
output value of the industry also dropped slightly. It is estimated that the ratio of profit to gross output value of the construction
industry will be 2.94% and 2.92% in 2009-2010 respectively. Correspondingly, the total profit of constructors will be
RMB212.692 billion and 235.079 billion, up 9.25% and 9.62% respectively.
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China Business Guide
5 Chapter 5 Development of Building Material Industry in 2008
5.1 Overview
5.1.1
Overall Size and Distribution
In February of 2008, there were 27,688 building material enterprises in China, up 11.13% over the same period of 2007.
The number of loss-incurring enterprises was 5,928, up 11.49% year on year, with the percentage of loss-incurring enterprises
being 21.41%. The number of employees engaged in this industry reached 4.562 million, up 4.47% year on year. The total assets
amounted to RMB1.51 trillion, up 19.22% year on year. As of November of 2008, the number of building material enterprises
stood at 29,897, up 10.33%. 4,923 enterprises suffered losses, up 13.17% over the same period of 2007, with the percentage of
loss-incurring enterprises being 16.47%. The number of employees engaged in this industry reached 4.85 million, up 2.33% year
on year. The total assets amounted to RMB1.80 trillion, up 18.86% year on year.
Table 5-1 Size of Chinese building material enterprises
Year-on-year
Number of loss-incurring Year-on-year
growth (%)
enterprises
growth (%)
Time
Number of
enterprises
Percentage of loss-incurring
enterprises (%)
2008-02
27688
11.13%
5928
11.49%
21.41
2008-05
28456
11.13%
5512
2.76%
19.37
2008-08
29147
11.21%
5079
3.95%
17.43
13.17%
16.47
2008-11
29897
10.33%
4923
Time
Number of
employees (10,000)
Year-on-year
growth (%)
Total assets
(RMB100 million)
Year-on-year growth (%)
2008-02
456.2
4.47%
15117.02
19.22%
2008-05
471.17
3.45%
16188.98
19.48%
2008-08
479.01
3.28%
17258.09
20.49%
2008-11
485.48
2.33%
17998.54
18.86%
Source: China Building Materials Federation
5.1.2
Output and Sales
In February of 2008, the gross output value of Chinese building material enterprises reached RMB258.4 billion, up 28.82%
over the same period of 2008. The sales amounted to RMB242.2 billion, up 29.03% year on year. The value of finished products
reached RMB91.3 billion, up 18.01% year on year. By November of 2008, the gross output value of Chinese building material
enterprises reached RMB2.10 trillion, up 29.74% over the same period of 2007. The sales amounted to RMB1.9930 trillion, up
28.72% year on year, and the value of finished products reached RMB127.8 billion, up 24.03% year on year.
Table 5-2 Output and sales of the building material industry in 2008 Unit: RMB100 million, %
Gross industrial
Year-on-year
Year-on-year
Finished
Year-on-year
Time
Sales
output value
growth
growth
products
growth
2008-02
2583.59
28.82
2421.65
29.03
912.73
18.01
2008-05
8248.59
2008-08
14668.58
31.86
7791.64
31.59
1075.18
20.97
30.93
13912.76
30.33
1191.83
23.04
2008-11
21030.89
29.74
19929.86
28.72
1277.68
24.03
Source: China Building Materials Federation
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The Building Materials Industry
5.1.3
Cost
In February of 2008, the product sales cost of Chinese building material enterprises stood at RMB203.5 billion, up 28.52%
year on year. The product sales expenses reached RMB23.1 billion, up 23.57% year on year. The overhead expenses amounted
to RMB10.6 billion, up 22.62% over the same period of 2007. The financial expenses totaled RMB3.8 billion, up 23.64% over
the same period of 2007. By November of 2008, the product sales cost of Chinese building material enterprises stood at
RMB1.6794 trillion, up 29.34% year on year. The product sales expenses reached RMB185.5 billion, up 45.27% year on year.
The overhead expenses amounted to RMB72.9 billion, up 22.22% over the same period of 2007. The financial expenses totaled
RMB25.9 billion, up 22.91% over the same period of 2007.
Time
2008-02
Table 5-3 Cost of building material enterprises
Unit: RMB100 million, %
Product sales Year-on-year Product sales Year-on-year Overhead Year-on-year Financial
cost
growth
expenses
growth
expenses
growth
expenses
2034.63
28.52
2008-05
6549.54
2008-08
11661.66
2008-11
16793.86
Year-on-year
growth
231.28
35.36
105.60
22.61
38.27
23.64
30.84
740.88
44.78
296.10
24.05
107.40
25.30
29.35
1322.95
46.40
504.95
23.36
179.17
22.39
29.34
1855.38
42.22
729.47
22.22
258.71
22.91
Source: China Building Materials Federation
5.1.4
Profit
In February of 2008, the total profit of China’s building material industry reached RMB12.4 billion, up 46.54%. The
number of loss-incurring enterprises was 5,928, up 11.49%. In February of 2008, the percentage of loss-incurring enterprises
was 21.41%, up 0.33% year on year, basically flat over the same period of 2007. The total losses of building material enterprises
amounted to RMB3.9 billion, up 27.89% year on year. By November of 2008, the total profit of building material industry stood
at RMB119.8 billion, up 24.15% over the same period of 2007. The number of loss-incurring enterprises was 4,923, up 13.17%
year on year. The percentage of loss-incurring enterprises was 16.47%, up 2.62% over the same period of 2007. The total losses
of building material enterprises amounted to RMB13.4 billion, up 35.63% year on year.
Time
Table 5-4 Profit of building material enterprises
Unit: RMB100 million, %
Year-on-year Number of loss-incurring Percentage of loss-incurring
Total profits
Total loss
growth
enterprises
enterprises
Year-on-year
growth
2008-02
124.27
46.54
5928
21.41
39.14
27.89
2008-05
449.05
45.65
5512
19.37
68.38
18.47
2008-08
838.14
35.96
5079
17.43
98.31
22.91
2008-11
1198.33
24.15
4923
16.47
133.66
35.63
Source: China Building Materials Federation
5.1.5
Region-specific Production and Sales
In 2008, China’s building material producers were mainly concentrated in Jiangxi, Shandong, Henan, Hunan and Jiangsu
provinces. Amongst, the total gross output value of building material producers in Jiangxi ranked the first in China, which
amounted to RMB228.8 billion, accounting for 10.89% of the national total. The gross output value of building material
producers in Yunnan ranked the last in China, which only reached RMB2.8 billion, accounting for 0.13% of the national total.
In the year, the sales of China’s building material industry were mainly distributed in Jiangxi, Shandong, Henan, Hunan and
Jiangsu provinces. Amongst, the sales of building materials in Jiangxi ranked the first in China, which amounted to RMB222.4
billion, accounting for 11.17% of the national total. In contrast, the sales in Yunnan ranked the last in China, which amounted to
only RMB2.7 billion, taking up 0.14% of the national total.
In 2008, the sales/output ratio of the building material industry remained high in all provinces. Except in Jilin, Guizhou,
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China Business Guide
Shaanxi and Qinghai, the ratio was over 90% in other provinces. Amongst, the sales/output ratio of Beijing and Liaoning ranked
the top in China and remained over 100%, which stood at 104.82% and 100.08% respectively. This ratio in Jilin and Qinghai
ranked the bottom in China, which was less than 90% at 83.56% and 84.89% respectively.
Table 5-5 Region-specific output and sales
Region
Gross industrial output value
Unit: RMB100 million, %
Sales value of industry
Sales/output ratio
Actual value
Proportion
Actual value
Proportion
Beijing
275.62
1.31
288.91
1.45
104.82
Tianjin
655.39
3.12
597.57
3.00
91.18
Hebei
392.67
1.87
378.34
1.90
96.35
Shanxi
384.43
1.83
369.6
1.86
96.14
Inner Mongolia
583.73
2.78
563.79
2.83
96.58
Liaoning
369.28
1.76
369.59
1.86
100.08
Jilin
769.48
3.66
642.99
3.23
83.56
Heilongjiang
283.39
1.35
276.05
1.39
97.41
Shanghai
969.19
4.61
962.89
4.83
99.35
Jiangsu
1610.57
7.66
1572.73
7.90
97.65
Zhejiang
1107.1
5.27
1053.8
5.29
95.18
Anhui
1210.49
5.76
1163.12
5.84
96.09
Fujian
430.93
2.05
425.1
2.13
98.65
Jiangxi
2287.71
10.89
2224.29
11.17
97.23
Shandong
1768.45
8.42
1652.16
8.29
93.42
Henan
1511.56
7.19
1423.41
7.15
94.17
Hubei
1126.98
5.36
1065.49
5.35
94.54
Hunan
1573.62
7.49
1440.79
7.23
91.56
Guangdong
868.15
4.13
807.79
4.06
93.05
Guangxi
717.36
3.41
691.53
3.47
96.40
Hainan
195.54
0.93
178.12
0.89
91.09
Chongqing
601.66
2.86
552.29
2.77
91.80
Sichuan
620.18
2.95
571.74
2.87
92.19
Guizhou
190.94
0.91
170.08
0.85
89.08
Yunnan
28.13
0.13
27.21
0.14
96.73
Shaanxi
184.01
0.88
163.09
0.82
88.63
Gansu
88.54
0.42
82
0.41
92.62
Qinghai
48.83
0.23
41.45
0.21
84.89
Ningxia
57.46
0.27
65.76
0.33
114.43
Xinjiang
102.86
0.49
98.89
0.50
96.15
Total
21014.25
100.00
19920.59
100.00
94.80
Source: China Building Materials Federation
5.2 Cement, Lime and Gypsum Manufacturing Industry
5.2.1
Overall Size and Distribution
In February of 2008, there were 5,285 cement, lime and gypsum makers in China, employing 1.13 million people, with the
annual cumulative increase in the number of employees being -2.48%. The number of loss-incurring enterprises was 1,622,
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The Building Materials Industry
whose total losses reached RMB1.658 billion. The assets of the whole industry totaled RMB502.6 billion, with the cumulative
increase being 16.43%.
Between January and November of 2008, the number of cement, lime and gypsum makers in China was 5,471, employing
1.166 million people on average, with the annual cumulative increase in the number of employees being -2.56%. The number of
loss-incurring enterprises fell to 1,431, whose total losses reached RMB4.29 billion. The assets of the whole industry totaled
RMB587.7 billion, with the cumulative increase being 17.95%.
Table 5-6 Size of cement, lime and gypsum industry
Unit: 10,000 people, RMB100 million, %
Annual
Cumulative
Number of
Cumulative
Number of
Time
average
increase in
loss-incurring
Total loss
Total assets
increase in
enterprises
employment employment
enterprises
total assets
2007-02
5330
124.0
0.74
1713
13.26
4453.55
12.4
2007-05
5397
126.4
-0.95
1879
24.26
4668.60
12.44
2007-08
5465
124.1
-0.88
1693
30.53
4830.95
12.92
2007-11
5552
125.0
-0.59
1451
36.36
5064.44
14.71
2008-02
5285
113.1
-2.48
1622
16.58
5026.10
16.43
2008-05
5341
116.1
-0.89
1582
24.91
5339.96
17.74
2008-08
5414
115.5
-2.34
1499
32.51
5665.64
19.1
2008-11
5471
116.6
-2.56
1431
42.89
5877.38
17.95
Source: China Building Materials Federation
5.2.2
Output and Sales
In February of 2008, the gross output value of China’s cement, lime and gypsum industry totaled RMB50.35 billion, up
9.55% year on year. The total sales of the industry reached RMB47.32 billion, up 9.63% over the same period of 2007. The
sales/output ratio was up to 93.99%. In the month, the finished products of the industry totaled RMB14.32 billion, up 7.95%
year on year.
Between January and November of 2008, the gross output value of China’s cement, lime and gypsum industry totaled
RMB456.1 billion, up 21.87% year on year. The total sales of the industry reached RMB439.9 billion, up 21.56% over the same
period of 2007. The sales/output ratio was up to 96.45%. In November, the finished products of the industry totaled RMB20.65
billion, up 21.40% year on year.
Time
Table 5-7 Output and sales of cement, lime and gypsum industry Unit: RMB100 million, %
Total industrial Year-on-year Total industrial Year-on-year Sales/output
Finished
Year-on-year
output
growth
sales
growth
ratio
products
growth
2008-02
503.52
9.55
473.24
9.63
93.99
143.22
7.95
2008-05
1756.94
19.50
1670.38
19.81
95.07
171.22
10.62
2008-08
3142.42
21.87
3011.32
21.61
95.83
191.48
11.68
2008-11
4560.95
21.87
4399.18
21.56
96.45
206.46
21.40
Source: China Building Materials Federation
5.2.3
Cost
In February of 2008, the product sales cost of Chinese cement, lime and gypsum makers stood at RMB40.5 billion, up
8.62% year on year. The product sales expenses reached RMB1.58 billion, up 13.32% year on year. The overhead expenses
amounted to RMB2.56 billion, up 11.63% over the same period of 2007. The financial expenses totaled RMB1.365 billion, up
11.12% over the same period of 2007.
Between January and November of 2008, the product sales cost of Chinese cement, lime and gypsum industry stood at
RMB373.26 billion, up 22.11% year on year. The product sales expenses reached RMB12 billion, up 10.50% year on year. The
overhead expenses amounted to RMB17.59 billion, up 14.54% over the same period of 2007. The financial expenses totaled
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China Business Guide
RMB9.041 billion, up 15.79% over the same period of 2007.
Table 5-8 Cost of cement, lime and gypsum industry
Unit: RMB100 million, %
Product sales Year-on-year Product sales Year-on-year Overhead Year-on-year Financial
cost
growth
expenses
growth
expenses
growth
expenses
Time
Year-on-year
growth
2008-02
405.02
8.62
15.79
13.32
25.63
11.63
13.65
11.12
2008-05
1414.60
18.31
47.52
10.86
73.25
17.14
38.57
16.48
2008-08
2529.13
19.72
83.23
11.86
124.78
18.18
63.58
13.44
2008-11
3732.57
22.11
120.04
10.50
175.89
14.54
90.41
15.79
Source: China Building Materials Federation
5.2.4
Profit
In February of 2008, the total profit of China’s cement, lime and gypsum industry reached RMB1.34 billion, up 39.63%
over the same period of 2007. But the total profit still remained at a low level. In the month, the number of loss-incurring
enterprises in this industry reached 1,622, with the percentage of loss-incurring enterprises being up to 30.69%. The total losses
of enterprises in the industry amounted to RMB1.66 billion, up 25.01% year on year. From the following table, we can see that
in February of 2008, the total loss of China’s cement, lime and gypsum industry was higher than the total profit. Therefore, cost
control should be further enhanced and profit should be increased.
Between January and November of 2008, the total profit of China’s cement, lime and gypsum industry stood at RMB27.0
billion, up 27.24% over the same period of 2007. The number of loss-incurring enterprises dropped to 1,431, but the percentage
of loss-incurring enterprises was still up to 26.16%. The total losses of these enterprises amounted to RMB4.3 billion, up
17.94% year on year.
Time
2008-02
2008-05
2008-08
2008-11
Table 5-9 Profit of cement, lime and gypsum industry Unit: RMB100 million, %
Year-on-year Number of loss-incurring
Percentage of
Total profit
Total loss
growth
enterprises
loss-incurring enterprises
13.43
39.63
1622
30.69
16.58
87.39
57.17
1582
29.62
24.91
188.17
48.16
1499
27.69
32.51
270.06
27.24
1431
26.16
42.89
Year-on-year
growth
25.01
2.69
6.51
17.94
Source: China Building Materials Federation
5.2.5
Product Yield
In 2008, China’s yield of cement, lime and gypsum totaled 140 million tons, up 5.2% year on year. The monthly yield in
February of 2008 reached 142.26 million tons, down 2.8% over the same period of 2007. In general, the yield increased
dramatically from March to July over the same period of 2007, and the growth decelerated significantly in the second half of the
year, but the increase rate remained flat.
Table 5-10 Total yield and year-on-year increase
Time
Output
Cumulative increase
2008-01
8268
2008-02
14226
-2.8
2008-03
25676
9.2
2008-04
38237
9.9
2008-05
51438
2008-06
64805
Unit: 10,000 tons, %
Time
Output
Cumulative increase
2008-07
76746
8.3
2008-08
88787
7.4
2008-09
101216
6.9
2008-10
113817
6.4
9.0
2008-11
126694
5.7
8.7
2008-12
138838
5.2
Source: China Building Materials Federation
•42•
The Building Materials Industry
5.2.6
Industrial Operational Performance
In February of 2008, the product sales of cement, lime and gypsum industry grew by a slow rate of 11.82%, which
represented a dramatic year-on-year decline of 61.14%. The capital maintenance and appreciation rate was 117.69%, up 2.50%
over the same period of 2007. The asset-liability ratio stood at 60.28%, up -1.10% year on year. The net amount of receivables
grew by 4.27%, down 289.78% over the same period of 2007.
Between January and November of 2008, the product sales of China’s cement, lime and gypsum industry grew by 24.68%,
up 6.52% year on year. The capital maintenance and appreciation rate was 120.31%, representing a year-on-year increase of
1.97%. The asset-liability ratio was 59.41%, up -1.54% year on year. The net amount of receivables grew by 12.29%, up
355.19% over the same period of 2007.
Time
Table 5-11 Operational performance
Unit: RMB100 million, %
Growth rate Year-on-year Capital maintenance Year-on-year Asset-liability Year-on-year Increase in net Year-on-year
of sales
growth
and appreciation rate
growth
ratio
growth
receivables
growth
2007-02
30.42
1.60
114.82
7.45
60.95
-2.65
-2.25
-135.60
2007-05
24.4
-11.30
113.41
2.54
62.03
-1.41
-1.19
-135.74
2007-08
24.28
-12.82
116.56
4.84
61.00
-2.60
1.83
51.24
2007-11
23.17
-6.35
117.99
5.58
60.34
-3.07
2.7
8900.00
2008-02
11.82
-61.14
117.69
2.50
60.28
-1.10
4.27
-289.78
2008-05
24.59
0.78
122.52
8.03
60.18
-2.98
6
-604.20
2008-08
26.12
7.58
122.84
5.39
59.87
-1.85
4.77
160.66
2008-11
24.68
6.52
120.31
1.97
59.41
-1.54
12.29
355.19
Source: China Building Materials Federation
5.2.7
Region-specific Production and Sales
In 2008, China’s cement, lime and gypsum were mainly produced in Shandong, Jiangsu, Hebei, Guangdong and Henan
provinces whose gross output value was RMB55.0 billion, 40.0 billion, 33.8 billion, 33.0 billion and 32.1 billion, accounting for
12.05%, 8.77%, 7.42%, 7.24% and 7.04% of national total respectively. The total gross output value of the five provinces took
up 43% of China’s national total.
In 2008, Shandong, Jiangsu, Guangdong, Zhejiang, Henan and Hebei ranked the top in China in terms of industrial sales of
cement, lime and gypsum industries, whose industrial sales reached RMB54.9 billion, 39.4 billion, 30.8 billion, 30.2 billion,
29.9 billion and 29.7 billion, accounting for 12.48%, 8.97%, 7.01%, 6.88%, 6.79% and 6.76% of the national total respectively.
The total gross industrial sales of the five provinces took up 49% of the national total.
In 2008, the sales/output ratio of all the provinces was very high, basically above 90%. The national sales/output ratio was
96.45%. Amongst, the sales/output ratio of Jilin, Shanghai, Jiangxi, Hubei and Hainan provinces ranked the top in China, over
100%. In contrast, the sales/output ratio of Tianjin, Hebei, Guizhou, Shaanxi and Tibet ranked the bottom, lower than 90% but
higher than 80%.
Table 5-12 Region-specific output and sales
Region
Gross industrial output value
Unit: RMB100 million, %
Sales value of industry
Sales/output ratio
Actual value
Proportion
Actual value
Proportion
24.85
0.54
24.37
0.55
98.05
Tianjin
18.33
0.40
15.49
0.35
84.54
Hebei
338.26
7.42
297.22
6.76
87.87
Shanxi
46.89
1.03
43.46
0.99
92.68
Inner Mongolia
119.87
2.63
116.36
2.65
97.08
Liaoning
144.72
3.17
136.18
3.10
94.11
Beijing
•43•
China Business Guide
Jilin
98.93
2.17
119.16
2.71
120.45
Heilongjiang
59.72
1.31
56.65
1.29
94.84
Shanghai
30.83
0.68
37.21
0.85
120.69
Jiangsu
399.94
8.77
394.46
8.97
98.63
Zhejiang
303.26
6.65
302.47
6.88
99.74
Anhui
239.19
5.24
237.23
5.39
99.18
Fujian
141.62
3.10
136.55
3.10
96.42
Jiangxi
169.89
3.72
169.96
3.86
100.04
Shandong
549.62
12.05
549.04
12.48
99.89
Henan
320.98
7.04
298.56
6.79
93.01
Hubei
189.59
4.16
192.11
4.37
101.33
Hunan
191.72
4.20
178.09
4.05
92.89
Guangdong
330.24
7.24
308.2
7.01
93.33
Guangxi
130.9
2.87
121.58
2.76
92.88
Hainan
18.81
0.41
19.37
0.44
102.98
Chongqing
86.08
1.89
83.62
1.90
97.14
Sichuan
213.96
4.69
200.42
4.56
93.67
Guizhou
57.13
1.25
48.5
1.10
84.89
Yunnan
92.49
2.03
86.85
1.97
93.91
Tibet
7.86
0.17
6.65
0.15
84.60
Shaanxi
99.55
2.18
88.88
2.02
89.28
Gansu
43.77
0.96
42.15
0.96
96.32
Qinghai
13.71
0.30
12.38
0.28
90.25
Ningxia
22.96
0.50
22.41
0.51
97.59
Xinjiang
55.29
1.21
53.61
1.22
96.96
Total
4560.95
100.00
4399.18
100.00
96.45
Source: China Building Materials Federation
5.3 Cement and Gypsum Product Industry
5.3.1
Overall Size and Distribution
In February of 2008, there were 3,495 cement and gypsum product makers in China, employing 0.42 million people, with
the annual cumulative increase in the number of employees being 2.09%. The number of loss-incurring enterprises was 995,
whose total losses reached RMB580 million. The assets of the whole industry totaled RMB173.2 billion, with the cumulative
increase being 18.15%.
Between January and November of 2008, the number of cement and gypsum product makers in China was 3,926,
employing 0.47 million people on average, with the annual cumulative increase in the number of employees being 8.43%. The
number of loss-incurring enterprises fell to 851, whose total losses reached RMB1.39 billion. The assets of the whole industry
totaled RMB217.6 billion, with the cumulative increase being 19.76%.
Table 5-13 Size of cement and gypsum product industry
Unit: 10,000 people, RMB100 million, %
Annual
Cumulative
Number of
Cumulative
Number of
Time
average
increase in
loss-incurring
Total loss
Total assets
increase in
enterprises
employment employment
enterprises
total assets
2007-02
2935
35.40
5.8
733
3.60
1383.67
16.27
2007-05
3060
38.26
7.02
839
7.40
1538.16
14.45
•44•
The Building Materials Industry
2007-08
3166
40.03
6.6
770
9.47
1658.62
16.6
2007-11
3318
41.15
8.8
682
11.78
1772.20
18.96
2008-02
3495
41.80
2.09
995
5.80
1731.62
18.15
2008-05
3621
44.49
11.67
946
9.53
1887.16
18.36
2008-08
3784
46.10
9.08
915
12.18
2052.09
20.85
2008-11
3926
47.16
8.43
851
13.93
2176.09
19.76
Source: China Building Materials Federation
5.3.2
Output and Sales
In February of 2008, the gross output value of China’s cement and gypsum product industry totaled RMB29.5 billion, up
42.63% year on year. The total sales of the industry reached RMB28.4 billion, up 39.97% over the same period of 2007. The
sales/output ratio was up to 96.30%. In the month, the finished products of the industry totaled RMB12.0 billion, up 21.38%
year on year.
Between January and November of 2008, the gross output value of China’s cement and gypsum product industry totaled
RMB255.2 billion, up 39.94% year on year. The total sales of the industry reached RMB242.3 billion, up 39.93% over the same
period of 2007. The sales/output ratio was up to 94.95%. In November, the finished products of the industry totaled RMB17.6
billion, up 14.58% over the same period of 2008.
Table 5-14 Output and sales of cement and gypsum product industry
Unit: RMB100 million, %
Total industrial Year-on-year
Total
Year-on-year Sales/output
Finished Year-on-year
Time
output value
growth
industrial sales
growth
ratio
products
growth
2008-02
294.93
42.63
284.03
39.97
96.30
120.33
21.38
2008-05
962.04
2008-08
1752.88
46.73
914.75
49.06
95.08
148.89
19.13
43.22
1658.53
43.39
94.62
160.78
16.20
2008-11
2551.75
39.94
2422.79
39.93
94.95
175.86
14.58
Source: China Building Materials Federation
5.3.3
Cost
In February of 2008, the product sales cost of Chinese cement and gypsum product industry stood at RMB24.7 billion, up
40.56% year on year. The product sales expenses reached RMB846 million, up 31.18% year on year. The overhead expenses
amounted to RMB1.17 billion, up 24.39% over the same period of 2007. The financial expenses totaled RMB297 million, up
40.34% over the same period of 2007.
Between January and November of 2008, the product sales cost of Chinese cement and gypsum product industry stood at
RMB208.9, up 40.00% year on year. The product sales expenses reached RMB7.39 billion, up 45.13% year on year. The
overhead expenses amounted to RMB8.43 billion, up 23.98% over the same period of 2007. The financial expenses totaled
RMB2.35 billion, up 39.39% over the same period of 2007.
Time
Table 5-15 Cost of cement and gypsum product industry
Unit: RMB100 million, %
Product sales Year-on-year Product sales Year-on-year Overhead Year-on-year Financial
cost
growth
expenses
growth
expenses
growth
expenses
Year-on-year
growth
2008-02
247.00
40.56
8.46
31.18
11.65
24.39
2.97
40.34
2008-05
795.37
50.05
28.19
50.72
32.99
24.43
9.28
49.05
2008-08
1407.04
40.90
51.01
50.06
57.31
24.71
16.52
48.28
2008-11
2088.71
40.00
73.90
45.13
84.26
23.98
23.48
39.39
Source: China Building Materials Federation
•45•
China Business Guide
5.3.4
Profit
In February of 2008, the total profit of China’s cement and gypsum product industry reached RMB1.037 billion, up 28.72%
over the same period of 2007. But the total profit still remained at a low level. In the month, the number of loss-incurring
enterprises in this industry reached 995, with the percentage of loss-incurring enterprises being up to 28.47%. The total losses of
enterprises in the industry amounted to RMB580 million, up 61.30% year on year.
Between January and November of 2008, the total profit of China’s cement and gypsum product industry stood at
RMB11.665 billion, up 30.85% over the same period of 2007. The number of loss-incurring enterprises dropped to 851, but the
percentage of loss-incurring enterprises was still up to 21.68%. The total losses of these enterprises amounted to RMB1.39
billion, up 18.25% year on year.
Table 5-16 Profit of cement and gypsum product industry
Unit: RMB100 million, %
Year-on-year Number of loss-incurring
Percentage of
Year-on-year
Total profit
Total loss
growth
enterprises
loss-incurring enterprises
growth
Time
2008-02
10.37
36.04
995
28.47
5.80
61.30
2008-05
39.01
59.95
946
26.13
9.53
28.75
2008-08
75.40
42.76
915
24.18
12.18
28.57
2008-11
116.65
38.88
851
21.68
13.93
18.25
Source: China Building Materials Federation
5.3.5
Product Yield
In 2008, China’s yield of light building materials totaled 1.11 billion square meters, representing a flat year-on-year
increase of 12.6%. The total yield of concrete structure reached 199.80 million square meters, down 19.8% over the same period
of 2007, representing a rapid decline. The yield between January and November decreased by 23.9% over the same period of
2007, the largest decline in the year. The output of cement sewer pipes reached 103.23 million meters, up 71.6% over the same
period of 2007. The yield in January-March and January-April represented a year-on-year increase of 165.3% and 129.9%
respectively. A total of 6.24 cement wire poles were produced, up 17.9% year on year. In the year, the yield of cement wire poles
reported stable growth.
Table 5-17 Total yield and year-on-year increase
Light building materials
Time
Concrete structure
Cement sewer pipe
Cement wire pole
Yield
Cumulative
Yield
Cumulative
Yield
Cumulative
Yield
Cumulative
(10,000 cubic meter) increase (%) (10,000m) increase (%) (10,000m) increase (%) (10,000) increase (%)
2008-01
6619
1646
939
2008-02
11507
10.0
2904
18.8
2008-03
19871
14.0
4822
2008-04
28564
13.4
6765
2008-05
38343
15.6
2008-06
47590
2008-07
58266
2008-08
32
1800
87.2
59
2.9
15.6
2119
165.3
105
4.9
17.5
2832
129.9
150
4.5
8557
11.1
3393
91.1
203
3.8
14.8
10158
-7.1
4480
90.0
257
5.3
14.9
11689
-4.6
5523
92.4
306
6.7
68258
13.7
13429
-4.5
6474
89.5
398
19.4
2008-09
78993
13.7
15003
-10.4
7414
54.5
458
19.4
2008-10
89190
13.5
16517
-14.5
8502
57.5
508
18.3
2008-11
100133
13.7
18162
-23.9
9411
74.5
567
18.5
2008-12
111336
12.6
19980
-19.8
10323
71.6
624
17.9
Source: China Building Materials Federation
•46•
The Building Materials Industry
5.3.6
Industrial Operational Performance
In February of 2008, the product sales of cement and gypsum product industry grew by 34.18%, which represented a
dramatic year-on-year decline of 16.94%. The capital maintenance and appreciation rate was 118.17%, down 2.13% over the
same period of 2007. The asset-liability ratio stood at 62.18%, up 0.37% year on year. The net amount of receivables grew by
16.3%, down 6.64% over the same period of 2007.
Between January and November of 2008, the product sales of China’s cement and gypsum product industry grew by
34.87%, down 7.80% year on year. The capital maintenance and appreciation rate was 118.6%, representing a year-on-year
increase of 0.95%. The asset-liability ratio was 62.69%, down 0.95% year on year. The net amount of receivables grew by
22.97%, up 48.48% over the same period of 2007.
Table 5-18 Industrial operational performance
Unit: RMB100 million, %
Growth rate Year-on-year Capital maintenance Year-on-year Asset-liability Year-on-year Increase in net Year-on-year
of sales
growth and appreciation rate growth
ratio
growth
receivables
growth
Time
2007-02
39.97
40.61
120.74
8.02
61.95
-1.87
17.46
-20.05
2007-05
32.17
12.74
110.5
-3.51
63.75
0.82
16.97
-22.83
2007-08
36.58
21.60
114.7
-1.67
63.37
0.68
14.2
-21.55
2007-11
37.59
23.09
117.48
2.48
63.29
0.56
15.47
-20.79
2008-02
34.18
-16.94
118.17
-2.13
62.18
0.37
16.3
-6.64
2008-05
46.15
30.29
119.67
8.30
62.75
-1.57
19.2
13.14
2008-08
39.28
6.87
120.68
5.21
62.48
-1.40
21.33
50.21
2008-11
34.87
-7.80
118.6
0.95
62.69
-0.95
22.97
48.48
Source: China Building Materials Federation
5.3.7
Region-specific Production and Sales
In 2008, China’s cement and gypsum products were mainly produced in Shandong, Jiangsu and Zhejiang provinces whose
gross output value was RMB33.7 billion, 34.1 billion and 26.5 billion, accounting for 13.22%, 13.36% and 10.37% respectively.
The total gross output value of the three provinces took up more than one third of China’s national total.
In 2008, Shandong, Jiangsu and Zhejiang ranked the top in China in terms of sales of cement and gypsum product industry,
whose industrial sales reached RMB33.2 billion, 33.1 billion and 25 billion, accounting for 13.69%, 13.64% and 10.30% of the
national total respectively. The total gross industrial sales of the three provinces took up nearly 38% of the national total.
In 2008, the sales/output ratio of cement and gypsum industry in all the provinces was 94.95%. In Tibet, the gross output
value and sales value of industry was quite insignificant, but the sales/output ratio was up to 142.11%. The sales/output ratio of
Beijing, Tianjin, Shanxi, Jiangxi, Hainan, Ningxia and Xinjiang was more than 100%. The sales/output ratio of Gansu ranked the
bottom in China, which was only 69.12%.
Table 5-19 Region-specific output and sales
Region
Gross industrial output value
Unit: RMB100 million, %
Sales value of industry
Sales/output ratio
Actual value
Proportion
Actual value
Proportion
91.52
3.59
95.38
3.94
104.21
Tianjin
37.12
1.45
37.25
1.54
100.37
Hebei
106.21
4.16
97.43
4.02
91.73
Shanxi
9.68
0.38
9.78
0.40
101.12
Inner Mongolia
32.48
1.27
29.77
1.23
91.67
Liaoning
130.11
5.10
125.00
5.16
96.07
Jilin
33.84
1.33
30.53
1.26
90.21
Heilongjiang
5.56
0.22
4.98
0.21
89.52
Beijing
•47•
China Business Guide
Shanghai
133.33
5.22
126.32
5.21
94.74
Jiangsu
340.89
13.36
330.55
13.64
96.97
Zhejiang
264.69
10.37
249.55
10.30
94.28
Anhui
62.85
2.46
53.17
2.19
84.60
Fujian
77.02
3.02
70.23
2.90
91.19
Jiangxi
37.76
1.48
38.06
1.57
100.78
Shandong
337.31
13.22
331.65
13.69
98.32
Henan
238.22
9.34
229.83
9.49
96.48
Hubei
69.98
2.74
62.46
2.58
89.26
Hunan
67.95
2.66
63.86
2.64
93.99
Guangdong
189.05
7.41
176.30
7.28
93.25
Guangxi
33.16
1.30
28.82
1.19
86.94
Hainan
8.80
0.34
8.83
0.36
100.32
Chongqing
54.28
2.13
50.55
2.09
93.11
Sichuan
91.74
3.60
84.55
3.49
92.15
Guizhou
12.16
0.48
9.79
0.40
80.55
Yunnan
11.34
0.44
9.10
0.38
80.25
Tibet
0.09
0.00
0.13
0.01
142.11
Shaanxi
34.49
1.35
30.89
1.28
89.57
Gansu
7.96
0.31
5.50
0.23
69.12
Qinghai
6.37
0.25
6.06
0.25
95.06
Ningxia
5.22
0.20
5.43
0.22
104.11
Xinjiang
20.59
0.81
21.05
0.87
102.28
Total
2551.75
100.00
2422.79
100.00
94.95
Source: China Building Materials Federation
5.4 Brick, Tile, Stone and Other Building Materials
5.4.1
Overall Size and Distribution
In February of 2008, there were 6,165 brick, tile, stone and other building material makers in China, employing 0.7965
million people, with the annual cumulative increase in the number of employees being 6.63%. The number of loss-incurring
enterprises was 764, whose total losses reached RMB382 million. The assets of the whole industry totaled RMB173.4 billion,
with the cumulative increase being 24.72%.
Between January and November of 2008, the number of brick, tile, stone and other building material makers in China was
6,905, employing 0.9387 million people on average, with the annual cumulative increase in the number of employees being
6.11%. The number of loss-incurring enterprises fell to 618, whose total losses reached RMB1.35 billion. The assets of the
whole industry totaled RMB221.5 billion, with the cumulative increase being 22.00%.
