All businesses practically have an interest in China, China has a huge economy, and it allows makers to export to a large population of consumers. The country’s population is hungry for manufactured products, for the consumer and for the various industries. For composite manufacturers, this offers tremendous opportunities.
The Shanghai Free Trade Zone is at the cusp of this opportunity.
The East Provides Opportunity
A recent report published on 11 January by Research and Markets, an Irish firm, forecasts a growing demand for composites in China. This market can grow to an impressive $11.5 billion by 2018.
In 2012, major industrial markets experienced major expansion, including electronics, transportation, and construction. This expansion has not signs of slowing down. Companies are forming joint ventures with China to take advantage of this growth. Higher volumes in production is called for, and this demand will keep growing.
This growth provides opportunities for designers of composite tooling and exporters of composite products.
The Shanghai Free Trade Zone
The Shanghai Free Trade Zone, or SFTZ, was created in September 2013. It offers new opportunities now and a glimpse at what is in store for the future.
The SFTZ is a tiny area of a large city in China where the rules for businesses are more liberal. This is the result of an earlier experiment in Shenzhen that took place in the 1980s. In this zone, regulations on business borrowing and investments are not as strict as in other parts of China. Companies experience less bureaucracy in their business dealings. China created this experiment as a way to allow more foreign businesses and investors to get involved with business in China, producing greater opportunities for everyone involved.
Composite Manufacturing and the SFTZ
The financial industry experienced the greatest changes in the SFTZ. However, the manufacturing industry also benefited from new options.
The SFTZ in itself is not a large area. It occupies only several square miles on mainland China, despite its small size, it is the ideal place for any company who is looking for opportunities to expand in China. Companies can establish their headquarters within the zone and conduct key business activities there. This allows them to distribute to the surrounding areas easily. Investment regulation that have loosened attract more support financially for companies that work in the free trade zone. It facilitates collaboration between foreign and Chinese companies in the distribution and supply chain.
The SFTZ offers unmatched opportunities to companies that provide composite products to consumers and businesses that deal with consumers. Those who work within the free trade zone are comparatively wealthy and enjoy a level of freedom in their lifestyles that will create markets for all kinds of consumer goods that are deemed as luxury items in other areas of China.
A micro-economy for composite goods will be created as end products and tools that make them are provided. More profits generated from the SFTZ will be directed to the manufacturers and companies who export to the zone.
What lies in the future
It is important to keep in mind that the opportunities presented by the SFTZ right now are not the only potential enjoyed by businesses dealing in composites. Rather, it is what the future holds for the SFTZ that should be examined carefully.
This free trade zone has the support of Chinese Premier Li Keqiang. He is an expert in economics who has the intention of liberalizing China’s economy and speed up growth. If the SFTZ is successful, then there is no doubt that he will liberalize rules throughout the rest of China. This was already seen in the Shenzhen experiment, companies that participate now will gain an advantage when that time arrives.
For companies that make composites, their business dealings in the SFTZ is not just a lucrative opportunity for the present – it is an investment in the biggest market in the world.
Amy Rice enjoys writing about composite products, when not writing she enjoys watching motors TV and Formula 1.