China's Natural Rubber Consumption Ranks First In The World, And Investment In Rubber Industry In Southeast Asia Is Favored.

- Apr 08, 2019-

The remaining temperature of the 9th International Rubber Conference just recently ended. Recently, Malaysian Minister of Primary Industries Guo Suzhen also said in a public speech that the rubber industry is expected to become the number one contributor to the country's economy due to difficulties in palm oil in the international market.

Natural rubber is native to the Amazon River in the South American Amazon (the western region, the local Indians call the rubber tree "tears of tears", and use the soil method to make rubber products such as water containers and rubber balls.

During the nautical process, the Spaniards and Portuguese brought the knowledge of natural rubber to Europe. However, for a long period of time, the understanding and application of natural rubber was limited to its waterproof properties, and the application of natural rubber has not made substantial progress.

Until the American chemist Charles Goodyear accidentally invented the vulcanization method of rubber during the test, natural rubber has since become a formal industrial raw material, which has made it possible to develop many industries related to rubber. Since then, the demand for natural rubber has also risen sharply.

Later, the British Wei Kehan (acquired 10,000 rubber seeds from the tropical jungle of the Amazon River, sent to the Royal Botanic Gardens in London, England, to grow rubber seeds into rubber seedlings, and then shipped the rubber seedlings to Singapore, Sri Lanka, Malaysia and other countries to grow and succeed.

According to data released by the International Rubber Research Group (IRGS) in the first quarter of 2017, China has continuously become the world's leading consumer of natural rubber since 2010, with the United States ranking second. ASEAN countries such as Thailand, Malaysia, Indonesia, Vietnam and Laos have become the world's major exporters of natural rubber due to their superior geographical advantages. So what are the comparative advantages of several major rubber exporting countries in Southeast Asia? What transformations and changes have China experienced in the rubber industry? With these questions, Caijing Shibao visited several industry professionals to solve the mystery.

The choice of foreign-funded enterprises in Southeast Asia

New Forests is a physical asset investment management company from Australia that provides clients with cutting-edge investment strategies in forestry, land management and conservation. In discussing with the Financial Times about his investment experience in the rubber plantation market in Southeast Asia, Paul Speed, Director of Investment and Operations, revealed that they have completed the first round of financing in Sabah, Laos and Indonesia in Malaysia and are currently reviewing the second round. Which country the financing will go to.

"The Thai government has restrictions on the amount of land that foreign companies can obtain locally, so Thailand does not meet our investment type; Vietnam has many investment opportunities and sufficient labor, but the government also restricts foreign investment; Indonesia has Large areas of forests and a more robust resource allocation system; the Lao government's acceptance of foreign investment is high; Malaysia should be the least risky among ASEAN countries," Paul said.

Paul then admitted to the Caijing Shibao that they had previously visited the Eucalyptus plantations in southern China and were particularly interested in one of them. They have already begun to do related research, but unfortunately they did not succeed. The reason is that the plantations there are part of the state-owned, and the government's transparency requirements for foreign investors are also high.

Where are the large quantities of natural rubber imported from China?

According to Dr. Wang Wencai, a professor at Beijing University of Chemical Technology, China's natural rubber consumption in 2016 was 4.78 million tons, of which only 760,000 tons of natural rubber came from China, and about 80% of the remaining natural rubber needed to be imported. In the same year, China produced 3.5. Billions of used tires, with a total weight of more than 13 million tons, accounting for 36% of the world total.

"Now China's large amount of rubber needs to rely on imports. If we make full use of used tires, we can reduce our dependence on imported rubber. Second, we can reduce hidden dangers such as black pollution and fire caused by used tires." The doctor said to the Caijing Shibao.

In 2015, China has produced more than 4.6 million tons of recycled rubber, accounting for 80% of the world total. According to Dr. Wang, recycled rubber can be used as a partial replacement for raw rubber and other rubber products such as conveyor belts, shoe materials and rubber hoses. At present, China's largest tire company Zhongce Rubber Group Co., Ltd. has used the latest technology to produce recycled rubber that has reached the emission standards of Northern California and the European Union. Its production line has also significantly improved energy, labor and safety.

Since China's technology for producing recycled rubber has become more mature, does this mean that China will gradually reduce the import of natural rubber in the future?

For this problem, the president of the Malaysian Plastics and Rubber Association (PRIM), Feng Jiashu, told the Caijing Shibao that he was also very surprised by the production of recycled rubber in China. However, due to its limited production, it is believed that China’s rubber imports will not be There is a significant decline in the short term.

"Rubber is widely used. It can be used in automobiles, ships, etc., so China views the rubber industry from a strategic perspective. China's long-term policy is self-sufficiency. In the past decade, China has established many synthetic rubber plants. In addition, natural rubber is also being planted in places such as Hainan and Yunnan. In addition, China is doing a lot of research on extracting rubber from dandelion and Eucommia ulmoides, "Feng Jiashu said.

Many Chinese companies in the trade war chose to set up factories in Thailand.

According to Feng Jiashu, China's current tire production is twice as much as domestic demand, but the rubber products recently used for export have been threatened by trade wars. There are 10 world-class rubber manufacturers in China, and about 8 of them have chosen to go to Thailand for production.

"China's factories are made in Thailand and then exported to the United States. Vietnam has also benefited a lot from the trade war. Their tire export growth rate is faster than that of Thailand. Two or three Chinese companies want to come to Malaysia. The factory was set up but ultimately failed, probably because of the old government. From a strategic point of view, I think Chinese companies can consider setting up factories in Vietnam because the labor force there is about 60% lower than that of Malaysia and Thailand.