Table 5-20 Size of brick, tile, stone and other building material industry
Unit: 10,000 people, RMB100 million, %
Number of Annual average Cumulative increase Number of lossCumulative increase
Time
Total loss Total assets
enterprises employment
in employment
incurring enterprises
in total assets
2007-02
5202
76.16
13.85
665
3.61
1402.69
17.83
2007-05
5386
82.17
11.3
640
6.55
1549.38
18.09
2007-08
5604
85.71
10.13
568
8.73
1674.36
19.18
2007-11
5938
89.72
12.31
515
10.41
1790.67
22.91
•48•
The Building Materials Industry
2008-02
6165
79.65
6.63
764
3.82
1733.94
24.72
2008-05
6392
87.64
7.69
727
7.10
1882.36
21.61
2008-08
6648
91.03
6.78
649
10.19
2023.41
20.09
2008-11
6905
93.87
6.11
618
13.52
2214.62
22.00
Source: China Building Materials Federation
5.4.2
Output and Sales
In February of 2008, the gross output value of China’s brick, tile, stone and other building material makers totaled
RMB45.85 billion, up 34.68% year on year. The total sales of the industry reached RMB42.08 billion, up 34.56% over the same
period of 2007. The sales/output ratio was up to 91.78%. In the month, the finished products of the industry totaled RMB15.38
billion, up 23.49% year on year.
Between January and November of 2008, the gross output value of China’s brick, tile, stone and other building material
industry totaled RMB412.86 billion, up 32.63% year on year. The total sales of the industry reached RMB389.8 billion, up
33.10% over the same period of 2007. The sales/output ratio was up to 94.41%. In November, the finished products of the
industry totaled RMB23.27 billion, up 26.05% year on year.
Table 5-21 Output and sales of brick, tile, stone and other building material industry
Total industrial Year-on-year Total industrial Year-on-year Sales/output
Time
output value
growth
sales
growth
ratio
Unit: RMB100 million, %
Finished
Year-on-year
products
growth
2008-02
458.5
34.68
420.8
34.56
91.78
153.8
23.49
2008-05
1547.2
33.74
1450.2
33.99
93.73
181.2
22.39
2008-08
2880.5
32.30
2679.3
31.66
93.02
203.5
18.73
2008-11
4128.6
32.63
3898.0
33.10
94.41
232.7
26.05
Source: China Building Materials Federation
5.4.3
Cost
In February of 2008, the product sales cost of China’s brick, tile, stone and other building material industry stood at
RMB35.616 billion, up 35.97% year on year. The product sales expenses reached RMB1.238 billion, up 22.73% year on year.
The overhead expenses amounted to RMB1.338 billion, up 24.39% over the same period of 2007. The financial expenses totaled
RMB516 million, up 24.86% over the same period of 2007.
Between January and November of 2008, the product sales cost of China’s brick, tile, stone and other building material
industry stood at RMB330.7 billion, up 32.88% year on year. The product sales expenses reached RMB12.57 billion, up 50.32%
year on year. The overhead expenses amounted to RMB11.35 billion, up 26.99% over the same period of 2007. The financial
expenses totaled RMB3.35 billion, up 23.87% over the same period of 2007.
Table 5-22 Cost of brick, tile, stone and other building material industry
Unit: RMB100 million, %
Product sales Year-on-year Product sales Year-on-year Overhead Year-on-year Financial Year-on-year
Time
cost
growth
expenses
growth
expenses
growth
expenses
growth
2008-02
356.16
35.97
12.38
22.73
13.38
28.34
5.16
24.86
2008-05
1212.81
30.86
44.70
46.04
41.20
32.59
14.16
23.40
2008-08
2257.06
29.74
82.98
45.98
74.43
28.51
22.71
20.80
2008-11
3307.18
32.88
125.65
50.32
113.51
26.99
33.53
23.87
Source: China Building Materials Federation
5.4.4
Profit
In February of 2008, the total profit of China’s brick, tile, stone and other building material industry reached RMB2.25
billion, up 50.38% over the same period of 2007. In the month, the number of loss-incurring enterprises in this industry reached
•49•
China Business Guide
764, with the percentage of loss-incurring enterprises being up to 12.39%. The total losses of enterprises in the industry
amounted to RMB382 million, up 5.80% year on year.
Between January and November of 2008, the total profit of China’s brick, tile, stone and other building material industry
stood at RMB22.78 billion, up 34.19% over the same period of 2007. The number of loss-incurring enterprises dropped to 618,
but the percentage of loss-incurring enterprises was still up to 8.95%. Compared with the level at the beginning of the year, the
number of loss-incurring enterprises and the percentage of loss-incurring enterprises dropped slightly. The total losses of these
enterprises amounted to RMB1.352 billion, up 29.79% year on year.
Table 5-23 Profit of brick, tile, stone and other building material industry
Unit: RMB100 million, %
Year-on-year Number of loss-incurring
Percentage of
Year-on-year
Time
Total profit
Total loss
growth
enterprises
loss-incurring enterprises
growth
2008-02
22.54
50.38
764
12.39
3.82
5.80
2008-05
82.23
43.02
727
11.37
7.10
8.31
2008-08
155.64
36.19
649
9.76
10.19
16.71
2008-11
227.78
34.19
618
8.95
13.52
29.79
Source: China Building Materials Federation
5.4.5
Product Yield
In 2008, China’s yield of marble slabs totaled 254.7 million cubic meters, representing a flat year-on-year increase of
17.0%. The total yield of granite slabs between January and December reached 232.13 million cubic meters, up 14.3% over the
same period of 2007, demonstrating a slight year-on-year decline in the growth rate in the second half of the year. The yield of
tiles reached 5 billion pieces, down 4.6% over the same period of 2007. Tile production presented a significant decline of growth
in the first half of 2008, which reported a negative year-on-year growth for four consecutive months from September. The annual
output of bricks totaled 14.56 million pieces, up 21.9% over the same period of 2007. The year-on-year growth of brick
production remained basically stable.
Table 5-24 Total yield and year-on-year increase
Marble slab
Time
Granite slab
Tile
Brick
Yield (10,000 Cumulative Yield (10,000 Cumulative Yield (100
Cumulative
cubic meters) increase (%) cubic meters) increase (%) million pieces) increase (%)
2008-01
111
2008-02
204
2008-03
2008-04
2008-05
1235
4
Yield (100
Cumulative
million pieces) increase (%)
66
10.5
2451
12.6
9
74.9
131
21.6
347
11.7
4408
20.5
13
70.1
218
21.0
495
10.0
6260
22.7
19
35.3
324
25.1
691
8.4
8359
22.3
26
23.2
446
25.6
2008-06
931
13.0
10753
20.2
30
13.4
591
24.2
2008-07
1123
15.8
12954
15.2
33
6.5
715
22.8
2008-08
1578
16.7
15161
12.6
36
0.5
841
23.8
2008-09
1818
17.1
17258
13.0
39
-4.5
984
24.2
2008-10
2038
14.8
19396
15.0
42
-6.2
1123
21.3
2008-11
2295
16.4
21414
13.9
46
-6.0
1313
22.2
2008-12
2547
17.0
23213
14.3
50
-4.6
1456
21.9
Source: China Building Materials Federation
5.4.6
Industrial Operational Performance
In February of 2008, the product sales of China’s brick, tile, stone and other building material industry grew by 33.56%,
which represented a dramatic year-on-year decline of 9.98%. The capital maintenance and appreciation rate was 128.39%, up
•50•
The Building Materials Industry
9.39% over the same period of 2007. The asset-liability ratio stood at 50.81%, down 3.75% year on year. The net amount of
receivables grew by 24.33%, up 22.51% over the same period of 2007.
Between January and November of 2008, the product sales of China’s brick, tile, stone and other building material industry
grew by 34.53%, down 13.22% year on year. The capital maintenance and appreciation rate was 122.33%, representing a
year-on-year decrease of 0.64%. The asset-liability ratio was 51.27%, down 0.64% year on year. The net amount of receivables
grew by 19.77%, down 30.99% over the same period of 2007.
Table 5-25 Industrial operational performance
Unit: RMB100 million, %
Growth rate Year-on-year Capital maintenance Year-on-year
AssetYear-on-year Increase in net Year-on-year
of sales
growth
and appreciation rate
growth
liability ratio growth
receivables
growth
Time
2007-02
37.28
-6.47
117.37
2.39
52.79
-0.62
19.86
2007-05
41.83
2007-08
40.59
2007-11
39.79
2008-02
2008-05
1.38
14.57
119.35
5.55
52.48
-2.74
21.07
-7.79
13.28
122.69
7.12
51.99
-3.31
22.58
-13.09
30.50
123.12
7.17
51.60
-2.25
28.65
20.18
33.56
-9.98
128.39
9.39
50.81
-3.75
24.33
22.51
36.93
-11.71
119.13
-0.18
52.57
0.17
20.82
-1.19
2008-08
34.03
-16.16
120.86
-1.49
51.52
-0.90
19.30
-14.53
2008-11
34.53
-13.22
122.33
-0.64
51.27
-0.64
19.77
-30.99
Source: China Building Materials Federation
5.4.7
Region-specific Production and Sales
In 2008, China’s brick, tile, stone and other building materials were mainly produced in Shandong, Guangdong and Fujian
provinces whose gross output value was RMB119.76 million, 78.20 million and 50.22 million, accounting for 29.01%, 18.94%
and 12.16% respectively. The total gross output value of the three provinces took up 60% of China’s national total.
In 2008, Shandong, Guangdong and Fujian provinces ranked the top in China in terms of sales value of industry, whose
industrial sales reached RMB115.40 million, 70.19 million and 49.39 million, accounting for 29.60%, 18.01% and 12.67% of
the national total respectively. The total gross industrial sales of the three provinces took up nearly 60% of the national total.
In 2008, the sales/output ratio of all the provinces was 94.41%. Amongst, the sales/output ratio of Beijing, Tianjin and
Qinghai was higher, which was over 100%. In contrast, the sales/output ratio of Tibet was only 32.27%, ranking the bottom in
China. In addition, the sales/output ratio of Shanxi, Guizhou, Yunnan and Shaanxi was lower, which was less than 80%.
Table 5-26 Region-specific output and sales
Region
Gross industrial output value
Unit: RMB100 million, %
Sales value of industry
Sales/output ratio
Actual value
Proportion
Actual value
Proportion
52.4
1.27
55.9
1.43
106.55
Tianjin
19.5
0.47
20.7
0.53
106.17
Hebei
101.4
2.46
90.9
2.33
89.73
Shanxi
12.3
0.30
9.5
0.24
77.72
Inner Mongolia
37.5
0.91
36.2
0.93
96.62
Liaoning
212.6
5.15
210.2
5.39
98.87
Jilin
56.9
1.38
54.6
1.40
95.90
Heilongjiang
11.3
0.27
10.9
0.28
96.44
Shanghai
70.1
1.70
69.3
1.78
98.86
Jiangsu
93
2.25
89.4
2.29
96.18
Zhejiang
131.5
3.19
121.7
3.12
92.56
Anhui
34.7
0.84
31.9
0.82
91.84
Fujian
502.2
12.16
493.9
12.67
98.35
Beijing
•51•
China Business Guide
Jiangxi
80.8
1.96
78.8
2.02
97.54
Shandong
1197.6
29.01
1154
29.60
96.36
Henan
313.5
7.59
290.2
7.44
92.56
Hubei
84.8
2.05
76.6
1.96
90.32
Hunan
76
1.84
73.9
1.90
97.30
Guangdong
782
18.94
701.9
18.01
89.75
Guangxi
42.3
1.03
38.9
1.00
92.01
Hainan
0.6
0.01
0.6
0.02
99.37
Chongqing
21.6
0.52
20.1
0.52
93.20
Sichuan
152.6
3.70
135.4
3.47
88.71
Guizhou
6.4
0.15
4.2
0.11
66.25
Yunnan
3.3
0.08
2.6
0.07
78.77
Tibet
0.3
0.01
0.1
0.00
32.27
Shaanxi
16.9
0.41
12.4
0.32
73.55
Gansu
2.8
0.07
2.5
0.06
90.44
Qinghai
1.7
0.04
1.8
0.05
102.79
Ningxia
2.2
0.05
2.1
0.05
95.70
Xinjiang
7.8
0.19
6.7
0.17
85.84
Total
4128.6
100.00
3898
100.00
94.41
Source: China Building Materials Federation
5.5 Glass and Glass Product Industry
5.5.1
Overall Size and Distribution
In February of 2008, there were 3,545 glass and glass product makers in China, employing 0.8 million people, with the
annual cumulative increase in the number of employees being 10.05%. The number of loss-incurring enterprises was 753, whose
total losses reached RMB493 million. The assets of the whole industry totaled RMB261.4 billion, with the cumulative increase
being 20.49%.
Between January and November of 2008, the number of glass and glass product makers in China was 3,812, employing
0.8204 million people on average, with the annual cumulative increase in the number of employees being 4.81%. The number of
loss-incurring enterprises fell to 719, whose total losses reached RMB3.077 billion. The assets of the whole industry totaled
RMB304.4 billion, with the cumulative increase being 18.69%.
Time
Table 5-27 Size of glass and glass product industry
Unit: 10,000 people, RMB100 million, %
Number of Annual average Cumulative increase Number of loss-incurring
Cumulative
Total loss Total assets
enterprises employment
in employment
enterprises
increase
2007-02
3145
72.21
8.68
647
4.64
2165.94
17.79
2007-05
3234
74.30
7.27
2007-08
3314
76.36
7.26
626
8.52
2272.44
16.94
586
14.82
2408.49
17.81
2007-11
3430
78.39
7.52
554
17.38
2543.05
20.48
2008-02
3545
2008-05
3632
79.68
10.05
753
4.93
2614.40
20.49
79.39
8.42
745
11.40
2759.60
20.57
2008-08
3711
81.31
6.4
716
20.11
2930.12
20.9
2008-11
3812
82.04
4.81
719
30.77
3044.22
18.69
Source: China Building Materials Federation
•52•
The Building Materials Industry
5.5.2
Output and Sales
In February of 2008, the gross output value of China’s glass and glass product industry totaled RMB41.19 billion, up
31.35% year on year. The total sales of the industry reached RMB39.74 billion, up 34.10% over the same period of 2007. The
sales/output ratio was up to 96.48%. In the month, the finished products of the industry totaled RMB16.36 billion, up 16.22%
year on year.
Between January and November of 2008, the gross output value of China’s glass and glass product industry totaled
RMB292.8 billion, up 28.44% year on year. The total sales of the industry reached RMB276.5 billion, up 25.72% over the same
period of 2007. The sales/output ratio was up to 94.42%. In November, the finished products of the industry totaled RMB22.36
billion, up 35.89% year on year.
Time
Table 5-28 Output and sales of glass and glass product industry
Unit: RMB100 million, %
Total industrial Year-on-year Total industrial Year-on-year Sales/output
Finished
Year-on-year
output value
growth
sales
growth
ratio
products
growth
2008-02
411.9
31.35
397.4
34.10
96.48
163.6
16.22
2008-05
1197.0
31.65
1145.9
30.86
95.73
189.5
23.10
2008-08
2050.4
29.82
1966.5
28.73
95.91
208.8
35.33
2008-11
2928.1
28.44
2764.7
25.72
94.42
223.6
35.89
Source: China Building Materials Federation
5.5.3
Cost
In February of 2008, the product sales cost of China’s glass and glass product industry stood at RMB32.94 billion, up
33.27% year on year. The product sales expenses reached RMB1.285 billion, up 22.80% year on year. The overhead expenses
amounted to RMB1.77 billion, up 26.97% over the same period of 2007. The financial expenses totaled RMB627 million, up
14.34% over the same period of 2007.
Between January and November of 2008, the product sales cost of China’s glass and glass product industry stood at
RMB233.0 billion, up 40.00% year on year. The product sales expenses reached RMB16.23 billion, up 116.15% year on year.
The overhead expenses amounted to RMB10.71 billion, up 21.99% over the same period of 2007. The financial expenses totaled
RMB4.68 billion, up 24.67% over the same period of 2007.
Time
2008-02
Table 5-29 Cost of glass and glass product industry
Unit: RMB100 million, %
Product Year-on-year Product sales Year-on-year Overhead Year-on-year Financial
sales cost
growth
expenses
growth
expenses
growth
expenses
329.44
33.27
2008-05
957.11
2008-08
1652.03
2008-11
2330.42
Year-on-year
growth
12.85
22.80
17.69
26.97
6.27
14.34
31.71
63.47
107.64
45.06
21.95
17.86
20.19
30.12
126.49
140.41
75.64
21.70
30.55
22.94
28.74
162.34
116.15
107.12
21.99
46.84
24.67
Source: China Building Materials Federation
5.5.4
Profit
In February of 2008, the total profit of China’s glass and glass product industry reached RMB2.363 billion, up 52.50% over
the same period of 2007. In the month, the number of loss-incurring enterprises in this industry reached 753, with the percentage
of loss-incurring enterprises being up to 21.24%. The total losses of enterprises in the industry amounted to RMB493 million, up
6.21% year on year.
Between January and November of 2008, the total profit of China’s glass and glass product industry stood at RMB15.62
billion, down 0.10% over the same period of 2007. The number of loss-incurring enterprises dropped to 719, but the percentage
of loss-incurring enterprises was still up to 18.86%. The total losses of these enterprises amounted to RMB3.08 billion, up
•53•
China Business Guide
77.09% year on year.
Time
Table 5-30 Profit of glass and glass product industry
Unit: RMB100 million, %
Year-on-year Number of enterprises Percentage of loss-incurring
Total profit
Total loss
growth
that suffered loss
enterprises
Year-on-year
growth
2008-02
23.63
52.50
753
21.24
4.93
6.21
2008-05
70.40
30.68
745
20.51
11.40
33.90
2008-08
116.27
13.44
716
19.29
20.11
35.71
2008-11
156.17
-0.10
719
18.86
30.77
77.09
Source: China Building Materials Federation
5.5.5
Product Yield
In 2008, China’s yield of fiberglass yarn totaled 2.43 million tons, representing a stable year-on-year increase of 45.5%.
The annual total yield of daily-use glass products reached 14.46 million tons, up 9.0% over the same period of 2007. The yield
of glass insulation containers and plate glass reached 604.99 million units and 551.85 million weight cases, up 25.8% and 6.5%
year on year respectively. The yield of glass insulation containers demonstrated a negative year-on-year decline in the first half
of 2008, and grew rapidly in the second year half, which rose by 50.6% year on year between January and September. Compared
with the same period of 2007, the output of plate glass showed a decelerating growth, which reported a double-digit growth in
the first year half, a single-digit growth in the second year half, and the lowest rate in December.
Table 5-31 Total yield and year-on-year growth
Fiberglass yarn
Time
Daily-use glass products
Glass insulation container
Yield
Cumulative Yield (10,000 Cumulative Yield (10,000 Cumulative
(10,000 tons) increase (%)
tons)
increase (%)
units)
increase (%)
2008-01
19
120
2008-02
37
61.6
215
2008-03
57
55.5
2008-04
69
40.8
2008-05
88
2008-06
2008-07
2008-08
4886
Plate glass
Yield (10,000 Cumulative
weight cases) increase (%)
4247
-2.3
8605
-4.2
8462
12.3
336
9.7
12593
-8.5
13167
12.9
447
11.8
13496
6.2
18013
12.6
40.2
566
12.7
18001
10.5
22692
14.0
111
43.4
686
12.8
24733
19.0
27520
12.2
131
43.3
804
12.7
32213
35.0
31799
10.3
154
45.2
961
11.8
37644
38.9
36879
10.0
2008-09
177
46.0
1082
10.6
45848
50.6
41348
9.2
2008-10
200
46.8
1208
10.1
48513
39.7
46615
9.5
2008-11
222
46.6
1325
11.1
54664
25.4
51390
9.0
2008-12
243
45.5
1446
9.0
60499
25.8
55185
6.5
Source: China Building Materials Federation
5.5.6
Industrial Operational Performance
In February of 2008, the product sales of China’s glass and glass product industry grew by 34.56%, which represented a
slight year-on-year decline of 4.74%. The capital maintenance and appreciation rate was 121.66%, down 0.44% over the same
period of 2007. The asset-liability ratio stood at 58.16%, down 0.33% year on year. The net amount of receivables grew by
10.39%, down 30.78% over the same period of 2007.
Between January and November of 2008, the product sales of China’s glass and glass product industry grew by 24.94%,
down 24.03% year on year. The capital maintenance and appreciation rate was 114.34%, representing a year-on-year decrease of
7.39%. The asset-liability ratio was 59.67%, up 3.76% year on year. The net amount of receivables grew by 12.64%, down
6.85% over the same period of 2007.
•54•
The Building Materials Industry
Time
Table 5-32 Industrial operational performance
Unit: RMB100 million, %
Growth rate Year-on-year Capital maintenance Year-on-year Asset-liability Year-on-year Increase in net Year-on-year
of sales
growth
and appreciation rate growth
ratio
growth
receivables
growth
2007-02
36.28
26.68
122.2
6.15
57.97
-2.49
15.01
-35.13
2007-05
32.79
9.89
123.61
9.90
57.9
-3.10
14.67
-24.54
2007-08
34.33
12.93
124.02
4.85
57.24
-3.47
16.74
-13.76
2007-11
32.83
8.10
123.47
1.82
57.51
-1.66
13.57
-28.16
2008-02
34.56
-4.74
121.66
-0.44
58.16
0.33
10.39
-30.78
2008-05
30.48
-7.04
117.35
-5.06
57.98
0.14
17.5
19.29
2008-08
27.86
-18.85
115.09
-7.20
59.95
4.73
15.41
-7.95
2008-11
24.94
-24.03
114.34
-7.39
59.67
3.76
12.64
-6.85
Source: China Building Materials Federation
5.5.7
Region-specific Production and Sales
In 2008, China’s glass and glass products were mainly produced in Shandong, Guangdong and Jiangsu provinces. Amongst,
the gross output value of Shandong ranked the first in China, which amounted to RMB68.11million, accounting for 23.26% of
the national total. The total gross output value of Guangdong and Jiangsu reached RMB31.07 million and 41.43 million,
accounting for 10.61% and 14.15% of the national total respectively. The total output value of the three provinces took up nearly
50% of China’s national total.
In 2008, Shandong, Jiangsu and Guangdong provinces ranked the top in China in terms of sales value of industry, whose
industrial sales reached RMB63.02 million, 40.27 million and 28.39 million, accounting for 22.80%, 14.56% and 10.27% of the
national total respectively. The total gross industrial sales of the three provinces took up nearly 50% of the national total.
In 2008, the sales/output ratio of all the provinces was 94.42%. Amongst, only the sales/output ratio of Qinghai and
Shanghai was over 100%, and only that of Guizhou was less than 80% to be 79.46%.
Region
Beijing
Tianjin
Hebei
Shanxi
Inner Mongolia
Liaoning
Jilin
Heilongjiang
Shanghai
Jiangsu
Zhejiang
Anhui
Fujian
Jiangxi
Shandong
Henan
Hubei
Hunan
Guangdong
Guangxi
Table 5-33 Region-specific output and sales
Unit: RMB100 million, %
Gross industrial output value
Sales value of industry
Actual value
Proportion
Actual value
Proportion
25.7
0.88
25
0.90
46.3
1.58
43.6
1.58
166.4
5.68
163.1
5.90
19.3
0.66
18.2
0.66
21.7
0.74
20.7
0.75
85
2.90
77.9
2.82
40.8
1.39
38.3
1.39
14.5
0.50
12
0.43
104.2
3.56
113.7
4.11
414.3
14.15
402.7
14.56
177.7
6.07
161.4
5.84
58.4
1.99
52
1.88
66.2
2.26
65.8
2.38
43.9
1.50
41.3
1.49
681.1
23.26
630.2
22.80
274.3
9.37
266.2
9.63
52.1
1.78
46.8
1.69
39
1.33
33.6
1.22
310.7
10.61
283.9
10.27
17.1
0.58
15.5
0.56
•55•
Sales/output ratio
97.12
94.12
98.02
94.11
95.26
91.56
94.23
82.36
109.04
97.19
90.84
89.07
99.49
94.19
92.53
97.04
89.83
86.17
91.39
90.82
China Business Guide
Hainan
Chongqing
Sichuan
Guizhou
Yunnan
Shaanxi
Gansu
Qinghai
Ningxia
Xinjiang
Total
4.7
55.1
164.5
3.8
7.2
18.1
5.3
0.5
0.6
9.6
2928.1
0.16
1.88
5.62
0.13
0.24
0.62
0.18
0.02
0.02
0.33
100.00
4.2
53
153.9
3
6.7
17.6
4.4
0.6
0.5
9.1
2764.7
0.15
1.92
5.57
0.11
0.24
0.64
0.16
0.02
0.02
0.33
100.00
88.01
96.05
93.55
79.46
93.25
97.51
81.89
113.72
80.28
94.97
94.42
Source: China Building Materials Federation
5.6 Ceramics Industry
5.6.1
Overall Size and Distribution
In February of 2008, there were 1,816 ceramics makers in China, employing 0.53 million people, with the annual
cumulative increase in the number of employees being 2.42%. The number of loss-incurring enterprises was 338, whose total
losses reached RMB148 million. The assets of the whole industry totaled RMB60.675 billion, with the cumulative increase
being 13.78%.
Between January and November of 2008, the number of ceramics product makers in China was 1,959, employing 0.5386
million people on average, with the annual cumulative decline in the number of employees being 3.08%. The number of
loss-incurring enterprises fell to 254, whose total losses reached RMB909 million. The assets of the whole industry totaled
RMB69.9 billion, with the cumulative increase being 13.4%.
Time
Table 5-34 Size of ceramic industry
Unit: 10,000 people, RMB100 million, %
Number of Annual average Cumulative increase Number of lossCumulative increase
Total loss Total assets
enterprises employment
in employment
incurring enterprises
in total assets
2007-02
1647
51.08
4.95
279
1.27
541.90
9.61
2007-05
1694
53.60
4.3
275
2.75
572.00
8.4
2007-08
1727
54.92
4.3
256
4.43
608.05
10.24
2007-11
1764
55.22
2.9
234
6.32
638.21
10.98
2008-02
1816
52.60
2.42
338
1.48
606.75
13.78
2008-05
1929
54.64
0.69
304
3.15
646.07
16.73
2008-08
1928
54.20
-2.09
281
6.79
673.23
1.38
2008-11
1959
53.86
-3.08
254
9.09
699.05
13.4
Source: China Building Materials Federation
5.6.2
Output and Sales
In February of 2008, the gross output value of China’s ceramics industry totaled RMB12.92 billion, up 28.38% year on year.
The total sales of the industry reached RMB11.62 billion, up 26.42% over the same period of 2007. The sales/output ratio was
up to 89.94%. In the month, the finished products of the industry totaled RMB5.84 billion, up 17.30% year on year.
Between January and November of 2008, the gross output value of China’s ceramics industry totaled RMB108.55 billion,
up 24.37% year on year. The total sales of the industry reached RMB101.83 billion, up 23.30% over the same period of 2007.
The sales/output ratio was up to 93.80%. In November, the finished products of the industry totaled RMB7.91 billion, up
12.53% year on year.
•56•
The Building Materials Industry
Time
Table 5-62 Output and sales of ceramic industry
Unit: RMB100 million, %
Total industrial Year-on-year Total industrial Year-on-year Sales/output
Finished
output value
growth
sales
growth
ratio
products
Year-on-year
growth
2008-02
129.2
28.38
116.2
26.42
89.94
58.4
17.30
2008-05
418.0
30.27
390.7
29.59
93.47
70.5
22.00
2008-08
739.8
25.41
697.3
24.86
94.25
74.2
11.82
2008-11
1085.5
24.37
1018.3
23.30
93.80
79.1
12.53
Source: China Building Materials Federation
5.6.3
Cost
In February of 2008, the product sales cost of China’s ceramics industry stood at RMB9.564 billion, up 23.56% year on
year. The product sales expenses reached RMB535 million, up 23.04% year on year. The overhead expenses amounted to
RMB600 million, up 19.34% over the same period of 2007. The financial expenses totaled RMB136 million, down 7.06% over
the same period of 2007.
Between January and November of 2008, the product sales cost of China’s ceramics industry stood at RMB84.516 billion,
up 23.49% year on year. The product sales expenses reached RMB5.433 billion, up 58.81% year on year. The overhead expenses
amounted to RMB3.995 billion, up 15.79% over the same period of 2007. The financial expenses totaled RMB1.046 billion, up
10.29% over the same period of 2007.
Time
Table 5-35 Cost of ceramics industry
Unit: RMB100 million, %
Product sales Year-on-year Product sales Year-on-year Overhead Year-on-year Financial
cost
growth
expenses
growth
expenses
growth
expenses
Year-on-year
growth
2008-02
95.64
23.56
5.35
23.04
6.00
19.34
1.36
-7.06
2008-05
327.71
32.04
21.37
63.50
16.82
19.80
4.35
14.08
2008-08
583.15
25.23
37.77
65.74
27.68
14.95
7.26
9.63
2008-11
845.16
23.49
54.33
58.81
39.95
15.79
10.46
10.29
Source: China Building Materials Federation
5.6.4
Profit
In February of 2008, the total profit of China’s ceramics industry reached RMB626 million, up 39.97% over the same
period of 2007, but the total profit still remained at a low level. In the month, the number of loss-incurring enterprises in this
industry reached 338, with the percentage of loss-incurring enterprises being up to 18.61%. The total losses of enterprises in the
industry amounted to RMB148 million, up 16.97% year on year.
Between January and November of 2008, the total profit of China’s ceramics industry stood at RMB5.79 billion, up 26.08%
over the same period of 2007. The number of loss-incurring enterprises dropped to 254, but the percentage of loss-incurring
enterprises was still up to 12.97%. The total losses of these enterprises amounted to RMB909 million, up 43.89% year on year.
Time
Total profit
Table 5-36 Profit of ceramics industry Unit: RMB100 million, %
Year-on-year Number of loss-incurring
Percentage of
Total loss
growth
enterprises
loss-incurring enterprises
Year-on-year
growth
2008-02
6.26
39.97
338
18.61
1.48
16.97
2008-05
22.13
41.09
304
15.76
3.15
14.58
2008-08
37.01
22.52
281
14.57
6.79
53.12
2008-11
57.89
26.08
254
12.97
9.09
43.89
Source: China Building Materials Federation
•57•
China Business Guide
5.6.5
Product Yield
In 2008, China’s yield of ceramics products totaled 15.67 billion pieces, representing a year-on-year increase of 6.1%. In
general, the year-on-year growth rate was fast in March-June and stood at 21.9% in January-March. In the second half of 2008,
the growth rate demonstrated an obvious decline, which was the lowest in December.
Table 5-37 Total yield and year-on-year increase
Time
Output
2008-01
9.1
2008-02
16.3
2008-03
Cumulative increase
Unit: 100 million pieces, %
Time
Output
Cumulative increase
2008-07
80.4
13.0
8.6
2008-08
95.5
12.0
35.8
21.9
2008-09
108.4
10.7
2008-04
39.3
17.7
2008-10
121.8
9.1
2008-05
51.3
15.0
2008-11
138.0
9.6
2008-06
67.3
14.1
2008-12
156.7
6.1
Source: China Building Materials Federation
5.6.6
Industrial Operational Performance
In February of 2008, the product sales of China’s ceramics industry grew by 25.09%, which represented a year-on-year
decline of 6.31%. The capital maintenance and appreciation rate was 116.19%, up 2.52% over the same period of 2007. The
asset-liability ratio stood at 54.28%, down 8.20% year on year. The net amount of receivables grew by 3.38%, down 71.74%
over the same period of 2007.
Between January and November of 2008, the product sales of China’s ceramics industry grew by 25.1%, down 28.98% year
on year. The capital maintenance and appreciation rate was 113.51%, representing a year-on-year decrease of 1.45%. The
asset-liability ratio was 62.69%, down 5.78% year on year. The net amount of receivables grew by 6.51%, down 46.73% over
the same period of 2007.
Time
Table 5-38 Industrial operational performance
Unit: RMB100 million, %
Growth rate Year-on-year Capital maintenance Year-on-year Asset-liability Year-on-year Increase in net Year-on-year
of sales
growth and appreciation rate growth
ratio
growth
receivables
growth
2007-02
26.78
13.72
113.33
0.76
57.93
-5.23
11.96
32.01
2007-05
31.35
7.33
114.67
5.11
58.62
-5.45
12.23
51.36
2007-08
33.27
11.72
114.73
3.84
58.55
-4.98
11.74
96.32
2007-11
35.34
28.37
115.18
2.19
57.61
-4.67
12.22
61.64
2008-02
25.09
-6.31
116.19
2.52
53.18
-8.20
3.38
-71.74
2008-05
29
-7.50
118.98
3.76
53.99
-7.90
5.82
-52.41
2008-08
25.39
-23.69
88.77
-22.63
54.66
-6.64
6.46
-44.97
2008-11
25.1
-28.98
113.51
-1.45
54.28
-5.78
6.51
-46.73
Source: China Building Materials Federation
5.6.7
Region-specific Production and Sales
In 2008, China’s ceramics products were mainly produced in Guangdong, Shandong and Jiangxi provinces whose gross
output value amounted to RMB28.35 million, 21.08 million and 11.56 million, accounting for 26.12%, 19.42% and 10.65% of
the national total respectively. The total output value of the three provinces took up 56% of China’s national total.
In 2008, Guangdong, Shandong and Jiangxi provinces ranked the top in China in terms of sales value of industry, whose
industrial sales reached RMB26.58 million, 20.05 million and 11.37 million, accounting for 26.11%, 19.69% and 11.17% of the
national total respectively. The total gross industrial sales of the three provinces took up nearly 57% of the national total.
In 2008, the sales/output ratio of all the provinces was 93.80%. Amongst, the sales/output ratio of Jilin, Heilongjiang,
•58•
The Building Materials Industry
Shanghai, Chongqing and Gansu was higher at more than 100%, and that of Guizhou ranked the bottom in China at only
69.63%.
Table 5-39 Region-specific output and sales
Region
Gross industrial output value
Unit: RMB10,000, %
Sales value of industry
Sales/output ratio
Actual value
Proportion
Actual value
Proportion
Beijing
6.3
0.58
6
0.59
94.26
Tianjin
0.3
0.03
0.2
0.02
83.34
Hebei
43.8
4.03
39.5
3.88
90.21
Shanxi
3.9
0.36
3.5
0.35
91.11
Inner Mongolia
1
0.09
0.7
0.07
76.50
Liaoning
34.6
3.19
33.1
3.25
95.66
Jilin
1.3
0.12
1.5
0.14
110.01
Heilongjiang
0.5
0.04
0.5
0.05
104.99
Shanghai
23.8
2.19
23.9
2.34
100.43
Jiangsu
51.5
4.74
47.5
4.66
92.27
Zhejiang
15.9
1.46
15.4
1.51
96.81
Anhui
3.6
0.33
2.6
0.25
71.41
Fujian
76.8
7.08
73.5
7.22
95.69
Jiangxi
115.6
10.65
113.7
11.17
98.32
Shandong
210.8
19.42
200.5
19.69
95.08
Henan
88.3
8.14
84.2
8.27
95.35
Hubei
5.6
0.52
4.6
0.45
81.44
Hunan
75.1
6.92
64.2
6.30
85.39
Guangdong
283.5
26.12
265.8
26.11
93.77
Guangxi
28.8
2.66
23.1
2.27
80.22
Chongqing
6.4
0.59
7.1
0.70
110.26
Sichuan
6.2
0.57
5.7
0.56
93.08
Guizhou
0.1
0.01
0.1
0.01
69.63
Yunnan
1.1
0.10
1
0.10
98.97
Shaanxi
0.6
0.03
0.3
0.03
50.33
Gansu
0.04
0.00
0.04
0.00
104.03
Total
1085.5
100.00
1018.3
100.00
93.80
Source: China Building Materials Federation
5.7 Refractory Industry
5.7.1
Overall Size and Distribution
In February of 2008, there were 1,830 refractory makers in China, employing 0.31 million people, with the annual
cumulative increase in the number of employees being 22.7%. The number of loss-incurring enterprises was 266, whose total
losses reached RMB94 million. The assets of the whole industry totaled RMB74.666 billion, with the cumulative increase being
25.55%.
Between January and November of 2008, the number of refractory makers in China was 1,918, employing 0.29 million
people on average, with the annual cumulative increase in the number of employees being 4.39%. The number of loss-incurring
enterprises fell to 185, whose total losses reached RMB234 million. The assets of the whole industry totaled RMB88.66 billion,
•59•
China Business Guide
with the cumulative increase being 20.22%.
