China disk industry set to be world's largest by 2008

Analysts predict the Mainland will surpass Taiwan to become the world''s largest recordable optical media producer at 3.8 billion disks annually.

Be it refrigerators, TVs, plastic Christmas trees, or a wealth of other consumer products, China has climbed to the top in the global production competition. And while it might not happen until 2008, the Mainland looks set to overtake Taiwan and emerge as the world''s leading supplier of recordable optical media.

According to statistics from the International Recording Media Assn. (IRMA; Princeton, NJ), China will produce around 1.6 billion recordable CDs and rewriteable CDs this year, compared with an estimated 5.9 billion in Taiwan and 425 million in the rest of the world. By 2008, however, the IRMA forecasts production of 3 billion such discs in China, compared with 2.3 billion in Taiwan, and 275 million in the rest of the world. By this time, China will also be turning out 800 million recordable DVDs, compared with around 1.3 billion from Taiwan, and 150 million in the rest of the world.

China is also developing its own standard for pre-recorded DVDs so that Chinese manufacturers of DVD players will not have to pay licensing fees to foreign companies such as Philips. Chinese authorities plan to make the Enhanced Versatile Disc (EVD) the de facto standard in China, although it will need support from film distributors prepared to release movies on the format to succeed. If EVD is deployed successfully, it will translate to further demand growth for optical media. The IRMA forecasts production of more than 270 million video DVDs in China (including Hong Kong and Macao) this year, growing to more than 800 million in 2008.

Another less fortunate aspect of the growth of China''s disk-replication industry is the volume of pirated material produced. Close to 900 million video CDs (a popular format in Asia whereby movies are recorded onto CDs) were made in China and Hong Kong in 2003, the majority of which were pirated. For each legitimate audio CD pressed in China, meanwhile, nine pirated disks were made, according to the International Federation of the Phonographic Industry (IFPI; London).

Despite the disk-replication industry''s complex dynamics, it represents promising opportunities for suppliers of polycarbonate resin and processing machinery alike, but as is often the case, processors are price-sensitive when it comes to machine investment.

"In Europe, replicators look at a five-year investment; but in China they want their money back in one year," says George Hoefner, managing director of Netstal Singapore. The latest Netstal machine boasts a dry cycle time of 2.5 seconds and can turn out 31,500 disks a day, compared with 22,000 for an average machine. But Netstal says Chinese replicators are more likely to opt for machines with 3.5-second cycle times, even though they will make less money over the long run. Hoefner estimates that China took delivery of 570 disk machines in 2003.

China''s first integrator starts up

Lines for disk replication have traditionally been sourced from Japan and Europe. Now, a Mainland China supplier offering complete systems has emerged. BlueRay Precision Machinery Technology Co. (City of Science, Guangdong Province) has its origins in the Guangdong Machinery Research Institute of Super-Fine Molding Technology Center, which initially developed disk tooling and molds.

A multinational team of engineers at BlueRay put together a complete disk production line, which is now commercially available. All components are manufactured in-house. "We plan to sell 30 lines in 2004 at less than 50% of the cost of a Japanese line," says BlueRay VP Kenichi Hirukawa. "Hirukawa notes that a lot of recent investment in China has focused on CD-R lines and he expects replicators to struggle with low selling prices. He expects a surge in DVD investment starting in March.Stephen Moore [email protected]

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