July/August 2015 | Volume 34 No. 3
By Jason Chen, China Correspondent
Boosted by the country’s environmental protection efforts, the Chinese filtration and separation market is expected to have a fast growth in the following decade. Various types of filtration separation products, such as bag filters, home-use water purifiers, air cleaners and filtration textiles, experienced double-digit annual growth rates in the last five years, and the strong growth is very likely to continue in the next five years, according to executives and experts in Chinese associations and companies.
But as of July 2015, there is still no national association for the filtration and separation industry in China. The main reason is that “filtration and separation,” as a separate industry sector, is a relatively new concept to some Chinese manufacturers, especially when compared to conventional industries such as textile and petrochemical. Generally, filtration and separation products are taken as auxiliaries to conventional industries such as textile, oil and petrochemical, power supply, cement, and iron and steel. As a result, Chinese filtration and separation companies chose to join different types of industrial associations according to different categories such as material types and/or customer base. For example, in an oil association there could be some companies whose main products are filters used in the production of oil and petrochemicals; another example is there are many filtration textile manufacturers that can be found in the China National Textile and Apparel Council (CNTAC), the largest textile association in China.
Indeed, there have been several associations solely focusing on the filtration and separation industry in China founded since the mid 2000s. But they are all regional societies covering only one region. For example, Xinxiang City Filter Association (XCFA) covers filtration and separation companies in Xinxiang, a city located in the north-China Henan Province, which is just one of China’s 334 prefecture-level cities.
But this situation could soon change later this year. As the Chinese filtration and separation industry grows larger and more mature, XCFA has been working with its members and hundreds of companies in other Chinese cities since 2013, aiming to set up the country’s first national association for the industry, according to Jeff Xu, assistant to the Secretary General of XCFA. Xu said the plan had been approved by the Chinese government earlier this year, and the new national association, which could be named the “China Filtration Industry Association” (CFIA) or something similar, is expected to officially launch in August this year, with a total of more than 500 members national-wide. In November, the new CFIA will hold its opening ceremony, said Xu.
Currently, there are several important associations for the filtration and separation business in China. They include China Association of Environmental Protection Industry (CAEPI), China Nonwovens & Industrial Textiles Association (CNITA), China General Machinery Industry Association (CGMA), Chemical Industry and Engineering Society of China (CIESC), and XCFA.
CAEPI has more than 1,100 members, covering almost all the environment-related business in China. More than 100 filtration companies, mostly manufacturers of bag filter products, are members of CAEPI.
CNITA is a part of CNTAC. It covers the business of nonwoven and technical textiles, including filtration textiles and the other 15 types of technical textiles such as geo-textiles, protective textiles, automotive textiles and medical textiles.
CGMA covers the business of general machinery, including valves, filters, and machines for producing filtering media.
XCFA’s members are mostly producers of filter cartridges, screens, meshes and filters located in the north-China Xinxiang City of Henan Province.
Xinxiang’s filtration industry has a long history spanning over 60 years. The city first set up its filtration production lines in the 1950s, soon after the establishment of the People’s Republic of China. In the early 1980s, when China just started its Reform and Opening movement, there were around 20 filtration companies in Xinxiang. The industry boomed in the following three decades. By 2014, the number of filtration companies in Xinxiang had overtaken 300, which supply to almost all the filtration and separation-related industrial sectors, including automobile, machinery, oil and petrochemical, aeronautics and space, metallurgy, power supply, coal, textile, mining, environmental protection, water treatment, medicine and food. In 2012, the filtration and separation industry in the city was creating more than 60,000 jobs and generating a total revenue of over 7.0 billion Yuan ($1.2 billion).
Most companies in Xinxiang are mid-size or small manufacturers. By the end of 2014, there were three relatively large filtration companies in Xinxiang that had an annual turnover of over 100 million Yuan ($16 million) per company. At the same time, there were more than 40 companies with annual sales of over 10 million Yuan ($1.6 million) per company, and more than 200 companies had annual sales below 10 million Yuan per company.
Though the Xinxiang-based companies are relatively small compared to their counterparts in North America and Europe, they are flexible, efficient, sensitive to the market, and have a high potential for future growth. XCFA and the Xinxiang municipal government are trying to help these companies maintain a high growth rate in the following years. For example, they will invest a total of 450 million Yuan ($72 million) to set up an industrial park in the suburban area of Xinxiang, which will support the research and development, logistics, trading and manufacturing of local filtration and separation companies. To date about one quarter of the industrial park has been built, which attracted 35 companies to set up production facilities there, with a total sales of over 300 million Yuan ($48 million) per year. XCFA says when the whole industrial park is completed, there will be more than 100 companies joining in, with a total annual sale of over two billion Yuan ($322 million). XCFA expects that the total sales of the industrial park will continue to grow at an annual rate of over 25% after the industrial park is totally completed. The photo below shows the companies from the industrial park joined together as a group attending a filtration show.
