Demand for windows and doors in China are projected to raise 11% pa through 2011 to 195 billion Yuan, outpacing growth in most other parts of the world as per a report by Freedonia. Growth will be driven by healthy gains in building construction activity as industrialization efforts continue and income levels rise. Increasing demand for larger living space, further privatization of home ownership, sustained strength in foreign investment, and a rapidly expanding domestic consumer market will also contribute to fenestration product market gains. Plastic will outpace metal and WPC windows and doors will continue to make inroads at the expense of metal and wood products through 2011. Plastic materials have rivaled both metal and wood in the residential market, primarily benefiting from their high energy efficiency, low maintenance requirements and relatively low cost. Plastic's rapid rise in the Chinese fenestration market is also partly due to strong support from the government. Demand for metal products will post slower yet still healthy growth. Despite market share loss to plastic, metal will remain as the dominant window and door material in China.
The nonresidential building construction market represents a bigger end use for windows and doors, and therefore exerts higher influence on overall demand for fenestration products in China. Although government actions such as tightening credit issuance and cutting unnecessary public spending on building construction, steps taken in recent years in order to prevent the economy from overheating, will also impact the nonresidential building construction market, market advances for windows and doors used on nonresidential structures will nevertheless post stronger gains. Nonresidential window and door demand will outpace market gains in the residential segment. In comparison, residential window and door demand will grow at a slower but still respectable pace. Unlike the US, new construction applications account for the majority of window and door sales in China. While it is typical of a developing market that new demand outweighs replacement need, this difference is also attributable to factors unique to China. For example, a large share of the Chinese window and door stock is comprised of metal products with a relatively longer useful life span, thus constraining replacement demand. As a result, demand for windows and doors in new construction applications will grow its market share to over 70%.
Due to regional differences in economic, social and cultural conditions, the size, growth and composition of window and door demand in the six regions of China varies considerably. The Northwest remains largely underdeveloped; however, it is being targeted by the central government's "Go West" strategy, which will result in significant demand growth in fenestration products. Demand in the Northeast will also benefit from government initiated construction activity as a result of the "Revival of the Northeast" project. However, the Central-East and Central-South will remain home to over half of China's total population and will account for a similarly large share of overall fenestration product demand.
Although Chinese WPC producers have been immune from economic problems, firms heavily involved in exporting are now seeing slowdowns. The housing industry problems in the US and Europe, as well as increasing strength of the Yuan and also domestic issues, such as new labour laws, are all having a negative impact. However, some industry officials and observers do not see the impact as being so great, and do not expect to see much slowing down, with Chinese demand for WPC still forecast to grow by 60% in the next two years. Stimuli to the domestic industry include use of WPC in high profile events including the Beijing Olympics, 2010 Asian Games and the 2010 World Expo in Shanghai. Also the Chinese building industry's growth has seen no slowdown as yet though China's construction industry will see a delayed impact from the worsening global economic picture. The Chinese WPC industry continues to attract investment both for expansion and upgrading.