Time
Table 5-40 Size of refractory industry
Unit: 10,000 people, RMB100 million, %
Number of Annual average Cumulative increase Number of lossCumulative increase
Total loss Total assets
enterprises employment
in employment incurring enterprises
in total assets
2007-02
1599
24.06
5.09
217
0.51
573.54
15.16
2007-05
1630
24.80
4.54
197
1.20
616.54
17.7
2007-08
1651
25.22
3.3
189
1.90
670.22
17.54
2007-11
1677
26.24
4.6
175
1.94
707.80
19.24
2008-02
1830
30.76
22.7
266
0.94
746.66
25.55
2008-05
1876
28.46
9.36
227
1.37
824.02
26.84
2008-08
1896
28.56
7.81
192
1.86
862.14
22.75
2008-11
1918
28.62
4.39
185
2.34
886.57
20.22
Source: China Building Materials Federation
5.7.2
Output and Sales
In February of 2008, the gross output value of China’s refractory industry totaled RMB21.79 billion, up 50.57% year on
year. The total sales of the industry reached RMB18.95 billion, up 45.94% over the same period of 2007. The sales/output ratio
was up to 86.99%. In the month, the finished products of the industry totaled RMB5.79 billion, up 21.11% year on year.
Between January and November of 2008, the gross output value of China’s refractory industry totaled RMB154.34 billion,
up 43.08% year on year. The total sales of the industry reached RMB139.64 billion, up 39.60% over the same period of 2007.
The sales/output ratio was up to 90.47%. In November, the finished products of the industry totaled RMB7.71 billion, up
22.50% year on year.
Time
Table 5-41 Output and sales of refractory industry
Unit: RMB100 million, %
Total industrial Year-on-year Total industrial Year-on-year Sales/output
Finished
output value
growth
sales
growth
ratio
products
Year-on-year
growth
2008-02
217.9
50.57
189.5
45.94
86.99
57.9
21.11
2008-05
649.9
51.45
570.9
46.73
87.84
64.7
19.72
2008-08
1093.7
44.88
1001.7
44.84
91.59
75.4
29.92
2008-11
1543.4
43.08
1396.4
39.60
90.47
77.1
22.50
Source: China Building Materials Federation
5.7.3
Cost
In February of 2008, the product sales cost of China’s refractory industry stood at RMB 15.24 billion, up 44.12% year on
year. The product sales expenses reached RMB15.24 billion, up 44.12% year on year. The overhead expenses amounted to
RMB678 million, up 37.62% over the same period of 2007. The financial expenses totaled RMB310 million, up 127.29% over
the same period of 2007.
Between January and November of 2008, the product sales cost of China’s refractory industry stood at RMB114.046 billion,
up 39.67% year on year. The product sales expenses reached RMB114.046 billion, up 39.67% year on year. The overhead
expenses amounted to RMB4.34 billion, up 38.00% over the same period of 2007. The financial expenses totaled RMB1.363
billion, up 38.19% over the same period of 2007.
Time
Table 5-42 Cost of refractory industry
Product sales Year-on-year Product sales Year-on-year
cost
growth
expenses
growth
Unit: RMB100 million, %
Overhead Year-on-year Financial
expenses
growth
expenses
Year-on-year
growth
2008-02
152.35
44.12
152.35
44.12
6.78
37.62
3.10
127.29
2008-05
463.82
44.19
463.82
44.19
18.21
33.92
5.79
51.78
•60•
The Building Materials Industry
2008-08
814.72
43.04
814.72
43.04
30.65
37.98
10.03
50.33
2008-11
1140.46
39.67
1140.46
39.67
43.41
38.00
13.63
38.19
Source: China Building Materials Federation
5.7.4
Profit
In February of 2008, the total profit of China’s refractory industry reached RMB1.617 billion, up 76.18% over the same
period of 2007. In the month, the number of loss-incurring enterprises in this industry reached 266, with the percentage of
loss-incurring enterprises being up to 14.54%. The total losses of enterprises in the industry amounted to RMB94 million, up
81.90% year on year.
Between January and November of 2008, the total profit of China’s refractory industry stood at RMB11.477 billion, up
40.28% over the same period of 2007. The number of loss-incurring enterprises dropped to 185, but the percentage of
loss-incurring enterprises was still up to 9.65%. The total losses of these enterprises amounted to RMB234million, up 20.39%
year on year.
Time
Table 5-43 Profit of refractory industry
Unit: RMB100 million, %
Year-on-year Number of loss-incurring
Percentage of
Total profit
Total loss
growth
enterprises
loss-incurring enterprises
Year-on-year
growth
2008-02
16.17
76.18
266
14.54
0.94
81.90
2008-05
47.59
87.84
227
12.10
1.37
14.98
2008-08
80.09
69.17
192
10.13
1.86
-1.93
2008-11
114.77
40.28
185
9.65
2.34
20.39
Source: China Building Materials Federation
5.7.5
Product Yield
In 2008, China’s yield of refractory totaled 44.18 million tons, up 14.3% year on year. The growth rate in the first half of
2008 was significantly higher than that in the second half of the year, which stood at 24% and 17% respectively. The growth rate
in December was the lowest.
Table 5-44 Total yield and year-on-year growth
Time
Output
2008-01
344
Cumulative increase
Unit: 10,000 tons, %
Time
Output
Cumulative increase
2008-07
2558
19.7
2008-02
673
24.3
2008-08
2911
17.4
2008-03
1080
25.2
2008-09
3437
20.9
2008-04
1489
24.7
2008-10
3787
18.7
2008-05
1930
25.5
2008-11
4114
16.7
2008-06
2392
25.4
2008-12
4418
14.3
Source: China Building Materials Federation
5.7.6
Industrial Operational Performance
In February of 2008, the product sales of China’s refractory industry grew by 36.66%, which represented a year-on-year
decline of 18.61%. The capital maintenance and appreciation rate was 133.2%, up 13.14% over the same period of 2007. The
asset-liability ratio stood at 53.15%, down 4.32% year on year. The net amount of receivables grew by 18.37%, down 0.49%
over the same period of 2007.
Between January and November of 2008, the product sales of China’s refractory industry grew by 36.21%, down 11.49%
year on year. The capital maintenance and appreciation rate was 123.82%, representing a year-on-year decrease of 1.82%. The
asset-liability ratio was 51.07%, down 2.95% year on year. The net amount of receivables grew by 22.02%, up 104.08% over the
same period of 2007.
•61•
China Business Guide
Table 5-45 Industrial operational performance
Unit: RMB100 million, %
Growth rate Year-on-year Capital maintenance Year-on-year Asset-liability Year-on-year Increase in net Year-on-year
of sales
growth and appreciation rate growth
ratio
growth
receivables
growth
Time
2007-02
45.04
4.04
117.73
-3.80
55.55
0.13
18.28
7.78
2007-05
39.04
9.76
120.22
3.92
55.51
-0.43
19.78
33.56
2007-08
37.79
4.42
122.75
1.37
53.96
-1.69
12.06
-53.24
2007-11
40.91
9.33
126.11
3.16
52.62
-3.31
10.79
-49.39
2008-02
36.66
-18.61
133.2
13.14
53.15
-4.32
18.37
0.49
2008-05
41.95
7.45
134.56
11.93
52.32
-5.75
18.48
-6.57
2008-08
41.82
10.66
124.33
1.29
52.45
-2.80
19.63
62.77
2008-11
36.21
-11.49
123.82
-1.82
51.07
-2.95
22.02
104.08
Source: China Building Materials Federation
5.7.7
Region-specific Production and Sales
In 2008, China’s refractory products were mainly produced in Liaoning and Henan provinces whose gross output value
amounted to RMB47.62 million and 52.54 million, accounting for 30.85% and 34.04% of the national total respectively. The
total output value of the two provinces took up 65% of China’s national total, indicating that China’s refractory makers are
highly concentrated.
In 2008, Liaoning and Henan provinces ranked the top in China in terms of sales value of industry, whose industrial sales
reached RMB36.41 million and 50.78 million, accounting for 26.07% and 36.37% of the national total respectively. The total
gross industrial sales of the two provinces took up nearly 62% of the national total.
In 2008, the sales/output ratio of all the provinces was 90.47%. Amongst, the sales/output ratio of Fujian was the highest at
140.63%. In addition, the sales/output ratio of Beijing, Tianjin, Inner Mongolia, Chongqing, Yunnan, Gansu and Qinghai was
more than 100%, while that of Heilongjiang ranked the bottom in China at only 66.28%.
Table 5-46 Region-specific output and sales
Region
Gross industrial output value
Unit: RMB100 million, %
Sales value of industry
Sales/output ratio
Actual value
Proportion
Actual value
Proportion
Beijing
17.1
1.11
18.5
1.32
108.21
Tianjin
8.7
0.57
8.9
0.64
102.47
Hebei
49.6
3.21
46.3
3.32
93.51
Shanxi
17.4
1.12
15.7
1.13
90.65
Inner Mongolia
5
0.32
5
0.36
100.53
Liaoning
476.2
30.85
364.1
26.07
76.46
Jilin
11
0.71
10.5
0.76
96.15
Heilongjiang
0.3
0.02
0.2
0.02
66.28
Shanghai
18.5
1.20
18.3
1.31
99.03
Jiangsu
99.2
6.43
96.2
6.89
96.91
Zhejiang
44.2
2.86
43.3
3.10
97.98
Anhui
8.3
0.54
7.6
0.54
90.71
Fujian
5.4
0.35
7.7
0.55
140.63
Jiangxi
9.4
0.61
9.3
0.67
98.45
Shandong
152.5
9.88
149.1
10.68
97.72
Henan
525.4
34.04
507.8
36.37
96.64
Hubei
18
1.17
13.5
0.97
75.08
Hunan
24
1.55
23.8
1.70
99.12
•62•
The Building Materials Industry
Guangdong
12.6
0.81
10.9
0.78
86.36
Guangxi
1.4
0.09
1
0.07
72.90
Chongqing
7.9
0.51
9.6
0.69
121.48
Sichuan
23.1
1.50
20.6
1.48
89.25
Guizhou
2.5
0.16
2.3
0.16
90.65
Yunnan
2.8
0.18
3.4
0.24
121.85
Shaanxi
1.3
0.09
0.9
0.07
71.96
Gansu
0.1
0.01
0.1
0.01
123.69
Qinghai
0.4
0.03
0.4
0.03
101.16
Ningxia
0.1
0.01
0.1
0.01
98.35
Xinjiang
0.8
0.05
1.1
0.08
135.85
Total
1543.4
100.00
1396.4
100.00
90.47
Source: China Building Materials Federation
5.8 Coating and Similar Product Industry
5.8.1
Overall Size and Distribution
In February of 2008, there were 3,494 coating and similar product makers in China, employing 0.34 million people, with
the annual cumulative increase in the number of employees being 8.51%. The number of loss-incurring enterprises was 826,
whose total losses reached RMB442 million. The assets of the whole industry totaled RMB176.21 billion, with the cumulative
increase being 19.78%.
Between January and November of 2008, the number of coating and similar product makers in China was 3,670, employing
0.3632 million people on average, with the annual cumulative increase in the number of employees being 4.62%. The number of
loss-incurring enterprises fell to 570, whose total losses reached RMB1.67 billion. The assets of the whole industry totaled
RMB199.92 billion, with the cumulative increase being 11.06%.
Time
Table 5-47 Size of coating and similar product industry Unit: 10,000 people, RMB100 million, %
Number of Annual average Cumulative increase in Number of lossCumulative increase
Total loss Total assets
enterprises employment
employment
incurring enterprises
in total assets
2007-02
3271
31.30
6.13
711
2.61
1476.95
20.68
2007-05
3362
32.69
5.42
578
4.35
1588.32
21.12
2007-08
3400
33.69
7.14
502
6.20
1680.21
19.87
2007-11
3462
34.28
7.01
460
9.12
1788.70
21.95
2008-02
3494
34.30
8.51
826
4.42
1762.13
19.78
2008-05
3574
35.09
7.25
666
8.54
1906.25
19.59
2008-08
3619
35.76
5.91
557
11.40
2000.35
18.92
2008-11
3670
36.32
4.62
570
16.73
1999.19
11.06
Source: China Building Materials Federation
5.8.2
Output and Sales
In February of 2008, the gross output value of China’s coating and similar product industry totaled RMB35.76 billion, up
18.46% year on year. The total sales of the industry reached RMB34.22 billion, up 21.46% over the same period of 2007. The
sales/output ratio was up to 95.70%. In the month, the finished products of the industry totaled RMB14.31 billion, up 17.85%
year on year.
Between January and November of 2008, the gross output value of China’s coating and similar product industry totaled
RMB263.48 billion, up 17.93% year on year. The total sales of the industry reached RMB254.18 billion, up 17.51% over the
•63•
China Business Guide
same period of 2007. The sales/output ratio was up to 96.47%. In November, the finished products of the industry totaled
RMB17.90 billion, up 19.57% year on year.
Table 5-48 Output and sales of coating and similar product industry
Unit: RMB100 million, %
Total industrial Year-on-year Total industrial Year-on-year Sales/output
Finished
Year-on-year
Time
output value
growth
sales
growth
ratio
products
growth
2008-02
357.6
18.46
342.2
21.46
95.70
143.1
17.85
2008-05
1098.6
21.03
1064.8
22.24
96.92
162.1
22.11
2008-08
1913.7
21.30
1858.1
21.19
97.09
177.5
27.19
2008-11
2634.8
17.93
2541.8
17.51
96.47
179.0
19.57
Source: China Building Materials Federation
5.8.3
Cost
In February of 2008, the product sales cost of China’s coating and similar product industry stood at RMB 28.61 billion, up
22.38% year on year. The product sales expenses reached RMB1.601 billion, up 25.12% year on year. The overhead expenses
amounted to RMB1.75 billion, up 22.46% over the same period of 2007. The financial expenses totaled RMB336 million, up
42.25% over the same period of 2007.
Between January and November of 2008, the product sales cost of China’s coating and similar product industry stood at
RMB211.334 billion, up 17.65% year on year. The product sales expenses reached RMB12.42 billion, up 32.55% year on year.
The overhead expenses amounted to RMB11.79 billion, up 21.86% over the same period of 2007. The financial expenses totaled
RMB2.31 billion, up 19.73% over the same period of 2007.
Time
2008-02
2008-05
2008-08
2008-11
Table 5-49 Cost of coating and similar product industry
Unit: RMB100 million, %
Product sales Year-on-year Product sales Year-on-year Overhead Year-on-year Financial
cost
growth
expenses
growth
expenses
growth
expenses
286.14
22.38
16.01
25.12
17.53
22.46
3.36
891.40
22.26
50.02
31.94
49.37
24.66
10.16
1552.91
21.27
87.16
34.91
81.62
21.61
16.38
2113.34
17.65
124.16
32.55
117.89
21.86
23.06
Year-on-year
growth
42.25
35.70
19.70
19.73
Source: China Building Materials Federation
5.8.4
Profit
In February of 2008, the total profit of China’s coating and similar product industry reached RMB1.628 billion, up 2.33%
over the same period of 2007. In the month, the number of loss-incurring enterprises in this industry reached 826, with the
percentage of loss-incurring enterprises being up to 23.64%. The total losses of enterprises in the industry amounted to RMB442
million, up 69.58% year on year.
Between January and November of 2008, the total profit of China’s coating and similar product industry stood at
RMB14.420 billion, up 2.71% over the same period of 2007. The number of loss-incurring enterprises dropped to 570, but the
percentage of loss-incurring enterprises was still up to 15.53%. The total losses of these enterprises amounted to RMB1.673
billion, up 83.35% year on year.
Time
2008-02
2008-05
2008-08
2008-11
Table 5-50 Profit of coating and similar product industry
Unit: RMB100 million, %
Year-on-year Number of loss-incurring Percentage of loss-incurring
Total profit
Total loss
growth
enterprises
enterprises
16.28
2.33
826
23.64
4.42
57.98
11.79
666
18.63
8.54
106.22
11.74
557
15.39
11.40
144.20
2.71
570
15.53
16.73
Source: China Building Materials Federation
•64•
Year-on-year
growth
69.58
96.36
83.91
83.35
The Building Materials Industry
5.8.5
Product Yield
In 2008, China’s yield of graphite and other non-metal mineral products totaled 16.37 million tons, up 13.6% year on year.
The growth rate in the year remained flat, which hit the year’s lowest level in December.
Table 5-51 Total yield and year-on-year growth of graphite and other non-metal mineral products
Unit: 10,000 tons, %
Time
Output
2008-01
115
2008-02
220
2008-03
Cumulative increase
Time
Output
Cumulative increase
2008-07
910
16.6
18.6
2008-08
1054
16.6
346
17.9
2008-09
1212
16.9
2008-04
479
15.7
2008-10
1356
16.0
2008-05
614
16.3
2008-11
1540
18.0
2008-06
766
16.2
2008-12
1637
13.6
Source: China Building Materials Federation
5.8.6
Industrial Operational Performance
In February of 2008, the product sales of China’s coating and similar product industry grew by 22.51%, which represented
a year-on-year decline of 32.62%. The capital maintenance and appreciation rate was 116.64%, up 2.05% over the same period
of 2007. The asset-liability ratio stood at 53.7%, down 0.76% year on year. The net amount of receivables grew by 15.49%,
down 43.65% over the same period of 2007.
Between January and November of 2008, the product sales of China’s coating and similar product industry grew by 17.83%,
down 33.35% year on year. The capital maintenance and appreciation rate was 113%, representing a year-on-year decrease of
7.48%. The asset-liability ratio was 53.72%, down 1.18% year on year. The net amount of receivables grew by 0.42%, down
98.26% over the same period of 2007.
Time
Table 5-52 Industrial operational performance
Unit: RMB100 million, %
Growth rate Year-on-year Capital maintenance Year-on-year Asset-liability Year-on-year Increase in net Year-on-year
of sales
growth
and appreciation rate
growth
ratio
growth
receivables
growth
2007-02
33.41
46.99
118.8
2.11
54.11
2.60
27.49
50.63
2007-05
29.92
17.52
118.68
-0.34
55.12
1.92
25.27
32.23
2007-08
29.51
5.96
119.59
1.65
54.87
-0.27
25.63
18.44
2007-11
26.75
-1.22
122.13
2.28
54.36
-0.64
24.1
11.99
2008-02
22.51
-32.62
121.23
2.05
53.7
-0.76
15.49
-43.65
2008-05
23.59
-21.16
116.64
-1.72
55.64
0.94
15.88
-37.16
2008-08
23.9
-19.01
119.23
-0.30
54.73
-0.26
11.32
-55.83
2008-11
17.83
-33.35
113
-7.48
53.72
-1.18
0.42
-98.26
Source: China Building Materials Federation
5.8.7
Region-specific Production and Sales
In 2008, China’s coating and similar products were mainly produced in Guangdong, Shanghai, Jiangsu and Zhejiang.
Amongst, the gross output value of Guangdong was RMB55.35 million, ranking the first in China and accounting for 21.01% of
the national total. The gross output value of Shanghai, Jiangsu and Zhejiang amounted to RMB32.10 million, 46.16 million and
36.46 million, accounting for 12.18%, 17.52% and 13.84% of the national total respectively. The total output value of the four
provinces took up 64% of China’s national total.
In 2008, Guangdong, Shanghai, Jiangsu and Zhejiang ranked the top in China in terms of sales value of industry, whose
industrial sales reached RMB53.52 million, 32.03 million, 44.25 million and 34.58 million, accounting for 21.06%, 12.60%,
•65•
China Business Guide
17.41% and 13.61% of the national total respectively. The total gross industrial sales of the four provinces took up nearly 67% of
the national total.
In 2008, the sales/output ratio China’s coating and similar product industry was 96.47%. Amongst, the sales/output ratio of
Hainan was the highest at 113.99%. In addition to Hainan, the sales/output ratio of Beijing, Shanxi, Shandong, Chongqing and
Xinjiang was more than 100%, while that of Guangxi and Ningxia was only 64.51% and 66.67% respectively, far lower than the
national average.
Table 5-53 Region-specific output and sales
Region
Gross industrial output value
Unit: RMB100 million, %
Sales value of industry
Sales/output ratio
Actual value
Proportion
Actual value
Proportion
Beijing
34.9
1.32
39.7
1.56
113.89
Tianjin
101.8
3.86
100.3
3.95
98.54
Hebei
98.5
3.74
97.6
3.84
99.04
Shanxi
13
0.49
13.2
0.52
101.19
Inner Mongolia
18.1
0.69
17.2
0.68
94.86
Liaoning
81.9
3.11
79
3.11
96.55
Jilin
14.3
0.54
12.4
0.49
86.45
Heilongjiang
2.4
0.09
2.2
0.09
90.93
Shanghai
321
12.18
320.3
12.60
99.80
Jiangsu
461.6
17.52
442.5
17.41
95.87
Zhejiang
364.6
13.84
345.8
13.61
94.85
Anhui
28.7
1.09
25.7
1.01
89.72
Fujian
62
2.35
60.3
2.37
97.35
Jiangxi
18.4
0.70
18.1
0.71
98.30
Shandong
171.4
6.50
171.5
6.75
100.07
Henan
84
3.19
76.5
3.01
90.97
Hubei
28.9
1.10
26.8
1.06
92.84
Hunan
75.1
2.85
69.9
2.75
93.13
Guangdong
553.5
21.01
535.2
21.06
96.71
Guangxi
21.7
0.82
14
0.55
64.51
Hainan
0.4
0.01
0.4
0.02
113.99
Chongqing
21.9
0.83
22.9
0.90
104.76
Sichuan
36.8
1.40
32.8
1.29
89.16
Guizhou
0.4
0.02
0.4
0.02
99.97
Yunnan
3
0.11
2.9
0.12
98.48
Shaanxi
6.3
0.24
5.3
0.21
84.37
Gansu
6.3
0.24
5.4
0.21
86.16
Ningxia
2.7
0.10
1.8
0.07
66.67
Xinjiang
1.4
0.05
1.4
0.06
101.39
Total
2634.8
100.00
2541.8
100.00
96.47
Source: China Building Materials Federation
•66•
The Building Materials Industry
6 Chapter 6 Development of China’s Building Material Industry in Recent Five
Years
6.1 Cement, Lime and Gypsum Industry
Cement industry is one of the fundamental industries in national economy, whose upstream industries include sand stone,
calcium carbonate and other chemicals, chemical boiler, stone ore, various mining and environmental protection equipment,
heavy-duty transportation, railroad, grinding and packing machinery and paper bag industries. Downstream, it affects real estate,
construction, public works and decoration industries.
As the economic develops and investment in real estate, road and other infrastructure increases, the demand of cement gets
intensified. As one of the fundamental industries, cement industry still plays an important role. In the future, as the urban
investment in fixed assets and real estate development accelerates, the construction of new countryside and urban infrastructure
will be enhanced. Consequently, the gross output value of the cement industry will continue to grow, and the proportion in GDP
will increase, but by a small margin. The cement industry will play an important role in national role, and its position as a
fundamental industry will remain firm.
The cement industry is a “high energy consumption, high pollution and low benefit” industry. As the government intensifies
policies on energy conservation and consumption reduction, the industry should actively develop advanced technologies,
eliminate outdated production capacity, extend its industrial chain, and vigorously develop processing business. It should also
carry out M&A to increase the industrial concentration, improve the industrial collaboration and bring itself onto the track of
technology advance and independent innovation.
The number of cement, lime and gypsum makers in China grew by a small margin from 5,245 in 2004 to 5,471 in
November of 2008. But the number of employees dropped by a large margin from 1.45 million in 2004 to 1.166 million in 2008.
The total industrial assets went up by a large margin from RMB373.1 billion in 2004 to 587.7 billion in November of 2008. The
gross output value and sales value of industry almost doubled from RMB245.3 billion and 233.8 billion in 2004 to RMB456.1
billion and 439.9 billion respectively in November of 2008. At the same time, the total profit also increased rapidly, almost
doubling from RMB13.8 billion in 2004 to 27.0 billion in 2008. The decline of employees engaged and the sharp increase in
output/sales and profit signified the considerable improvement in per capita productivity.
Table 6-1 Growth in size of cement, lime and gypsum industry 2004-2008
Item
2008 (Jan.-Nov.)
2007
2006
2005
Number of enterprises
5471
5552
5510
5410
Annual average employment (10,000 people)
116.6
125.0
129.7
137.1
Total assets (RMB100 million)
5877
5064
4503
4072
Gross industrial output value (RMB100 million)
4561
3742
3448
2750
Sales value of industry (RMB100 million)
4399
3619
3313
2670
Total profit (RMB100 million)
270
212
156.6
83
2004
5245
145.3
3731
2453
2338
138
Source: China Building Materials Federation
From 2004 to 2008, the gross output value of cement industry grew from RMB240.1 billion in 2004 to RMB 438.1 billion
in 2008, up 82.5% in 5 years. The gross output value of lime and gypsum industry grew for nearly 2.6 times from RMB5.2
billion in 2004 to 17.9 billion in 2008.
Table 6-2 Gross output value of cement, lime and gypsum industry 2004-2008
Unit: RMB100 million
Item
2008
2007
2006
2005
2004
Cement
4381
3621
3341
2684
2401
Lime and gypsum
179
122
107
66
52
Source: China Building Materials Federation
•67•
China Business Guide
The product sales cost of the cement, lime and gypsum industry grew from RMB194.0 billion in 2004 to RMB373.2 billion
in November of 2008, maintaining a year-on-year growth rate of more than 20%. The overhead expenses grew from RMB14.3
billion in 2004 to 17.6 billion in November of 2008. Except in a few years when they declined somewhat, overhead expenses
increased during this period. The financial expenses rose from RMB5.6 billion in 2004 to 9.0 billion in November of 2008, up
80% in five years.
Table 6-3 2004-2008 Cost structure of cement, lime and gypsum industry 2004-2008
Item
2008 (Jan.-Nov.)
2007
2006
2005
Product sales cost (RMB100 million)
3732
3057
2834
2313
Year-on-year growth (%)
22.11
7.83
22.51
19.24
Overhead expenses (RMB100 million)
176
154
154
139
Year-on-year growth (%)
14.54
-0.60
11.35
-2.67
Financial expenses (RMB100 million)
90
78
77
62
Year-on-year growth (%)
15.79
1.56
23.19
11.84
2004
1940
26.82
143
15.23
56
12.00
Source: China Building Materials Federation
In 2004-2008, the asset growth rate of the cement industry maintained a fairly fast growth rate, which was up to 12.18% in
2007. The asset-liability ratio remained almost flat, which was 61.99% in 2004 and around 60% in the following years. In 2008,
the profit was quite lower, compared with that in 2006 and 2007. The gross output value of the cement, lime and gypsum
industry still maintained a fairly fast growth rate, which was quite significant in 2008 at 21.02%. The growth rate of annual
average employment maintained a stable decline which was very fast at 7.05% in 2008.
Table 6-4 Benefit growth of cement industry 2004-2008
Unit: %
2008 (Jan.-Nov.)
2007
2006
Asset growth rate
16.01
12.18
10.33
Asset-liability ratio
59.48
60.45
61.66
Profit growth rate
30.80
64.66
92.58
Growth rate of gross industrial output value
21.02
0.08
24.49
Growth rate of annual average employment
-7.05
-3.92
-6.07
Item
2005
0.09
62.83
-38.69
11.78
-5.65
2004
---61.99
21.50
---------
Source: China Building Materials Federation
In 2004-2008, the asset growth rate of the lime and gypsum industry maintained a fairly fast growth, which was up to
36.26% in 2007. The asset-liability ratio remained almost flat, which was 54.36% in 2004 and around 50% in the following
years. In 2008, the profit grew quite significantly by 52.13%. The gross industrial output value of the industry maintained a
fairly fast growth, which was quite significant at 47.16% in 2008. The growth rate of annual average employment maintained a
stable rise, but the margin in 2008 was much smaller than in 2006 and 2007.
Table 6-5 Benefit growth of lime and gypsum industry 2004-2008
Item
2008 (Jan.-Nov.)
2007
2006
Asset growth rate
18.92
36.26
37.51
Asset-liability ratio
54.98
52.47
49.15
Profit growth rate
52.13
-2.75
83.56
Growth rate of gross industrial output value
47.16
13.54
61.57
Growth rate of annual average employment
1.57
9.31
25.41
Unit: %
2005
0.28
51.24
54.54
27.73
-6.02
2004
----54.36
59.29
----------
Source: China Building Materials Federation
The list of top 10 cement makers in China in 2007 is as follows:
Ranking Region
1
2
3
Zhejiang
Guangdong
Hunan
Table 6-6 Top 10 cement makers in China 2007
Multiple of average Multiple of industrial Market
Company
enterprise revenues average pre-tax profits share (%)
Zhejiang Jianfeng Group Co., Ltd.
12.12
13.08
0.24
Guangdong Taipai Group Co., Ltd.
10.76
25.80
0.21
Hunan Shaofeng Cement Group Co., Ltd.
9.89
4.02
0.19
•68•
The Building Materials Industry
4
5
6
7
8
9
10
Anhui
Chizhou Conch Cement Co., Ltd.
Zhejiang Zhejiang Shanying Building Material Group Co., Ltd.
Jiangsu
Jiangsu Shuanglong Group Co., Lt.
Anhui
Anhui Ningguo Cement Factory
Zhejiang
Ningbo Conch Cement Co., Ltd.
Jiangsu
Pangu Cement Group Co., Ltd.
Guangdong
Yun’an Hengdali Cement Product Co., Ltd.
9.80
9.78
9.73
9.38
9.36
9.28
9.06
43.70
23.33
13.91
38.41
10.23
55.94
26.88
0.19
0.19
0.19
0.18
0.18
0.18
0.18
Source: www.paihang360.com
6.2 Cement and Gypsum Product Industry
In recent, years, China’s cement and gypsum product industry grew rapidly. The product yield increased year after year.
Industrial policies encouraged the industry to make high-technology products, and investment in new projects kept rising.
In 2004-2008, the number of cement and gypsum product makers grew from 2,309 in 2004 to 3,926 in November of 2008.
The total industrial assets rose from RMB94.2 billion in 2004 to 217.6 billion in November of 2008. The gross output value and
sales value of industry grew from RMB90.5 billion and 83.5 billion in 2004 to RMB255.2 billion and 242.2 billion in November
of 2008, up 1.833 and 1.88 times respectively. The total profit rose from RMB3.4 billion in 2004 to 11.67 billion in November of
2008.
Table 6-7
Growth in size of cement and gypsum product industry 2004-2008
2008 (Jan.-Nov.)
2007
2006
2005
2004
Number of enterprises
Item
3926
3318
2916
2680
2309
Annual average employment (10,000 people)
47.16
41.15
37.72
35.41
33.50
Total assets (RMB100 million)
2176
1772
1471
1260
942
Gross industrial output value (RMB100 million)
2552
1823
1467
1166
905
Sales value of industry (RMB100 million)
2422
1731
1398
1099
835
Total profit (RMB100 million)
116.7
84
68
47
34
Source: China Building Materials Federation
In 2004-2008, the gross output value of the cement product industry grew from RMB59.2 billion in 2004 to RMB178.4
billion in 2008, up 2.01 times in 5 years. The gross output value of the concrete structure industry rose from RMB17.2 billion in
2004 to 32.0 billion in 2008, up 3.57 times in 5 years. The gross output value of asbestos-cement product industry and light
building material industry grew from RMB1.4 billion and 9.4 billion in 2004 to 9.8 billion and 27.7 billion respectively in 2008.
The gross output value of other cement product industry rose for 1.33 times from 2004 to 2008.
Table 6-8 Gross output value of cement and gypsum product industry 2004-2008
Item
Unit: RMB100 million
2008
2007
2006
2005
2004
Cement products
1784
1273
1059
866
592
Concrete structure
320
240
183
164
172
Asbestos-cement products
98
81
54
19
14
Light building materials
277
182
140
92
94
Other cement products
74
47
32
24
33
Source: China Building Materials Federation
The product sales cost of cement product industry grew from RMB71.7 billion in 2004 to 208.9 billion in
January-November of 2008 at a large year-on-year margin. The overhead expenses almost doubled from RMB4.4 billion in 2004
to 8.4 billion in January-November of 2008. The financial expenses amounted to RMB2.3 billion in January-November of 2008,
which reported a year-on-year growth of 39.39% in the year, and grew more than twice from RMB900 million in 2004.
•69•
China Business Guide
Table 6-9 Cost structure of cement and gypsum product industry 2004-2008
2008 (Jan.-Nov.)
2007
2006
2005
2004
Product sales cost (RMB100 million)
Item
2089
1492
1202
943
717
Year-on-year growth (%)
33.40
24.15
27.47
31.52
54.66
84
68
65
57
44
23.98
4.34
13.68
30.62
32.65
23
17
14
12
9
39.39
16.32
17.44
38.44
41.14
Overhead expenses (RMB100 million)
Year-on-year growth (%)
Financial expenses (RMB100 million)
Year-on-year growth (%)
Source: China Building Materials Federation
In 2004-2008, the asset growth rate of the cement product industry remained stable, which was up to 51.35% in 2005 and
22.27% in 2008. The asset-liability ratio remained stable, which was 62.69% in 2004 and around 65% in the following years.
The financial crisis and the economic downturn had a negative impact on the cement product industry whose profit growth rate
was 31.94% in 2008, representing a considerable decline over 2007. The gross output value of the cement product industry grew
by 46.29% in 2005, and 40.15% in January-November of 2008. The growth rate of annual average employment kept rising year
after year in recent years, which was 12.47% in 2005 and 15.87% in 2008.
Table 6-10 Benefit growth of cement product industry 2004-2008
Item
Unit: %
2008 (Jan.-Nov.)
2007
2006
2005
2004
Asset growth rate
22.27
18.77
17.81
51.35
------
Asset-liability ratio
64.34
65.02
64.88
64.12
62.69
Profit growth rate
31.94
47.79
31.79
14.53
15.54
Growth rate of gross industrial output value
40.15
20.23
22.45
46.29
------
Growth rate of annual average employment
15.87
8.68
5.46
12.47
------
Source: China Building Materials Federation
In 2004-2008, the asset growth rate of the concrete structure industry remained stable, from a negative value in 2005 to a
positive value in 2006, and further up to 22.7% in 2008. The asset-liability ratio remained flat, which stood at 63.58% in 2004
and around 65% in the following years. The financial crisis and the economic downturn had a negative impact on the concrete
structure industry whose profit growth rate was 25.24% in 2008, representing a significant decline over 2007. The growth rate of
gross output value of the industry was -4.29% in 2005, which rose to 33.11% in January-November of 2008. The growth rate of
annual average employment stood at -14.46% in 2005 and 6.92% in 2008.
Table 6-11 Benefit growth of concrete structure industry 2004-2008
Item
Unit: %
2008 (Jan.-Nov.)
2007
2006
2005
2004
Asset growth rate
24.77
21.61
7.68
-1.14
------
Asset-liability ratio
62.94
64.58
64.74
66.73
63.58
Profit growth rate
25.24
66.86
32.02
41.27
49.59
Growth rate of gross industrial output value
33.11
31.34
11.18
-4.29
------
Growth rate of annual average employment
6.92
3.25
6.05
-14.46
------
Source: China Building Materials Federation
In 2004-2008, the asset growth rate of the asbestos-cement product industry remained stable, which was 18.75% in 2006
and 28.38% in 2008. The asset-liability ratio reported a stable decline from 58.48% in 2004 to 43.04% in January-November of
2008. The financial crisis and economic downturn had a negative impact on the asbestos-cement product industry whose profit
growth rate was 18.60% in 2008, down more than 100 percentage points over 2007. The growth rate of gross output value of the
asbestos-cement product industry was 37.56% in 2005, which grew significantly in 2006 and 2007, and then fell somewhat in
2008 to 20.72%. The growth rate of annual average employment stood at 4.29% in 2005, which stood dropped to -0.63% in
2008, the first negative increase in five years.
•70•
The Building Materials Industry
Table 6-12 Benefit growth of asbestos-cement product industry 2004-2008
Item
Unit: %
2008 (Jan.-Nov.)
