RAPPORTO SULL INDUSTRIA CINESE DI MACCHINE PER MATERIE PLASTICHE E GOMMA

RAPPORTO SULL INDUSTRIA CINESE DI MACCHINE PER MATERIE PLASTICHE E GOMMA MARKET REPORT 2010

CHINA PLASTIC AND RUBBER MACHINERY Overall market snapshot China is the world s largest plastic and rubber machinery market, accounting for 25% of the global market In 2009, the market size of Chinese plastic and rubber machinery was about RMB 29.2 billion (excluding the components and parts), of which the imported machinery was about RMB 8.6 billion, and domestic-made machinery was about RMB 20.6 billion The industry is forecasted to grow steadily in 2010, mainly driven by increasing demand from key customer industries such as automotive and electronics Chinese machinery companies served mainly the low-mid end market, while high value-added machinery is mostly reliant on imports There are about 800 local manufacturers of plastic and rubber machinery industry; however there is a significant technology gap between large and small companies. About 60 large manufacturers 1 dominate the market with about 73% market share. Latest import-export analysis / Italy s market position China is still a net importer of plastic and rubber machinery; in 2009 the imports reached USD 2.03 billion while exports was USD 1.35 billion However, exports are growing much faster than imports, with CAGR of 40% (2005 2008); majority of imported items are high-end machinery, while exports are mainly low to mid-end machinery. In 2009, both imports and exports experienced the decline. In particular, the imports decreased by 29.3% compared with the previous year. 1 There are 12 manufacturers with revenue >RMB 100 million, and 50 with revenue >RMB 30 million, which together account for about RMB 8 billion in sales 3 HS 8477: Machinery for working rubber or plastics or for the manufacture of products from these materials 2

Million USD 2850 2550 2250 1950 1650 1350 1050 750 China Import & Export Plastic and Rubber Machienry 2005-2009 2457.6 2452.4 756.6 1046.6 2571.2 1448.2 2877.9 1910.1 2034.6 1354.5 2005 2006 2007 2008 2009 Import Export Note: All value in the chart is the sum of HS codes used for plastic and rubber machinery 8477 3 Table below shows the key countries that export plastic and rubber machinery to China Italy ranked #4, with an import value of US$ 124.15 million, accounting for 6.1% of total imports. 3

Table: China imports of plastic and rubber production machinery, top 5 countries, in 2009 Rank Country Import value % of total Note [US$ M] imports 1 Germany 634.12 31.17 #1 in blowing molding machinery, Extruders, vacuum moulding machinery, and other moulding machinery 2 Japan 580.96 28.55 #1 in injection molding machinery, #2 in Extruders 3 Taiwan 179.80 8.84 #3 in Injection molding machinery and Thermoforming & vacuum molding machinery #4 in Other molding machinery #2 in Thermoforming & vacuum 4 Italy 124.15 6.1 molding machinery #3 in blowing molding machiner 5 Korea, 101.02 4.97 #4 in injection molding machinery South Germany and Japan are the key Top 5 total 1620.05 79.63 exporting countries, accounting for about 60% of total imports Snapshot of key customer segments The following table shows the key customer industries for plastic and rubber machinery more than 75% of production of these industries are concentrated alone the East cost of China Automotive industry is the largest customer segment; however demand from plastic bottling, medical packing and architectural industries are expected to grow rapidly 4

Industries Description Geographical distribution Production value in 2008: RMB 3339.5 billion, 23% growth from 2007 About 18,000 manufacturers Automotive industry Plastic and rubber is much cheaper and lighter, and has gradually replaced steel for the body parts Increasing demand in rubber is mainly driven by tire industry growth Production value in 2008: RMB 1412.6 billion, 22% growth from 2007 About 24,000 manufacturers PET bottle accounts for 57% of total beverage packaging, and it is expected Plastic and rubber industry to continue growing as some beer producers have planned to replaced glasses bottle by PET Plastic film packaging has been applied to some fast-growing sectors such as medical, cosmetic and agricultural packaging Production value in 2008: RMB 1,600 billion, 20% growth from 2007 About 22,000 manufacturers Increasing demand driven by: - Government is implementing a series of Architectural urban renewal schemes, demand of material plastic pipe, door and window remains industry strong - Increasing demand on waterproof rubber building material such as waterproof film and quakeproof material Source: China Statistics Yearbook 5

