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Frost & Sullivan See Growth Potential for China's PPE Industry

Posted on: Monday, 19 January 2009, 22:17 CST

~ Taking a look back at the PPE Industry in 2008 and its market outlook for 2009 ~

SINGAPORE, Jan. 19 /PRNewswire/ -- China has the largest labor market around the globe, which creates large demand for personal protective equipment (PPE) products every year, including 80 million suits of protective clothing, 96 million pairs of protective footwear, and 156 million pieces of anti-dust respirators. Currently the Chinese market for PPE generates over RMB50 billion annually.

(Logo: http://www.newscom.com/cgi-bin/prnh/20081117/FSLOGO)

According to Frost & Sullivan's China Consultant for Chemicals, Material & Food Practice Vivian Chen, the global financial crisis has caused great impact on quite a few industries in China such as construction and petrochemicals, which traditionally create large demand for PPE. The Chinese PPE market is indirectly impacted as PPE products are widely used in various industries and is exported to Asia and Europe. Due to the decreased overseas demand and the appreciation of RMB, PPE manufacturers are facing tremendous difficulties maintaining their sales.

She added that as the current regulatory system for PPE in China is insufficient, some small enterprises may consider reducing investments on labor protection to cut costs to survive the global financial crisis.

"The conservative attitude towards consumption due to the world recession is hampering the growth of leisure PPE. As a result, the future development of Chinese PPE market is adjusted to around 13 percent, comparing to the initial estimation at 16.6 percent from 2007 to 2014," she continues.

In terms of industry specifics, Chen says that China has continuously driven the approach of national standards on PPE products in line with the ISO system, so as to standardize the industry. With the advancement of society, people have raised increasing demand for PPE products. "This not only creates development for the industry, but also promotes the formulation of industrial standards. In recent years, China has revised some out-dated regulations and issued some new regulations on PPE industry," she adds.

She continues to say that inferior-quality counterfeits have long been a major concern for the Chinese PPE market which disorders the industry and threaten certified manufacturers. Due to ignorance of regulations regarding the safety of workers, accidents are frequent in China workplaces.

"With the State Administration of Work Safety (SAWS) carrying out special examinations on PPE nationwide, there is now enforcement with supervision. This program covers supervisions on the implementation of Rules of Supervising and Managing Labor Protective Production. Employers who provide unqualified PPE products will be severely punished. If accidents or occupational hazards occur, employers should be liable for these activities," says Chen.

Rising safety concerns and workers' awareness of their rights to a safe working environment and self-protection is causing a surge in demand for PPE in China. The Chinese Government is increasingly emphasizing work safety issues and strictly enforcing safety laws, compelling enterprises to offer PPE to employees.

"Although the Chinese PPE industry is not as advanced as in developed countries in terms of product diversity and technical innovation, more and more MNCs are recognizing the growth potential and the benefits of localization. Increased penetration of enhanced PPE products are predicted to further aid the growth of this market," she continues.

China has embarked on a massive infrastructure construction program with RMB4 trillion to stimulate domestic consumption and growth. Optimistically, China is still forecasted to be the major impetus of world economy with GDP growth rate expected at 9 percent in 2009. In addition, the regular replacement of PPE products in corporations create great amount of demand every year.

"The world economy is forecasted to gradually recover in two years, but the first half of 2009 is still a hard period for all. Frost & Sullivan thus estimates the growth rate of Chinese PPE market to be around 14 percent in 2008 and 2009, 5 percent lower in comparison to 2007," she added.

As the Chinese PPE market is still at its developing stage where inadequate diversification of products remains a major problem with the industry. China is still highly dependent on high-performance PPE products such as flame-retardant clothing. These products which require high technical capabilities are usually sold at high prices with large profit margins.

"Fortunately, more and more foreign suppliers have become aware of the prosperous Chinese market and have set up their bases here, supplying both local and overseas markets. These MNCs are tremendously upgrading the PPE industry structure in China, by offering more advanced techniques," says Chen.

Faced with fierce competition from foreign brands, domestic companies are pushed to put more emphasis on R&D and product innovation accelerating the Chinese PPE industry in terms of both width and depth. The subdivision of PPE products is likely to meet with the increasing demand from end applications.

About Frost & Sullivan

Frost & Sullivan, the Growth Partnership Company, enables clients to accelerate growth and achieve best in class positions in growth, innovation and leadership. The company's Growth Partnership Service provides the CEO and the CEO's Growth Team with disciplined research and best practice models to drive the generation, evaluation and implementation of powerful growth strategies. Frost & Sullivan leverages over 45 years of experience in partnering with Global 1000 companies, emerging businesses and the investment community from 31 offices on six continents. To join our Growth Partnership, please visit http://www.frost.com.

MEDIA CONTACT: Donna Jeremiah Corporate Communications - Asia Pacific P: +603 6204 5832 F: +603 6201 7402 E: djeremiah@frost.com Carrie Low Corporate Communications - Asia Pacific P: +603 6204 5910 E: carrie.low@frost.com

SOURCE Frost & Sullivan

Source: PR Newswire

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