2007
2006
2005
2004
Asset growth rate
28.38
22.68
18.75
13.44
------
Asset-liability ratio
43.04
44.01
65.57
63.63
58.48
Profit growth rate
18.60
134.69
133.03
121.27
17.88
Growth rate of gross industrial output value
20.72
51.45
174.90
37.56
------
Growth rate of annual average employment
-0.63
1.98
37.48
4.29
-----
Source: China Building Materials Federation
In 2004-2008, the asset growth rate of the light building material industry remained fairly fast, which was 18.50% in 2006
and 23.72% in 2008. The asset-liability ratio remained stable, 50.20% in 2004, 52.70% in January-November of 2008 and
around 50% in recent five years. The profit growth rate of the industry registered a considerable decline in 2007 and 2008 over
2005 and 2006. The growth rate of gross output value of the industry was -2.15% in 2005, which rose significantly in
January-November of 2008 to 51.82%. The growth rate of annual average employment stood at 5.74% in 2005 and rose to
21.46% in 2008.
Table 6-13 Benefit growth of light building material industry 2004-2008
Item
Unit: %
2008 (Jan.-Nov.)
2007
2006
2005
2004
Asset growth rate
23.72
19.25
18.50
-1.36
-----
Asset-liability ratio
52.70
54.45
49.54
51.81
50.20
Profit growth rate
35.07
29.11
63.30
50.53
33.46
Growth rate of gross industrial output value
51.82
30.55
51.51
-2.15
------
Growth rate of annual average employment
21.46
14.41
5.52
5.74
------
Source: China Building Materials Federation
In 2004-2008, the asset growth rate of other cement product industry maintained stable growth, which was up to 86.11% in
2007 and down to 22.51% in 2008. The asset-liability ratio remained stable, which was 63.97% in 2004 and around 60% in the
following years. The profit rate of the industry was the highest at 229.04% in 2004 and over 100% in 2006, but declined to
around 50% in 2008. The growth rate of gross output value of the industry was -26.39% in 2005 and began to rise quite fast
from 2006. The growth rate of annual average employment stood at -14.98% in 2005 but rose to positive values in the following
years, and up to 45.46% in 2007.
Table 6-14 Benefit growth of other cement product industry 2004-2008
Item
Unit: %
2008 (Jan.-Nov.)
2007
2006
2005
2004
Asset growth rate
22.51
86.11
29.44
0
-----
Asset-liability ratio
64.60
53.28
57.27
57.83
63.97
Profit growth rate
49.59
34.39
101.09
56.95
229.04
Growth rate of gross industrial output value
56.39
47.14
33.30
-26.39
-----
Growth rate of annual average employment
14.31
45.46
6.21
-14.98
------
Source: China Building Materials Federation
The list of top 10 concrete structure makers in China in 2007 is as follows:
Table 6-15 Top 10 concrete structure makers in China 2007
Ranking
Region
Company
1
Beijing
China Railway Fashan Bridge Co., Ltd. Beijing
1.21
2
Shandong Zhaoyuan Beiguandong Cement Precast Component Factory
1.20
3
Shenzhen Shenzhen Antuoshan Investment & Development Co., Ltd.
1.19
4
5
Guangdong Tongguan Redland Precast Concrete Products Limited
Shandong Jinhe Precast Component Factory (Xuecheng District of Zaozhuang City)
•71•
Market share (%)
1.17
1.17
China Business Guide
6
Tianjin
7
Tianjin Jianhua Concrete Pile Co., Ltd.
1.13
Shandong Building Material Factory of Rongcheng Donglei Construction Engineering Co., Ltd.
8
Tianjin
9
Zhejiang
10
Beijing
1.04
Tianjin Pharmaceutical Group Jiaozuo Co., Ltd.
1.01
Zhejiang Huawei Building Material Co., Ltd.
1.00
Beijing Shunyi Houlu Cement Precast Component Factory
0.95
Source: www.paihang360.com
The list of top 10 asbestos-cement product makers in China in 2007 is as follows:
Table 6-15 Top 10 asbestos-cement product makers in China 2007
Ranking
Region
Company
Market share (%)
1
Henan
Zhengzhou Great Wall Special Cement Co., Ltd.
2.98
2
Hebei
Yutian Shunfa Industry, Trade and Material Co., Ltd.
2.70
3
Shandong
Zibo Boshan Chenguang Building Material Machinery Co., Ltd.
2.15
4
Hubei
Qichun Lihui Asbestos Tile Factory
2.02
5
Henan
Henan Xinmi Xinghua Building Material Factory
1.96
6
Anhui
Zongyang Zhongmingwu Building Material Co., Ltd.
1.91
7
Henan
Xizheng Tianzhongwang Cement Tile Co., Ltd.
1.84
8
Henan
Huazhuang Precast Component Factory (Xincai County)
1.65
9
Jiangsu
Teralong Building Materials (Suzhou) Co., Ltd.
1.55
10
Liaoning
Jinzhou Bolang Asbestos Cement Products Co. Ltd.
1.49
Source: www.paihang360.com
The list of top 10 light building material makers in China in 2007 is as follows:
Table 6-16 Top 10 light building material makers in China 2007
Ranking
Region
1
Shandong
2
Beijing
3
4
5
Company
Market share (%)
Xicun Integrated Processing Factory of Rushan
8.85
BNBM Public Limited Company
7.39
Shandong
Shandong Taihe Dongxin Stock Co., Ltd.
5.61
Henan
Zhengzhou Aircraft Equipment Co., Ltd.
4.41
Shandong
Shandong Longxin Building Material Co., Ltd.
3.80
6
Shandong
Hainan Shengao Industry Company Weihai Branch
2.06
7
Anhui
Knauf Plasterboard (Wuhu) Co., Ltd.
1.75
8
Chongqing
Chongqing Specialstar Suit Door Co., Ltd.
1.63
9
Chongqing
Chongqing Jiangbei Special Building Materials Co., Ltd.
1.62
Source: www.paihang360.com
The list of top 10 other cement product makers in China in 2007 is as follows:
Table 6-17 Top 10 other cement product makers in China 2007
Ranking
Region
Company
1
Shandong
Dezhou Jinghua Group (Dam) Cement Co., Ltd.
3.10
2
Shanghai
Shanghai Hangzhen Concrete Product Co., Ltd.
3.07
3
Jiangsu
Suzhou Hangda Cement Product Co., Ltd.
2.50
4
Liaoning
Dalian Jinhe Concrete Product Co., Ltd.
2.44
5
Henan
Labor Service Company of Qixian Power Supply Bureau
2.13
6
Guangzhou
Guangzhou Guangyi Trading Co., Ltd.
1.98
7
Shandong
Shanghe Tenglong Building Materials Co., Ltd.
1.84
8
Shanxi
Taiyuan Delong Superfine Powder Technology Co., Ltd.
1.78
•72•
Market share (%)
The Building Materials Industry
9
Tianjin
Tianjin Yicheng Concrete Mixing Co., Ltd.
1.72
10
Sichuan
Chengdu Yuanzhuo Commodity Concrete Co., Ltd.
1.37
Source: www.paihang360.com
6.3 Brick, Tile, Stone and Other Building Material Industry
The brick, tile, stone and other building material industry is also a pillar industry of the national economy, which exerts
important influence on real estate, construction, public buildings and other industries.
As a result of economic development and rising investment in real estate, public buildings and other infrastructure, the
demand of bricks and tiles gets intensified. As one of the fundamental industries, brick, tile and stone industry still plays an
important role. In the future, as the urban investment in fixed assets and real estate development accelerates, the construction of
new countryside and urban infrastructure will be enhanced. Consequently, the gross industrial output value of the brick, tile and
stone industry will continue to grow, but by a small margin. The industry will play an important role in national role, and its
position as a fundamental industry will remain firm.
The brick, tile and stone industry is highly energy-consuming. As the government intensifies policies on energy
conservation and consumption reduction, the industry should actively develop advanced technologies, eliminate outdated
production capacity, extend its industrial chain, and vigorously develop processing business. It should also carry out M&A to
increase the industrial concentration, improve the industrial collaboration and bring itself onto the track of technology advance
and independent innovation. Moreover, it should put emphasis on energy conservation and pollution emission reduction,
vigorously develop circular economy, and boost the construction of a resource-saving and environment-friendly industry.
In 2004-2008, the number of brick, tile, stone and other building material makers in China grew from 4,297 to 6,905.
Consequently, the number of employees grew from 0.723 million in 2004 to 0.94 million in 2008. The total industrial assets
went up from RMB108.1 billion in 2004 to 221.4 billion in November of 2008. The gross output value and sales rose from
RMB136.2 billion and 121.4 billion in 2004 to RMB412.9 billion and 389.8 billion respectively in November of 2008. At the
same time, the total profit increased for almost three times from RMB6.4 billion in 2004 to 22.8 billion in November of 2008.
Table 6-18 Growth in size of brick, tile, stone and other building material industry 2004-2008
2008 (Jan.-Nov.)
2007
2006
2005
2004
Number of enterprises
Item
6905
5938
5144
4563
4297
Annual average employment (10,000 people)
93.87
89.72
80.56
73.80
72.30
Total assets (RMB100 million)
2214
1791
1500
1270
1081
Gross industrial output value (RMB100 million)
4129
3113
2450
1820
1362
Sales value of industry (RMB100 million)
3898
2929
2284
1650
1214
Total profit (RMB100 million)
228
170
124
85
64
Source: China Building Materials Federation
In 2004-2008, the gross output value of the clay, brick, tile and building block industry grew from RMB22.2 billion in 2004
to RMB67.7 billion in 2008. The gross output value of the building ceramics industry rose from RMB54.3 billion in 2004 to
172.0 billion in 2008. The gross output value of building stone industry grew from RMB34.7 billion in 2004 to 105.5 billion in
2008. The gross output value of waterproof building material, insulating and soundproof material industries rose from RMB12.9
billion and 5.0 billion in 2004 to 28.3 billion and 16.2 billion in 2008 respectively. The gross output value of other building
material industry rose from RMB7.2 billion in 2004 to 23.2 billion in 2008.
Table 6-19 Gross output value of brick, tile, stone and other building material industry 2004-2008
Unit: RMB100 million
Item
2008
2007
2006
2005
2004
Clay, brick, tile and building block
677
487
362
249
222
Building ceramic
1720
1401
1164
768
543
Building stone
1055
766
640
493
347
•73•
China Business Guide
Waterproof building material
283
193
135
171
129
Insulating and soundproof material
162
99
72
52
50
Other building materials
232
168
126
87
72
Source: China Building Materials Federation
The product sales cost of brick, tile, stone and other building material industry grew from RMB121.4 billion in 2004 to
389.8 billion in January-November of 2008 for about 30% every year. The overhead expenses also grew stably from RMB4.4
billion in 2004 to 11.4 billion in January-November of 2008. The financial expenses rose from RMB1.6 billion in 2004 to 3.4
billion in 2008 at a fairly fast rate every year except in 2007. In January-November of 2008, the year-on-year growth rate of
product sales cost, overhead expenses and financial expenses was 32.87%, 27.00% and 23.87% respectively.
Table 6-20 Cost structure of brick, tile, stone and other building material industry 2004-2008
Item
2008 (Jan.-Nov.)
2007
2006
2005
2004
Product sales cost (RMB100 million)
3898
2928
2284
1650
1214
Year-on-year growth (%)
32.87
29.61
37.38
35.67
33.92
114
89
76
57
44
27.00
17.84
32.11
31.80
57.71
34
27
27
21
16
23.87
0.63
29.52
31.29
11.44
Overhead expenses (RMB100 million)
Year-on-year growth (%)
Financial expenses (RMB100 million)
Year-on-year growth (%)
Source: China Building Materials Federation
In 2004-2008, the asset of the clay, brick, tile and building block industry maintained a fairly fast growth rate, which was
up to 25.55% in 2007 and 35.01% in 2008. The asset-liability ratio maintained a flat change, which was 55.38% in 2004 and
45.67% in January-November of 2008. In 2005-2008, the profit growth rate was quite significant, which was 52.41% in 2007
and 57.13% in January-November of 2008 despite the world economic downturn and decelerating economic growth at home.
The growth rate of annual average employment stood at 4.98% in January-November of 2008 and 5.70% in 2007.
Table 6-21 Benefit growth of clay, brick, tile and building block industry 2004-2008
Item
Unit: %
2008 (Jan.-Nov.)
2007
2006
2005
2004
Asset growth rate
35.01
25.55
18.26
-3.73
Asset-liability ratio
45.67
50.38
49.90
53.28
55.38
Profit growth rate
57.13
52.41
65.35
53.91
15.36
Growth rate of gross industrial output value
39.10
34.52
45.34
23.31
Growth rate of annual average employment
4.98
5.70
-1.10
-8.22
Source: China Building Materials Federation
In 2004-2008, the asset of the building ceramics industry maintained a fairly fast growth rate, which was 22.03% in 2004
and 15.82% in 2008. The asset-liability ratio changed stably, 58.14% in 2004 and 53.21% in January-November of 2008. The
financial crisis and economic downturn had a negative impact on the profit growth of the building ceramics industry. In 2008,
the profit growth rate of the industry was 19.96%, much lower than in 2007. The growth rate of annual average employment
stood at 2.01% in January-November of 2008 and 10.24% in 2007.
Table 6-22
Benefit growth of building ceramics industry 2004-2008
Item
Unit: %
2008 (Jan.-Nov.)
2007
2006
2005
2004
Asset growth rate
15.82
10.73
18.38
22.03
-----
Asset-liability ratio
53.21
53.29
54.03
56.97
58.14
Profit growth rate
19.96
50.23
34.30
2.09
34.26
Growth rate of gross industrial output value
22.78
20.33
51.45
41.56
-----
Growth rate of annual average employment
2.01
10.24
21.00
7.63
----
Source: China Building Materials Federation
In 2004-2008, the asset of the building stone processing industry maintained a fairly fast growth rate, which was up to
•74•
The Building Materials Industry
26.01% in 2004 and 25.44% in 2008. The asset-liability ratio changed stably, which was 45.55% in 2004 and 43.85% in
January-November of 2008. In 2004-2008, the profit growth rate was quite significant, 36.97% in 2007 and 33.29% in
January-November of 2008 despite the world economic downturn and decelerating economic growth at home. The growth rate
of gross output value was 37.63% in 2004 and 2008, which reported a stable increase in recent years. The growth rate of annual
average employment stood at 8.46% in January-November of 2008 and 13.63% in 2007.
Table 6-23
Benefit growth of building stone processing industry 2004-2008
Item
Unit: %
2008 (Jan.-Nov.)
2007
2006
2005
2004
Asset growth rate
25.44
26.30
29.10
26.01
-----
Asset-liability ratio
43.85
41.83
43.95
45.08
45.55
Profit growth rate
33.29
36.97
31.35
42.11
35.84
Growth rate of gross industrial output value
37.63
19.67
29.86
41.97
-----
Growth rate of annual average employment
8.46
13.63
5.94
15.45
----
Source: China Building Materials Federation
In 2004-2008, the asset of the waterproof building material industry maintained a fairly fast growth rate, which was up to
34.31% in 2007 and 30.25% in 2008. The asset-liability ratio changed stably, which was 69.12% in 2004 and 67.75% in
January-November of 2008. The financial crisis and economic downturn had a negative impact on the profit growth rate of the
industry. In 2008, the profit growth rate was 14.22%, much lower than in 2007. The rate of gross output value was 32.76% in
2004 and 47.14% in 2008. The growth rate of annual average employment stood at -11.69% in January-November of 2008 and
40.33% in 2007.
Table 6-24
Benefit growth of waterproof building material industry 2004-2008
Item
Unit: %
2008(Jan.-Nov.)
2007
2006
2005
2004
Asset growth rate
30.25
34.31
-13.25
39.55
-----
Asset-liability ratio
67.75
66.81
66.21
60.54
69.12
Profit growth rate
14.22
200.87
-47.47
10.87
17.71
Growth rate of gross industrial output value
47.14
42.25
-20.89
32.76
-----
Growth rate of annual average employment
-11.69
40.33
-6.15
18.23
-----
Source: China Building Materials Federation
In 2004-2008, the asset of the soundproof and insulating material industry maintained a fairly fast growth rate, which was
up to 38.56% in 2006 and 55.72% in 2008. The asset-liability ratio changed stably, which was 46.90% in 2004 and 51.64% in
January-November of 2008. In 2004-2008, the profit grew stably by 18.55% in 2007 and 43.78% in January-November of 2008
despite the world economic downturn and decelerating economic growth at home. The growth rate of gross output value was
3.71% in 2004 and 63.80% in 2008. The growth rate of annual average employment stood at 26.45% in January-November of
2008 and 20.34% in 2007.
Table 6-25
Benefit growth of soundproof and insulating material industry 2004-2008
Item
Unit: %
2008 (Jan.-Nov.)
2007
2006
2005
2004
Asset growth rate
55.72
12.41
38.56
6.37
------
Asset-liability ratio
51.64
49.11
50.96
38.09
46.90
Profit growth rate
43.78
18.55
20.20
29.64
16.40
Growth rate of gross industrial output value
63.80
36.71
39.60
3.71
-----
Growth rate of annual average employment
26.45
20.34
4.68
-8.97
-----
Source: China Building Materials Federation
In 2004-2008, the asset of the other building material industry maintained a fairly fast growth rate, which was up to 34.32%
in 2007 and 17.98% in 2008. The asset-liability ratio changed stably, standing at 56.78% in 2004 and 55.55% in
January-November of 2008. In 2004-2008, the profit grew significantly by 81.15% in 2006 and 67.91% in January-November of
2008 despite the world economic downturn and decelerating economic growth at home. The growth rate of gross output value
•75•
China Business Guide
was 21.27% in 2004 and 38.19% in 2008. The growth rate of annual average employment stood at 16.76% in January-November
of 2008 and 22.32% in 2007.
Table 6-26 Benefit growth of other building material industry 2004-2008
Item
2008 (Jan.-Nov.)
2007
2006
Asset growth rate
17.98
34.32
48.45
Asset-liability ratio
55.55
57.32
57.10
Profit growth rate
67.91
27.75
81.15
Growth rate of gross industrial output value
38.19
33.45
44.81
Growth rate of annual average employment
16.76
22.32
22.97
Unit: %
2005
-3.82
60.08
26.93
21.27
-16.86
2004
------56.78
29.41
-----------
Source: China Building Materials Federation
The list of top 10 clay, brick, tile and building block makers in China in 2007 is as follows:
Ranking Region
Table 6-27 Top 10 clay, brick, tile and building block makers in China 2007
Multiple of average
Company
Market share (%)
enterprise revenues
1
Shandong Zibo Luzhong Building Material Factory
8.17
0.62
2
Shandong Zibo Xutai Building Material Co., Ltd.
7.94
0.60
3
Shandong Shandong Changxing Group
7.90
0.60
4
Hebei Handan Fuxiang Building Material Co., Ltd.
7.67
0.58
5
Henan Linying Taichen Construction and Building Material Corporation
7.48
0.57
6
Shandong Zibo Mazhuang Earthenware Tile Factory
7.46
0.57
7
Shandong Henan Hongjian New Building Material Co., Ltd.
7.10
0.54
8
Shandong Zhaoyuan Hongwei New Building Material Co., Ltd.
7.00
0.53
6.91
0.52
6.75
0.51
9
10
Henan Linying Juling Building Material Company
Shandong Wendeng Longyu Brick Factory
Source: www.paihang360.com
The list of top 10 waterproof building material makers in China in 2007 is as follows:
Table 6-28 Top 10 waterproof building material makers in China 2007
Multiple of average
Company
enterprise revenues
Market
share (%)
Ranking
Region
1
Shandong
Qingdao Guangyuanfa Group Co., Ltd.
124.91
43.37
2
Shandong
Shandong Wendeng Chemical Factory
12.14
4.22
3
Shandong
Shandong Xingchuang Paper Group Co., Ltd.
11.65
4.04
4
Shandong
Shandong Qingda Industries (Group) Co., Ltd.
6.28
2.18
5
Shandong
Wendeng Ziran Building Material Co., Ltd.
5.56
1.93
6
Shandong
Laizhou Huatong Synthetic Material Factory
4.49
1.56
7
Shandong
Dongping Jinma Tyre Cord Fabric Co., Ltd.
3.76
1.31
Beijing Oriental Yuhong Waterproof Technology Co., Ltd.
2.55
0.89
Shandong Hongxiang Chemical Fiber Group Co., Ltd.
2.44
0.85
Bo’ai County Jiegou Building Materials Factory
2.28
0.79
8
Beijing
9
Shandong
10
Henan
Source: www.paihang360.com
The list of top 10 insulating and soundproof material makers in China in 2007 is as follows:
Ranking
Table 6-29 Top 10 insulating and soundproof material makers in China 2007
Multiple of average
Region
Company
enterprise revenues
1
Beijing
2
Shanghai
Market
share (%)
Beijing Star Brand Building Materials Co., Ltd.
10.60
5.12
Armstrong Building Products Co. (Shanghai), Ltd.
10.03
4.85
•76•
The Building Materials Industry
3
Hebei
Renqiu Jinglian New Building Material Factory
8.77
4.24
4
Beijing
Beijing HTN Pipeline Equipment Co., Ltd.
8.18
3.95
5
Guangdong
CSR Guangdong Glasswool Co., Ltd.
6.07
2.93
6
Shanghai
HunterDouglas Industries (China) Co ., Ltd.
5.59
2.70
7
Shandong
Weihai Xingyuan Group Company
4.05
1.96
8
Shandong
Qingdao Bangde Heat Insulating Material Co., Ltd.
3.89
1.88
9
Liaoning
Linghai Wendilou Welfare Perlite Factory
3.88
1.87
10
Hebei
Langfang Tianrong Light Building Material Co., Ltd.
3.71
1.79
Source: www.paihang360.com
6.4 Glass and Glass Product Industry
Glass making has a long history in China, dating back to the Western Zhou Dynasty when China could make a product
called “Liuli (colored glaze)”. Since the reform and opening up drive was kicked off, China’s glass and glass product industry
has grown dramatically, with the product varieties increasing and industrial structure gradually becoming rational. As a result of
the sharp increase in 2004 and 2005, the production capacity became highly excessive, leading to continuous price falls. In 2007,
NDRC issued a notice, requiring local governments to accelerate the elimination of outdated production capacity of plate glass,
and made the Access Conditions of Plate glass Industry. Consequently, the production capacity of glass was brought under
control, and the industry was restructured to some extent.
In 2004-2008, the number of glass and glass product makers in China grew from 1,679 to 2,766 in November of 2008.
Consequently, the number of employees grew by about 30% from 0.51 million in 2004 to 0.65 million in 2008. The total
industrial assets went up from RMB118.6 billion in 2004 to 223.7 billion in November of 2008. The gross output value and sales
value rose from RMB85.3 billion and 82.7 billion in 2004 to RMB209.2 billion and 196.0 billion respectively in November of
2008. At the same time, the total profit increased from RMB5.6 billion in 2004 to 9.5 billion in 2008.
Table 6-30 Growth in size of glass and glass product industry 2004-2008
Item
2008 (Jan.-Nov.)
2007
2006
2005
2004
Number of enterprises
2766
2476
2153
2012
1679
Annual average employment (10,000 people)
65.09
63.07
58.28
55.69
50.77
Total assets (RMB100 million)
2237
1859
1519
1368
1186
Gross industrial output value (RMB100 million)
2092
1591
1340
1088
853
Sales value of industry (RMB100 million)
1960
1537
1304
1050
827
95
101
53
51
56
Total profit (RMB100 million)
Source: China Building Materials Federation
In 2004-2008, the gross output value of the plate glass industry increased from RMB28.9 billion in 2004 to 47.6 billion in
January-November of 2008. The gross output value of fiberglass and product increased from RMB13.6 billion in 2004 to 52.2
billion in January-November of 2008. The gross output value of the glass fiber reinforced plastic product industry grew from
RMB7.2 billion in 2004 to 14.9 billion in January-November of 2008.
Table 6-31 Gross output value of glass and glass product industry 2004-2008
Item
Unit: RMB100 million
2008 (Jan.-Nov.)
2007
2006
2005
2004
Plate glass
476
411
337
307
289
Fiberglass and product
522
376
298
225
136
Other glass products
149
100
89
77
72
Source: China Building Materials Federation
The product sales cost of glass and glass product industry grew from RMB82.7 billion in 2004 to 196.0 billion in
January-November of 2008 for about 20% every year. The overhead expenses also grew stably from RMB5.0 billion in 2004 to
•77•
China Business Guide
7.8 billion in January-November of 2008. The financial expenses rose for more than 100% from RMB1.5 billion in 2004 to 3.4
billion in 2008. In January-November of 2008, the year-on-year growth rate of product sales cost, overhead expenses and
financial expenses was 28.63%, 18.73% and 30.90% respectively.
Table 6-32 Cost structure of glass and glass product industry 2004-2008
Item
Product sales cost
2008 (Jan.-Nov.)
2007
2006
2005
2004
1960
1537
1304
1050
827
27.50
17.83
24.18
26.99
48.16
78
65
58
53
50
20.01
12.55
9.75
5.98
35.97
(RMB100 million)
Year-on-year growth (%)
Overhead expenses (RMB100 million)
Year-on-year growth (%)
Financial expenses (RMB100 million)
Year-on-year growth (%)
34
28
23
18
15
21.59
19.79
32.57
17.74
33.11
Source: China Building Materials Federation
In 2004-2008, the asset of the plate glass industry maintained a fairly fast growth rate, which was up to 21.76% in 2007 and
8.40% in 2008. The asset-liability ratio changed stably, which stood at 59.92% in 2004, 67.30% in January-November of 2008
and around 60% in the remaining years. In 2005-2008, the profit of the plate glass industry witnessed a negative growth rate
which was -68.22% in 2005, -94.29% in 2008 and the lowest -338.02% in 2007. The growth rate of gross output value of the
industry was 15.82% in January-November of 2008 and 6.20% in 2005. The growth rate of annual average employment stood at
-5.26% in January-November of 2008, the first negative growth in five years, and 3.44% in 2007.
Table 6-33 Benefit growth of plate glass industry 2004-2008
Item
Unit: %
2008 (Jan.-Nov.)
2007
2006
2005
2004
8.40
21.76
4.23
0.53
-----
Asset growth rate
Asset-liability ratio
67.30
64.27
65.53
58.56
59.92
Profit growth rate
-94.29
-338.02
-139.84
-68.22
145.48
Growth rate of gross industrial output value
15.82
21.91
9.86
6.20
-----
Growth rate of annual average employment
-5.26
3.44
0.33
1.71
-----
Source: China Building Materials Federation
In 2004-2008, the asset of the fiberglass and product industry maintained a fairly fast growth rate, which was up to 67.29%
in 2005 and 30.08% in 2008. The asset-liability ratio changed stably, which was 61.11% in 2004 and 59.11% in
January-November of 2008. The financial crisis and economic downturn had a negative impact on the profit growth rate of the
fiberglass and product industry which was 12.68% in 2008, representing a significant decline over 2007. The growth rate of
gross output value of the industry was 38.85% in January-November of 2008 and 65.34% in 2005. The growth rate of annual
average employment stood at 9.55% in January-November of 2008 and 14.81% in 2007, signifying a dramatic decline in the
growth rate.
Table 6-34
Benefit growth of fiberglass and product industry 2004-2008
Item
Unit: %
2008 (Jan.-Nov.)
2007
2006
2005
2004
30.08
34.67
30.40
67.29
------
Asset-liability ratio
59.11
52.81
52.41
58.73
61.11
Profit growth rate
12.68
51.08
39.65
11.80
49.77
Growth rate of gross industrial output value
38.85
26.25
32.30
65.34
-----
Growth rate of annual average employment
9.55
14.81
9.82
19.33
------
Asset growth rate
Source: China Building Materials Federation
In 2004-2008, the asset of the other glass product industry maintained a fairly fast growth rate, which was up to 12.48% in
2005 and 49.91% in 2008. The asset-liability ratio changed stably, standing at 60.09% in 2005 and 50.23% in January-November
of 2008. In 2005-2008, the profit grew significantly and stably. The profit of the industry grew by 47.46% in 2007 and 52.32%
year on year in January-November of 2008 despite the world economic downturn and decelerating economic growth at home.
•78•
The Building Materials Industry
The growth rate of gross output value of the industry was 49.16% in 2008 and 6.27% in 2005. The growth rate of annual average
employment stood at 11.49% in January-November of 2008 and 14.77% in 2007, signifying a dramatic decline in the growth
rate.
Table 6-35 Benefit growth of other glass product industry in 2004-2008
Item
Unit: %
2008 (Jan.-Nov.)
2007
2006
2005
2004
Asset growth rate
49.91
13.68
7.89
12.48
----
Asset-liability ratio
50.23
53.71
50.52
57.51
60.09
Profit growth rate
52.32
47.46
11.17
10.47
36.14
Growth rate of gross industrial output value
49.16
11.63
16.37
6.27
-----
Growth rate of annual average employment
11.49
14.77
17.31
-11.74
-----
Source: China Building Materials Federation
The list of top 10 glass product makers in China in 2007 is as follows:
Table 6-36 Top 10 glass product producers in China 2007
Ranking
Region
Company
1
Guangdong
CSG Holding Co., Ltd.
21%
2
Guangdong
Xinyi Glass Holdings Limited.
12%
3
Guangdong
Guangdong Golden Glass Technologies Limited
10%
4
Guangdong
China Aviation Sanxin Company Limited (CAS)
Market share (%)
9%
5
Henan
Luoyang North Glass Technology Co., Ltd.
9%
6
Shanghai
Shanghai Yaohua Pilkington Glass Co., Ltd.
8%
7
Guangdong
Foshan ZNG Glass Co., Ltd.
8%
8
Shandong
Jinjing Group
8%
9
Henan
Luoyang Glass Group
8%
10
Guangdong
Grand Engineering Glass (Zhongshan) Co., Ltd.
7%
Source: www.paihang360.com
6.5 Ceramics Industry
The production of ceramics products has a long history in China. In this course, production technologies have been
evolving. Particularly, in the recent two decades, the structure of ceramics products has been adjusted to a rational level,
accommodating the demand of consumers at home and abroad. Moreover, as a result of social advance and improvement of
people’s living conditions, ceramics products are applied more and more widely in people’s life.
In 2005, the production capacity of China’s ceramics industry grew rapidly, resulting in strained supply of ceramics
materials. In some areas, the price of raw material rose dramatically. On the other hand, continuous price hikes in international
oil market also sent up the increase of fuel oil price at home. At the same time, the continuously expanding production capacity
of ceramics products at home further exacerbated the excessive demand. As the products are not well differentiated, producers
have to lower their prices to gain larger market shares, spawning more heated price competition. In 2008, NDRC issued a
document, stipulating that investment in new projects should be carefully assessed and examined, and projects that fail in
examination of energy conservation should not be approved or started. The energy consumption standards of building and
sanitary ware products were revised. Consequently, the production capacity was brought under control to some extent.
In 2004-2008, the number of ceramics product makers in China grew from 1,538 in 2004 to 1,959 in November of 2008.
But the number of employees witnessed a small decline from 0.55 in 2004 to 0.54 million in 2008. The total industrial assets
grew from RMB59.1 billion in 2004 to 69.9 billion in November of 2008. The gross output value and sales value of the industry
rose from RMB60.2 billion and 56.5 billion in 2004 to RMB108.6 billion and 101.8 billion in November of 2008 respectively.
The total profit doubled from RMB2.9 billion in 2004 to 5.8 billion in November of 2008.
•79•
China Business Guide
Table 6-37 Growth in size of ceramics industry 2004-2008
2008 (Jan.-Nov.)
2007
2006
2005
2004
Number of enterprises
Item
1959
1764
1628
1528
1538
Annual average employment (10,000 people)
53.86
55.22
54.03
52.84
55.05
Total assets (RMB100 million)
699
638
578
584
591
Gross industrial output value (RMB100 million)
1086
873
712
662
602
Sales value of industry (RMB100 million)
1018
826
673
627
565
58
46
37
34
29
Total profit (RMB100 million)
Source: China Building Materials Federation
In 2004-2008, the gross output value of the sanitary ware industry increased from RMB16.7 billion in 2004 to 24.0 billion
in 2008. The gross output value of special ceramics product industry more than doubled from RMB10.2 billion in 2004 to 35.5
billion in 2008. The gross output value of the daily-use ceramics products industry grew from RMB21.7 billion in 2004 to 39.1
billion in 2008. The gross output value of garden, decorative and other ceramics industry grew by more than 100% from
RMB4.08 billion in 2004 to 9.91 billion in 2008.
Table 6-38 Gross output value of ceramics industry 2004-2008
Unit: RMB100 million
Item
2008
2007
2006
2005
2004
Sanitary ware products
240
197
167
223
242
Special ceramics products
355
263
185
143
102
Daily-use ceramics products
391
331
283
235
217
Garden, artistic and other special ceramics
99.1
81.1
77.8
62.3
40.8
Source: China Building Materials Federation
The product sales cost of ceramics industry grew from RMB46.0 billion in 2004 to 84.5 billion in January-November of
2008, with the rise being insignificant in 2005 and 2006, and more than 23% in 2007 and 2008. The overhead expenses also
grew from RMB2.7 billion in 2004 to 3.4 billion in January-November of 2008, marking the largest year-on-year growth in five
years. The financial expenses rose from RMB862 million in 2004 to 1.05 billion in January-November of 2008 for more than
10.29% year on year, marking the largest growth in five years.
Table 6-39 Cost structure of ceramics industry 2004-2008
Item
2008 (Jan.-Nov.)
2007
2006
2005
2004
845
684
553
518
460
Year-on-year growth (%)
23.49
23.82
6.78
12.57
17.65
Overhead expenses (RMB100 million)
39.95
34.50
33.95
30.96
26.99
Year-on-year growth (%)
15.79
1.61
9.65
14.74
13.23
Financial expenses (RMB100 million)
10.46
9.49
8.74
8.76
8.62
Year-on-year growth (%)
10.29
8.59
-0.28
1.63
11.14
Product sales cost (RMB100 million)
Source: China Building Materials Federation
In 2004-2008, the asset of the sanitary ware industry grew unevenly. The growth rate was negative in 2005 and 2006, and
15.98% in January-November of 2008. The asset-liability ratio changed stably, standing at 53.43% in 2004 and 47.88% in
January-November of 2008. In general, the asset-liability ratio declined between 2004 and 2007. In recent five years, the profit
growth rate of the industry kept falling to a negative value in 2008. The growth rate of gross output value was 21.47% in
January-November of 2008 and -7.68% in 2004. The growth rate of annual average employment stood at 6.71% in
January-November of 2008 but was negative in 2005 and 2006.
Table 6-40 Benefit growth of sanitary ware industry 2004-2008
Item
Unit: %
2008 (Jan.-Nov.)
2007
2006
2005
2004
Asset growth rate
15.98
16.77
-12.64
-0.21
----
Asset-liability ratio
47.88
45.20
45.58
40.39
53.43
•80•
The Building Materials Industry
Profit growth rate
-12.61
7.72
18.27
20.36
34.75
Growth rate of gross industrial output value
21.47
18.13
-25.17
-7.68
-----
Growth rate of annual average employment
6.71
9.08
-5.37
-0.19
-----
Source: China Building Materials Federation
In 2004-2008, the asset of the special ceramics industry grew evenly. The growth rate was up to 25.9% in 2004 and 15.90%
in January-November of 2008. The asset-liability ratio changed stably, standing at 62.70% in 2004 and 59.30% in
January-November of 2008. In general, the asset-liability ratio declined between 2004 and 2008. In this period, the profit of the
industry maintained a stable growth rate which stood at 45.20% in 2007 and 39.10% in January-November of 2008 despite the
world economic downturn and declining economic growth at home. The growth rate of gross output value was 24.00% in
January-November of 2008 and 33.50% in 2004. The growth rate of annual average employment stood at 2.60% in
January-November of 2008 but was negative in 2005.
Table 6-41 Benefit growth of special ceramics industry 2004-2008
Item
2008 (Jan.-Nov.)
