Future development thinking on recycled chemical fiber industry in a dilemma
---Interview with Zhang Limin, the former general manager of Anshun Chemical Fiber Co., Ltd. and now consultant of Anshun
Zhejiang Anshun Chemical Fiber Co., Ltd. is located in Fuyang District, Hangzhou, Zhejiang. It was established in 1994 and is dedicated to the production and development of functional polyester staple fibers, recycled polyester staple fibers and composite staple fibers. The product quality and research & development capabilities are highly praised in the industry. As a recycled fiber enterprise, Anshun also has unique features in the road to transformation.
On September 27th, CCFGroup was invited to conduct an exclusive interview with Zhang Limin, the former general manager of Anshun Chemical Fiber Co., Ltd. and now consultant of Anshun.
CCFGroup: First of all, I am very grateful to Mr. Zhang for sharing the experience at the critical moment when the industry is in urgent need of transformation. Since the “ban of solid waste imports”, the cost of recycled raw materials has been supported, while the virgin fiber prices declined after the capacity expansion. Thus the spread between vrigin and recycled fibers narrowed gradually. Some recycled fiber plants have stopped production during the traditional peak season in Sep and Oct. What do you think of the current predicament of the recycling industry?
Mr. Zhang: In the past three years, the market environment of the domestic recycled chemical fiber industry has undergone significant changes, so the recycling companies have also taken active measures to cope with market changes in recent years. However, the difficult situation of the industry in previous two years is mainly resulted from the raw materials. With the implementation of the ban on solid waste imports, the price spread of recycled bottle flakes at home and abroad was large. Domestic recycled fiber producers have invested in foreign countries for the purpose of seeking cheaper raw materials. It can be said that the domestic recycled fiber enterprises have been seeking for the survival and development through industrial transfer in 2017 and 2018. This year, it is obvious that the consumption market of recycled fiber has changed. The price spread of domestic and foreign recycled bottle flakes gradually narrowed, while the raw materials cost of virgin fiber has dropped significantly. The market share has been squeezed by the low-priced virgin fibers, which may become regular later. The measures of industrial transfer by the domestic recycled fiber industry will be ineffective. This is the current predicament of the recycled fiber industry.
CCFGroup: I agree, facing the grim situation that has never been seen in history, what do you think the recycled fiber companies should do?
Mr. Zhang: For the majority of recycled fiber companies, the product and market layout must be adjusted. They should look at the new market in the longer run.
At present, the adjustment of some enterprises still focuses on the further extension of the industrial chain or the broadening of product varieties, such as the expansion of recycled chemical fiber production to the recycled bottle flakes, or the addition of other varieties of recycled fibers, hollowed or cotton type. To a certain extent, this can make up for the company's resistance to risk. However, there is no essential change in the recycled chemical fiber and it should not be a better and long-term strategic measure.
I personally think that the development of the recycled chemical fiber plants has three directions: 1. Breaking through - highlighting its own advantages and making environmentally friendly materials; 2. sinking, returning to the initial intention of recycled fibers - low cost, low price; 3. walking on two legs - Virgin + recycled fibers. Don't think of yourself as a recycling plant.
CCFGroup: Can you explain it to us in more detail?
Mr. Zhang: 1. The upward breakthrough is to highlight the fundamentals of recycling and is the concept of environmentally friendly materials. In the past two years, the demand for environmentally-friendly materials has expanded rapidly. For example, Adidas announced that it will completely use recycled materials by 2024. Decathlon, who reported at 2019 PSF Industry Forum (the 7th Re-PET Forum) held by CCFGroup in July, also said that it hopes to completely use recycled fiber by 2021. Other well-known companies like IKEA and Nike also announced their goal of increasing or even completely using recycled materials in the future. This is an opportunity for the recycling industry. However, companies must strive to obtain certifications for this environmentally friendly material, such as GRS certification, OEKO-TEX certification, including domestic green fiber (GF) certification, and some environmentally-friendly organizations. For example, Anshun is now cooperating with ZDHC.
2. Sinking, continuing to return to the root of regeneration, is to enrich the source of recycled chemical fiber raw materials, reduce the cost of raw materials, still adhere to their own low-cost route. For example, many companies now use the thickening technology, using waste yarn, or cheaper fabric scraps and popcorn to meet demand.
3. Virgin + regeneration mode. Now, many companies are implementing this mode. Such as Anshun, Dafa, Guangdong Xiamei and so on. This mode is different from the 100% regeneration product type. Firstly, in view of product, the virgin product can not simply be a conventional product. After all, the existing domestic virgin PSF enterprises have already enjoyed the first-mover advantage and scale advantage. Direct competition does not have advantage. So, it still needs to do some differentiated products. Secondly, in terms of management, the management mode of the virgin staple fiber will be more refined and systematic, and the management of the recycled chemical fiber will be promoted by improving the management mode of the virgin PSF. The two complement each other and promote each other.
CCFGroup: Is the regeneration made by adding the viscosity of fabric scraps not recycled? Can't take the environmental route?
