Volume 40,   Issue 6                                June  2005

Shanghai Surprise

Though China Glass was Immense,
Overall it Proved Imitative, not Innovative
by Charles Cumpston

Everything you’ve heard about China is true. It’s big, it’s busting out all over and it’s formidable. All this was evident at China Glass 2005. The crowds for the first two days of the four-day event were big, steady and aisle-filling. The country’s glass industry is growing, domestically, because of the large building boom, and internationally where its exports of glass have certainly caused alarm (in the mirror and auto glass segments especially). The country’s machinery is getting better all the time as well.

The 16th annual Chinese international glass industrial technical exhibition was held April 13-16 in Shanghai. (The show alternates between there and Beijing, where it will be held next April.) It featured 611 exhibitors, 204 of which were foreign, in approximately 300,000 square feet (30,000 square meters) of space in three halls.
China Glass is much like the glass industry’s largest international event, glasstec in Düsseldorf, Germany, in that all segments of the glass industry are present: container, hollow and stained glass as well as architectural and automotive.

And China Glass has the same feel that glasstec had in the early 1980s when the industry was just starting to become international and more automated. The difference is that no one outside [Germany] felt threatened by glasstec and its exhibitors. This was not necessarily the case with China Glass and its exhibitors.

Many Chinese equipment suppliers were at the show with large, impressive (if somewhat crude) booths; but there was more imitation than innovation on display. In fact, one company is reported to have once stated proudly in its literature that it is the original copier of the Tamglass tempering equipment.

But it is generally acknowledged that the quality of the Chinese equipment and glass is getting better and that it will inevitably be an important exporter sooner than competing suppliers from other countries would like.

Jay Molter, director of marketing and sales for Glasstech Inc., called China Glass the safety glass equipment machinery company’s second most important show after glasstec in Düsseldorf.

Steve Weidner, vice president of sales and marketing-building products for Pilkington North America Inc., echoed those sentiments. 

“This is the second time we’ve done the show and we find it very useful. It’s a great market for our coated products.”

TruSeal’s president Gus Coppola pointed out that his company has been exhibiting at the show through its distributor for six years or so.

“The quality of the equipment has really improved in the last few years,” he said.
But Van Kuh, general manager of Aztech in Somerville, N.J., said the market is not mature yet. 

“I spend a lot of time educating people about what I offer and about insulating glass,” he said. “The market here is what it was in the United States in the 1970s in that sense.”

Another U.S. exhibitor, Scott Grubb, sales manager for Soleras Ltd. in Biddeford, Maine, made this observation. “Our gas prices are going up and you look at the number of cars here and you know why. You hear about the shortage of construction materials—steel, concrete—it’s easy to see why. You have to expect a vibrant glass industry.”

No Slow Boat to China
The importance the Chinese market holds is clear in conversations with the sales and marketing personnel of foreign suppliers and those involved in joint ventures. They cite the dramatic increase in the frequency of visits they and other technical people from their companies are making to the country. The number seems to have risen drastically in the last six months to a year, with people reporting monthly, and some even more frequent, visits to China as common.

Particularly, the equipment suppliers see the market as an important one, but they grit their teeth about the blatant copying that has been done by Chinese companies, sometimes down to using the same color as the original supplier’s equipment.

Renata Gaffo, director for the Italian equipment suppliers group, GIMAV, explained one dilemma her group’s members face. 

“It’s a very important market, but the problem is that in many cases the Italian companies’ machinery has been copied.” The more simple machines are copied the most,” she said. “The more simple it is, the easier it is to copy.” 

She reported that GIMAV companies sell into the Chinese market, but not very many units. The strategy for many Italian companies is to do joint ventures or invest capital for production for the local market, she explained. Some companies have signed agreements with Chinese companies for joint ventures, while others, such as Bottero and Fenzi, have made capital investments.

Previously, GIMAV has participated in the show every other year in Beijing, but decided to do it as a group in Shanghai this year as well.

Gaffo described China as a good market but tricky. “Prices are low, and if you want to sell in this market you have to have high quality and competitive prices,” she said.

“The problem with competitive pricing is that the exchange rate for the Chinese currency (the RMB or yuan) is pegged to the dollar rather than free floating at market value.”

Gaffo continued, “The Italian machinery manufacturers want to sell in the market because it is large. There are 140 float plants, of which 120 are running, and I’ve heard there are 60 more float plants on the boards. They need machinery to work that glass.”

The Chinese Horde
According to Harley Gu, a Shanghai-based publisher of a number of magazines for the Chinese glass industry, there are 6,200 fabricators in the country, of which 3,000 do more than $1 million a year in sales.

“There is such a high need for information here and people are so eager to see the equipment,” he said. 

Talking to people at the show and seeing all the building that is taking place in Shanghai, it appears that the reality of construction has outpaced the industry’s ability to build a solid base and infrastructure. Companies find out what is available, make a copy or something similar, and sell it to the local market at a price it can afford. This seems to be the modus operandi.

Jorma Vitkala of Tamglass heads up the Glass Processing Days (GPD) educational event. Vitkala also ran the two-day GPD China program coinciding with the show, and said that the educational effort was to try to get people to understand that the key factor in fabrication is quality—whether it is making safety glass or insulating glass (IG). 

“It is important that the industry understand that it can lose its reputation if there are quality problems,” he said. “We point out what the experience has been for other countries, so they can learn from that experience.”

For IG, he said the tempered glass IG unit is about 80 percent of production in China.

“This seems to be a higher proportion than where the industry is in general compared to where other countries were 20 years ago,” he said.

Gerhard Reichert, vice president of business development for Edgetech IG Inc., estimated that the Chinese IG market is about the size of Canada’s, which is about a tenth of that of the United States. 

“It is growing on a steep plane, but it still has 20 to 25 years of growth before it matures,” he said.

When it comes to quality, Reichert said the Chinese market is like any other large one.

“There are conscientious fabricators who do good work and then there are those that just slap the unit together.”

Kaj Appelberg, president of sales for Z. Bavelloni S.p.A./Tamglass, pointed out that much of the quality of the production in China is not being questioned. 

“All the plants are working three shifts and they’re just trying to get the product out,” he stated.

Glasstech’s Molter said that, on the automotive side, the Chinese fabricators must have Western technology because local suppliers cannot make glass that is going to meet the international standards for auto glass so that they can export cars to Europe and someday the United States. 

Threat? Opportunity? Both?
One primary glass manufacturer executive who attended the show and spoke on the condition of anonymity, summed it up: “The industry is exploding. If they ever get excess capacity, they could flood the world. Everyone talks about cheap labor but we’ve been in three plants this week and they are all state of the art automated. They are running lean and mean and still looking to take costs out of the operation.”

The orient is mysterious; China Glass is transparent. You’ve seen it all before. It showcased an emerging industry, but not one that has something new to offer the market at this time.  

Charles Cumpston is a contributing editor for USGlass magazine.


USG
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