Technology development and industry trends Level of technology. It is estimated that the technology level of China s plastic machinery industry lags behind Europe and US by about 10 years. However, as domestic players are paying more attention on R&D, the technology level is constantly improving and the gap is narrowing Equipment used. Injection molding machinery, extruders and blow molding machinery are the three key segments, accounting for 40%, 25% and 13% of total domestic production respectively. There is an increasing use of computerized systems and all-electric machinery to boost production efficiency and improve product quality Foreign players with domestic production. Many international brands have set up manufacturing facilities in China; initially, these companies entered through joint ventures with domestic machinery suppliers, but many have since converted to WOFEs Industry consolidation. Small domestic suppliers are exiting the market due to fierce competition, while foreign companies are expanding through M&A activity; the number of domestic plastic and rubber machinery suppliers have declined from 800 in 2007 to 600 in 2009. Brand establishment. Domestic players are focusing more on creating their own brands rather than competing purely on price Potential opportunities for Italian companies The market is growing and greatly dependent on foreign technology, thus representing good opportunities for Italian plastic and rubber machinery suppliers Italian companies may consider establishing a manufacturing presence in China in form of WOFE or JV 4, as an offshore assembling base for the global market in order to take the advantage of China s lower production cost and the large domestic market 4 WOFE = Wholly-Owned Foreign Enterprise; JV = Joint Venture 6

APPENDIX IMPORT-EXPORT STATISTICS China s Total Import from World by countries World 2571.24 2877.94 2034.61 100 100 100-29.3 1 Germany 500.47 738.98 634.12 19.46 25.68 31.17-14.19 2 Japan 909.52 988.19 580.96 35.37 34.34 28.55-41.21 3 Taiwan 356.38 304.63 179.80 13.86 10.59 8.84-40.98 4 Italy 133.62 169.98 124.15 5.2 5.91 6.1-26.96 5 Korea, South 203.82 171.63 101.02 7.93 5.96 4.97-41.14 6 United States 80.62 90.83 79.01 3.14 3.16 3.88-13.01 7 France 79.13 84.81 61.53 3.08 2.95 3.02-27.45 8 Switzerland 38.10 27.84 49.25 1.48 0.97 2.42 76.91 9 Canada 39.48 44.55 44.14 1.54 1.55 2.17-0.92 10 Austria 45.91 51.11 43.88 1.79 1.78 2.16-14.15 7

China s Total Import from World by products HS Description 2007 2008 2009 2007 2008 2009-09/08-8477 Machinery For Working Rubber & 2571.24 2877.94 2034.61 100 100 100-29.3 847710 Injection-Molding 931.53 941.38 574.41 36.23 32.71 28.23-38.98 847780 O Work Rubber/Plstc 484.97 589.76 524.87 18.86 20.49 25.8-11 847720 Extruders 306.78 348.13 312.12 11.93 12.1 15.34-10.34 847790 Parts For 8477 230.95 298.01 229.36 8.98 10.36 11.27-23.04 847730 Blow-Molding 162.82 249.05 180.30 6.33 8.65 8.86-27.61 847740 Vac-Mold+Othr Therm 219.76 238.53 107.51 8.55 8.29 5.28-54.93 847759 O Mld/Form Rub/Plst 208.47 176.29 87.52 8.11 6.13 4.3-50.36 847751 M/Retrd Pnmtic Tire 25.96 36.78 18.52 1.01 1.28 0.91-49.64 China s Import from Italy by products HS Description 2007 2008 2009 2007 2008 2009-09/08-8477 Machinery For Working Rubber & 133.62 169.98 124.15 100 100 100-26.96 847780 O Work Rubber/Plstc 38.86 61.89 41.73 29.1 36.41 33.6-32.58 847740 Vac-Mold+Othr Therm 52.60 41.59 22.42 39.4 24.47 18.1-46.1 847720 Extruders 6.95 8.76 16.35 5.2 5.15 13.2 86.68 847759 O Mld/Form Rub/Plst 4.28 12.16 13.56 3.2 7.15 10.9 11.56 847730 Blow-Molding 11.87 19.00 13.54 8.89 11.18 10.9-28.73 847710 Injection-Molding 10.04 12.69 8.23 7.52 7.46 6.63-35.15 847790 Parts For 8477 8.47 12.40 7.89 6.34 7.3 6.36-36.38 847751 M/Retrd Pnmtic Tire 0.54 1.50 0.44 0.41 0.88 0.35-70.8 8

