By Han Yongqi, Jiaodong Industry Research Center
Opportunities and challenges during the 14th Five-Year Plan period (2021-2025)
Covid-19 puts a spanner in the works, leaving the world’s economy in a striking predicament. The world is going through unprecedented changes, which domestic dye enterprises must adapt to. Since the latest information technological revolution, AI, VR, big data and blockchain technologies have all gathered pace. Burgeoning emerging information technologies bring both opportunities and challenges to China’s dye industry, which will deepen reform continually in the coming five years and will enter a new stage of development.
Foundation and problems
Large scale is a foundation for the development of China’s dye industry. Not strong competitiveness is the biggest obstacle to new growth.
1) Decreasing number of domestic dye firms and increasing market concentration rate
Some dye firms have gradually pulled out of the market in recent years. Hence shrinking number of companies – falling to around 300 in late 13th Five-Year Plan period (2016-2020) from more than 500 in 2010 – and higher market concentration rate. It is forecast that the rate will increase continually from 2021 to 2025. At present, enterprises mainly produce disperse and reactive dyes.
2) Large industrial scale and declining consumption
Domestic capacities of disperse and reactive dyes currently concentrate in Zhejiang and Jiangsu. Though some dye enterprises were shut down due to reasons like environmental protection, dye supply is in excess, with annual output during 2016-2020 reaching 800 000-900 000 tons, higher than annual apparent consumption of 600 000-700 000 tons.
3) High market shares in the global market
A large producer as well as a large exporter of dyes and pigments, China exports dyes and pigments mainly to Southeast Asia and Europe, accounting for around 70% of market shares in the global market. In spite of high export volume, benefits remain quite limited, given that most exports are products of average quality.
4) More intelligent production
While utilizing high-tech achievements from home and abroad in R&D, design, production and testing of products, and in services and recycling over the past five years, domestic dye firms have greatly promoted cleaner production technologies – such as dye and pigment intermediate hydrogenation reduction and sulfur trioxide sulphonation – to reduce discharge of waste water, COD and other hazardous wastes. Further, dye companies have spent more on technical reform in recent years, striving for more intelligent production.
Problems such as product homogeneity, lack of innovation and weak competitiveness in middle and high-end markets still exist. In the process of developing new products, enterprises surely have many difficulties to contend with. Other problems mainly involve water consumption, energy consumption and high pollution.
Ways to help the dye industry make new progress in the 14th Five-Year Plan period
* To transform industrial structure and pivot to high-quality development
* To adopt advanced technologies from home and abroad, and conduct technical innovation
* To propel green development via cleaner production, energy conservation and emission reduction
* To implement brand strategy – i.e. creating brand-name products through resource integration, which will help realize rational allocation of resources like capital, talents and technologies
* To expand dye export
Implementation of RCEP (Regional Comprehensive Economic Partnership) will improve market situation and bring new opportunities to domestic dye exporters. While keeping or seizing more domestic market shares, China’s leading dye enterprises will expand international markets, relying on means like technology innovation – a basic path to stronger competitiveness for all dye companies.
China's large-scale market is an advantage. Domestic dye enterprises should make full use of it to attract foreign investors, and try to achieve win-win results.
