Extension of China Cement Industry: Extensive Barriers to Entry: Ken Research
Posted on 04 October 2017 by KenResearch Manufacturing And Construction,
Construction industry and fixed asset investment is closely related to cement which is an important building material. With the development of construction industry, the demand of cement also rises as well as cement price. Year over year there is 8.1% increase in fixed asset investment and have reached to CNY 59,650.10 billion in China. In 2016, there was also a 7.1% increase in gross output value of construction industry, which reached to CNY 19,356.70 billion in China. In addition, there was 3.2% increase in housing construction area, which was about 7,589.75 million square meters.
According to the market research report "Research Report on China Cement Industry, 2017-2021", after opening-up and China’s reform there is rapid growth of cement industry in China. There was 9.3% CAGR in past 30 years and there was 166 million tons to 2,403 million tons of output volume increase of cement market in China. Despite the fall in growth of China’s economy but still it leads worldwide. Therefore, the demand for cement remained large. From many years, china’s gross output volume of cement has been the largest globally.
There is a large barrier to entry in cement industry in China. The China cement production industry is highly fragmented by numerous enterprises because energy dependence, high transportation cost and limited sales radius are the features of cement product in China. There are over 3,000 cement producers in the end of 2016 of China. There is a low market concentration rate and existence of intense market competition of cement industry in China.
In the future period, it is expected that there will be better development prospects of cement industry in China. On 17 June 2016, there was a ‘Three years action plan’, which was proposed by government of China. There was a steady demand to cement industry as the plan included to aim 18 million suites, which further include dangerous buildings in urban areas, and dangerous suites in rural area of about 10.6 million.
According to China’s railway development plan in the forecast period, the fixed asset investment of China’s railway will reach CYN to 3.8 trillion and 30,000-kilometer railway will be newly built until 2020 in terms of infrastructure. There will be construction of subway before 2020 by the 50 cities in china in terms of urban rail transit and the total mileage will reach to 6,000 kilometer. In china’s cement, industry there will be enlargement in the scale of infrastructure construction.
Anhui Conch, CNBN (Sinoma), Taiwan cement, China resources cement, Jidong development group, Tianrui group, Jaingsu Jenfeng cement group, Shanshui (Sunncy), Lafarge Shui On cement and Asia cement are the top ten cement producers in china, which have more than half production capacity.
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