2007
2006
Asset growth rate
15.90
14.80
14.30
Asset-liability ratio
59.30
58.80
60.10
Profit growth rate
39.10
45.20
35.30
Growth rate of gross industrial output value
24.00
25.60
21.00
Growth rate of annual average employment
2.60
2.60
3.60
Unit: %
2005
12.40
61.60
26.10
23.40
-0.20
2004
25.90
62.70
31.50
33.50
14.50
Source: China Building Materials Federation
In 2004-2008, the asset of the garden, artistic and special ceramics industry grew stably. The growth rate was up to 2.09%
in 2005 and 21.44% in January-November of 2008. The asset-liability ratio changed stably, which was 46.31% in 2004 and
46.11% in January-November of 2008. The financial crisis and economic downturn had a significant negative impact on the
profit growth rate of the industry which stood at 4.41% in 2008, marking a considerable drop over 2007. The growth rate of
gross output value was 22.16% in January-November of 2008 and 52.52% in 2005. The growth rate of annual average
employment stood at -4.77% in January-November of 2008, marking negative growth rates in two years in a row.
Table 6-42 Benefit growth of garden, artistic and other ceramics industry 2004-2008
Unit: %
Item
2008 (Jan.-Nov.)
2007
2006
2005
2004
Asset growth rate
21.44
5.04
7.63
2.09
----Asset-liability ratio
46.11
46.45
49.71
47.22
46.31
Profit growth rate
4.41
21.21
66.76
18.08
53.18
Growth rate of gross industrial output value
22.16
4.25
24.98
52.52
----Growth rate of annual average employment
-4.77
-0.27
6.36
27.15
----Source: China Building Materials Federation
The list of top 10 building ceramics makers in China in 2007 is as follows:
Ranking
1
2
3
4
5
6
7
8
9
10
Region
Guangdong
Guangdong
Guangdong
Zhejiang
Henan
Shanghai
Shanghai
Guangdong
Guangdong
Guangdong
Table 6-43 Top 10 ceramics makers in China 2007
Company
Guangzhou Eagle-Brand Ceramics Co., Ltd./
Guangdong Weimei Ceramics Co., Ltd.
Guangdong G WINTO Ceramics Co., Ltd.
Hangzhou Nabel Group Co., Ltd
Champion Building Material (China) Co., Ltd.
Shanghai CIMIC
Shanghai Asia Ceramics Co., Ltd.
Guangdong Dongpeng Ceramics Co., Ltd.
Newpearl Ceramics Group Co., Ltd.
Guangdong Xinzhongyuan Ceramics Co., Ltd.
Source: www.paihang360.com
•81•
China Business Guide
6.6 Refractory Industry
Fire-retardant material is a basic raw material, mainly used for high-temperature applications in metallurgy, cement, glass
and petrochemical industries. China is a major refractory producer in the world. In recent years, boosted by the high-speed
growth of steel, building material and other relevant industries, China’s refractory industry reported a considerable expansion.
There are 2,000 refractory producers above the designated size in China, distributed in all the provinces, municipalities and
autonomous regions except Tibet. A complete refractory industrial system has taken shape, employing nearly 300,000 people.
Between 1979 and 2007, a total of 177.961 million tons of refractory was supplied, and China’s output of refractory totaled
41.8239 million tons in 2007, 2.84 times that of 1979. Particularly, the import in 2007 only accounted for 0.5% of the domestic
demand, proving that homemade refractory products can fully meet the domestic demand and replace imported products.
In general, the production of China’s refractory industry was stable in 2008, with the output being 24.17 million tons. But
from the second half of 2008, due to the dramatic change in the production of China’s metallurgy, building material and
non-ferrous industries, the conflict between supply and demand of refractory began to emerge, forcing some refractory makers to
stop and limit their production. Some small makers were even force to stop their production because of decreasing orders and
difficult fund recovery. To cope with the global financial crisis and help the enterprises overcome the difficulties, Chinese
government has taken a host of major measures, ensuring the stable and fairly fast growth of national economy.
As one of the major characteristics of China’s economic growth is the rapid growth of heavy and chemical industries, the
demand of refractory from steel, petrochemical and building material industries will keep growing in the next few years. This
presents an opportunity for the expansion of refractory industry.
Chinese refractory makers must address the favorable development situation, intensify their innovation, and become “larger
and stronger” through M&A. This is an inevitable choice for the development of refractory makers and an important
development trend of the industry in the future.
In 2004-2008, the number of refractory makers in China grew from 1,136 in 2004 to 1,918 in November of 2008.
Consequently, the number of employees grew stably from 0.22 million in 2004 to 0.29 million in 2008. The total industrial
assets grew stably from RMB42.1 billion in 2004 to 88.7 billion in November of 2008. The gross output value and sales value
rose from RMB50.0 billion and 45.9 billion in 2004 to RMB154.3 billion and 139.6 billion in November of 2008 respectively.
The total profit grew by more than 3 times from RMB2.8 billion in 2004 to 11.5 billion in November of 2008. After nearly five
years of expansion, the size and technology level of China’s refractory industry have reported a significant improvement.
Table 6-44 Growth in size of refractory industry 2004-2008
Item
2008 (Jan.-Nov.)
2007
2006
Number of enterprises
1918
1677
1505
Annual average employment (10,000 people)
28.62
26.24
25.40
Total assets (RMB100 million)
887
708
585
Gross industrial output value (RMB100 million)
1543
1079
852
Sales value of industry (RMB100 million)
1396
1000
794
Total profit (RMB100 million)
115
82
53
2005
1359
24.33
513
667
640
43
2004
1136
21.63
421
500
459
28
Source: China Building Materials Federation
In 2004-2008, the gross output value of the asbestos product industry increased from RMB2.67 billion in 2004 to 6.45
billion in 2008. The gross output value of mica product industry rose from RMB869 million in 2004 to 2.610 billion in 2008.
The gross output value of the fire-retardant ceramics and other refractory industry grew by 2.15 times from RMB46.5 billion in
2004 to 145.2 billion in 2008.
Table 6-45 Gross output value of refractory industry 2004-2008
Unit: RMB100 million
Item
2008
2007
2006
2005
Asbestos products
64.5
47.71
40.74
41.25
Mica products
26.10
17.29
15.08
11.01
Fire-retardant ceramics and other refractory
1452
1014
797
614
Source: China Building Materials Federation
•82•
2004
26.72
8.69
465
The Building Materials Industry
The product sales cost of refractory industry grew from RMB36.8 billion in 2004 to 114.0 billion in January-November of
2008, up 39.67% year on year in 2008. The overhead expenses reached RMB3.146 billion in 2007, up 6.58% year on year, and
4.341 billion in January-November of 2008, up 38.00% year on year. The financial expenses rose to RMB968 million in 2007,
up 11.35% year on year, and 1.363 billion in January-November of 2008, up 38.19% year on year, indicating that the financial
expenses grew rapidly over the same period of 2007.
Table 6-46 Cost structure of refractory industry 2004-2008
Item
2008 (Jan.-Nov.)
2007
2006
2005
2004
Product sales cost (RMB100 million)
1140
817
655
520
368
Year-on-year growth (%)
39.67
24.75
25.90
41.19
31.90
Overhead expenses (RMB100 million)
43.41
31.46
29.51
25.96
20.58
Year-on-year growth (%)
38.00
6.58
13.67
26.18
43.94
Financial expenses (RMB100 million)
13.63
9.86
8.86
7.98
6.72
Year-on-year growth (%)
38.19
11.35
10.98
18.75
22.58
Source: China Building Materials Federation
In 2004-2008, the asset of the asbestos product industry was 11.17% in January-November of 2008, reversing the trend of
negative growth in 2006 and 2007. The asset-liability ratio changed stably, standing at 63.67% in 2004 and 53.20% in
January-November of 2008. In general, the asset-liability ratio kept falling, but remained over 50%. The profit grew significantly
between 2004 and 2008 at a rate was up 117.83% in 2005, 46.77% in 2006 and 51.29% year on year in January-November of
2008. In general, the profit growth rate maintained a stable and fast rise in the five years. The growth rate of gross output value
was 54.37% in 2005 and 35.25% in January-November of 2008. The growth rate of annual average employment stood at 7.49%
in January-November of 2008. Although this rate was far lower than 22.50% in 2005, it reversed the trend of negative growth in
2006 and 2007.
Table 6-47 Benefit growth of asbestos product industry 2004-2008
Item
Unit: %
2008 (Jan.-Nov.)
2007
2006
2005
2004
Asset growth rate
11.17
-1.04
-2.03
16.04
Asset-liability ratio
53.20
53.84
50.53
61.90
63.67
Profit growth rate
51.29
45.59
46.77
117.83
66.14
Growth rate of gross industrial output value
35.25
17.10
-1.22
54.37
Growth rate of annual average employment
7.49
-2.66
-17.18
22.50
Source: China Building Materials Federation
In 2005-2008, the asset of the fire-retardant ceramics and other refractory industry grew stably. The growth rate was up to
22.09% in 2005 and 25.78% in January-November of 2008. The asset-liability ratio changed stably, which stood at 57.53% in
2004 and 51.02% in January-November of 2008. In general, the asset-liability ratio declined between 2004 and 2008. In this
period, the profit of the industry maintained a stable growth. The profit growth rate was 72.20% in 2007 and 38.99% in
January-November of 2008 despite the world economic downturn and declining economic growth at home. The growth rate of
gross output value was 43.31% in January-November of 2008 and 32.24% in 2005. The growth rate of annual average
employment stood at 9.63% in January-November of 2008 and 12.24% in 2004.
Table 6-48 Benefit growth of fire-retardant ceramics and other refractory industry 2004-2008
Item
Unit: %
2008 (Jan.-Nov.)
2007
2006
2005
2004
Asset growth rate
25.78
22.36
15.11
22.09
-----
Asset-liability ratio
51.02
52.60
55.95
56.21
57.53
Profit growth rate
38.99
72.20
33.15
37.88
36.56
Growth rate of gross industrial output value
43.31
27.27
29.67
32.24
-----
Growth rate of annual average employment
9.63
3.56
6.11
12.24
----
Source: China Building Materials Federation
•83•
China Business Guide
7 Chapter 7 “Going International” of Chinese Building Material Makers
7.1 Fruitful Rewards
As the world economy becomes further globalized and integrated, countries in the world are getting more and more
involved in the wave of globalization. After its accession to WTO, China combines its rapidly-growing open economy and the
world economy more profoundly. While China actively introduces foreign investments, some excellent Chinese enterprises are
also “going international”. Currently, Chinese enterprises are playing a more and more important role in the world economy.
After accumulating and expanding at home, they are going out to embrace the challenges and opportunities in international
market. Thanks to the “going international” development strategy, the number of Chinese enterprises that go out almost doubles
every year. The period between 2003 and 2004 marked the commencement of a new era for Chinese enterprises, as some of
them began to go out when China issued some detailed encouragement policies. 2004 was a landmark year for Chinese
enterprises when Lenovo acquired IBM PC business and TCL acquired Thomson.
In addition, China’s direct overseas investment is characterized by diversified investors in recent years. In terms of
industrial distribution of investors, manufacturing accounts for 45.5% of the investors, which are mainly textile and garment, hat,
shoe, communication equipment, computer and other electronic equipment, electrical machine and equipment, handicraft and
medicine makers. In 2008, revenues of Chinese contractors abroad reached US$56.6 billion, and the total price of newly-signed
contracts amounted to US$104.6 billion, up 35%.
Since the reform and opening up, China has been opening its gate and introducing advanced technology and management
expertise, making a leap-forward development. As the reform and opening up drive is further deepened, the internationalization
of Chinese enterprises plays an important role in boosting China’s national economy and foreign relations. Through the “going
out strategy”, China has acquired several crude oil and mineral production bases abroad to secure the oil, gas, minerals, timber
and fishing resources necessary for its economic growth and social advance. Chinese enterprises are engaged in household
appliance, mechanical and electrical equipment, textile, garment and other light industries abroad, advancing the industrial
restructuring at home. They are carrying out economic cooperation in more than 200 foreign countries and regions, helping the
host countries to development their economy, increasing the employment and taxation revenues for mutual benefit, common
development and win-win situation. They are more than welcome by the host countries, especially developing countries. The
“going out” strategy also plays a significant role in alleviating the short supply of resources, boosting industrial restructuring,
expanding export, increasing employment at home and promoting friendly cooperation with other countries.
7.2 Chinese Government Unveiled Encouragement Policies for Business
Internationalization
At a time of economic globalization, capital is flowing across borders, facilitating optimal allocation of resources at a
broader scope and helping businesses find investment opportunities around the world to pursue interest. As Chinese enterprises
expand their overseas investment, the government plays a guide and servant role. The size of overseas investment by Chinese
enterprises grew and the method evolved in recent years. This is because China’s foreign policies become more loosened,
providing a necessary policy guaranty and assistance for Chinese enterprises to “go global”. The strategy to support Chinese
enterprises to “go international” was adopted at the Fifth Plenary Session of the Fifteenth Central Committee of the Communist
Party of China which approved the Communist Party of China (CPC) Central Committee's Proposal on the Formulation of the
11th Five-Year Plan (2006-2010) for National Economic and Social Development. The proposal stipulated that during the 11th
five-year-plan perid and even a longer period afterwards, an important task is to implement the “go out” strategy. It pointed the
direction for China’s overseas investment in the next five years, creating a sound policy environment for Chinese enterprises to
go international.
In October of 2004, the Notice on Granting Credit Support Policies to Key Overseas Investment Projects Encouraged by
•84•
The Building Materials Industry
China was issued. This notice specified the detailed measures to support direct overseas investment. In October of 2002, the
former Ministry of Foreign Trade and Economic Cooperation issued the Interim Measures for Joint Annual Examination of
Overseas Investment and Measures for Overseas Investment Comprehensive Performance Evaluation (Trial). In November of
2004, the Ministry of Commerce distributed the Notice of the Ministry of Commerce on Printing and Distributing System of
Reporting Country-specific Investment and Operation Obstacles. At the Fifth Plenary Session of the Sixteenth Central
Committee of the Communist Party of China held in October of 2005, the Communist Party of China (CPC) Central
Committee's Proposal on the Formulation of the 11th Five-Year Plan (2006-2010) for National Economic and Social
Development was adopted, which pointed out that we must constantly deepen the reform and opening up, implement an open
strategy for mutual benefit and win-win results, support enterprises with conditions to “go out” and invest overseas in
accordance with international rules, encourage contracting of overseas projects and export of labor service to expand mutually
beneficial cooperation and common development. In October of 2006, the executive meeting of the State Council adopted the
Opinions on Encouraging and Regulating the Overseas Investment by Chinese Enterprises, the first guideline document
systematically regulating and encouraging overseas investment since the “go out” strategy was adopted, helping create a sound
policy environment for the overseas expansion of Chinese enterprises. In 2007, the Ministry of Commerce, in cooperation with
relevant authorities, hammered out a “go out” plan to specify the key points and guide the sound growth of overseas investment.
In terms of investment, foreign exchange, insurance and taxation, encouragement polices were promulgated. The State
Administration of Taxation will create a sound environment for overseas investment made by Chinese enterprises in five aspects.
China will improve its taxation policy to boost overseas investment. Currently, China has established trade and economic
relations with more than 220 countries and regions in the world, diversifying the investment destinations. Recently, the Ministry
of Commerce issued the Measures for Overseas Investment Management to further reform the overseas investment management
processes, facilitate overseas investment and vigorously support Chinese enterprises to “go out” to embrace international
economic cooperation and competition. Compared with the currently effective regulations, the Measures for Overseas
Investment Management only reserves the approval authority of major overseas investments for the Ministry of Commerce.
Moreover, the approval procedures of overseas investment are greatly simplified.
China’s overseas investments are distributed in agriculture, forestry, animal husbandry, fishing, energy, light industry,
communication, electronics, traffic and transportation, real estate, tourism, finance and consultancy service industries. The
investments are made in a variety of forms. Except for newly-constructed projects, mergers and acquisitions account for a
quarter of the overseas investment projects. The investors are also diversified. Besides state-owned enterprises, overseas projects
invested by Chinese private sector take up one fifth of the total. The internationalization of Chinese enterprises is till at the
preliminary stage. Chinese government will, in addition to giving full play to the role of market mechanism, support Chinese
enterprises including financial institutions to invest overseas in four aspects. To improve the policy environment, China needs to
deepen the system reform and legal construction so as to consolidate the role of Chinese enterprises in the “going global”
strategy. For its part, Chinese government should provide more standardized procedures and better services for overseas
investment, and make relevant plans and country-specific industrial guidance policies in light of China’ national conditions to
link China’s overseas investment to industrial restructuring and optimization at home. Moreover, “going global” entities should
be cultivated. The government needs to improve its finance and foreign exchange polices and encourage enterprises of various
ownerships with advantages to invest overseas and operate internationally. It also needs to require enterprises to operate lawfully,
observe local laws and regulations, earnestly fulfill necessary social responsibilities, including the protection of legitimate rights
and interests of local employees and local partners.
7.3 Landscape of China’s Overseas Direct Investment in 2008
2008 marked major adjustments to China’s foreign-related economy. In the first half of the year, China continued to adjust
and optimize its export structure, accomplishing significant achievements. In the second half of the year, to cope with the
dramatically deteriorating international economic and financial situation, China promulgated a series of adjustment policies in a
timely manner to alleviate the difficulties of exporters and maintain the stable growth of foreign trade.
In 2008, China intensified its fiscal and taxation policy support to sustain foreign trade growth. In July, October, November
•85•
China Business Guide
and December, Chinese government raised the export duty drawback rates for some products to improve financial services for
exporters and facilitate trade and investment. To support exporters, Chinese government raised the export forex settlement rate
of ordinary enterprises from 10% to 25% in the fourth quarter. In December, the Working Guidelines for the Chinese Interested
Parties Related to the Abnormal Pullout of Foreign Investment to Conduct Transnational Investigation and Litigation was issued,
stipulating transnational lawsuits against abnormal withdrawal of foreign investments from China to safeguard the legitimate
rights and interests of stakeholders in China.
According to the China's Balance of Payments Statement 2008, China’s overseas direct investment totaled US$55.6 billion
in 2008, up 194% over the previous year; US$2.2 billion was remitted to China from the liquidation and withdrawal of overseas
direct investment, up 13% year on year; the net amount of fund outflow was US$53.5 billion, up 215% over 2007. Seen from the
composition of investors, the overseas direct investment of China’s non-financial sector amounted to US$40.7 billion in 2008,
and the investment of financial sector totaled US$14.9 billion.
In terms of destinations, the overseas direct investment by China’s non-financial sector went to Asia, Latin America,
Oceania, North America, Africa and Europe. Amongst, Asia attracted 77% of the overseas direct investment from China. The
direct investment from China to Latin America, Oceania, North America, Africa and Europe accounted for 10%, 5%, 4%, 3%
and 1% respectively. The overseas investment by financial sector mainly went to the U.S., Hong Kong and other regions where
the financial markets are developed.
Table 7-1 Destinations of foreign investment by China’s non-financial sector in 2008
Unit: %
77%
80%
60%
40%
20%
0%
10%
亚洲
拉丁美洲
5%
4%
大洋洲
北美洲
3%
非洲
1%
欧洲
By industry, the overseas direct investment from China’s non-financial sector mainly went to resource exploitation,
machinery manufacturing, wholesale/retail, public products, design and R&D. Amongst, direct investment was concentrated on
commercial service, mineral exploitation, manufacturing, electricity and gas production and supply industries. In 2008, the
investment in the four industries accounted for 60%, 16%, 5% and 4% of the total respectively.
•86•
The Building Materials Industry
Table 7-2 Region-specific distribution of direct investment from China’s non-financial sector in 2008
Unit: %
In terms of investment methods, competitive investors in China’s non-financial sector mainly invested overseas in the form
of M&A. In 2008, this kind of investment accounted for 50% of the total overseas direct investment from China’s non-financial
sector. For instance, Aluminum Corporation of China invested US$12.8 billion to acquire the shares of Rio Tinto. The financial
sector mainly invested overseas through acquisitions and establishment of branches overseas. Investment made in this form
accounted for 60% of the overseas direct investment made by China’s financial sector. For instance, the Industrial and
Commercial Bank of China acquired Standard Bank of South Africa, and China Merchants Bank acquired Hong Kong-based
Wing Lung Bank.
Region-specifically, the outbound direct investment from Guangdong, Zhejiang, Shandong and Hunan was larger in size,
while the investment from Guizhou, Hainan, Qinghai and Inner Mongolia was smaller in size.
Table 7-1 China’s province-specific overseas investment in January-December of 2008
S/N
Province
Paid-in investment
Proportion
S/N
Total
1
Guangdong
614354
100
121394
19.76
2
Zhejiang
50558
3
Shandong
4
5
Unit: US$10,000
Province
Paid-in investment
Proportion
16
Sichuan
12799
2.08
17
Chongqing
11215
1.83
8.23
18
Xinjiang Production and
Construction Corps
10158
1.65
48627
7.92
19
Guangxi
8537
1.39
Hunan
46502
7.57
20
Jilin 省
7416
1.21
Gansu
38651
6.29
21
Xinjiang
6205
1.01
6
Liaoning
32558
5.30
22
Anhui
5315
0.87
7
Shanghai
32543
5.30
23
Hebei
4709
0.77
8
Fujian
27939
4.55
24
Hubei
3450
0.56
9
Jiangsu
27025
4.40
25
Shanxi
2754
0.45
10
Yunnan
23915
3.89
26
Ningxia
1571
0.26
11
Henan
23636
3.85
27
Jiangxi
1446
0.24
12
Beijing
20582
3.35
28
Inner Mongolia
460
0.07
13
Tianjin
15277
2.49
29
Qinghai
202
0.03
14
Shaanxi
14499
2.36
30
Hainan
113
0.02
15
Heilongjiang
14285
2.33
31
Guizhou
15
0.00
Source: Ministry of Commerce
•87•
China Business Guide
7.4 Export of China’s Building Material Industry
7.4.1
Import and Export
In January-November of 2008, China’s building material industry imported 29.57 million cubic meters of timber log, down
20.4% year on year. The growth was negative each month in January-December. In the second half of the year, the deceleration
was more significant than in the first half of the year. In the year, the import of lumber totaled 0.709 million cubic meters, up
9.0% year on year. In January-July, the growth rate was 10.3% over the same period of 2007, the highest in the year. The import
of plywood and similar boards totaled 0.29 million cubic meters in January-December, down 3.3%. The growth rate of import of
plywood and similar boards dropped significantly in the second half of 2008. The import of fiberglass and products totaled
21,000 tons, down 9.2% year on year. From August, the growth in fiberglass and products was negative over the same period of
2007. The year-on-year growth rate dropped significantly in the second half of the year. In general, the growth rate of import of
China’s building material industry declined significantly in the second half of 2008.
Table 7-2 Total and year-on-year growth of major products imported by China’s building material industry in 2008
Time
Timber log
10,000
m3
Lumber
Growth rate (%) 10,000
m3
Plywood and similar boards
Growth rate (%) 10,000
m3
Fibreglass and products
Growth rate (%)
Tons
Growth rate (%)
Jan.-Feb.
523
-12.7
9.4
9.7
5
2.4
36791
32.3
Jan.-Mar.
851
-11.5
15.1
7.2
8
1.1
54233
16.2
Jan.-Apr.
1159
-12.4
21.3
7.2
11
3
73267
9.4
Jan.-May
1410
-16.5
27.8
9.4
13
-2.9
92977
7.2
Jan.-Jun.
1636
-18.2
33.8
9.3
16
0.9
111551
4.2
Jan.-Jul.
1875
-18.6
40.2
10.3
18
-1.2
131842
0.9
Jan.-Aug.
2085
-19.7
45.6
8.7
21
0.3
150955
-1.7
Jan.-Sept.
2315
-19.5
51.6
7.2
23
-1
170216
-2.3
Jan.-Oct.
2547
-19.7
58.2
8.6
26
-1.8
188621
-2.2
Jan.-Nov.
2776
-19.2
64.4
8.6
27
-3.4
200753
-5.5
Jan.-Doc.
2957
-20.4
70.9
9.0
29
-3.3
210075
-9.2
Source: Ministry of Commerce
In January-December of 2008, the amount of timber log imported by China’s building material industry totaled US$5.18
billion, down 3.2% over the same period of 2007. The growth was negative each month in January-August. In the second half of
the year, the deceleration was more significant than in the first half of the year. In the year, the import amount of lumber totaled
2.02 billion, up 14.5% year on year. The import amount of lumber grew stably over the same period of 2007. The import amount
of plywood and similar boards totaled US$167 million in January-December, down 1.7%. The growth rate of import of plywood
and similar boards dropped significantly in the last two months of 2008. The import amount of fiberglass and products totaled
US$766 million, down 6.0% year on year. The import amount of fiberglass and products grew quite rapidly before March of
2008. The growth rate declined significantly in the following months, and was negative in the last two months of 2008.
Table 7-3 Total amount and year-on-year growth of major products imported by China’s building
material industry in 2008
Time
Timber log
Lumber
Plywood and similar boards
US$1,000 Growth rate (%) US$1,000 Growth rate (%)
Fiberglass and products
US$1,000 Growth rate (%) US$1,000 Growth rate (%)
Jan.-Feb.
842541
7.6
265368
13.4
27246
17.3
128529
16.4
Jan.-Mar.
1399984
8.2
425661
10.8
44481
12.5
192970
10.1
Jan.-Apr.
1935160
7.8
598995
11.7
61547
6.9
270055
7.7
Jan.-May
2395508
2.6
782459
14.4
76921
-0.9
344667
8.4
•88•
The Building Materials Industry
Jan.-Jun.
2801350
0.5
954586
13.6
91104
2.1
414732
6.3
Jan.-Jul.
3277794
1.1
1148690
15.0
104892
1.2
490039
3.9
Jan.-Aug.
3637657
-0.8
1311986
13.6
122005
2.6
556933
1.0
Jan.-Sept.
4057500
-0.4
1488912
13.3
135069
1.4
626135
0.7
Jan.-Oct.
4456455
-1.2
1679593
15.1
147593
0.4
688398
0.3
Jan.-Nov.
4867400
-1
1850875
14.9
157464
-1.3
731910
-2.7
Jan.-Doc.
5183623
-3.2
2024164
14.5
167473
-1.7
766592
-6.0
Source: Ministry of Commerce
In 2008, China’s building material industry exported 26.04 million tons of cement, down 21.1% over 2007. From April, the
year-on-year growth rate of cement export dropped for 9 consecutive months, and the decline accelerated in the second half of
the year. The total year-on-year decline rate was over 20%. The export of granite and products amounted to 121,000 tons in 2008,
down 3.2% year on year. In January-March, the growth rate of export declined rapidly over the same period of 2007. In
January-February, the export declined by 37.26% over the same period of 2007, and picked up somewhat in the following
months. The export of plate glass totaled 277.62 million square meters in January-December, down 10.1% year on year. The
year-on-year growth rate was negative in each month of the year, and the year-on-year growth rate dropped in the second half of
the year.
Table 7-4 Total and year-on-year growth of major products exported by China’s building material industry in 2008
Cement
Time
Granite and products
Plate glass
10,000 t
Growth rate (%)
1,000t
Growth rate (%)
10,000m2
Growth rate (%)
Jan.-Feb.
508
13.4
15
-37.6
4454
-5.6
Jan.-Mar.
780
1.0
25
-21.1
6913
-12.9
Jan.-Apr.
985
-12.4
39
-5.9
9179
-15.9
Jan.-May
1281
-10.5
52
1.7
11712
-18.0
Jan.-Jun.
1449
-18.4
63
7
14331
-18.7
Jan.-Jul.
1671
-20.4
75
3.3
17237
-15.4
Jan.-Aug.
1865
-22.4
86
2
19639
-14.5
Jan.-Sept.
2104
-21.5
96
1.6
22157
-11.3
Jan.-Oct.
2264
-22.1
105
1.8
24301
-9.8
Jan.-Nov.
2424
-22.2
114
0.2
26045
-9.8
Jan.-Doc.
2604
-21.1
121
-3.2
27762
-10.1
Source: Ministry of Commerce
In 2008, the amount of cement export by China’s building material industry reached US$1098.80 million, down 4.5% year
on year. From the second half of 2008, the year-on-year growth of export amount was negative. The export amount dropped by
6.8% over the same period of 2007 in January-August and maintained a stable decline in the following months of the year. The
amount of granite and products exported in January-December totaled US$188.26 million, down 1.3% year on year. The
year-on-year growth rate of export amount declined significantly in the first four months of the year. In January-February, export
amount dropped by 39.5% over the same period of 2007, which picked up somewhat after May. The export amount of plate
glass totaled US$915.05 million in 2008, up 12.8% over 2007. The export amount maintained stable growth. In
January-December, the export amount of glass products reached US$3,484.04 million, up 35.9% year on year. Moreover, in
October-December, the year-on-year growth rate went up stably.
Table 7-5 Total amount and year-on-year growth of major products exported by China’s building
material industry in 2008
Time
Jan.-Feb.
Cement
Granite and products
Plate glass
Glass Product
US$10,000 Growth rate (%) US$10,000 Growth rate (%) US$10,000 Growth rate (%) US$10,000 Growth rate (%)
18895
30.9
2163
-39.5
•89•
13701
22.4
40810
7.8
China Business Guide
Jan.-Mar.
29458
16.4
3659
-25.1
21468
13.9
61281
16.7
Jan.-Apr.
37871
1.3
5596
-11.4
28881
9.2
85039
16
Jan.-May
49953
4.5
7514
-2.3
37306
6.6
109332
16.2
Jan.-Jun.
57214
-3.4
9289
4
45980
5.2
133951
14
Jan.-Jul.
67063
-4.4
11102
1.5
55406
8.5
161775
14.7
Jan.-Aug.
75670
-6.8
12758
1.1
63595
9.4
192791
17.8
Jan.-Sept.
86494
-5.4
14389
1.8
72123
13.1
225345
21
Jan.-Oct.
94378
-5.5
15961
2.6
79537
14.5
263456
26.8
Jan.-Nov.
101589
-5.9
17529
1.7
85707
14.1
303119
31.3
Jan.-Doc.
109880
-4.5
18826
-1.3
91505
12.8
348404
35.9
Source: Ministry of Commerce
7.4.2
Characteristics of “Going out” of China’s Building Material Industry
As the world economy becomes more globalized and China has joined WTO, it is a common understanding that Chinese
enterprises should go out and take part in international competition. Whether China’s building material industry can go
international and make leap-forward development more extensively and intensively is related to the development prospect of the
industry. However, faced with the pressure of strong multinationals and international brands, it is no easy task for domestic
building material makers to go out. To compete with multinationals, local building material makers must choose a workable “go
out” strategy that accommodates China’s reality. Only in this way can a new export situation be created for China’s building
material industry.
The building material industry is one of the earliest industries in China that began to conduct international economic and
technological exchanges after the founding of the People’s Republic of China. China’s export of building materials started in
1950. In 1954, the first import contract of cement-making equipment package was signed. In 1956, the industry began to
undertake foreign economic and technological assistance tasks. Before 1990, large cement-making equipment packages and
some advanced technologies needed to be imported. From the end of the 8th five-year-plan period to the 9th five-year-plan period,
China successfully built three Luoyang float glass production lines and nearly 20 NSP kiln cement production lines in more than
20 developing countries including Indonesia, Thailand, Malaysia, Vietnam, Bangladesh, Laos, Iran and Pakistan, starting the
export of high-technology equipment packages. This signified that the technology and equipment manufacturing of China’s
building material industry had stepped onto a new level.
As a developing country, although China is not in parallel with developed countries in building material industry, it boasts
some comparative advantages as compared with some other developing countries. In markets where enterprises from developed
countries maintain strong presence and the demand is saturated, it is less likely that China’s building material makers can
succeed. Therefore, when expanding overseas markets, Chinese building material makers should give full play to their own
comparative advantages, and aim at the markets where demand is relatively larger than supply, i.e. they should first choose
regions where the economy is less developed than China such as Russia, India, Southeast Asia, Middle Asia and Africa where
the building material industry is less developed, the market potential is huge, or developing countries. Then they can gradually
infiltrate into developed countries.
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8 Chapter 8 Dominant Building Material Makers in China
8.1 Dominant Cement Makers
8.1.1
Anhui Conch Cement Company Limited
On September 1 of 1997, Anhui Conch Cement Company Limited (“Conch Cement”) was exclusively initiated and
established by Anhui Conch Holdings Company Limited with relevant cement assets of its subsidiaries Ningguo Cement Plant
and Baimashan Cement Plant. The business scope of Conch Cement covers the manufacturing and sales of cement and clinker.
Conch Cement has been the No. 1 cement and clinker manufacturer and seller for 10 years in China. It is also the largest cement
and clinker supplier in Asia at present.
By the end of 2007, Conch Cement had built 58 subsidies and branches and held shares in 2 companies. It assets now total
RMB30.9 billion. It has 21 clinker plants and 26 cement grinding mills in 9 provinces and municipalities in East and South
China, 43 clinker lines whose capacity is 2,000-10,000t/d and total annual capacity is 86 million tons. Conch Cement also has
three NSP clinker lines whose capacity is 10,000t/d, which represents the most advanced technology in the world.
Conch Cement possesses abundant and high quality limestone reserves in East and South China, which are low in alkalinity,
high in CaCO3 and are good materials for manufacturing high-quality low-alkali cement. All production lines in Conch Cement
adopt NSP technology, which are equipped with advanced machinery and equipment, controlled automatically in the whole
process from quarry to shipyard, with the quality controlled in accordance with ISO9001 standards. In virtue of well netted
railway, road and marine transportation system, Conch Cement has built up a professional manufacture system integrating
clinker bases and cement grinding mills and a huge marketing network.
Our leading products are high-quality Conch-branded cement and commodity clinker, which have been recognized as
“China Famous Trademark” by CTMO of SAIC, and “CONCH” cement has been approved as an inspection-free product by
AQSIQ and widely used in many landmark projects, such as Shanghai Oriental Pearl TV Tower, Rail beam of Shanghai maglev
train, Lianyungang Tianwan nuclear power station, Pudong International airport, Haicang bridge, Hangzhou gulf bridge cross
the sea etc. Meanwhile, our products are also exported to more than 20 countries and regions in USA, Europe, Africa and Asia.
On strength of advanced process, excellent quality, knight service, perfect sales network, strong manufacturing and supply
capacity, as well as professional technical support, CONCH are fulfilling its management tenet “Tiptop Quality and Sincere
Service”.
Based on the management philosophy of “creating the future living space for the humankind” and relying on the solid
strength, Conch boasts the competence to supply all kinds of special cements, such as SR Portland cement, Low and Moderate
heat Portland cement and Portland cement for road etc. Nuclear cement is specially developed for nuclear power projects, which
has little calefactive range at low temperature and sluggish distention. Non-magnetic cement is suitable for precise instruments,
navigation orientation system and buildings that are sensitive to electromagnetism and geomagnetism. The cement manufactured
in compliance with ASTM II and IV standards and exported to USA, is well received by users. After more than 10 years of
endeavors, we have made great breakthroughs in localization of equipment for large cement production line, design of 3millionton cement grinding mills, independent development of power generation with low-temperature residual heat, recycle of
industrial wastes, environmental protection, etc. The distributed control software developed by the company is a cutting-edge
offering of its kind in China.
8.1.2
Huaxin Cement Co., Ltd.
Huaxin Cement Co., Ltd. is a leading cement maker which has a history of more than 100 years, and also one of the large
enterprises supported by the government in China. In 1907, Zhang Zhidong proposed to set up the company and the proposal
was approved by the then Qing dynasty. It was rebuilt in 1946. In the 1950’s it was called “the largest cement maker in the Far
East” by Chairman Mao Zedong. In 1993, it was reformed into a shareholding company and its shares A and B are traded at
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Shanghai Stock Exchange. In 1999, it established strategic partnership with Holcim, one of the world’s largest cement makers
(The group is now the largest shareholder of the company). In the new century, the company is adhering to its active, safe, rapid
and high-efficiency development strategy. By building and expanding its production facilities and carrying out mergers and
acquisitions, the company is growing by more than 30% annually.