Mr. Zhang: It is not impossible to do it. Mainly use fabric scraps and popcorn as raw materials. The general source is relatively wide, the impurity content is generally high, and there may even be some problems such as excessive heavy metals. These problems are complicated to deal with, the volatility is large, and even the cost is high. Therefore, it is best not to use tackifying as a goal of environmentally friendly materials. In addition, the raw materials required for environmentally friendly materials are post-consumer raw materials. Therefore, waste yarn, as an industrial waste, is not within the scope of certification of environmentally friendly materials.
CCFGroup: It is true that there have been cases where the heavy metal of the socks exceeded the standard and could not be exported. So what do you think of differentiated products?
Mr. Zhang: Personally, I think that multi-varieties and functions are not differentiation. Differentiation should be closer to market demand, display features and characteristics, and make products different from those of other companies. Therefore, even conventional products can also be made into differentiated products.
CCFGroup: For the concept of recycling and environmental protection you mentioned, domestic companies are also working on this in recent years. For example, in the Shanghai yarn expo, sustainability, environmental protection and regeneration become highlights, and GRS certification signs are also seen everywhere. However, we also found that re-PFY has been "on the train", but re-PSF industry seems to react mediocrely, especially HC re-PSF seems little affected. Some HC re-PSF plants also reflect that there are not many big orders and the production cannot be digested. Now it is still a very moderate market, and there is no sign of peak season.
Mr. Zhang: This is normal. Looking from the control of the entire chain of textiles and apparel, it generally starts from fabrics, dyes, or related chemical additives, and then the fibers, auxiliary materials, and even the raw materials. As the direct raw material to fabric, Re-PFY is controlled relatively faster. Re-PSF is also a direct raw material for fabrics after spinning, so the control to it is also moderate. As a filling material, HC re-PSF is to some extent an auxiliary material, so the control to it will be slower, but in the end, recycling and environmental protection will still extend to this product.
CCFGroup: Anshun used to produce HC re-PSF, but now the product field has been transformed into non-woven field, and it has become a benchmark. Last year, it began to produce ES fiber and entered the field of virgin PSF. In the process, what can you share with us?
Mr. Zhang: Worries will soon appear if one gives no thought to a long-term plan. A manager must be far-sighted. Anshun used to be a producer of HC re-PSF, but with the rapid expansion of the market, the competition for HC products became more serious. We took the initiative to adjust the product and gradually abandoned the HC products, although at that time we also had quite a large number of large brand customers downstream. It's like just going up the stairs. Only you leave the steps under your feet, can you step upstairs. After the company's goals are determined, it should learn to abandon.
When choosing a new product, it is necessary to do a full research and analysis on the market and have a clear positioning of the product. Take the investment of Anshun on ES fiber market as an example. In addition to our own comprehensive research, we also make a feasibility study report on the industry through CCFGroup, so that the understanding of the market is more comprehensive. Therefore, the positioning of our products is very accurate at the beginning-the high-end market. We follow this positioning in terms of equipment selection, factory construction, and product development. Otherwise, the waste of funds and time caused by repeated adjustments may be seen later.
In daily management, we are closely following the market, to make "sales around the market, production around sales, companies around production" as the core of the entire company, ensuring that the market is always our highest guide. At the same time, we have been researching the market, tracking market dynamics and strengthening product development. Every day, we collect the industrial chain data from CCFGroup and build our own database. At present, our data system can be traced back to the year of 2009, and it is already a small CCFroup database. A great investment has been made in product development, and laboratories, research and development rooms, including test lines have been set up. The newly-launched ES fiber, as the raw material of the hygienic material, our workshop construction and internal management are all in accordance with the first-class standard requirements. These are closely integrated with the high-end positioning of the products to ensure that our products can also cooperate with the first-class downstream enterprises.
Therefore, in terms of sales concept, Anshun has already changed from pure sales to marketing, always oriented to customer needs, and how to effectively create customers as a top priority. The transition from tactics to strategy has been achieved.
CCFroup: So in many ways, Anshun has indeed walked in front of the peers. So, do you think that Anshun still needs to be strengthened?
Mr. Zhang: From a management point of view, Anshun has done a good job, but compared with the virgin polyester market, it is equivalent to a "guerrilla", not a "regular army." I hope that through my own efforts, I will do a good job of this product, ES fiber, and then feed back the recycled chemical fiber, so that both products can be more refined.
CCFGroup: So the future development of Anshun will focus on ES+ recycle?
Mr. Zhang: I personally made a rough three-level division of Anshun's development. The first level is the development of the recycling industry. So far, this level of development is relatively successful. The second level is the development of virgin and recycling industries. Now the second level planning is underway, and the company is also doing the five-year plan (2020-2025). At the third level, I hope to be the output of the management model. Through Anshun's mature management model and experience, whether it is a merger or acquisition, to achieve further development.
CCFGroup: Thank you very much. Last one, a personal question. After your retirement from Anshun this year, you only serve as an advisor to Anshun, how will you spend your time since you have acquired a lot more personal time.
Mr. Zhang: Haha, cultivate your heart. Practice Chinese characters, painting, and participate in a singing group, basically going to practice every morning.
CCFGroup: I remember you have an electronic organ, copper Xiao. Poetry and painting everything through. May you be in good health. Thank you very much for your sharing and suggestions. Thank you !
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