China Glass could be an excellent opportunity to test these recent change-markers in the Chinese market first-hand.
We were accustomed to considering China a powerhouse that was growing relentlessly, perhaps no longer at double digit figures but nonetheless close to the threshold of 10%. Last year a 7.4% increase in GDP was a sign that a downward trend was underway, even though the increase was still high compared to western standards. Chinese premier Li Keqiang, confirming the outcome of China’s Central Economic Work Conference, has announced a 7% growth target for 2015. This shows that the economic phase of accelerated, brisk development has run its course, that things have changed and a new chapter has opened.
The consolidation of Chinese economy has begun. In just over 10 years it has jumped from 8th in the world to 1st on a par with the United States and is expected to overtake the latter. This huge market can no longer physically or reasonably keep up with its past growth rates and needs to find a new development model and correct the distortions that have been emerging over the years. The first and most serious, which stems from its ultra-fast and as such uncontrolled industrialization in certain ways, is pollution which has become a real social plague. Achieving an acceptable quality of life is one of the central points on the government’s agenda, which has launched a very ambitious reform program to boost domestic consumption, focus on quality production and apply particularly strict environmental rules and regulations. It will be a drastic change compared to the previous export-driven model with intensive and extremely demanding production.
Bottero Hollow Glass Area Manager for China Giancarlo Castoldi.
This turnaround is bound to have a significant impact on foreign companies already working China that have carved out their own important commercial and production share over the years. One example is Bottero from Cuneo, one of the most well-structured companies in the glass industry and which considers China one of the most flourishing markets for its industrial machinery. On the eve of China Glass 2015, where Bottero will be exhibiting along with 28 Gimav member companies from Italy, we spoke to Giancarlo Castoldi, the company’s Hollow Glass Area Manager for China: “The Chinese market is definitely changing, with new opportunities because demand is now mainly focused on quality. The growth rate has slowed down, so people are more careful about budgets and the Chinese industry has grown more selective, tending to invest in higher quality production, even for the local market. We strongly believe in the technological development of the Chinese industry: our machinery satisfies this because it is leading-edge. The price is much higher than locally-produced machinery but is partially offset by the low value of the euro at present and the fact that 80% of the machines sold are assembled in China, while 75% of the components are Italian or European. In this way we can keep our costs at reasonable levels.”
Davide Cigna, Head of Product Management at the Bottero Flat Glass Division.
Davide Cigna, Head of Product Management for Flat Glass at Bottero fully agrees: “Our main commitment is to offer the best value for money, while maintaining a medium/high quality product even for our entry level machinery. Our production in China is of a good quality, as is the specialization of Bottero factory workers in China and their wages, which are above the average. Bottero is currently present in China with machinery that covers the entire glass processing and production process: we aim to be a complete partner for Chinese industry and to accompany it in its development process, which is becoming increasingly more pronounced. Its level of technology continues to rise. As a result of float technologies, even ultra-fine glass is now being produced, the old and more polluting manufacturing facilities are being closed down and the glass transformation sector is growing strongly, similarly to what happened to our industry in Europe. The entire production process is adapting to the general demand for a better quality of life: here, the drive towards automation translates into more safety in the workplace and lower costs to pay for high wage increases. This is definitely an interesting development that offers a great deal of opportunities despite the slower growth rate. And we will be there: the more China develops its products, the more Bottero will follow and accompany it in its path”.