The company is mainly engaged in the production and sales of cement, concrete, clinker, cement-making equipment and
cement packages. It follows a concept of environment-friendly production. Boasting top-notch technologies, equipment and
reputation, the company produces and provides superb products and services. It applies the most advanced quality management
system in China, and was the first cement maker at home that passed the ISO9001 and ISO14000 certification. All its cement
offerings are of best quality. “Huaxin Castle” is approved as a renowned trademark in China. All its products are exempted from
inspection. Awarded the best quality prizes in China for many years in history, some of its products are benchmarks in China.
The company’s brand is reputable at home and abroad.
Over the past century, the company has represented the most advanced productivity in China’s cement industry, boasted
strong technological and managerial advantages, and led the development of China’s cement industry. The “Huaxin Kiln”
developed in the 1950’s was the leading large cement-making equipment in China, which remained so for decades, making itself
a landmark in the development history of China’s cement industry. The No. 4 and No. 5 kiln projects that the company
completed during the 5th and 6th five-year-plan periods demonstrated quality, efficiency and cost-effectiveness, presenting
precious experience for the construction of NSP cement lines, and boosting development of China’s dry cement production
technologies. The 3,200t/d cement line which was completed and put into operation in Yichang in 2003 created the best record in
China in terms of construction duration, project quality, fund investment, project management and equipment localization,
winning the praise of experts from home and abroad. Holcim promoted it to other countries and regions as a demonstration
project. The NSP cement lines completed and put into operation in Yangxin, Wuxue, Enshi, Tibet, Zhaotong, Xiangfan and Chibi
demonstrated cutting-edge cement production technologies in the world. The projects that are being constructed and to be
constructed by the company comply with China’s industrial policy, and are supported by the government. After completed, these
projects will vigorously boost the restructuring of China’s cement industry.
Reputed as “Cradle of China’s cement industry”, Huaxin makes great contribution to the development of China’s cement
industry and socialist construction. Many of the well-known key cement projects in China and abroad are attributable to the
wisdom and hard work of people from Huaxin. The company infused many top-notch technological and managerial talents to
government, universities/colleges and research institutions. It co-established the post-doctoral industrial base with Wuhan
University of Technology. Over the years, the company has won more than 1,000 awards and honors above the city level. In
particular, AAA-grade credit, China’s Excellent Enterprise Award and China’s May 1st Labor Award did much credit to the
company’s sound image.
Headquartered in Huangshi of Hubei province, the company newly established a business management center in Wuhan
city. The production facilities are mainly distributed in the valley of the Yangtze River and coastal areas where the resources are
abundant and traffic is convenient. Its sales network covers the whole of southern China from the Himalayas to the East Sea,
presenting a sound development prospect. The company adheres to a strategy of integration, highlights its main business line,
and vigorously develops emerging businesses including concrete, aggregate and environmental protection. It sticks to centralized
and intensive management, and also rational resource development and allocation for better and more vigorous expansion.
Currently, it has nearly 30 subsidiaries and branches. Its fixed assets total nearly RMB10 billion and its annual capacity is up to
32 million tons, ranking the top in China. By the end of the 11th five-year-plan period, the annual capacity of the company will
reach 80 million tons of cement, total annual yield will be 50 million tons, annual capacity of its equipment will be 12,000 tons,
and the yield of concrete and aggregate will be up to 10 million tons respectively. Consequently, the company will maintain its
leading position in terms of size, technology, environmental protection and benefits. It will strive for harmony between
shareholders, employees, company and society, build itself into a modern company with international competitiveness and
become a top 10 cement maker in the world.
8.1.3
Hebei Provincial Jidong Cement Group Co., Ltd.
Hebei Provincial Jidong Cement Group Co., Ltd. is one of the largest backbone enterprises in Chinese building material
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industry as well as one of the twelve large cement groups supported by nation. It has 11 subsidiaries and its asset total RMB15.5
billion. The annual capacity of cement is up to 40 million tons. The group has won many awards and honors.
The group was a wholly state-owned company adopting modern enterprise systems and incorporated in September of 1979
upon the approval of Hebei Provincial People’s Government. Its predecessor was Hebei Provincial Jidong Cement Factory
which was founded in 1979. Since its establishment, the group has been actively promoting NSP technology, and dedicated itself
to the research and application of NSP cement technologies and equipment. It was the first to introduce the most advanced NSP
line whose daily capacity is up to 4,000 tons of cement clinker in China, construct the first domestic demonstration line whose
daily capacity is 4,000 tons of clinker. The group has cultivated a large pool of high-caliber talents for China’s cement industry.
It is praised as the leader of China’s cement industry and cradle of China’ NSP cement technology.
At present, the group is developing to a large scale conglomerate covering Northeast, North China and Northwest region.
With the major businesses of cement product and equipment manufacture, the group also runs the design of cement factory,
design and manufacture of electromechanical equipment and automatic control system, engineering construction, logistics,
commercial concrete, dry powder and cement mortar, etc..
Tangshan Jidong Cement Co., Ltd., the key enterprise of the group, is one of the largest cement listed company in the north.
The major products of the company are the famous Dunshi-branded low alkali Portland cements, including English and
American standard Portland cement, road Portland cement, slag Portland cement and compound cement compliant with
standards in China, U.K. and U.S. and special cements. The company’s products are available in three series and dozens of
varieties, which are well received in China’s north, northeast and northwest, and also other countries and regions in Asia, North
America, Middle East, Africa, etc. In 2005, the “Dunshi” trademark was approved to be a famous trademark in China by SAIC,
which is one of the most famous trademarks in China’s building material industry. Dunshi-branded cement is applied in many
national important projects such as the Capital International Airport, Qinhuangdao-Shenyang passenger railway line,
Beijing-Shanghai high-speed railway, Beijing-Tianjin railway special line, Caofeidian harbor, Beijing Olympic Centre, etc..
Guided by national industrial policies, while maintaining the competence of core business, the group has been actively
promoting the introduction of new products and industrial optimization and upgrading. It established Tangshan Dunshi Dry
Mortar Building Material Co., Ltd. in 2000 which introduced cutting-edge dry mortar production line from Austria. Its annual
output of environment-friendly Dunshi dry mortar is 0.15 million tons in a full spectrum. The company is the largest dry mortar
producer in China. The group also founded Tangshan Jidong Cement Additive Co., Ltd. in 2003, which can produce 5,000 tons
of grinding aids and 20,000 tons of concrete additives. The new company is one of the few grinding aid producers that boast
independent innovation and proprietary grinding aid formula, and also the largest liquid grinding aid producer in China.
At present, the group is operating in Beijing, Tianjin, Tangshan, Jilin, Liaoning, Shaanxi, Inner Mongolia, and rapidly
expanding to Shanxi, Hunan, Sichuan and Chongqing. Currently, it has 33 subsidiaries and 3 jointly-operated companies. It is a
trans-regional conglomerate with multiple ownerships engaged in different industries. Its assets total RMB13.1 billion and
annual capacity of cement is up 30 million tons annually. Its main target market include Beijing, Tianjin, Tangshan, Jilin,
Liaoning, Shanxi and Inner Mongolia. It remains an industry leader in terms of comprehensive competence. Its resource
allocation, market influence, control, integration, sustainability and risk resistance are significantly improved.
While focusing on its core business, the group is also striving to leverage its advantages to optimize resource allocation,
intensify system integration services and develop cement engineering businesses. Currently, the group owns an engineering
company qualified to be a general contractor at home and abroad. The group company also owns Hebei Province Building
Material Industry Design Academy. It has undertaken the Jidong Fufeng Heidelberg Phase-II clinker production line project
whose daily capacity is 5,000t and the 2,000,000 t/a EP project of Heidelberg Indonesia. The group boasts strong competence for
turnkey cement production line projects from technology design, equipment R&D and manufacturing, construction, installation
to commissioning.
In the next three years, the group will continue its strategy of leadership in regional cement markets, increase its cement
capacity to 100 million tons annually and build itself into the market leader in northern China, the largest cement maker in China
and a top 5 cement maker in the world. It will strive to expand its business lines and increase its equipment manufacturing
ability to 350,000 tons and build up the competence to undertake 8 turnkey clinker projects whose capacity is 5,000t/d at the
same time to become a notch-notch engineering contractor and premium equipment supplier both at home and abroad.
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China Business Guide
8.1.4
Shandong Yizhou Cement Group Corp.
Founded in 1958, Yizhou Cement Group Corp. was one of the major enterprises and top 10 cement makers in China. It is a
large cross-regional group engaged in cement, coking, chemical, building ceramics and power generation businesses, whose
assets total nearly RMB4 billion, employing more than 10,000 people. In 2008, its revenues amounted to RMB4 billion and
pre-tax profit RMB500 million.
The group has its own patented production technologies, and is well completed with test and inspection equipment. It was
the first cement maker to pass the ISO9001 quality certification and GB6566 environmental inspection. Its products won many
awards, including the Product Quality Award of Shandong, Renowned Brand of Shandong, Recommended Brand of China,
Inspection-free Product, Renowned Trademark of Shandong and Top 10 Quality Brands in China’s Building Material Industry.
Its marketing network covers more than 20 provinces, autonomous regions and municipalities in China, and extends to more
than 10 countries and regions in Southeast Asia, Europe and America. The group was awarded many prizes and honors such as a
Top 100 Building Material Makers in China, Advanced Quality Management Enterprise of Shandong, Advanced Environmental
Control Enterprise of Shandong, Advanced Energy-saving Enterprise of Shandong, and Excellent Tax-paying Enterprise of
Shandong. Moreover, it is one of the 500 most competitive enterprise in China’s building material industry and among the 60
cement makers supported by NDRC and other competent authorities for cement industry restructuring.
In recent years, adhering to its strategy of “developing circular economy and building ecological parks”, the group took the
lead in industrial restructuring for sustainability. The phase-I project of the two dry rotary kiln clinker production lines whose
capacity is 5000t/d at Feixian County in which the group invested RMB1.0 billion has been completed and put into operation.
Consequently, the group maintains its leadership in China’s building material industry. The Xuzhou coking project at Pizhou of
Jiangsu Province in which the group invested RMB2.3 billion has been kicked off and construction is proceeding smoothly.
After put into operation, the project will be the largest independent coking project in China. The group has also completed asset
reorganization for its ceramics business, and will soon build itself into one of the largest building ceramics producers in northern
China. Then the group will rank among top 200 companies in China as its annual revenues amount to RMB15 billion and pre-tax
profit 2.0 billion.
The predecessor of Yizhou Cement Group Corp. was Linyi Cement Factory established in 1958. After years of development,
it has grown into a large cement production base which is equipped with NSP rotary kiln production lines. Presently, the annual
cement output is up to 6 million tons. It unswervingly follows the national industrial policy by expanding circular economy and
following a green development road. It successfully restructured internally by phasing out the outdated production capacity and
carrying out technological renovation. The new NSP clinker production line was designed by Sinoma International Nanjing
Cement Design and Research Institute, adopting the latest technologies and equipment in China. Since its trial operation on
November 26 of 2005, all the indicators meet or exceed the designed level, achieving desirable economic and social results. It
also won management award conferred by China Building Material Enterprise Management Association.
The group boasts top-notch product quality. Its laboratory is capable of quality inspection and supervision, staffed with
personnel compliant with national requirements. Its products won many quality awards and honors and the group passed
ISO9002 certification, product quality certification and GB566 environmental certification. Meeting the requirements of
customers, the group’s products are well received in domestic and overseas markets.
8.1.5
China Resources Cement Holdings Limited (CRC)
China Resources Group is a large SOE directly under the control of the State-owned Assets Supervision and Administration
Commission of the State Council. Today, it is one of the largest China-owned enterprises in Hong Kong which has many
subsidiaries listed in Hong Kong and China mainland. By the end of 2007, China Resources had more than HK$240 billion of
assets and nearly 300,000 employees.
CRC was registered and incorporated in Cayman Islands on March 13 of 2003. It is a subsidiary wholly owned by China
Resources, engaged in the production and sales of cement, concrete and pre-cast products. Its main business line covers the
whole value chain of the cement industry from the exploitation of limestone, production of clinker, grinding of cement, supply
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of cement to the production of pre-cast products. In 2007, its annual cement output reached 14 million tons, concrete output 7
million m2 and pre-cast products 0.3 million tons. It is one of the 60 large cement makers in China, which was ranked among the
top 12 clinker makers in 2007.
As a rising star in China’s building material industry, CRC is among the large cement makers in China. Currently, its annual
cement and concrete production capacity reach 16 million tons and 9 million tons respectively. According to its competition
strategy, the company is expanding its production capacity. It now has 8 cement production facilities, 13 concrete mixers, 8
clinker production lines and 25 cement grinding lines in operation. The company plays a leading role in the market of southern
China. On strength of its cement and concrete businesses, CRC is also one of the largest cement and concrete makers in China.
8.2 Dominant Glass Makers
8.2.1
Fuyao Glass Industry Group Co., Ltd.
Fuyao Group is a joint venture corporation founded in 1987 in Fuzhou, specialized in production of automotive safety glass
and industrial technological glass. It is the first glass maker in China that got listed at Shanghai Stock Exchange in 1993. The
name of its shares is Fuyao Glass and the share code 600660. The group has over 10,000 employees and has built automotive
glass production bases in Fuqing, Changchun, Chongqing, Shanghai, Guangzhou, and Beijing and modern float glass production
bases in Fuqing of Fujian, Shuangliao of Jilin, Tongliao of Inner Mongolia, and Haikou of Hainan. Moreover, it has established a
complete production and sales network across the country. The total assets have accrued from RMB6.27 million when the
company was registered in 1987 to more RMB9.0 billion at present. It is a transnational company with subsidiaries in Hong
Kong and U.S., and business offices in Japan, Korea, Australia, Russia, West Europe, and East Europe.
Fuyao Group is the largest, most advanced manufacturer, and the biggest exporter of automotive glass in China. The “FY”
trademark stands out exclusively in China’s automotive glass industry as a famous trademark and since 2004 has received two
times consecutively the title of “China Famous Brand Products”. Fuyao products are satisfying to customers and the board of
directors was selected as “the Best 10 Board of Directors”. The share of Fuyao Glass is one of the 50 Index Sample Shares of the
Shanghai Stock Exchange, “the Beauty 50” – the 50 most developing A-shares of blue chips of the listed companies by the New
Finance, and “China Securities · Asia Business Consulting Top 50 Leading Listed Companies in China for Business
Sustainability”, etc. It is among the leading 50 blue-chip A-share companies for several years. Moreover, it’s China’s Best
Corporate Citizen and 2007 CCTV Best Employer.
High-quality products, leading R&D center, complete production lines and huge capabilities attribute to the company’s
strong product marketability. The FY-branded automotive glass not only predominates in China’s automotive glass OEM and
ARG markets, but also stands out in the fierce competition of the international markets. In 2006 the research institute of the
group was accredited to be “the State Accredited Enterprise Technology Center” by the State Reform and Development
Commission, the Ministry of Science and Technology, the Ministry of Finance, General Administration of Customs, and the
State Administration for Taxation.
For motor makers in China, Fuyao provides OEM supplies for famous motor brands and takes over half of the Chinese
OEM market share. Globally, it has been approved by eight world leading motor makers and become the qualified supplier to
provide batch OEM supplies for Audi, Bentley, VW, GM, Ford, Toyota, Honda, Nissan, PSA, Volvo, Hyundai, and Daimler
Chrysler.
8.2.2
CSG Holding Co., Ltd.
Incorporated in 1984, CSG Holding Co., Ltd. was a Sino-foreign JV. In February of 1992, it’s A shares and B shares were
traded at Shenzhen Stock Exchange at the same time, making the company one of the first listed companies in China. After more
than two decades of development, the group now has more than RMB8.5 billion of assets, 27 subsidiaries and is staffed with
more than 7,600 employees. It is one of the most competitive and influential companies in China’s glass industry.
The company is mainly engaged in research, development and production of high-grade float glass sheet, engineering and
architectural glass, precise glass, photovoltaic technology green energy products (high-purity silicon materials, solar ultra-white
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glass, crystal silicon solar cells, thin-film solar cells and components), Structural ceramics and other products, technology advice,
service and investment.
CSG runs modern float glass production facilities in Shenzhen, Guangzhou, Chengdu and Langfang, engineering glass
facilities in Dongguan, Tianjin, Chengdu and Wujiang, quality placer in Hainan, green energy industrial park that mainly
produces ultra-clear solar glass and solar battery in Mayong of Dongguan, and high-purity polycrystalline silicon production
facility in Yichang of Hubei. It established a solar battery industry chain integrating silica sand, glass sheet, further processing of
glass, polycrystalline silicon, silicon wafer, battery cell and solar battery. Its marketing network is widespread in China. It
established a subsidiary in Australia and Hong Kong, and its products are sold to the U.S., Japan and some other countries. It is a
leading glass maker that provides a complete product line, and also the largest engineering and building glass supplier in China.
In virtue of its well-established industry chain and complete product line, CSG is highly competitive in the market.
After more than two decades of expansion, CSG is now on a road of independent innovation and rapid growth in terms of
production, research, development, operation and management. Now it is staffed with a large pool of experienced professionals
and high-caliber employees. It is also equipped with a sound incentive mechanism. The large-scale production, strict cost
management, ever-innovated operational mechanism and strict risk control lays a solid foundation for the company’s
sustainability.
The great progress and development made in the past two decades earns much market reputation and honor for CSG. Hu
Jintao, Qiao Shi and other CPC and top-ranking leaders paid inspection tours to CSG. In the Top 20 Building Material Makers
selected by the National Bureau of Statistics and China Building Material Industry Association in April of 2004, CSG ranked the
ninth, and also the first among China’s glass makers. Among the Top 100 Building Materials selected in May of 2005, CSG
ranked the fifteenth (and the first float glass maker) in China. In September of 2005, float glass made by CSG was recognized as
a renowned product in China. In September of 2007, the CSG-branded insulating glass was honored as China’s Renowned
Product, further exalting CSG’s brand image. In December of 2008, CSG was honored as an excellent JV in China and ranked
among the top 10 tax-paying JVs in Shenzhen.
8.2.3
Shandong Blue Star Glass Group Co., Ltd
Weihai Blue Star Glass Holding Co., Ltd is a subsidiary of China Glass Holdings Limited. After 44 years development
since its establishment in 1965, it has become one of the most famous companies engaged in building material manufacturing in
China. Its products have earned many honors such as China Top Brand, National Inspection-free Product and China Well-known
Trademark.
Companies held by Weihai Blue Star Holding Company Limited include:
• Weihai Blue Star New Technology Glass Co., Ltd,
• Zhongbo Technology Co., Ltd,
• Weihai Blue Star Zhongbo Photovoltaic Co., Ltd,
•Weihai Blue Star Technical Industrial Zone Co., Ltd,
•Weihai Blue Star Glass Import & Export Co., Ltd,
• Beijing Zhonghaixingye Safety Glass Co., Ltd,
• Wuhai Blue Star Glass Group Holding Co., Ltd,
• Nanjing Yuanhong Glass Ceramics Glaze Co., Ltd.
It also holds shares in Shaanxi Blue Star Glass Co., Ltd.
The Company is mainly engaged in production and sales of top-grade colored float glass, on-line solar control coated glass,
on-line solar control easy-clean coated glass, on-line Low-E coated glass, off-line Low-E coated glass, post-temperable off-line
Low-E coated glass, self-cleaning glass, thin film solar cell subassemblies and glass substrates. Presently its offerings are
available in more than 10 colors such as green, gray, blue, dark brown and golden. It can also produce a series of products coated
with other colors as per client specification and as demanded by the market.
The cooperation between Weihai Blue Star Glass Holding Co., Ltd, Zhejiang University, Tsinghua University and
Hangzhou Blue Star New Material & Technology Co., Ltd is a most efficient combination between research and production
elements. It is also a most successful model for cooperation between producers, universities and research institutions. The
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On-line coated glass product series were co-developed by adopting the CVD technology which is well known and highly praised
both domestically and by markets overseas for its advanced technology, consistent high quality and unique performance in
tempering and thermal bending. Listed on the National 863 Plan, online coated LOW-E glass became Blue Star’s most popular
product for its completely independent intellectual property rights and wonderful performance in energy conservation.
Struggling in the marketplace for 44 years, Weihai Blue Star Glass Holding Co., Ltd. has become a top company with
advanced technology, seasoned business professionals, scientific management methods, unexcelled design concepts, first class
inspection facilities and excellent service. In virtue of its corporate culture, Blue Star has trained a high-quality employee team.
Blue Star's renowned brand image has formed a solid partnership base with numerous clients both domestically and abroad. Its
distribution network spreads in China and stretches out globally. The products have been exported to more than 90 countries and
regions such as North America, the European Union, Russia, Australia, Africa, the Middle East, Mid-Asia, Southeast Asia, ROK
and Taiwan.
8.2.4
China Yaohua Glass Group Corporation
Established in 1922, China Yaohua Glass Group Corporation (originally named Qinhuangdao Yaohua Glass Factory) is the
first enterprise that adopted machinery and continuous process in production of sheet glass in China and even in the Far East. It
is reputed as “Cradle of China Glass Industry”.
Yaohua has remained an industry leader for a long time in terms of scale, equipment, product quality, foreign exchange
from export and corporate management. It is one of the 520 leading enterprises of China. The group is one of the 57 national
pilot enterprise groups, and also a backbone group in Hebei Province. In order to further develop and strengthen Yaohua Group,
Qinhuangdao Beifang Glass Group Corporation was merged into Yaohua in June of 2000, by which Yaohua’s leading position
in the industry is consolidated. At present, Yaohua has become an extra large glass group in China with over 30 subsidiary
companies such as Qinhuangdao Beifang Glass Group Corporation, Qinhuangdao Yaohua Glass Co., Ltd., Qinhuangdao Yaohua
Guotou Glass Co., China Yaohua (Hong Kong) Co., Ltd, Yaohua Group Financial Co., Ltd. It also possesses a national level
R&D center, postdoctoral R&D workstation, Yaohua Design Institute and Yaohua Engineering Co.
Yaohua’s products are available in 7 series and 10 varieties, including building glass, industrial & technological glass, other
glass products, functional high polymer products, FRP (Fabric Reinforced Plastic) products, daily-use glass products and other
textile/knitting products. Its annual production capacity of sheet glass now hits 15 million weight cases and its assets total
RMB3.6 billion. New products jointly developed by Yaohua and famous enterprises from home and abroad include self-cleaning
glass, Guotou 15mm plate glass, online coated glass, Yaohua SUN-E glass and Yaohua LOW-E glass.
Yaohua started export business from 1925 and set up its import & export division in 1988 which has now become a
professional import & export division with rich experience in foreign trade and economy. Yaohua is in a position to export glass,
textile products, equipment and technology packages, import equipment and materials, export labor service and engaged in other
import and export businesses. Yaohua’s advanced research and design ability provides a strong support for its business line.
For many years, Yaohua has been making outstanding contributions to China’s glass industry and local economic
development. It won many honorary titles in the province and China. Yaohua is recognized by the State Administration for
industry and Commerce as a well-known brand in China.
8.2.5
China Luoyang Float Glass Group Co., Ltd.
Established in 1956, China Luoyang Float Glass Group Co., Ltd. is a large-size enterprise group integrating scientific
research, production, import & export, finance and security. It controls, holds shares in and manages 26 companies. It also owns
a technical center of the state level and a financial company. Its assets total RMB4.16 billion. After more than 40 years'
development, Luoyang Glass Group, birthplace of "Luoyang Float Glass Process", one of the 3 float glass processes in the world,
is the sole glass group that can produce 0.55-25mm float glass in China. Owning 13 modern float glass production lines, the
group can produce 20 million weight cases of high-quality float glass of varied colors and specifications.
Through constant innovation, Luoyang Glass Group now owns a comprehensive glass deep-processing base with the
greatest productivity in western and central China. With cutting-edge production technology and equipment, the production base
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can produce 10 million m2 processed glass per year including automotive safety glass, architectural safety glass, decoration glass
and other glass. It has the national Grade-I curtain wall construction qualification. The projects it undertook won 4 Luban
awards.
In the past decade, Luoyang Glass Group has carried extensive international cooperation. In 1990, it exported a complete
equipment package for a 300 t/d float glass production line adopting Luoyang Float Glass Process technology to Indonesia. In
2004, it completed the turn-key project of a 600 t/d float glass production line in Algeria in the form of technology and
management export, including design, construction, equipment arrangement and personnel training. It also reorganized a new
company, Qingdao Saint-Goban Korea-Luoyang Glass Co., Ltd, a JV between Qingdao Taiyang Glass and Saint Goban of
France.
The group has a perfect marketing network that stretches to every provincial capital and surrounding cities in China. Its
products are also exported to more than 40 countries and regions in the world.
8.3 Dominant Ceramics Makers
8.3.1
Tangshan Huida Ceramics (Group) Co., Ltd.
Tangshan Huida Ceramics (Group) Co., Ltd. was established in 1982. At present, the group has RMB1.3 billion of assets
and over 10,000 employees. It is equipped with 17 gas tunnel kiln production lines with an annual output of more than 9 million
pieces of Huida-branded sanitary ware. Its products are available in more than 200 varieties. Huida Group has established itself
as a national large-scale ceramics maker with a spectrum of offerings including sanitary wares, wall tiles, plastic fittings,
bathtubs and hardware fittings. At the beginning of 2002, Huida was recognized as well-known trademark of China by the State
Administration for Industry and Commerce. In September of 2003, Huida-branded sanitary ware was recognized as a renowned
product in China. In January of 2004, Huida-branded ceramics were approved to be inspection-free products, and Huida Group
became the first enterprise that won the 3 top awards in China’s construction and sanitary ware industry.
From the beginning of 1996, Huida began standard-compliance training and formulated its quality guideline: work fine,
optimize function, pursue the best, and satisfy the customers. In June of 1997, it passed ISO9002 quality certification firstly
among the national sanitary wares industry. In 2001, it finished the transformation of 2000 edition quality certification, and
passed both quality and product certifications Then its products passed the water conservation and environmental certification,
and got authenticated by SAI in Australia, CSA Authentication from Canada, KS system in Korea, UPC from U.S. and so on.
Since 1995, Huida Group has remained an industry leader in terms of production scale, economic efficiency and export.
Huida-branded products have become the best-sellers in China, and are also sold to other countries and regions, such as U.S.,
South Korea, Russia, Hong Kong and Macao, making the group an up-to-name flagship enterprise in China’s ceramics industry.
The group has won many awards and honors for credit and product quality. It was appointed as first manufacturers of
water-saving toilets by the former Economic and Trade Commission and Ministry of Construction. Its products were
recommended by six ministries/commissions including the State Science and Technology Commission and Ministry of
Construction for residential buildings. Huida was appraised as a well-known brand for water-saving toilets by China
Construction and Sanitary Ware Committee. In the first evaluation for key national industrial enterprises, the group was selected
as one of the Top-ten enterprises with the best profitability. In December of 2004, Huida brand was selected as one of the
national 195 key recommended and supported export brands for 2005-2006 by the Ministry of Commerce. On June 2 of 2008, in
the ranking of 500 Most Valuable Brands in China 2008 issued by the authoritative famous brand appraisal institution - the
World Famous Brand Lab, Huida secured the position as the most valuable ceramics brand in ceramics industry with a brand
value of RMB3.115 billion. After winning the bid for the Olympic gymnasiums in 2007, Huida was chosen to supply ceramics
for the National Gymnasium in 2008, becoming the most important sanitary products provider for Beijing Olympic projects.
Wang Huiwen, chairman and president of the company, is also a deputy to the National People’s Congress, vice president of
China Building Materials Federation, vice president of China Building Ceramics & Sanitary Ware Association, vice president of
Hebei Building Material Industry Association and vice president of General Charity Association in Tangshan. He has been
awarded as the National Excellent Entrepreneur, National May 1st Labor Medal, Famous Entrepreneur in Hebei Province, Nation
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Model Laborer, Top-Ten Influential Persons in China’s Ceramics Industry, National Charity Person and so on.
As the pioneer of national sanitary industry, Huida has been improving its brand image delivering a pleasant user
experience. With excellent quality and vigorous ambition, Huida stays firmly in the world’s sanitary market.
8.3.2
CIMIC
CIMIC is a Sino-foreign JV listed in Share-A market. It manufactures and markets high-grade porcelain and ceramics tiles.
This Shanghai-based company began operations in 1993. It has RMB38 million of registered capital and covers an area of 1,500
mu (approximately 666.7m2/mu). The company introduced complete professional ceramics tile production lines from Italy and
Switzerland which can produce safe building materials through the intelligent simulation production equipment and
exquisitely-selected materials that contain no radioactive substance.
Vitrous bricks, the major offerings of the company, are
available in more than 20 families, 10 specifications and more than 100 varieties. The glazed tiles are complete in 6
specifications and available in wall tile, floor tile, encaustic tile, belt tile, corner tile and many others. The company also boasts
many technologies that are superior to national standards. The external and internal wall dry hanging products and technologies
and static-resistant floor are well praised by industry insiders and outsiders. CIMIC’s corporate standard for external and internal
wall dry hanging technologies has passed the authentication by the Construction Products and Fittings Technology Standard
Committee of the Ministry of Construction. The insulating and energy-saving external hall dry hanging porcelain plate was the
first of its kind in China.
Constantly pursuing the principle of being ‘Just the Best’, CIMIC products have been authenticated by ISO9002 in 1997,
and ISO9001 and ISO14000 in 2003. They also passed CE authentication in 2006 and ASTM in 2007. CIMIC products have
won many awards and honors. More than 30 kinds of patented tile products have passed the “3C Authentication” and are labeled
as “green” (environment-friendly) construction materials by inspection authorities.
8.3.3
Chongqing Swell Holding (Group) Co., Ltd.
The predecessor of Chongqing Swell Holding (Group) Co., Ltd. was Chongqing Swell Ceramics Industry Co. (Group) Ltd.
It is situated at Youxi Town, Jiangjin District of Chongqing, adjacent to the Yangtze River. It is the only large sanitary ware
producer established in China’s southwest during the 7th five-year-plan period. Since it was put into operation in 1992, the
company has grown into a large private enterprise integrating research, development, production and marketing through
high-efficiency operation and rapid expansion. At present, it has 6 wholly-owned companies and companies held by it, including
Chongqing Swell Jinme Faucets Co., Ltd., Chongqing TME Technology Co, Ltd, and Sissi Sanitary Ware Co., Ltd. Swell
Holding adopts a diversification strategy while focusing on sanitary ware. Its product line mainly consists of bathtub, toilet,
faucet and bathroom cabinet.
After years of efforts, the company has won many national product awards. It passed the ISO9002 quality certification in
1997, and ISO9001:2000 certification in 2003. Moreover, it was selected as a key building material maker of Chongqing and
ranked among the top 30 exporters of Chongqing in 2007.
Swell was the first sanitary ware producer in China that went listed. Now it has three production facilities at Jiangjin and
Wansheng of Chongqing and Xiangtan of Hunan. Its annual output include 4 million pieces high/medium-grade sanitary ware,
330,000 sets of faucets and 30,000 bathtubs, making the company the largest of its kind in China’s western regions and among
the top in China. More than 60% of the company’s products are exported to Europe and the U.S. Swell is one of the largest
exporters and most competent enterprises in China’s sanitary ware industry. As a world-renowned sanitary ware maker, Swell
has been strengthening its cooperation with international sanitary ware makers. It established joint ventures with Duravit of
Germany, and companies in the U.S. and Austria to open up high-level sanitary markets.
Swell boasts a strong product development ability and strict quality control system. It won many awards and honors. While
dedicated to the development in sanitary ware market, Swell is getting more professional.
8.3.4
Jiangsu Gaochun Ceramics Co., Ltd.
Jiangsu Gaochun Ceramics Co., Ltd. is located in Gaochun Economic and Technology Development Zone, the suburban
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area of Nanjing City. It is less than 100km from Nanjing Port and only 50km from Nanjing Lukou international airport.
The
Nanjing-Gaochun Expressway to the north of it is connected with the Shanghai-Nanjing and Nanjing-Hangzhou freeways,
delivering significant traffic advantages to the company.
Founded in 1958, the company used to be a workshop making daily-use crude pottery. In the 1980’s, the company began to
focus on ceramics and exporting tableware, becoming a major foreign exchange earner in Jiangsu’s ceramics industry. In the
1990’s, it stood out and remained among the top ceramics makers in terms of comprehensive benefits, which set a record in the
industry by making profits for 30 consecutive years. In January of 2003, its shares were traded at Shanghai Stock Exchange,
making the company the only ceramics maker that went listed in China under the approval system.
The company is now the only ceramics maker that is widely influential in China’s daily-use ceramics and high-tech
ceramics industries. The Yuquan-branded stoneware is famous for its characteristic of high mechanical strength, high thermal
stability and low metal release, suitable for mechanically washing, high-temperature disinfection and microwave heating
applications. It sells well in international markets for nearly 30 years. In recent 6 years, the company’s transmutation glaze
tableware remained the best seller in department stores in the U.S. for years. The bone china is called “King of China”, and
selected by the Great Hall of People in Beijing and hundreds of deluxe hotels.
The cordierite honeycomb ceramics, developed with Shanghai Ceramics Institute China Academy of Science, is used in the
automobile emission catalytic converter. The major equipment of the production line is imported from the U.S. and Japan. The
products are up to the EURO IV exhaust standard. Currently, the company is the largest and most advanced honeycomb
ceramics producer in China, whose annual capacity is up to 6 million cubic of honeycomb ceramics, environmental ceramics and
heat storage materials.
After nearly half century’s development, Gaochun Ceramics has grown from a small workshop to a listed company. Its
assets now total RMB650 million. Staffed with more than 2,000 employees, the company is mainly engaged in daily-use
ceramics, high-tech ceramics, real estate, machinery manufacturing and trade. It now has a daily-use ceramics production facility
at Gucheng Town of Gaochun, a high-tech ceramics industry park at Gaochun Economic and High-tech Development Zone, a
real estate development business at the county proper of Gaochun, and a daily-use ceramics production facility at Xinzhou of
Shanxi Province. It is selected as one of the 100 most sustainable companies in China mainland by the Forbes Magazine.
8.3.5
Huasheng Jiangquan Group
Huasheng Jiangquan Group is a village collective enterprise of Shenquan Village, Luozhuang District of Linyi City. With
the power to engage in import and export, the group has 9 subsidiaries, including Shandong Jiangquan Industry Co., Ltd., a
listed company. The group is staffed with 26,000 employees, engages an area of 5.3 million m2, and its assets total RMB8.06
billion. It is engaged in thermal power, electrolytic aluminum, steel, coking, building ceramic, daily-use ceramics and lumber,
import and export, real estate, construction and cement. Its annual output includes 2.2 billion kWh of power, 1.3 million tons of
steel, 1.2 million tons of coke, 35 million m2 of building ceramics, 220 million pieces of daily-use ceramics and 2 million tons of
cement. It also imported and processed 1 million m2 of lumber and plywood. Its annual import and export amount to US$200
million. It also passed the ISO9002, ISO14001 and certification for ceramics exported to the U.S. In 2004, its sales reached
RMB6.38 billion, profit RMB460 million and tax 260 million. The foreign exchange earnings from export totaled US$66
million. In recent years, it has won many awards and honors for township businesses. In 2002, it was approved by the State
Administration for Industry and Commerce to be a state-level group, and selected as a top 500 companies in China for three
consecutive years.
8.4 Dominant Coating Makers
8.4.1
Northwest Yongxin Chemical Co., Ltd.
Northwest Yongxin Chemical Co., Ltd. was a listed company initiated and held by Northwest Paint Factory. The name of its
share is Northwest Chemical and code 000791. The assets of the company total RMB410 million. The company now has more
than 1,000 employees, including over 300 engineers and management personnel.
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The company is mainly engaged in the development, production, wholesale and retail of coatings, dyestuffs, chemical
machinery products, and IT consultancy service. Its products are available in 17 categories and more than 400 varieties, which
are mainly applied in equipment manufacturing (coatings for oil equipment, electrical, machinery, machine tool and vehicle),
roads, bridges and tunnels, national defense, general and civilian purposes. These products meet the general protection and
special requirements under various environmental conditions. The company is well positioned to provide a spectrum of
coating-related services for customers.
Since its founding more than 4 decades ago, the company’s products have been sold in the northwest and other parts of
China. Nearly 0.5 million tons of Yongxin paint has been used in areas of national defense, military and national economy.