Machinery for Injection-Molding (HS code 847710) World 931.53 941.38 574.41 100 100 100-38.98 1 Japan 541.67 555.18 315.18 58.15 58.98 54.87-43.23 2 Germany 80.22 83.39 75.56 8.61 8.86 13.16-9.38 3 Taiwan 164.34 140.77 72.96 17.64 14.95 12.7-48.17 4 Korea, South 42.95 49.24 36.90 4.61 5.23 6.42-25.07 5 Canada 12.01 18.98 18.68 1.29 2.02 3.25-1.58 6 Austria 11.29 29.15 15.90 1.21 3.1 2.77-45.45 7 Switzerland 15.59 5.26 13.14 1.67 0.56 2.29 150.08 8 Italy 10.04 12.69 8.23 1.08 1.35 1.43-35.15 9 China 31.51 31.33 6.40 3.38 3.33 1.11-79.58 10 United States 5.11 4.28 3.25 0.55 0.46 0.57-24.05 Machinery for Extruders (HS code 847720) World 306.78 348.13 312.12 100 100 100-10.34 1 Germany 86.08 149.80 154.22 28.06 43.03 49.41 2.95 2 Japan 118.03 120.78 68.68 38.47 34.69 22-43.14 3 United States 18.81 16.67 22.85 6.13 4.79 7.32 37.05 4 Italy 6.95 8.76 16.35 2.27 2.52 5.24 86.68 5 Austria 25.85 7.03 10.85 8.43 2.02 3.48 54.32 6 Taiwan 23.62 18.31 10.10 7.7 5.26 3.24-44.85 7 Switzerland 5.02 0.99 7.65 1.64 0.29 2.45 671.88 8 Korea, South 10.11 8.26 6.03 3.3 2.37 1.93-27.02 9 Finland 2.51 7.11 5.84 0.82 2.04 1.87-17.81 10 France 1.68 2.03 3.70 0.55 0.58 1.19 82.41 9

Machinery for Blow-Molding (HS code 847730) World 162.82 249.05 180.30 100 100 100-27.61 1 Germany 58.24 130.00 99.84 35.77 52.2 55.38-23.2 2 France 57.28 52.46 28.78 35.18 21.06 15.97-45.13 3 Italy 11.87 19.00 13.54 7.29 7.63 7.51-28.73 4 Japan 13.21 19.82 11.01 8.11 7.96 6.11-44.47 5 Malaysia 9.68 15.54 7.00 5.94 6.24 3.88-54.94 6 Switzerland 0.00 0.00 6.89 0 0 3.82 0 7 Taiwan 4.39 2.31 6.54 2.7 0.93 3.63 183.22 8 United States 0.86 5.21 5.07 0.53 2.09 2.81-2.65 9 Korea, South 0.70 1.60 0.42 0.43 0.64 0.23-73.58 10 Singapore 0.00 0.40 0.41 0 0.16 0.23 2.75 Machinery for vacuum molding and thermoforming (HS code 847740) World 219.76 238.53 107.51 100 100 100-54.93 1 Germany 53.03 69.20 36.89 24.13 29.01 34.31-46.7 2 Italy 52.60 41.59 22.42 23.9 17.44 20.9-46.1 3 Taiwan 49.11 29.63 12.10 22.35 12.42 11.26-59.15 4 Korea, South 11.29 8.11 11.64 5.14 3.4 10.83 43.45 5 Japan 27.54 52.28 8.90 12.53 21.92 8.28-82.97 6 Switzerland 3.68 12.31 5.22 1.68 5.16 4.86-57.6 7 United States 4.41 7.66 4.77 2.01 3.21 4.44-37.71 8 Malaysia 0.10 3.45 1.50 0.05 1.44 1.39-56.56 9 France 2.76 5.79 0.89 1.26 2.43 0.83-84.59 10 South Africa 0.00 0.00 0.81 0 0 0.75 0 10

Machinery for moulding and retreading pneumatic tyres or inner tubers (HS code 847751) World 25.96 36.78 18.52 100 100 100-49.64 1 Japan 10.85 8.17 3.89 41.77 22.21 20.99-52.41 2 Taiwan 2.75 10.17 3.84 10.59 27.65 20.73-62.24 3 Netherlands 1.22 0.00 3.72 4.71 0 20.1 0 4 Germany 0.00 0.00 3.20 0 0 17.29 0 5 Korea, South 7.66 11.23 2.96 29.49 30.54 15.97-73.66 6 Italy 0.54 1.50 0.44 2.1 4.08 2.36-70.8 7 Romania 0.73 3.54 0.42 2.82 9.64 2.24-88.28 8 United Kingdom 0.04 0.50 0.03 0.16 1.36 0.17-93.87 9 United States 2.08 0.96 0.03 8.02 2.6 0.15-97.14 10 Sweden 0 0 0 0 0 0 0 Other machinery for moulding and retreading pneumatic tyres or inner tubers (HS code 847759) World 208.47 176.29 87.52 100 100 100-50.36 1 Japan 61.81 55.26 16.19 29.65 31.35 18.5-70.71 2 Italy 4.28 12.16 13.56 2.05 6.9 15.5 11.56 3 Taiwan 20.77 24.17 9.09 9.96 13.71 10.39-62.4 4 Slovakia 10.89 13.53 8.73 5.23 7.68 9.97-35.52 5 Korea, South 67.16 25.80 8.63 32.22 14.63 9.86-66.55 6 Germany 11.42 23.20 8.62 5.48 13.16 9.85-62.86 7 United States 8.89 7.42 5.73 4.27 4.21 6.54-22.8 8 Netherlands 2.83 1.72 4.79 1.36 0.97 5.47 178.85 9 France 0.22 0.91 3.28 0.11 0.51 3.75 262.46 10 Malaysia 0.32 0.30 2.38 0.16 0.17 2.72 689.12 11

