Economic environment in 2014
China's economy grew at its slowest pace in two decades in 2014 as property prices declined and companies and local governments struggled under debt burdens. GDP grew by 7.4%, a rate envied by most countries, but a cause for concern due to the significant production overcapacity, slower demand and hence, fierce competition in several industrial markets.
Demand from tire markets remained solid in the first nine months of 2014, but dropped significantly in the final quarter of the year. Prices further eroded in a market which was characterized by less export volumes for Chinese tire makers, structural domestic overcapacity and commoditization of truck tire reinforcement solutions.
Demand from solar markets in China picked up in 2014, and several other industrial markets, such as the elevator businesses and the automotive parts sector, performed well. Bekaert’s activities in Shenyang and Jiangyin were able to answer the development and supply needs of customers in search of high-end steel wire solutions.
Economic growth in India moved up firmly from the sub 5% levels of the past two fiscal years. Domestic industrial demand picked up after the newly elected Government took office and implemented reforms to strengthen the economy. Bekaert’s tire cord activities in India recorded solid growth by gaining market share in a rebounding market environment.
South East Asia continued its solid growth trend in most countries, although the region’s largest economy, Indonesia, grew at a slower pace in 2014 with a downward trend for the third consecutive year. On the positive side, the manufacturing industry is one of the strongest contributors to the GDP of the country.
Bekaert is present in Asia Pacific with manufacturing and development centers in China, India, Indonesia, Malaysia and Japan. After the balance sheet date, we also completed the acquisition of the ropes business from Arrium in Newcastle, Australia.