Moreover, the company’s products are exported to Russia, Kazakhstan and other neighboring countries. Northwest Chemical has
been ranked among the 500 industrial enterprises with the best economic benefit in China for 4 years in a row, and the won the
championship in the coating competition organized by the former Ministry of Chemical Industry for 10 consecutive years. The
Yongxin brand also won many local and national awards and honors, and nearly 100 Yongxin products won many titles above
the provincial level.
In 1997, the company passed the ISO9000 certification, and China’s 3C certification for coating and the confidentiality
qualification certification for military enterprises. It now boasts an efficient and stable quality system. In recent years, the
company vigorously restructured its products and actively engages itself in the development of high-performance, low-pollution
environment-friendly coatings. In the future, the company will remain committed to boosting the development of China’s
coating industry and business sustainability. It will also strive to maintain its leadership in the coating industry and build itself
into a top-notch coating company in China.
8.4.2
Chongqing Sanxia Paints Co., Ltd.
Chongqing Sanxia Paints Co., Ltd is located in Chongqing, adjacent to Chengdu-Chongqing Highway and Hi-tech
Development Zone.
Since its incorporation, thanks to the concerted efforts of more than 400 technical engineers and all employees, the
company was honored as one of the top industrial companies and high-quality and benefit enterprises in Chongqing for 8
consecutive years. The Sanxia-branded paint was recognized as a renowned brand in Chongqing and most satisfactory product in
China, which passed the quality certification.
To address the opportunities brought by the development of China’s western regions, the company constantly restructures
its product line. It is now specialized in the production and marketing of Sanxia-branded automobile paint, building paint,
decorating paint, anti-corrosion paint and engineering paint, all of which are well reputed in the market. Its paint products are
available in more than 800 varieties and 1,500 colors. In recent years, the low-pollution and high-performance fluorocarbon
coating, heavy-duty corrosion-resistant coating, aircraft skin coating, water-based corrosion-resistant coating, water-based
household decorating paint, inorganic water-based zinc silicate rust-resistant paint and near-infrared camouflage coating
developed by the company are favored by customers.
The company advocates a philosophy of “doing better than customers’ expectations”. It took the lead in the industry in
adopting lean production management and ISO quality management standards to control its products, production process and
system. To ensure product quality, it introduced cutting-edge technologies and equipment from abroad, such as production
equipment from Germany, Belgium and Japan, and automatic production lines whose annual capacity is up to 810,000t from
Italy. The company is equipped with HP gas-liquid chromatography, IR Spectrometers and accelerated ageing test instruments
for effective acquisition, control and test of product performance indicators and parameters.
The Sanxia-branded paint is applied to many landmark buildings in Chongqing and important projects in China, including
the Great Hall of People in Chongqing, Chongqing Yu’ao Bridge, Chongqing Huanghuayuan Bridge, the Yangtze River Bridge
for Yuhuai Railway at Changshou, Chongqing Southern Garden (Nan Fang Hua Yuan) and Chongqing Rongqiao Peninsula
(Rong Qiao Ban Dao) residential communities, the steel structure of main building of Shenzhen Lingao Nuclear Power Plant,
Guangdong Shan-Mei Highway tunnels and Minsu RORO vessel of Chongqing Minsheng Industrial Group Co., Ltd., presenting
excellent decorative effects.
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8.5 Dominant New Building Material Makers
8.5.1
China National Building Material Group Corporation (CNBM)
As a state-owned enterprise in charge of administrative affairs in building material industry, China National Building
Material Group Corporation (CNBM) was incorporated in 1984 upon the approval from the State Council and is a holding
company. In 2003, it became one of the large-scale groups under the administration of the State-owned Assets Supervision and
Administration Commission of the State Council.
CNBM’s assets total RMB55 billion and the company employs more than 50,000 people. It manages 19 wholly-owned
companies and companies it controls, 6 listed companies, including 2 companies listed overseas. It also holds shares in 10 listed
companies.
CNBM is engaged in the design, manufacturing and sales of new building materials, chemical building materials, cement,
composite materials, glass, distribution of building materials, scientific research and design, real estate development, import and
export trade, consulting service, etc. In many of these fields, CNBM is playing the leading role.
8.5.2
Shandong Luyang Share Co., Ltd.
Established in 1984, Shandong Luyang Share Co., Ltd. is a professional manufacturer and supplier of ceramics fiber, a new
energy-saving material. Its production capacity and sales have been ranked the first in China for 15 years. Its products sell well
in China and are exported to more than 50 countries and regions in Asia, Africa, Latin America and Europe. It is a
comprehensive energy-saving service provider trusted by users both at home and abroad.
Over the past two decades, the company has been dedicated to the development and production of new energy-saving
products. It has won 58 national patents and 31 technological achievements. Moreover, it is a major drafter of national standards,
which leads the development trends of energy-saving materials in China. Currently, it has more than RMB1 billion of assets and
boasts a competent research and marketing team. In addition, it is the only listed company in the industry.
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9 Chapter 9 Dominant Building Material Cities in China
9.1 Dacheng of Hebei-China’s Capital of Green Insulating Building Materials
Dacheng County of Hebei Province was awarded the title of “China’s Capital of Green Insulating Building Materials” by
CHCBM in 2007. Moreover, it was also awarded the title of “Hebei Insulating Building Material Production Base” by the
provincial science and technology department.
Dacheng began to develop the insulating building material industry in 1985. After decades of growth, the innovation and
R&D ability of enterprises is constantly improved. Currently, a pattern which centers on the insulating building material industry
cluster of Liugongzhuang Town and spreads to the whole county has formed.
The insulating building material industry of Dacheng enjoys significant scale advantages. Starting from scratch, the
insulating building material industry of Dacheng now sees more than 1,500 enterprises employing more than 38,000 people and
equipped with 28 most advanced production lines in China. In 2006, the revenues of the industry totaled RMB5.06 billion. The
centrifugal glass wool, rubber plastic, aluminum silicate, compound silicate, extruded plastic and other insulating products made
in this area take up more than 40% of the market share in China. Dacheng is now the largest insulating building material
production and sales center in China. Particularly, Hebei Huamei Group is a professional group engaged in R&D, production
and sales, whose products are recommended for China’s power system and petrochemical enterprises, and are free of inspection.
It is a technology-intensive company and China’s largest insulating building material maker. Hebei Shenzhou Thermal Insulation
Building Material Group Co., Ltd. hit a record by making of 300m3/d silicate plate and felt in China.
A variety of insulating building materials is produced in the county. The product line of the county spreads from the original
rock wool and mineral wool products to more than 30 series and 100 varieties including centrifugal glass wool, rubber plastic,
aluminum silicate, high pressure polyethylene foam, polystyrene foam, polyurethane and foam asbestos, covering nearly all the
insulating building materials. The products sell well in China and some of them are exported to the U.S., Germany, France,
Korea and Southeast Asia. The county is home to some famous brands such as Humei glass wool, rubber plastic, rosin, Meijia
plastic extruding plate, Golden Money aluminum silicate of Shenzhou Group and Lvdu rubber plastic.
The county boasts strong R&D competence. The local insulating building material makers leverage the strong R&D
competence of research institutions and integrate technological resources. They develop more than 30 new products and
cultivated 14 high-tech enterprises independently or jointly with universities and research institutions. Nearly half of them have
established stable technical cooperation with universities and research institutions. The technology contents of new products are
on the rise. In June of 2007, the county was named as the “Insulating Building Material Base of Hebei” by the provincial science
and technology department.
The policy environment gets more and more lenient. In 2006, the county CPC committee and government re-planned the
insulating building material industry cluster which would cover an area of 40km2. Currently, the construction of infrastructure is
underway. Moreover, to further build the local insulating building material industry, the county CPC committee and government
established a leading group and industry association in 2007. They also promulgated regulations on optimizing the local
investment environment and other preferential policies to streamline and simplify the administrative approval procedures and
improve the work efficiency, which was fully acknowledged and well received by domestic and foreign business people.
9.2 Nanzhuang Town of Foshan-China’s No. 1 Building Ceramics Town
On May 28 of 2002, the focus of China’s building ceramics industry was shifted to Nanzhuang Town, Nanhai of
Guangdong Province, which is only 76.9km2 in size. On this day, China Building Materials Industry Association and China
Building & Sanitary Ware Association jointly conferred the title of “China’s No. 1 Building Ceramics Town” to Nanzhuang
Town. After 15 years of hard work, this town finally won this title.
Nanzhuang Town, which used to be very poor, is located in the center of the Pearl River Delta region and the southwest of
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Nanhai City. Fifteen years ago, there was no ceramics maker here. As the town is not a place of origin for ceramics materials, all
the required materials for ceramics industry need to be outsourced from other places. It is fair to say that local ceramics makers
started from scratch. Today, the town has finished the industrialization process after hard work in the last two decades of the 20th
century. Currently, Nanzhuang Town has built an industrial system dominated by building ceramics, and composed of aluminum
profile, household appliance, hardware and machinery, plastic and chemical industries. In 2001, the industrial and agricultural
output of the town totaled RMB8.12 billion. Consequently, Nanzhuang ranked the 7 th among all the 1,637 towns in Guangdong
in terms of comprehensive strength.
Since the kick off of reform and opening up, local building ceramics makers developed rapidly at Nanzhuang Town.
Currently, there are 72 large/medium-sized building ceramics makers in the town, which are equipped with more than 400
advanced and automatic building ceramics production lines whose annual output exceeds 600 million m2, accounting for more
than 20% of the national total. As a result of highly-concentrated and large-scale production, Nanzhuang becomes the first
building ceramics producing town in China. Moreover, in recent years, more and more people from other places begin to
establish building ceramics facilities in the Great Foshan region, and become the pillar force of the local building ceramics
industry. According to statistics by competent authority, over 60% of the building ceramics enterprises in Foshan are run by
people from Nanzhuang. In addition to the Great Foshan region, many people from Nanzhuang also set up building ceramics
facilities in Heyuan and Sihui of Guangdong, and also in Sichuan and Shandong provinces. For instance, New Zhongyuan
Ceramics Co. Ltd. invested more than RMB550 million to acquire over 1,000mu (about 666.667m2/mu) of land at Jiajiang
County of Sichuan Province to build a large building ceramics enterprise. In June of 2001, it acquired 1,000mu of land at
Heyuan of Guangdong to build more than 30 building ceramics production lines. Building ceramics has become a pillar industry
of the local economy. Last year, this industry contributed 67% of the gross output value of the town. In 2001, five of the top 10
building ceramics makers in Foshan were run by people from Nanzhuang.
After Nanzhuang built the largest building ceramics industry in China, the subsequent effects came one after another. Firstly,
it became an emerging nationwide center for production and sales of ceramics products, and information exchange and R&D.
Consequently, the ceramics products made in Nanzhuang take the lead in China’s building ceramics industry. Secondly, due to
the effect of scale, the production and operation costs are reduced. As a result, building ceramics products made here are of high
quality and low price, presenting great comparative advantages in terms of performance and price. This is conducive to sales in
overseas market. Thirdly, building ceramics products made in the town are available in different grades and varieties to address
the demand of different customer groups.
As it has built itself into a production and sales center of building ceramics products in China, Nanzhuang is playing a more
and more important role in China’s building ceramics industry. Currently, over 500 building ceramics makers are doing business
in Nanzhuang, with the annual domestic sales totaling more than RMB15 billion and the products sold to all provinces
(autonomous regions and municipalities) in China. In recent years, the export of Nanzhuang has also grown rapidly. In 2001, the
town exported more than RMB800 million worth of building ceramics products to more than 50 countries and regions in the
world. After 15 years of development, Nanzhuang has grown into one of the largest building ceramics production and sales
centers in China.
9.3 Jingdezhen, Ceramics Capital in Southern China
Boasting a long history and splendid culture, Jingdezhen is south to the Yangtze River. Historically, it is one of the four
famous towns in China, with the rest three towns being Foshan of Guangdong, Hankou of Hubei and Zhuxian of Henan. After
the founding of the People’s Republic of China, it became of the 24 historical and cultural cities approved by the State Council,
and listed as a Grade-A open city.
Jingdezhen was born, developed, and became renowned in the world because of ceramics. Peculiarly, from the Han
Dynasty to today, the kiln has been burning for more than 2,000 years, making the Jingdezhen a unique ceramic town in the
world.
In 1949, Jingdezhen was liberated and then split from Fuliang County. In June of 1953, the State Council approved
Jingdezhen to be a city directly under the provincial government of Jiangxi. In 1960, Fuliang County became the suburbs of
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Jingdezhen. In 1982, Jingdezhen became one of the first state-level historical and cultural cities in China. In July of 1983, upon
the approval of the State Council, Leping County of Shangrao was annexed to Jingdezhen, and at the same time, Nianyu Town
and Hetang Reclaiming and Cultivating Farm of Boyang County were annexed to Changjiang District of Jingdezhen. In October
of 1988, the organizational system of Fuliang County was restored. In September of 1992, Leping County was approved to be a
county-level city. Therefore, Jingdezhen governs one city, one county and two districts, i.e. Leping City, Fuliang County,
Zhushan District and Changjiang District. It has an area of 5,256km2 and a population of 1.52 million, including 0.5 million
urban residents.
Jingdezhen is an important industrial base of Jiangxi Province. The ceramics industry has become an industry dominated by
tableware ceramics and composed of art ceramics and building ceramics. In particular, the art ceramics develop rapidly, and
many ceramics masterpieces were created. Qinghua, Fengcai, Linglong and Caiseyou are famous in the world. Mr. Guo Moruo
also praised the splendid history and culture of ceramics of Jingdezhen which is closely connected with the world by ceramics.
9.4 Zichuan of Shandong-Ceramics Capital North to the Yangtze River
Zichuan, dubbed as “Ceramics Capital”, aims to build itself into China’s capital building ceramics. It is constantly
restructuring and upgrading the local building ceramics industry. As all the local building ceramics makers improve their quality,
the influence of local brands is on the rise. Consequently, local building ceramics makers have grown into the “vane” of China’s
building ceramics industry.
Building ceramics is one of the pillar industries of Zichuan. More than 90% of the building ceramics makers are located at
Shuangyang Town, hence the saying that “Building ceramics makers north to the Yangtze River are concentrated in Zibo, and
the makers in Zibo are concentrated at Zichuan, and mainly at Shuangyang”. Since late 1990’s, building ceramics makers have
been mushrooming at Shuangyang Town, which actively introduced production lines from abroad. Currently, an industry that is
characterized by strong industrial foundation, complete system and many renowned brands has formed. At present, there are 116
building ceramics makers and 204 production lines at the town, whose annual capacity totals 400 million m2 of ceramic tiles and
ranks the second in China. Consequently, Zichuan is the second largest building ceramics base in China, only second to Foshan
of Guangdong. The Zichuan Building Material Center which grows up on strength of the local industry is the largest building
material and bathroom product distribution center in China, whose transaction totaled RMB10.9 billion last year.
Shandong Gengci Group Co., Ltd., which has four subsidiaries, i.e. Gengci, Gengtao, Micron and Yuxi, is equipped with 10
production lines whose annual capacity totals 30 million square meters. The group is in the leading position in China’s building
ceramics industry in terms of equipment and technological level. In May of this year, the group’s “Gengci Jitu” was recognized
by the State Administration for Industry and Commerce as a renowned trademark in China. Tongyi Ceramics Co., Ltd., which
adheres to the concept of developing the most advanced technology, first developed the static-resistant bricks. The performance
of the brick is deemed to be top-notch in the world. Not long ago, the company was designated by competent authorities to be a
major drafter of compulsory standards for static-resistant ceramic bricks. A pool of large and strong enterprises that boasts
high-grade products, such as Lion King, Guorun, Xinbo, Sidanke, Fengxia and Yadi are cultivated.
The CPC committee and government of Zichuan District carefully consider the situation and address the opportunity that
the local ceramics makers are relocated elsewhere and much market space is left. It will co-sponsor the Third China (Zichuan)
Building Material and Bathroom Product Fare with the Information Center of Development Research Center of the State
Council and China Building & Sanitary Ware Association. By that time, the top 100 influential figures in China’s ceramics
industry, top 500 ceramics distributors in China’s tier-1 cities, top 10 figures in China’s ceramics industry 2008, top 10
philanthropists in China’s ceramics industry 2008, top 10 most competitive enterprises in China’s ceramics industry 2008 and
enterprises with most development potential in China’s ceramics industry 2008 will be gathered at Zibo to share their ideas
about future development of China’s ceramics industry and the local building ceramics makers.
9.5 Qingyuan of Guangdong-China’s Cement Capital
As a prefecture-level city directly under the administration of Guangdong province, Qingyuan is a young and charming city.
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It is situated in the central-northern part of Guangdong province, the middle reaches of the Beijiang River, adjacent to the
southern part of Nanling Mountain Range and the Pearl River Delta region. It is north to Guangzhou and Foshan, south to Hunan,
Guangxi, adjacent to Shaoguan in the east and northeast, and Zhaoqing in the west and southwest. It is also the largest
prefecture-level city and major home to ethnic minority groups in Guangdong. On January 1 of 1988, the State Council
approved the founding of the city which was officially set up on February 28. It now governs five counties and one district, i.e.
Qingxin County, Fogang County, Yangshan County, Liannan Yao Autonomous County, Lianshan Zhuang and Yao Autonomous
County and Qingcheng District. It also serves as an acting administrative body for Yingde and Lianzhou county-level cities.
When inspecting Yingde, Zhang Dejiang, member of Political Bureau of CPC Central Committee and Secretary of CPC
Guangdong Provincial Committee highly praised the practice of the city to make full use of the mountainous resources and
vigorously develop NSP cement industry for rapid regional economic growth. Chen Yongzhi, Secretary of CPC Qingyuan
Municipal Committee adopts a strategy to develop cement industry in Qingyuan which abounds with limestone resource,
increase the annual capacity to 40 million tons to cover one third of the provincial production capacity, and build Qingyuan into
China’s “Cement Capital”.
Qingyuan also suffered the nightmare caused by cement. In 2003, the capacity of highly-polluting shaft kiln and
wet-process production took up 85% of the total. Nearly half of the cement makers were located around the highly-populated
urban areas. Due to inadequate input in environmental protection, the city was seriously polluted. Moreover, because of many
problems in structure, size, benefit and resource utilization, the industry was low in competitiveness, resource utilization rate and
benefits. In late 1990’s, most cement makers suffered heavy losses, making themselves a heavy burden for local government. In
2002, Qingyuan decided to adjust its development approach and attract investment to build up its cement industry. “We must
introduce large cement makers with advanced technologies and strong capital strength,” said Chen Yongzhi.
By leveraging the resource, energy, traffic and geological advantages, and constantly improving the local investment
environment, Qingyuan soon attracted some renowned cement makers. In January of 2003, Anhui Conch Group, China’s largest
cement maker whose production capacity ranked the first in Asia and the sixth in the world, signed a contract with the municipal
government to build a large cement (clinker) production base, and acquired Yingde Longshan Cement Co., Ltd. and
Longweishan Cement Factory to establish Yingde Longshan Cement Co., Ltd. In June of the same year, TCC Group, the largest
cement maker in Taiwan also executed contracts with the municipal to acquire Guanyinshan Cement Factory. From then on, the
cement industry in Qingyuan came to a “turning point”.
In terms of technology, Qingyuan introduced new technologies. Consequently, the local cement industry has embarked on a
journey of sustainability.
According to experts of cement industry, with the large-scale construction of infrastructure in Guangdong, adjustment to
urban planning and the form of city belts, the demand of cement will still rise after 2010 to about 120 million tons annually.
Amongst, the demand of the Pearl River Delta region will amount to 90 to 100 million tons. The establishment of cement base in
Qingyuan can not only promote the restructuring of cement industry of Guangdong and meet 25% of the cement demand of the
province, but also effectively alleviate the resource and environmental pressure of the Pearl River Delta region and achieve a
rational distribution of cement industry in the province.
For Qingyuan, the benefits not only include the operational returns. The diversified operation of large enterprises also
boosts relevant industries. These projects have become engines for the rapid development of Qingyuan. It is learned that
investment of Conch Group in cement, PVC profiles, plastic package and five-star Conch International Hotel totals RMB4.5
billion. It brings along the development of the whole region. It is estimated that each cement production line can contribute
RMB15 million of fiscal income to the local government annually. Moreover, it can drive the local logistics, service and real
estate business, playing a major booster role in facilitating local economic growth.
It is expected that by 2010, Qingyuan will boast an annual capacity of 40 million tons of NSP cement production, building
itself into the most competitive NSP rotary kiln cement production base which is the largest in Guangdong and even in China.
Moreover, it will eliminate all the outdated production technologies and increase the market share of its NSP rotary kiln cement
in Guangdong to over 30%. The goal of becoming China’s “Cement Capital” is gradually achieved.
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10 Chapter 10 Policies and Regulations on Building Material Industry
10.1 Industrial Development Policies
10.1.1 Cement Industry Development Policy
On October 17 of 2006, NDRC issued the Cement Industry Development Policy. Cement is a fundamental material in
national economy. After years of development, China’s cement industry has made great achievements and its cement yield has
ranked the first in the world for many consecutive years, meeting the demand of economic growth. To accelerate the
restructuring and upgrading of cement industry, guide the sustainable, stable and sound development of the industry and
modernize the industry, China formulated the development policy for cement industry. The major contents of the policy are as
follows:
1. Goals of industrial policies
Boost cross-functional and cross-regional reorganization of cement makers for intensive operation and rational resource
allocation to increase the production concentration and competitiveness of cement makers; eliminate outdated dry hollow kilns
and wet kilns of various specifications by the end of 2008 to further cut the capacity of mechanical shaft kilns; eliminate all the
mechanical shaft kilns in areas where the conditions are met; accelerate technological advance, encourage the application of
advanced technologies and equipment to exalt the technological level and narrow the gap with the world’s advanced level.
2. Key development points
Encourage local governments and enterprises to develop NSP cement production by eliminating outdated production
capacity, support NSP cement projects whose capacity is more than 4,000t/d and large clinker projects in areas where necessary
resources are available, and establish large cement grinding stations in areas close to the markets.
3. Technological policies
Develop NSP cement production technology, boost the restructuring and upgrading of the cement industry, carry out
resource conservation to protect the environment, adhere to circular economy and sustainability and take a new road of
industrialization; strengthen the management of mineral resources for cement industry, encourage local governments and
enterprises to effectively use mineral resources in a rational manner; encourage large enterprises to adopt advanced technologies
and equipment to renovate small enterprises into cement grinding stations, and the capacity of new cement grinding stations
should be no less than 600,000 t/a.
4. Organizational polices
Further increase the concentration of enterprises in this industry to make the enterprise operation more group-based,
production more professional and management more modern; encourage cement makers to become cross-functional and
cross-regional groups through reorganizations, association and shareholding system.
5. Investment management policies
Subject the approval of cement projects except the banned projects to provincial investment authority according to the
reformed investment approval system; develop NSP cement technology, eliminate outdated technologies in areas where capacity
is concentrated, strictly prohibit enterprises that do not have the conditions from blindly expanding their capacity, and prevent
low-level repeated construction regardless of the environmental impact; in newly-constructed cement projects, the self-owned
funds must account for more than 35% of the total; for projects that comply with industrial policies and planning, banks should
provide credit support according to the principle of independent examination of loan applications.
6. Development guaranty policies
NDRC formulated the development plan for cement industry which specifies the short-term and long-run objectives,
distribution plan of cement industry and related measures to guide the restructuring and upgrading of cement industry. Relevant
departments should, in line with the industrial policies, draft and revise energy consumption, product quality, concrete and
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environmental standards, and appropriately increase the strength requirements for cement used for high-strength concrete.
10.1.2 Development Policy for Refractory Industry
On April 30 of 2006, the Association of China Refractory Industry issued the Development Policy for Refractory Industry, a
document that guides the sound development of refractory industry, promotes the technological advance and industrial
upgrading. It mainly includes the following aspects:
1. Goals of industrial policies
Adhere to the scientific outlook of development, take a new road of industrialization, establish a concept of overall,
coordinated and sustainable development, continue to strengthen and improve macro control and develop the refractory industry;
adjust the product structure, focus on green refractory products and significantly lower the output of ordinary products by 2010;
greatly increase the line of more durable, energy-saving, less polluting and more functional products by 2020 to meet the
demand of metallurgy, building material, chemical and other energy industries; increase the technology content of exported
products; carry out industrial restructuring, M&A and reorganization; lower unit energy consumption and strive for the “zero
emission” target.
2. Adjustment to industrial distribution
To adjust the distribution of refractory industry, we should take into consideration the distribution of mineral resources and
markets, energy, traffic and transportation and environmental capacity. The existing refractory makers are basically close to
mineral resources. The production of these makers should be arranged according to the market and supply of mineral resources.
In this process, product restructuring and sustainability should be the main factors taken into consideration.
Technological policies and access conditions
The equipment, technological and economic access conditions for refractory makers are as follows. The existing makers
should meet such indicators through technological renovation:
(1) In terms of size, the annual output capacity should be more than 30,000 tons for quality clay alumina bubble brick
workshop, 5,000 tons for magnesia carbon brick workshop, 10,000 tons for basic brick workshop, 20,000 tons for silica brick
workshop, 10 million tons for slide nozzle brick workshop, 10 million tons for long nozzle brick workshop, and 10,000 tons for
unshaped refractory workshop;
(2) The product variety should meet the requirements of technological policies;
(3) The makers must meet national and local environmental standards, and the discharge of main pollutants should be
controlled within the indicators approved by local environmental authority.
(4) The makers must meet the designated energy conservation indicators.
When investing in refractory makers, overseas investors must comply with China’s refractory industrial policies; The
industry should further improve the quality stability of refractory, develop quality synthesis materials, use the state-owned
mineral resources on a payment basis, limit the export of fused magnesite, carborundum, magnesite, bauxite chamotte and other
primary products which consume much energy and cause serious pollution.
3. Corporate organizational and industrial restructuring
Support the enterprises to grow into groups, carry out strategic reorganization through association, M&A and shareholding
so as to reduce the number of enterprises, restructure, optimize and upgrade the refractory industry; support large enterprises
with conditions to appropriately expand their scale for intensive production through restructuring and industrial upgrading. The
government should grant policy support in terms of separation of secondary line of businesses from core businesses, personnel
reassignment and social security; refractory makers should focus on the main business and carry out diversified operation to
expand new development space. Enterprises with conditions can comprehensively use the resources, and expand to building
material, chemical, magnesium alloy, magnesium chemical and other industries.
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10.2 Market Regulation
10.2.1 Market Access Conditions for Plate glass Industry
On September 10 of 2007, NDRC began to implement the Market Access Conditions for Plate glass Industry to regulate the
investment in plate glass industry, prevent repeated construction and blind investment, promote industrial restructuring, lower
energy consumption and protect the environment for harmonious and sustainable socio-economic development.
The Market Access Conditions for Plate glass Industry mainly include the following contents:
1. Distribution of makers
Newly-built or rebuilt/upgraded (hereinafter referred to as rebuilt) plate glass projects must comply with national industrial
policies and plans, general land utilization plans, land supply policies and land utilization standards. No plate glass maker should
be built in the scenic spots, ecological reserves, natural and cultural heritage sites and sources of drinking water designated by
national laws, regulations, administrative rules and plans, or approved by people’s government above the county level. To
promote rational distribution of plate glass makers and coordinated development between China’s eastern, central and western
regions, region-specific guidance and discriminated policies should be carried out for the plate glass industry.
2. Industry and equipment
The overall technology and equipment of newly-built or rebuilt plate glass projects should be close to the international
advanced level. The kiln capacity of newly-built or rebuilt plate glass production lines (except ultra-thin glass production lines)
should be more than 500t/d. The designed service life of newly-built or rebuilt glass kilns should be more than 8 years. New
ordinary float glass projects should be strictly limited, and the outdated colburn technology should be eliminated.
3. Variety and quality
Special quality float glass production lines refer to float glass productions lines that can produce super-thin (less than
1.3mm) plate glass for electronic industry, ultra-clear (visible light transmission rate for 5mm in thickness >90%) plate glass for
solar power industry and Low-E plate glass for energy-saving buildings. While meeting the requirements specified in
GB11614-1999 Plate glass, newly-built or rebuilt float glass production lines should also be able to produce glass above the
quality standards for automobile glass which accounts for more than 70% of the total production (assess the design indicators
and quality of products after the production lines are put into operation).
4. Energy consumption
The unit energy consumption of newly built or rebuilt quality float glass production lines should meet the limits in the
following table.
Table 10-1 Unit energy consumption limit for newly-built or rebuilt float glass production lines
Overall energy consumption
Heat consumption of glass furnace
Category
(KG standard coal/weight case)
(KJ/kg of glass liquid)
≥500t/d
≤16.5 KG
≤6500
The unit energy consumption of existing plate glass production lines should meet the limits specified in the following table:
Table 10-2 Unit energy consumption limit for existing plate glass production lines
Overall energy consumption
Heat consumption of glass furnace
Category
(KG standard coal /weight case)
(KJ/kg of glass liquid)
≤300t/d
≤20.5
≤8200
>300t/d, ≤500 t/d
≤19.5
≤7500
>500 t/d
≤18.5
≤7100
5. Environmental protection
The glass furnaces should adopt fume dedusting, desulfurizing and oxygen-enriched combustion technologies, which
should be installed with online automatic fume surveillance systems that are connected to environmental protection authority.
After treated, the emitted fume should meet the Grade-II standards in GB9078-1996 Emission Standard of Air Pollutants for
Industrial Kiln and Furnace. After the Pollutant Emission Standards for Float Glass Industry are promulgated and becomes
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effective, pollutants in the fume should meet the new standards.
During the production, the water used should be circulated in a closed circulation system. Wastewater should meet the
requirements of GB8978-1996 Integrated Waste-water Discharge Standard. After the Pollutant Emission Standards for Float
Glass Industry are promulgated and becomes effective, pollutants in the wastewater should meet the new standards.
The production process should be controlled through clean production approval and by other means to reduce the
generation and emission/discharge of various pollutants, lower the pollution treatment cost during and at the end of the
production process, make the discharge/emission of various pollutants during production meet the local environmental capacity
and quantum requirements. The storage, weighing, transporting, mixing and feeding of materials should be carried out in a
sealed manner to prevent unorganized discharge/emission.
6. Safety, health and social responsibility
The plate glass makers must adopt production safety measures specified in laws, regulations and standards, establish and
improve a system of responsibility for production safety. They must also be complete with labor protection and industrial health
facilities, observe GB15081-1994 Specification for Industrial Health and Safety Technology in Glass Factory. They
should not default taxes, employees’ salaries, medical expenses, fail to pay premium for pension, medical, work-related injury
and unemployment insurance in full amount on a timely basis, or hurt national or employees’ interest in other ways.
7. Supervision and management
Newly-built and rebuilt plate glass projects must meet the above access conditions. Before put into operation, newly-built
and rebuilt plate glass projects must be inspected and approved by investment, land, environment, production safety, health and
quality inspection authorities at and above the provincial level in accordance with the access conditions and relevant regulations
(The inspection team must include experts from Chinese Architectural and Industrial Glass Association). NDRC should issue the
list of plate glass makers compliant with the access conditions on a regular basis for social supervision and dynamic
management.
8. Supplementary provisions
The access conditions are applicable to plate glass makers within the territory of the People’s Republic of China excluding
Hong Kong, Macau and Taiwan.
10.2.2 Access Conditions for Fiberglass Industry
On January 18 of 2007, NDRC issued the Access Conditions for Fiberglass Industry to check the low-level repeated
construction and blind expansion of the fiberglass industry, boost industrial restructuring and upgrading, regulate industrial
development and keep the market competition in order. The major contents are as follows:
1. Distribution of makers
The sites selected for new fiberglass projects must comply with the general land utilization, urban and industrial
distribution plans. No fiberglass maker should be built in the scenic spots, ecological reserves, natural and cultural heritage sites
and sources of drinking water designated by the State Council, competent authorities and provincial people’s governments, and
other areas where the construction of industrial enterprises is banned. The construction of fiberglass projects should be
prohibited in newly-built urban areas and non-industrial zones in cities.
2. Industry and equipment
The capacity of new fiberglass DM production lines must be over 30,000t/a. Construction of new alkali-free and
medium-alkali glass bead production lines should be banned. The annual sales of new fiberglass product processors should be
more than RMB20 million. No textile equipment that should be eliminated according to national regulations should be used to
make fiberglass products, and no DM glass fiber produced with clay crucibles should be adopted to make fiberglass products.
The technology and equipment for the production of glass fiber with clay crucibles should be eliminated in accordance with law.
The production and sales of high-alkali fiberglass products should be prohibited.
3. Energy consumption
The energy consumption of new fiberglass DM production lines should be less than 1 ton of standard coal per ton of glass
fiber. The rebuilt alkali-free glass bead kilns must adopt cutting-edge kiln smelting process heat preservation and energy
conservation technologies, whose energy consumption should be less than 580kg of standard coal per ton of bead. The rebuilt
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medium-alkali glass bead kilns must adopt cutting-edge kiln smelting process, heat preservation and energy conservation
technologies, whose energy consumption should be less than 300kg of standard coal per ton of glass bead.
4. Environmental protection
The emission of air pollutants must meet the Emission Standard of Air Pollutants for Industrial Kiln and Furnace and
Integrated Emission Standard of Air Pollutants. The discharge of wastewater must meet Integrated Waste-water Discharge
Standard and other local environmental standards. Sizing pickup and cooling water used in the production of fiberglass and glass
bead must be collected, treated and recycled. After the promulgation of pollutant standards for fiberglass industry, the
discharge/emission of pollutants of the industry should meet the new standards. Waste glass fiber generated in the spinning,
warping and weaving processes must be collected and reused rather than buried. The content of toxic and hazardous substance,
heavy metals and arsenic trioxide in fiberglass must meet related standards. Dust removal, desulfurization and de-nitrification
facilities should be reserved for newly-built, rebuilt and expanded fiberglass production lines.
5. Supervision and management
Newly-built fiberglass and rebuilt/expanded glass bead production lines must meet the above access conditions. Before put
into operation, newly-built fiberglass and rebuilt/expanded glass bead production lines must be inspected and approved by
investment, land, environment, production safety, health and quality inspection authorities at and above the provincial level in
accordance with the access conditions and relevant regulations. Fiberglass authorities at different levels should strengthen the
supervision and management of the implementation of access conditions by fiberglass makers. For newly-built fiberglass and
rebuilt/expanded glass bead production lines which fail to meet the access conditions, investment authority should not put them
on records, land authority should not complete the land utilization procedures, environmental protection authority should not go
through the environmental protection assessment and approval procedures, financial institutions should not provide credit
support, and electricity suppliers should cut off the power supply in accordance with law.
10.3 Trade and Investment
10.3.1 Measures for Overseas Investment Management
The Ministry of Commerce decided to implement the Measures for Overseas Investment Management from April 1 of 2009.
Compared with the current regulation, the new regulation only reserves the approval authority of major overseas investments for
the Ministry of Commerce. Moreover, the approval procedures of overseas investment are also greatly simplified.
The term “overseas investment” as mentioned in these Measures means that an enterprise legally established in China
(hereinafter referred to as the “enterprise”) sets up a new non-financial enterprise overseas or acquires the right to own, control
or manage an existing non-financial enterprise overseas in the way of merger or acquisition.
According to the new regulation, enterprises should submit their applications for the following outbound investments to the
Ministry of Commerce for approval: investment in countries which do not have diplomatic relations with China, investment in
specific countries (or regions), investment whose value is more than US$100 million, investment involving interest of more than
one country (region), and investment for the establishment of companies with special purposes overseas.
Moreover, overseas investment whose amount is more than US$10 million but less than 100 million, investment in energy
and mineral, and investment which needs to attract capital at home should be submitted to provincial commerce authority for
approval.
The regulation stipulates that the Ministry of Commerce should only reserve the approval authority for major overseas
investment. Last year, about 85% of the applications for overseas investment were approved by provincial commerce authorities.
Moreover, the Measures for Overseas Investment Management issued by the Ministry of Commerce greatly simplified the
approval procedures. Most enterprises that intend to invest overseas only need to submit an application and can receive the
Certificate for Overseas Investment within 3 working days.