Other Machinery (HS code 847780) World 484.97 589.76 524.87 100 100 100-11 1 Germany 163.50 204.75 206.05 33.71 34.72 39.26 0.63 2 Japan 79.05 114.78 111.08 16.3 19.46 21.16-3.22 3 Italy 38.86 61.89 41.73 8.01 10.5 7.95-32.58 4 Taiwan 71.50 56.55 40.78 14.74 9.59 7.77-27.89 5 Korea, South 46.08 42.39 24.25 9.5 7.19 4.62-42.8 6 United States 27.16 30.40 22.07 5.6 5.16 4.21-27.4 7 United Kingdom 5.72 26.66 20.78 1.18 4.52 3.96-22.05 8 Austria 3.18 8.42 11.10 0.66 1.43 2.12 31.78 9 Switzerland 8.90 6.90 10.42 1.84 1.17 1.98 50.9 10 Denmark 2.83 4.38 9.59 0.58 0.74 1.83 119.02 Parts (HS code 847790) World 230.95 298.01 229.36 100 100 100-23.04 1 Germany 47.98 78.63 49.74 20.78 26.39 21.69-36.74 2 Japan 57.38 61.93 46.03 24.84 20.78 20.07-25.67 3 Taiwan 19.91 22.72 24.40 8.62 7.63 10.64 7.36 4 Canada 12.35 17.98 18.42 5.35 6.03 8.03 2.47 5 France 9.02 15.11 15.83 3.9 5.07 6.9 4.77 6 United States 13.29 18.23 15.24 5.75 6.12 6.65-16.39 7 Netherlands 20.26 18.58 11.71 8.77 6.24 5.11-36.98 8 Korea, South 17.87 25.00 10.20 7.74 8.39 4.45-59.19 9 Italy 8.47 12.40 7.89 3.67 4.16 3.44-36.38 10 Switzerland 3.50 2.32 5.94 1.52 0.78 2.59 155.54 12

China s Total Export to World by countries World 1448.21 1910.14 1354.47 100 100 100-29.09 1 India 89.76 139.29 118.12 6.2 7.29 8.72-15.2 2 Thailand 67.41 82.18 73.40 4.65 4.3 5.42-10.67 3 Vietnam 66.74 78.65 72.13 4.61 4.12 5.33-8.29 4 Brazil 56.95 84.98 68.57 3.93 4.45 5.06-19.3 5 Japan 173.67 184.52 68.53 11.99 9.66 5.06-62.86 6 Indonesia 54.83 92.78 67.37 3.79 4.86 4.97-27.39 7 Iran 53.88 74.52 57.93 3.72 3.9 4.28-22.26 8 Malaysia 37.66 50.33 45.86 2.6 2.64 3.39-8.89 9 Turkey 67.84 62.35 38.85 4.68 3.26 2.87-37.69 10 Taiwan 50.52 60.68 36.50 3.49 3.18 2.7-39.84 China s Total Export to World by products January - December % Share % Change HS Description 2007 2008 2009 2007 2008 2009 09/08 Machinery For 8477 Working Rubber & plastics 1448.21 1910.14 1354.47 100 100 100-29.09 847780 O Work Rubber/Plstc 346.04 514.55 397.97 23.9 26.94 29.4-22.66 847710 Injection-Molding 485.47 556.06 370.63 33.5 29.11 27.4-33.35 847790 Parts For 8477 267.09 321.31 186.80 18.4 16.82 13.8-41.86 847720 Extruders 167.55 248.98 170.24 11.6 13.04 12.6-31.62 847730 Blow-Molding 75.84 106.83 108.82 5.24 5.59 8.03 1.86 847740 Vac-Mold+Othr Therm 69.41 80.22 64.76 4.79 4.2 4.78-19.26 847759 O Mld/Form Rub/Plst 26.21 50.61 44.26 1.81 2.65 3.27-12.56 847751 M/Retrd Pnmtic Tire 10.61 31.57 11.00 0.73 1.65 0.81-65.17 13