XCFA to CFIA
XCFA understands their missions for the newly established CFIA. A series of new measures for promoting the Chinese filtration and separation industry have been prepared. In general, CFIA will set up “five platforms, three bases and ten main tasks.” The five platforms include: a technologies service platform, a finance service platform, a quality testing and certification platform, an ecommerce platform, and an industry communication platform. The three bases include: a product manufacturing base, a human resources base, and a logistics and purchase base. The some of the ten main tasks include: creating a new magazine for the Chinese filtration and separation industry, holding a series of forums and expos every year, and pushing the communication with the filtration and separation associations and companies in other countries such as the United States.
CAEPI is the largest society for environment-related business in China. In the filtration and separation sector, CAEPI seems to mainly focus on bag filtering business. Founded 1993, CAEPI now claims it has more than 1,100 members. Some of these members are large companies that produce bag filers and their filtering media.
In the past few years, rising public concerns over severe air pollution problems forced the Chinese government to take new measures for controlling gases emissions from industries such as power supply, cement, iron and steel and oil and petrochemical. One of these new measures is to replace electrostatic precipitators by bag filters in high-temperature filtration, which will increase the country’s consumption of bag filtering media to nearly 100 million square meters per year by 2015 from the 2010 level of 30 to 40 million square meters, according to a report published by CAEPI. Even more, the trend is likely to continue in the next decade, as the air pollution problem is getting worse and the government may have to take stricter measures to control gases emissions from major industries. The Chinese central government, provincial governments and municipal governments are working on their “13th Five Year Plan” for the next five years (2016 to 2020), which will no doubt set up new caps on the country’s gases emissions.
The growing bag filters demand attracted many investors to join in the past few years. According to CAEPI, there are approximately 200 companies engaging in the bag filter business in China, and some of the big ones are members of CAEPI. Most of them had a double-digit annual growth rate for sale and profits in the past five years. Examples include Xiamen Savings Co., Ltd. (Savings) and Anhui Shengyun Machinery Co., Ltd. (Shengyun).
Savings is a member of CAEPI that focuses on the research and development and production of bag filtering media for industrial applications. By the end of 2014, Savings had an annual capacity of 5.0 million square meters of high-temperature filtering materials. According to its annual reports, Savings’ filtering material business remains at nearly 100% operating rate and high gross profit rate in the past few years. Savings’ net profits grew by a whopping 521% in 2013 compared to their 2012 level. In 2014, its growth was much “slower,” but still had an 18.4% increase of net profits. Savings may have big expansion plans in the near future, based on their optimistic forecasts to the market.
Another CAEPI member is Shengyun. It is a major producer of bag filters. Bag filters and projects contributed to a big share to Shengyun’s sales and profits, and the company’s export of bag filters remained at above $10 million per year in the past few years.
In dealing with the fast-growing filtration business, CAEPI has set up a special bag filter committee to provide services to its members.
CNITA covers all the technical textiles sectors. Some of the CNITA members are filtering media suppliers. For example, Shanghai BG Group is a CNITA member and one of China’s largest manufacturers for filtration textiles. It covers the production of nonwoven and filtration textiles and engineering of bag filtering systems. By far Shanghai BG Group has an annual capacity of 30 million square meters of filtration materials.
According Li Lingshen, president of CNITA, China’s filtration and separation textile market will grow at 14% in the 13th Five Year Plan period (2016 to 2020) and reach 2.134 million metric tons by 2020. Filtration textile companies like Shanghai BG Group may continue to enjoy rapid growth in the next five years.
Like CAEPI, CNITA also has a “sub-association” for the filtration textile sector. This sub-association was founded in 2012 and has approximately 100 filtering materials producers.
There are many other regional and national associations that consider the filtration and separation industry their main focus in China, including:
– Solid/Liquid/Gas Filtration and Separation Professional Group, a branch of CIESC, was founded in 1987 and is run by the Group Committee, composed of a number of experts, professors and entrepreneurs who are well known in the Chinese solid/liquid/gas separation industry. The Group holds a China Solid/Liquid/Gas Filtration and Separation conference every two to three years, with more than 45 enterprises and about 20 universities, colleges and research institutes attending; their 12th conference will be held August 4-7 this year.
– CGMA, Jiangsu Advanced Materials Industry Association (JAMIA) and China Fiberglass Industry Association (CFIA) consider the filtration and separation business as their most important industrial sector.
– Sinoma Science & Technology Co., Ltd. (Sinoma) is a member of both JAMIA and CFIA. Filtering material is one of the three major business focuses of Sinoma and the most profitable one. Sinoma’s sales of filter materials reached 3.37 million square meters in 2014, up 59.72% from the 2013 level, while revenues increasing 24.32% in the same period.
Sinoma believes there will be a very promising market of industrial dust removal and membrane filtering materials coming in the next decade. In middle 2014, Sinoma started to build a new fiberglass filtering material production line with an annual capacity of 4.0 million square meters. In October 2014, Sinoma decided to invest more than $14 million on setting up a production line with an annual capacity of 5.0 million square meters of chemical fiber felt filtering materials. Sinoma expects the completion of their new production line to help the company maintain a high growth rate and profits in the following decade.