10.3.2 Catalogue for the Guidance of Foreign Investment Industries
The Catalogue for the Guidance of Foreign Investment Industries which was implemented on December 1 of 2007
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specified the catalogue of industries for which foreign investment is encouraged. The list of building material projects for which
foreign investment is encouraged is as follows:
Table 10-3 List of building material projects in which foreign investment is encouraged
S/N
1
2
3
4
Contents
Development and production of new energy-saving, environment-friendly architecture material: lightweight
high-intensity and multi-function materials for wall, high-level environment protecting decorating and finishing materials,
high quality water-proof and airproof materials, and effective thermal insulation materials.
Production of energy-saving and high-efficient chemical architecture materials which use plastic to replace steel and
wood.
Production of more than 10,000,000m2/a of elastomer, plastic changeable asphaltum waterproof coiled materials,
high-quality width (more than 2 meters) EPDM waterproof coiled materials and matched materials, durable PVC coiled
material, and TPO waterproof coiled materials.
Production of glass fiber (product line with technology of wire drawing in tank furnace) and glass fiber reinforced plastic
products with an annual capacity of 50,000 tons or more.
5 Production of sequential fiberglass original silk felt, fiberglass surface felt, micro-electronics fiberglass cloth and thin felt.
6 Production of coherent fiber bundle and laser medical optic fiber
7 Production of sanitation porcelain with an annual production of 1,000,000 pieces or over
8 Standardized refinement of ceramics material and production of high-level decorative materials used for ceramics.
9
Production of high-level refractory material used in furnaces for cement kiln, top-grade (electronic) glass, ceramics, glass
fiber and microporous carbon brick.
10 Production of ceramics carrier, AIN ceramics base piece and multiple-hole ceramics used in car catalyzing equipment.
Production of inorganic non-metal materials and products: artificial crystal, carbon/carbon complex materials, special
ceramics, special airproof materials, quick oil sealed materials, special cementation materials, special latex materials,
11
water rubber materials, heat insulation materials whose heat-transfer coefficient is or less than 0.025W/mK under normal
temperature and so on.
Production of high-tech compound materials: sequential fiber thermoplasticity-increasing compound materials and
prepreg, process assistant materials for molding colophony compound material which can endure heat > 300℃,
colophony compound material oar, top-grade sports articles made of colophony compound material, glass steel
tube(pressure > 1.2MPa) with special capabilities, special function compound materials and products, deep-water and
12
diving compound material products, medical and convalescent compound material products, carbon/carbon compound
materials and brake piece, high-performance ceramics compound materials and products, metal compound materials and
products, metal layer compound materials and products, super-high-pressure compound rubber pipes enduring a
pressure≥320MPa, and jumbo passenger airplane tyres.
Production of precise and high-capability ceramics and functional ceramics materials: carborundum super-minute powder
(purity > 99%, average granule diameter < 1μm), Si3N4 super-minute powder (purity > 99%, average granule diameter <
1μm), high-purity and super-minute alumina powder (purity > 99%, average granule diameter < 0.5μm), low-temperature
13
sintered zirconia powder (sintered temperature < 1350℃) , high-purity AlN powder (purity > 99%, average granule
diameter < 1μm), rutile TiO2 powder (purity > 98.5%), white char black (average granule diameter < 100nm), barium
titanate (purity > 99%, average granule diameter < 1μm)
14 Production of multi-dimensional and multi-directional integer weaving fabric and profile modeling fabric.
15 Innocuous disposal of combustible industrial castoff and domestic garbage with new dry cement kiln.
Source: NDRC and the Ministry of Commerce
10.3.3 Catalogue for the Guidance of Industrial Structure Adjustment
The Catalogue for the Guidance of Industrial Structure Adjustment released by NDRC in 2008 pointed out the directions
for investment in building material projects. It specified the building material projects in which the investment is encouraged,
restricted and banned. The list of the catalogue is as follows:
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S/N
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
Table 10-4 List of building material projects in which investment is encouraged
Contents
NSP cement production lines whose daily capacity is more than 4,000t (2,000t in western regions) and development of
NSP cement production equipment and accessory materials
Development and production of new environmental energy-saving wall material, insulating and soundproof materials,
waterproof materials, sealing materials for building and building coatings
Production of high-quality and environmental friction and sealing materials
Development and application of alkali-free DM fiberglass technology whose annual capacity is more than 310,000t and
high-performance fiberglass and product technologies
Production of high-quality and energy-saving compound door & window and hardware accessories
Development and manufacturing of new pipelines (including pipe fittings)
Development of high-quality float glass production technologies and equipment, and safe plate glass further processing
technologies
Development and manufacturing of flushing toilets which flushes less than 6 liters each time and water-saving squatting
toilets and water-conserving control equipment
Production of high-purity, ultra-fine, modified and other fine processed mineral materials needed for high-tech and
environmental protection industries, development and manufacturing of technology equipment
Development of key technologies and equipment for innoxious disposal and reuse of industrial waste, urban waste and
sludge in NSP cement, new wall material and other building material products
Development of fiberglass reinforced plastics mechanized forming technologies
Development of bulk cement equipment and technologies
Development and production of high-performance concrete additives
Artificial sand production lines whose annual capacity is more than 5,010,000t, development and production of
technology equipment
Construction of large cement grinding stations whose annual capacity is more than 10,010,000t
Large quarry stone production lines whose annual capacity is more than 200,000t and ultra-thin compound stone
production lines whose annual capacity is more than 300,000/t
Development of high-quality artificial crystalloid material production technologies
Source: NDRC
Table 10-5 List of building material projects in which investment is restricted
S/N
Contents
1 Ordinary float glass production line
2 Building and sanitary ware tile production lines whose annual capacity is less than 1 million m2
3 Sanitary ware tunnel kilns whose annual capacity is less than 500,000 pieces
Cement mechanized shaft kilns, dry hollow kilns, Lepol kilns and wet kilns; new NSP cement production lines whose
4
daily capacity is less than 2,000t
5 Paper base petroleum asphalt felt production lines whose annual capacity is less than 20 million rolls
Paper base petroleum asphalt felt production lines, modified asphalt waterproof rolling material production lines whose
annual capacity is less than 5 million m2, flexible compound bitumen waterproof membrane production lines and
6
Compound waterproof rolling material of PE film and PP fiber production lines whose PE film thickness is less than
0.5mm
7 Medium-alkali glass bead production lines, platinum crucible bead DM fiberglass production lines
8 Clay brick production projects
Gypsum (hollow) block production lines whose annual capacity is less than 150,000m2, small hollow concrete block
productions lines whose annual capacity is less than 25,000m3/shift, fixed concrete paver production lines whose annual
9
capacity is less than 150,000m3/shift and artificial light weight aggregate (ceramisite) production lines whose annual
capacity is less than 50,000m3
10 Aerated concrete production lines whose annual capacity is less than 100,000t
11 Gangue and shale fired solid brick production lines whose annual capacity is less than 30 million standard bricks
12 Rock (mineral) wool production lines whose annual capacity is 5,000t.
13 Asbestos friction and sealing material production lines
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14
15
16
17
Technology to produce clutch facing production through glue digestion and immersion with organic solvents
Magnesite wall board whose annual capacity is less than 150,000m2
Magnesite decorating (fireproof) board production lines whose annual capacity is less than 1 million m2
Caustic magnesia reverberatory kiln process whose content of active MgO is less than 50%
Cement grinding stations whose annual capacity is less than 6010,000t/ (except those in Xinjiang other western regions
18
with less developed traffic conditions)
Source: NDRC
S/N
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
Table 10-6 List of building material projects in which investment is banned
Contents
Colburn process plate glass production lines (including Glaverbel process lines)
Mechanized cement shaft kilns whose diameter is less than 3m (2010)
Unfilmed plastic fabric cement package production lines
Medium/Low-grade building ceramics tile production lines whose annual capacity is less than 700,000m2 and low-grade
sanitary ware production lines whose annual capacity is less than 200,000 pieces
Gypsum plasterboard whose annual capacity is less than 4 million m2
Modified asphalt waterproof rolling material production lines whose annual capacity is less than 2 million m2
Dry hollow cement kilns (except those used to produce special cement) and dry hollow waste heat power generation kilns
(2008)
Wet cement kilns (except those used to produce special cements and dispose sludge and calcium carbide slag) (2008)
Cement grinding equipment whose diameter is less than 1.83m
Egg-shaped kilns and ordinary shaft kilns
Outdated building and sanitary ware kilns, down draught kilns, beehive kilns, coal-fired open-flame tunnel kilns, muffle
tunnel kilns and saggar sanitary ware tunnel kilns
Friction brick presses used to mould building ceramics tiles
Cement lime shaft kilns
Technology and equipment for the production of glass fiber with clay crucible
Annular kilns with less than 18 doors and shaft kilns, archless annular kilns and U-shaped kilns
Model-400 and below ordinary brick presses
Model-450 ordinary brick presses
SJ1580-3000 double-shaft and single-shaft mixers
SQP400500-700500 double-roll crushers
Model-1000 ordinary cutters
Rotary brick presses whose capacity is less than 100t
Manual wall board production lines
Movable concrete block press and attached vibration press
Fixed concrete block press whose annual capacity is less than 10,000m3/shift, fixed concrete paver press whose annual
capacity is less than 100,000m3/shift
Manually placed non-mechanically pressed gypsum (hollow) block production technology
Paper base petroleum asphalt felt production lines whose annual capacity is 1 less than million rolls
Vacuum pressure and one-step quartz glass producing technology and equipment
6×600t hexahedron synthetic diamond presser
Non-autoclaved and manual cutting autoclaved aerated concrete production line
Non-mechanical non-metal exploitation without mining permit or incompliant with environmental and production safety
requirements
Roasting or calcining kilns use to prepare caustic magnesia
Caustic calcined magnesia reverberatory furnaces whose standard coal consumption is ≥330kg/t and volume is ≤18m3
Source: NDRC
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10.4 Taxation Policy
10.4.1 Corporate VAT
Chinese government decided to reform the VAT from January 1 of 2009. The amount of tax on purchases occurred when
VAT payers purchase or makes fixed assets can be deducted from the amount of tax on sales according to the VAT invoice, VAT
payment certificate issued by the customs house and freight settlement documents (VAT deduction certificate) in pursuance of
the Provisional Regulations of the People's Republic of China on Value-Added Tax and Rules for the Implementation of the
Provisional Regulations of the People's Republic of China on Value-Added Tax.
VAT is a new commodity and labor service tax levied upon commodities and labor services on the basis of added value. It
falls into two categories according to the ways in which the amount of tax on purchases is deducted. Firstly, only the tax upon
the purchased materials is deducted, while the tax upon the purchased fixed assets is not. Secondly, the tax upon all the
purchases, including materials and fixed assets is deducted. Normally, the former is called production VAT and the latter
consumption VAT. Currently, production VAT is adopted in China. The transition of VAT refers to the transition of production
VAT to consumption VAT.
Currently, China’s VAT rate is 17%. However, as production VAT is adopted, it is equivalent to the rate of consumption
VAT which stands at 23%. The rate is deemed to be high in the world. To enhance the international competitiveness of
enterprises and drive technological advance and industrial upgrading, the VAT rate should remain unchanged or be turned down
appropriately after the taxation reform. Generally, the VAT reform increases the profitability of enterprises and lays a solid
foundation for the future development of enterprises.
10.4.2 Export Duty Drawback
In the second half of 2008 and 2009, to stimulate economic growth and boost export, Chinese government frequently
increased the export duty drawback rates for some products. Each rate increase involved some building material products. The
details of the rate adjustment are as follows:
On July 30 of 2008, the Ministry of Finance and State Administration for Taxation issued the Notice on Adjusting the
Export Duty Drawback Rate for Textile, Clothes and Other Commodities (Cai Shui [2008]111), stipulating that from August 1,
the VAT export drawback rate of some textile products and garments would be increased from 11% to 13%, the VAT export
drawback rate of some bamboo products would be increased to 11%, and the export duty drawback for Korean pine nut kernel,
some pesticides, some organic arsenic products, paclitaxel and its products, rosin, silver, zero-grade zinc, some coating products,
some battery products and carbon anode would be cancelled.
On October 21 of 2008, the Ministry of Finance and State Administration for Taxation issued the Notice on Raising the
Export Duty Drawback Rate for Some Commodities (Cai Shui [2008]138), stipulating that from November 1, the VAT export
drawback rate would be increased to 14% for some textile products, garments and toys, 11% for daily and artistic ceramics
products, 9% for some plastic products, 11% and 13% for some furniture products. Moreover, the VAT export drawback rate for
AIDS medicine,
genetically-recombined insulin humulin lyophilized powder, collagan, toughened safety glass, capacitor grade
tantalum wire, ship anchor chain, sewing machine, fan, hard alloy cutter for CNC machine tool, some books and notebooks
would be raised to 9%, 11% and 13% respectively.
On November 17 of 2008, upon the approval of the State Council, the Ministry of Finance and State Administration for
Taxation issued the Notice on Raising the VAT Export Duty Drawback Rate for Labor-Intensive Products and Other
Commodities (Cai Shui [2008]144), stipulating that from December 1, the VAT export drawback rate would be increased from
5% to 9% for some rubber products and forestry products, from 5% to 11% for some moulds and glass utensils, from 5% to 13%
for some aquatic products, from 11% to 13% for bag, shoe, hat, umbrella, furniture, bedclothing, lamps and lanterns, clock and
watch, from 5% an 9% to 11% and 13% respectively for some chemical products, stone and processed non-ferrous metal
material, from 9% to 11%, from 11% to 13% and from 13% to 14% for some mechanical and electrical products.
On December 29 of 2008, the Ministry of Finance and State Administration for Taxation issued the Notice on Raising the
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Export Duty Drawback for Some Machinery Products (Cai Shui [2008]177), stipulating that from January 1 of 2009, the VAT
export drawback rate would be raised from 13% and 14% to 17% for inertia navigation system for aviation, gyroscope, ion ray
detector, nuclear reactor and industrial robot, and from 11% and 13% to 14% for motorcycle, sewing machine and electric
conductor.
On April 1 of 2009, the Ministry of Commerce increased the export duty drawback to 17% for CTR color TV set, optical
cable, UPS (Uninterrupted Power Supply) and backed copper clad laminate for PCB, to 16% for textile products and garments,
to 13% for trisodium hexafluoroaluminate and other chemical products, perfume and daily-use chemical detergent, PVC and
other plastic products, some rubber and rubber products, fur clothes and other leather products, envelope and other paper
products, daily ceramics products, glass shell of kinescope and other glass products, precision welded steel pipe and other steel
products, monocrystalline silicon wafer, monocrystalline silicon stick whose diameter is larger than and equal to 30cm,
aluminum profile and other non-ferrous metal products, some rock drilling tool and metal furniture, to 11% for methyl alcohol,
some plastics and products, wooden photo frame and other wooden products, automobile rearview mirror and other glass
products, to 9% for sodium carbonate and other chemical products, building ceramics products, sanitary ware products, lock and
other small hardware products, copper plate and rod, some porcelain enamel products, some steel products and imitation jewelry,
to 5% for calcium hypochlorite and other hypochlorite of calcium and zinc sulfate.
On June 1 of 2009, the Ministry of Finance increased the export duty drawback rate to 17% for TV transmitting equipment
and sewing machine, to 15% for can, juice, umbrella silk and other further-processed agricultural products, electric gear pump,
semi-trailer and other mechanical products, optical components and other instruments, insulin preparation and other medicine,
bag, shoe, hat, umbrella, hair product, toy and furniture, to 13% for some plastic, ceramics and glass products, some aquatic
products and turning tools, to 9% for alloy steel and other anisotropic material, steel, steel structures and other steel products and
scissors, and to 5% for cornstarch and alcohol.
10.5 New Industrial Standards
The new standards for building materials which became effective in 2008 are as follows:
Table 10-7 New industrial standards for building materials which became effective in 2008
Standard Code
Standard Name
Enforcement Date
JC/T 411-2007 Cement-bonded Particle-board Reinforced with Fibrous Wood Particles
April 1, 2008
JC/T 422-2007 Non-fired Rubbish Gangue Brick
April 1, 2008
The Methods for the Measurement and Calculation of Heat Balance, Heat Efficiency of
JC/T 428-2007
Tunnel Kiln
The Methods for the calculation of the efficiency, unit heat consumption and unit coal
JC/T 429-2007
consumption of dryer annular tunnel kiln system
April 1, 2008
April 1, 2008
JC/T 443-2007 Paper for gypsum board
April 1, 2008
JC/T 496-2007 Alkali-resistant bricks for cement kiln
April 1, 2008
JC/T 504-2007 Bituminous waterproofing sheet use of Aluminum foil
April 1, 2008
JC/T 525-2007 Cinder brick
April 1, 2008
JC/T 535-2007 Wollastonite
April 1, 2008
JC/T 568-2007 Boards of magnesium oxychloride cement
April 1, 2008
JC/T 58.1-2007 Glass fiber reinforced plastics water tanks Part 1:SMC sectional water tanks
April 1, 2008
JC/T 713-2007 Energy consumption quota of fired brick and tile
April 1, 2008
JC/T 746-2007 Concrete tiles
April 1, 2008
The method for the measurement and calculation of heat balance, heat efficiency of annular
JC/T 791-2007
kilns
The methods for the measurement and calculation of heat balance, heat efficiency of tunnel
JC/T 792-2007
dryer
JC/T 793-2007 The methods for the calculation of the efficiency, unit heat consumption and unit coal
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April 1, 2008
April 1, 2008
April 1, 2008
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consumption of tunnel dryer annular kiln system
JC/T 800-2007 Decorating gypsum board for lay-in installing
April 1, 2008
JC/T 803-2007 Perforated gypsum board for acoustic use
April 1, 2008
JC/T 846-2007 Film mounted glass
April 1, 2008
JC/T 1051-2007 Aluminum foil faced phenolic foam sandwich panels
April 1, 2008
JC/T 1052-2007 Wool products for sound sorption and thermal insulation
April 1, 2008
JC/T 1053-2007 Test methods of waste dregs mixing amount in fired bricks and tiles
April 1, 2008
JC/T 1054-2007 Coated glass of antibacterial
April 1, 2008
JC/T 1055-2007 Sandwich composite panel with fiber cement in building
April 1, 2008
JC/T 1056-2007 Unbounded pre-stressed concrete pipe
April 1, 2008
JC/T 1057-2007 Glassfiber reinforced cement panel for exterior wall
April 1, 2008
JC/T 1058-2007 Zirconia ceramics edged ring
April 1, 2008
JC/T 1059-2007 Metal and metal-composite ceilings
April 1, 2008
JC/T 690-2008 Bitumen flexible waterproofing membrane with double reinforcement
July 1, 2008
JC/T 1060-2007 Test methods for waste residue in silicate building material products
April 1, 2008
JC/T 1061-2007 Aluminum-foil faced rigid polyurethane foam sandwich panels
April 1, 2008
JC/T 1062-2007 Foamed concrete block
April 1, 2008
JC/T 1063-2007 Spalling resistant high alumina bricks for cement kiln
April 1, 2008
JC/T 1064-2007 Guimo brick for cement kiln
April 1, 2008
JC/T 1065-2007 Constant speed friction test machine
April 1, 2008
JC/T 1066-2008 Limit of harmful substances of building waterproof coatings
July 1, 2008
JC/T 1067-2008 Waterproof materials for pitched roof Underlayments of polymer modified bituminous
July 1, 2008
JC/T 1068-2008
Waterproof materials for pitched roof underlayments of self-adhering polymer modified
bituminous
July 1, 2008
JC/T 1069-2008 Primer of substrate used for bituminous waterproofing sheet
July 1, 2008
JC/T 1070-2008 Self adhering polymer modified bituminous flashing strip
July 1, 2008
JC/T 1071-2008 Granule for asphalt shingles
July 1, 2008
JC/T 1072-2008 Quality control regulations for waterproof membrane manufacturers
July 1, 2008
JC/T 1073-2008 Methods for chemical analysis of chloride for cement
July 1, 2008
JC/T 1074-2008 Purificatory performance of coatings with air purification
July 1, 2008
JC/T 1075-2008 Root penetration resistance of waterproof sheets for green roof system
July 1, 2008
Reclaim crumb rubber modified bituminous waterproofing sheet using a combinative
reinforcement of glass felt and glass fabric mesh
Reclaim crumb rubber modified bituminous waterproofing sheet using a combinative
JC/T 1077-2008
reinforcement of glass felt and polyethylene
Reclaim crumb rubber modified bituminous waterproofing sheet using a combinative
JC/T 1078-2008
reinforcement of polyester and glass fabric mesh
JC/T 1076-2008
July 1, 2008
July 1, 2008
July 1, 2008
JC/T 71.2-2008 Coated glass fiber woven Part2:PTFE emulation coated glass woven
December 1, 2008
JC/T 407-2008 Aluminum pastes for aerated concrete
December 1, 2008
JC/T 449-2008 Raw materials for magnesia cement
December 1, 2008
JC/T 474-2008 Water-repellent admixture for mortar and concrete
December 1, 2008
JC/T 506-2008 Soundless Cracking Agent
December 1, 2008
JC/T 550-2008 Adhesives for polyvinyl chloride floor tiles
December 1, 2008
JC/T 564.1-2008 Fiber reinforced calcium silicate boards Part 1:Non-Asbestos calcium silicate boards
December 1, 2008
JC/T 564.2-2008 Fiber reinforced calcium silicate boards Part 2 Asbestos calcium silicate boards
December 1, 2008
JC/T 566-2008 Perforated fiber-cement sheet for absorbing sound
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China Business Guide
JC/T 567-2008 Glass fiber reinforced cement corrugated sheet and ridge tile
December 1, 2008
JC/T 589-2008 Glass fiber reinforcing cord for rubber
December 1, 2008
JC/T 626-2008 Fiber reinforced low alkalinity cement flat sheets for building
December 1, 2008
JC/T 627-2008 Asbestos-cement half-corrugated sheet of asymmetrical section
December 1, 2008
JC/T 630-2008 Rubber rings for asbestos-cement pipe
December 1, 2008
JC/T 641-2008 Decorative concrete block
December 1, 2008
JC/T 671-2008 Vinylon fiber reinforced cement flat sheet
December 1, 2008
JC/T 694-2008 Package of Sanitary Ware
December 1, 2008
JC/T 758-2008 Washbasin Faucets
December 1, 2008
JC/T 760-2008 Bathtub and Shower Faucets
December 1, 2008
JC/T 764-2008 Toilet Seats
December 1, 2008
JC/T 851-2008 Wire Mesh Asbestos-cement Small Corrugated Sheet
December 1, 2008
JC/T 854-2008 Glass fiber Reinforced Cement Duct for Ventilation
December 1, 2008
JC/T 860-2008 Masonry Mortar for Small Hollow Concrete Block ＆ Concrete Brick
December 1, 2008
JC/T 861-2008 Grout for Concrete Blocks (Bricks)
December 1, 2008
JC/T 862-2008 Small Hollow Block of Fly Ash Concrete
December 1, 2008
JC/T 864-2008 Polymer Emulsion Architectural Waterproof Coating
December 1, 2008
JC/T 1079-2008 Insulating Glass
December 1, 2008
JC/T 1080-2008 Dry-hanging Hollow Ceramics Slab
December 1, 2008
JC/T 1081-2008 Technical Specification for Quarry of Decorative Stone
December 1, 2008
JC/T 1082-2008 Low Heat Portland Steel Slag Cement
December 1, 2008
JC/T 1083-2008 Test Method for Compatibility of Cement and Water-reducing Agent
December 1, 2008
JC/T 1084-2008 Methods for Chemical Analysis of China ISO Standard Sand
December 1, 2008
JC/T 1085-2008 X-ray Fluorescence Analyzer for Cement
December 1, 2008
JC/T 1086-2008 The Method for Determining the Chloride Diffusion Coefficient for Cement
December 1, 2008
JC/T 1087-2008 Steel Slag Cement for Road
December 1, 2008
JC/T 1088-2008 Methods for Chemical Analysis of Granulated Electric Furnace Phosphorous Slag
December 1, 2008
JC/T 1089-2008 Continuous High Silica Glass Yams
December 1, 2008
JC/T 1090-2008 Steel Slag Masonry Cement
December 1, 2008
JC/T 1091-2008 The Joint Ring Steel for Pre-stressed Concrete Cylinder Pipe
December 1, 2008
JC/T 1092-2008 Unsaturated Polyester Resin for Mechanically Transformed Fiber Reinforced Plastics
December 1, 2008
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The Building Materials Industry
11 Chapter 11 Future Prospects of China’s Building Material Industry
11.1 Cement Product Industry
The financial crisis which first broke out in the U.S. in 2008 affected the whole world. China’s building material industry
was also impacted. The real estate industry was in depression, the market demand of cement shrank, monetary policies were
tightened, growth rate in investment in cement industry fell back, and the growth of industrial profit decelerated. In 2008, the
growth of cement demand is less than 2.8%. Amongst, the growth rate in July, August and September is only 2.0%, the lowest
since the beginning of 2008.
In terms of yield, August, September and October of 2008 saw lower yield than the same periods of 2007. The growth in
cement production also declined compared with the same period of 2007. In November and December, China’s cement yield
went up slightly over the same period of 2007. As China began to vigorously boost its domestic demand and accelerate the
construction of key projects and infrastructure, the cement industry began to recover from the fourth quarter of last year.
In 2009, China’s cement industry will face daunting tasks and challenges. In general, the growth of cement demand will be
80-110 million tons, corresponding to the newly-added production capacity, making the demand and supply basically balanced.
However, in the second half of the year, there will be some changes. In the first half of the year, the demand pressure is huge. In
the second half of the year, as the demand is released together, the demand and supply may become balanced. In terms of price
change, in the first half of the year, cement price will continue to fall. From the third quarter, as the demand rises, the price will
rise slightly. However, the annual average price will still be lower than that in the previous year. Correspondingly, the gross
profit rate will still fall in the first year half. From the third quarter, as the demand goes up and the coal price rebounds, the gross
profit rate is likely to increase. Against this backdrop, the cement production capacity will continue to rise. As a result of rising
cement production capacity, the industrial competition will unavoidably become even tougher. 2009 will be more difficult for
China’s cement industry.
Specifically, changes in China’s cement industry will present the following characteristics in 2009:
Firstly, the decline of market demand will be checked. However, some segmented demands are still inadequate. Due to the
financial crisis, the financial market was severely affected and the external demand fell dramatically. As a result, China’s
domestic demand of cement dropped significantly in 2008. In the fourth quarter of last year, China’s policies to boost domestic
demand were gradually implemented. Consequently, the demand of cement rebounded to some extent. However, the first season
of this year was traditionally a low season for cement industry. Affected by the Spring Festival, the demand is expected to
remain slack. In January, because of the Spring Festival vacation season, cold weather, and unsmooth logistics, plus the overcast
and rainy days in February and March, the market situation was still bleak. In terms of project construction, except for key
projects that need much cement, new real estate projects dropped significantly, and the input on foundations declined
dramatically. Consumption in rural areas dropped as the income of migrant workers fell.
Secondly, the industrial restructuring will bring new opportunities. However, the market imbalance resulting from too fast
capacity expansion has emerged. Objectively, the financial crisis boosted the restructuring of the cement industry. The further
upgrading, extensive production and intensive operation of the industry will bring new opportunities to and create a new
development environment for dominant cement makers which will secure more development space by building up their own
competence and risk resistance ability. However, they should also be aware that over-rapid capacity expansion in some regions
will also bring some negative effects, posing potential risks to the balance between demand and supply. Many newly-constructed
large cement makers are suffering losses.
Thirdly, the price hike pressure of coal, electricity and composite material remains tremendous. In the third quarter of last
year, coal price hit a record high in history, but the quality deteriorated, posing severe threats to cement production. The rising
electricity price also brought new cost pressure to high energy-consuming cement makers. The cost of coal and electricity
reached RMB160/t, accounting for 75% of the production cost. At the same time, the declining steel output and electricity
generation also stressed composite material supply and drove up the price, further eroding the cement cost. It is expected that the
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continuous price hike of coal, electricity and composite material will further shrink the profit space of cement makers, sending
the gross profit rate further down. Although since the fourth quarter of last year, international coal and oil price dropped
dramatically, domestic coal price failed to go down accordingly and the effect has not walked its way to the cement industry.
Moreover, as the demand does not grow vigorously, the cement industry still faces daunting cost pressure.
11.2 Glass Product Industry
In 2008, China’s glass industry remained booming. According to the restructuring goal of the glass industry, quality float
glass and post processed glass of special varieties will be the focus of the industry in the future, and development goal set forth
in national industrial restructuring plans. According to the restructuring plan, the production of ordinary float glass will be
limited, and the outdated colburn process (including Glaverbel technology) will be eliminated. Although China’s glass yield has
ranked the first in the world for many years in a row, most of the glass products are ordinary float glass. Moreover, the
production technology for special ordinary float glass such as ultra-thick, ultra-thin and ultra-clear ordinary float glass is still
immature. According to the guiding opinions of competent authorities, by the end of 2010, the proportion of quality ordinary
float glass will reach 40% in China. The 2010 World Expo will be held in China. The construction of arenas and relevant
buildings will boost the demand of Low-E glass. In nearly 10 years, market demand of Low-E glass will rise rapidly in China.
As furniture, decoration, electronic information and solar power industries are still at the growth period, the consumption of
glass in these areas will grow faster than in construction and automobile industries. As a result of rapid expansion of the
electronics/electrical appliance industries, product innovation and significant increase in people’s income, by 2011, the market of
glass in electronic/electrical appliance industries will expand at the highest rate. Similarly, the market demand of automobile
glass will also be quite considerable due to the rapid expansion of the automobile industry. Post processed glass includes
insulating glass, toughened glass, laminated glass, mirror and other special glass products. The market demand of post processed
glass will grow by 12.5% annually, much higher than the growth rate of the plate glass industry. It is expected that by 2011, the
total demand will be up to 450 million m2. Construction will remain the largest plate glass product consuming industry, which
will consume 87% of the plate glass products by 2011.
Glass post processing ability is the core of competition between glass product makers. Energy-conserving glass, electronic
glass and solar glass will be the focus of the industry in the future. In 2010, China’s LCD sales will be up to 16 million units,
accounting for more than 23% of the world’s total. An indispensable material of the TFT-LCD industry is glass substrate whose
demand will also rise by 30%-50% in the next several years. China proposes to reduce the energy consumption by 50% for one
third of the newly-constructed buildings by 2010, and by 65% for all the newly-constructed buildings by 2020. According to the
2010 target, the floor space of newly-constructed energy-saving buildings will be about 3 billion m2, requiring about 600 million
m2 of energy-saving glass, 120 million m2 annually. Low-E glass is facing a rosy development prospect.
11.3 Stone Industry
In 2009, the impact of international financial crisis on the real economy will be even more profound. However, as China’s
stone makers normally arrange their production according to the orders they receive, and various construction projects, from
civil engineering to decoration, will last about one year, the impact of financial crisis on China’s stone industry will lag behind
the impact on other industries. Therefore, we must pay much attention to the development of the industry in the next half of the
year. For China’s stone industry, challenges mainly come from the dramatically declining external and internal demand, i.e.
export and domestic market demand.
As China’s stone industry has been operating according to the mode of market economy for a long time, it is highly
market-oriented and accustomized to market changes. For the industry, on the one hand, although the export to Europe, U.S.,
Japan and Korea grows at a slower pace, the market potential of Russia, Saudi Arabia, United Arab Emirates and other emerging
and energy-exporting countries is rising. Therefore, the total amount and quantity of China’s stone export still increases.
Consequently, as long as we continue to consolidate the traditional markets and explore markets in new industrializing and
petroleum-exporting countries, the growth rate of stone export will soon recover, and China’s stone export may even take a
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The Building Materials Industry
larger share in the international market after the crisis. On the other hand, in the RMB4 trillion worth of domestic demand
expansion packages that were newly promulgated and the plans for revitalizing 10 industries that have been or will soon be
promulgated, infrastructure, projects for improving people’s well-being, pillar industries, the maintenance of growth, industrial
restructuring and upgrading are highlighted. This will boost China’s stone market. In particular, there are still many new
stone-consuming hotspots in China. For instance, the Binhai New Area of Tianjin will boost the economic growth in the Bohai
rim regions and the huge investment in Shanghai World Expo will boost the Yangtze River Delta region. The development of
China’s western regions, the revitalization of the old industrial bases in China’s northeast, the rise of city belts in Wuhan,
Changsha-Zhuzhou-Xiangtan and China’s central regions, the reconstruction in disaster-hit areas, urbanization and demand in
rural areas will drive the growth of decoration business, which in turn will stimulate the consumption of stone. Moreover, the
international oil price has fallen dramatically, and is unlikely to rise within a short time. This presents a new opportunity for
industrial integration and building up of the competence of dominant stone makers.
In 2009, China’s stone will continue to rise stably, and this momentum will not change in the next several years.
11.4 Ceramics Industry
After many years of development, China’s ceramics industry is now the world’s first in terms of size. However, China’s
ceramics industry is large in size but not strong in competence. In terms of export, brand and quality, China is only a
second-class country. To exalt the position of China’s ceramics industry in the world and build up the competence of the industry,
the key is to boost strategic reorganization and restructuring, and make the production more intensive, extensive and
concentrated. Moreover, we should, in line with new industrialization requirements, develop circular economy, intensify
innovation, optimize and upgrade product structure, cultivate famous brands and expand export. The negative impact of the
global economic crisis has significantly affected China’s ceramics industry. As overseas orders keep falling, some
export-oriented enterprises have cut their employees or given long vacations to their employees. In Shanghai where commerce is
the pillar economy, due to the economic crisis, the housing price declines after growing madly for 10 years. Although real estate
developers and ceramics vendors take various measures to stimulate the enthusiasm of consumers, people remain unmoved
because of falling purchase power.
In 2009, China’s ceramics industry will face tremendous variables. The adjusted industrial environment will force
small/medium-sized enterprises to shut down. Due to the world economic depression caused by the financial crisis in 2008,
China’s export of ceramics products is greatly affected, which in turn will threaten the survival of many enterprises. To help
enterprises alleviate their operational pressure and expand their export, and continue to build up the international competence of
“Made in China” products, China will promulgate some favorable policies, including raising the export duty drawback rate.
Although ceramics industry is not included in the newly-issued list of industries eligible for the raised export duty drawback rate,
the policy fundamental is good and the export duty drawback for ceramics industry is likely to be raised in 2009. In general,
China’s ceramics industry will still face some difficulties in 2009 and this situation will not improve before 2010.
11.5 Coating Industry
The global demand of building coating is growing by 3.7% annually. It is estimated that by 2009, the total demand will be
19.8 million tons, worth US$39.3 billion. The demand growth results from the rapidly-growing economy and construction of
many buildings. Moreover, urban population grows at a fast pace, stressing the housing reserve and boosting the construction of
private and public houses. The fastest market growth and expansion will be reported in China and India. In 2009, Japan’s output
value of coating will be much lower than the world average, and the demand growth in North America and Western Europe will
be lower than the world average, where the population only accounts for 13% of the world total, but contributes 45% of total
consumption. In the U.S., the demand of external architectural coating is affected by the transition from wooden materials to
ethylene materials. The market demand of paint and coating in Western Europe will grow at a rate of 2.2% annually by 2009.
In general, China’s coating market will grow stably in 2008, and 2009 will see many difficulties and challenges in coating
industry. Although Chinese government has promulgated many economy stimulating and industrial revitalization packages, due
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China Business Guide
to the lagging effect of fiscal policies, it is expected that the overall recovery will not occur before the fourth quarter of 2009.
The local demand of paint and coating will 2%-5% higher in the first half of 2009 year on year, 20% higher in the second half of
2009 over the same period of 2008. It is expected that the export will report a negative growth in 2009. However, as the effect of
economy stimulating and industrial revitalization packages begins to show, China’s paint and coating industry is expected to
rebound in 2010, and the export will grow positively in 2010. To sum up, China’s yield of paint and coating will pick up and
report a double-digit growth in 2010.
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