Downturn Expected to Slow Growth of China's PPE Market
China has the largest labor market in the world, which creates a 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 more than RMB (Chinese currency) 50 billion annually.
But the demand will slow this year, said Frost & Sullivan's China consultant for Chemicals, Material & Food Practice, Vivian Chen. The global financial crisis has had a great impact on quite a few industries in China, such as construction and petrochemicals, which traditionally create large demand for PPE, she said. The Chinese PPE market is indirectly impacted because PPE is widely used in various industries and is exported to Asia and Europe. Because of decreased overseas demand and the appreciation of RMB, PPE manufacturers are facing tremendous difficulties maintaining their sales, according to Frost & Sullivan. Chen said because 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 the Chinese PPE market is adjusted to around 13 percent, comparing to the initial estimation at 16.6 percent from 2007 to 2014," she said.
In terms of industry specifics, Chen said China has continuously driven the approach of national standards on PPE products in line with the ISO system so as to standardize its industry. With the advancement of society, the populace has increased the 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 In recent years, China has revised some outdated regulations and issued some new regulations on PPE industry," she said. Chen said inferior-quality counterfeits have long been a major concern for the Chinese PPE market and threaten certified manufacturers. Due to ignorance of regulations to safeguard workers, accidents are still frequent in China's workplaces, Frost & Sullivan says.
"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," Chen said.
Rising safety concerns and workers' awareness of their rights to a safe working environment and self-protection are 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. China has embarked on a massive infrastructure construction program with RMB 4 trillion to stimulate domestic consumption and growth. According to Frost & Sullivan, China is still forecasted to be the major impetus of world economy with a 9 percent GDP growth rate expected in 2009. In addition, regular replacement of PPE in corporations creates a large 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," Chen added. The Chinese PPE market is still in a developing stage, where inadequate diversification of products remains a major problem, Frost & Sullivan officials said. China is still highly dependent on high-performance PPE products, such as flame-retardant clothing, that require high technical capabilities and are usually sold at high prices with large profit margins, Frost & Sullivan stated. Faced with fierce competition from foreign brands, domestic companies are pushed to put more emphasis on R&D and product innovation, accelerating and broadening the Chinese PPE industry.