Asia is the fastest growing and most dynamic market for thermoplastic masterbatch products in the world as per a report by AMI Consulting. Despite the impact of the global recession, demand for masterbatch products has continued to power ahead in the region and is forecast to continue growing by over 7% pa. The masterbatch market in China is one of the fastest growing and most dynamic in the world. Its rate of advance has enjoyed strong double-digit growth over recent years and despite the impact of the global recession the market continues to advance at around 8% pa in volume terms as per AMI. The most significant driver of this demand is the continuing expansion and rapid development of the market in China, where masterbatch production has grown rapidly over the past five years, more than doubling to meet a comparable increase in demand. Over the same time China has moved from being a net importer to a net exporter of masterbatch. Consumption of masterbatches in China is lower than that of North America while its consumption of plastics is higher than North America. In fact, China’s market by value is just about 65% that of North America. Though it is the world's fastest-growing and largest usage market, the Chinese consumers are very price sensitive. The processors still use dry pigmentation instead of masterbatches where aesthetics and colour consistency are still not essential. Several factors drive the growth of masterbatches in China- Demographic change, where over 40% of the total population now lives in urban area has a significant impact on the market dynamics of plastics and masterbatches. Introduction of Western lifestyle has pioneered and established the concepts of super markets and retail chains that have driven the growth of masterbatches because of the growing need for more sophisticated packaging products which need masterbatches for consistency and superior aesthetics. As a result, a thriving business has developed to serve China’s plastics processing industry involving a wide variety of companies from those that remain under state control to major international groups. AMI estimates there are at least 500 companies producing masterbatch in China. Most are small-scale, locally-based suppliers. Even so, unlike plastics processing, production of masterbatch in China is more concentrated in the hands of the leading players. The leading 50 companies in China account for approximately 50% of production in 2008. The research has revealed that in volume terms the largest is Cabot Plastics, which has a long established black masterbatch plant in Hong Kong and is supplying product throughout Asia. However, black is more of a commodity product and in value terms the leading producer is Ngai Hing Hong, which supplies a full range of colour, black, white and additive varieties. Ngai Hing Hong has a network of plants in China with 5 factories. Yangxi Huaqiang Color Masterbatch Factory, Guandong Charming Company, PolyOne and Clariant are the largest in terms of their production of color masterbatches in China. The leading white masterbatch producer is Meilian Chemical based in Guandong which is mainly supplying to the blow moulding industry, while A Schulman is China’s largest producer of additive masterbatch. It started a 16,000 tpa capacity plant based on a single line in Dongguan in 2005 and has rapidly built up market share producing masterbatch to supply the Chinese film and packaging markets. While there is a clear trend to make greater use of masterbatch, many Chinese processors continue to use dry blends and pigments in significant quantities, especially in sectors where issues of quality or consistency may not be of a major concern. There are lots of companies supplying these pigment products which the processor then doses directly into the moulding or extrusion equipment. The switch to masterbatch is often hard to achieve in the face of the cost-effectiveness and simplicity of these traditional colouring practices. This method persists in China mainly on grounds of cost and tends to be used in products which are for the local market, rather than those destined for export. Increasingly though as standards, quality and colour matching requirements improve so companies are expected to make greater use of masterbatch. Another feature of the masterbatch industry in China is that most plants, even those belonging to major international groups, serve relatively local markets. A combination of poor logistics and local regulations result in little long distance masterbatch supply in China. Each province also has its own commercial environment and structure and there does not yet exist a homogenous “Chinese market”. To deal with this, many of the leading producers are developing networks of plants in order to serve the total market. The main companies to have gone down this route are Clariant, Ngai Hing Hong and PolyOne.