Four problems encountered in the development of the glass industry

1、 Rapid growth in production capacity, rising production costs, and declining economic benefits for enterprises

The glass industry generally experiences a fluctuation cycle of 3-4 years, often in a favorable situation where some companies blindly invest in expansion and then fall into a trough, leading to industry risks caused by overcapacity. According to statistics, since 2009, China's glass production capacity has grown rapidly. It is preliminarily estimated that about 15 production lines will be put into operation in 2012, with an additional production capacity of about 63 million weight boxes. Glass has the characteristic of continuous and uninterrupted production, and the stable release of production capacity significantly exceeds the growth in demand from downstream markets such as real estate, automobiles, and exports.

Since the first half of 2010, the rising prices of raw materials such as soda ash, coal, heavy oil, natural gas, and electricity, as well as the increase in financial costs such as personnel salaries, have led to a continuous increase in production costs for glass enterprises. Due to the fact that glass production enterprises produce mostly homogeneous products, some companies are willing to lower prices in order to reduce inventory. The supply and demand contradiction in the entire glass industry is prominent, and prices continue to be low. Disorderly development leads to intensified industry competition, and chaotic market competition order leads to a decline in overall industry profit margins. In 2011, the total profit of the flat glass industry in Hebei Province showed negative growth, with a loss of 495 million yuan for the enterprise.

2、 From the perspective of industrial structure, there are significant gaps in technology structure, product structure, organizational structure, and other aspects

Although China's flat glass industry is developing rapidly, its technological progress and innovation capabilities are still insufficient. At present, the energy consumption of China's flat glass industry is much higher than the advanced level abroad, and the production capacity of backward production processes still exceeds 50 million weight boxes. The deep processing rate of flat glass is far below the world average. The structure of glass products is unreasonable and there are structural gaps. The supply of medium and low-end ordinary float glass exceeds demand, and there are too few high-end and high-quality float glass production lines. Some special purpose electronic glass, automotive and architectural glass still need to be imported. There are numerous glass production enterprises with small scales, excessive dispersion of production, and low industrial concentration. The average scale of float glass production enterprises nationwide is only 6.83 million weight boxes. In 2005, the industry concentration of the top ten glass enterprise groups was only 45.8%, and in 2009, the total production capacity of China's top five glass groups accounted for only about 30% of the country's total. In contrast, the four major multinational companies in Japan, namely Asahi Glass, Pangzi, Saint Gobain of France, and Gadian of the United States, concentrate 41% of the world's flat glass, 62% of high-quality float glass, and over 50% of deep processed glass production. Compared with developed countries, there is a significant gap in the scale of enterprises and industrial concentration in China's glass industry.

3、 Due to high production capacity consumption, heavy pollution, and increased pressure on resources and the environment

Although the current production process of flat glass in our country has been in line with international standards, there is still a significant gap in product quality and energy consumption compared to international standards. The average energy consumption of float glass in China is 7800 kilojoules per kilogram, which is 20% higher than the international average of 6500 kilojoules per kilogram. At the same time, due to the fact that glass melting furnaces mainly use coal and heavy oil as fuels account for about 90%, air pollution is easily caused during the production process. At present, the main glass production enterprises abroad have multiple float glass production lines in China through various forms such as acquisition, holding, sole proprietorship, and joint venture. The expansion of their production capacity has exacerbated the situation of energy shortage in China and also caused a large loss of raw material resources. The trend of accelerating the transfer of the glass industry to the domestic market has further exacerbated energy consumption and environmental protection issues, which is extremely unfavorable for achieving sustainable development of the industry.

4、 Glass product exports face more trade barriers and frictions

In recent years, with the continuous expansion of China's exports of flat glass, the risk of encountering trade protection has also been increasing. In 2010, countries such as the Philippines, India, South Africa, Australia, Brazil, and Ukraine successively conducted anti-dumping investigations or safeguard measures against China's flat glass. In March 2011, South Korea announced that it would extend the anti-dumping measures against float glass produced in China by three years and continue to impose import tariffs ranging from 12.04% to 36.01%. After initiating an anti-dumping investigation on colorless flat glass imported from China with a thickness of 2mm to 19mm in July 2010, Brazil held another hearing on the anti-dumping case against colorless flat glass imported from China in August 2011. The rapid increase in trade barriers faced by glass exports and the rise of international trade protectionism have further worsened the glass export environment.