Packaging Industry in China
Euromonitor International's Packaging Industry in China Euromonitor International's World Market for Glass Packaging report offers insight into key trends and developments in global and regional consumer glass packaging. It provides analysis of the major growth markets and end-use applications, together with analysis of the corporate strategies of the leading companies.
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Chapters: 6 | Tables: 41 | Publication date: Apr 2007
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Executive summary
Packaging legislation becomes more stringent
The Chinese government passed more than five new regulations and national standards in 2005 and 2006, reflecting the mounting concerns regarding environmental protection and health. The newly launched regulations govern various aspects of the packaging industry, covering material selection in plastic packaging, quality standards in liquid cartons and paper-based packaging, as well as standardised labelling in food packaging.
These regulations have had a strong impact on the packaging industry. For example, the labelling regulations involve huge replacement costs for dairy manufacturers; cheap plastics are banned resulting in higher raw material costs; and more stringent recycling standards require improvements in and reconstruction of manufacturing processes.
Surge in investments in packaging production
Packaging producers, both foreign and domestic, invested heavily in expanding production capacity in 2005 and 2006, much of which was focused on liquid cartons and rigid plastic packaging. Modern financing channels represented by stock markets largely help finance these investments. During the last few years of the review period, capacity expansion was stimulated by the sudden rising demand for particular types of packaging, such as liquid cartons, both domestically and internationally.
Joint ventures and domestic players aiming to boost industry share in the more dynamic areas of packaging, such as liquid cartons, increased their production capacity the most dramatically. The majority of these new production plants are located in mid and northern China, where operating costs are much lower.
Profit squeezed by rising costs
Profit decreased in 2005 and 2006 across the packaging industry, especially in flexible plastic packaging and rigid plastic packaging, as the cost of raw materials climbed dramatically towards the end of the review period. The hike in costs affected the industry’s profitability as a whole, even though some of the costs were passed downstream. The situation was also exacerbated by the increase in competition, which forced some manufacturers to lower their prices, despite the higher production costs.
Moreover, operational costs such as rising salaries, management and utility costs also began climbing. This was most significant for packaging players in the south and east of the country where most of the production is concentrated. The rampant economic growth in these regions quickly uplifted local manufacturing costs.
State-owned groups characterise the packaging industry
Without exception the packaging giants in China are owned by the central government. Many were originally formed by major packaging players and government bodies with the intention of taking advantage of economies of scale. Large groups such as the China National Packaging Corporation are not only manufacturers, but also law makers and government watchers. Such organisations also manage the education and training systems for the packaging industry and, as packaging technology research and development usually demands strong and long-term financial support, it is only these giants which can provide such conditions.
Table of contents
EXECUTIVE SUMMARY
Packaging legislation becomes more stringent
Surge in investments in packaging production
Profit squeezed by rising costs
State-owned groups characterise the packaging industry
MARKET BACKGROUND
PACKAGING LEGISLATION
Use of PVC becomes restricted
Two new national standards in liquid cartons and cartons
Further legislation expected on environmental protection
Food labelling standards upgraded
ICCA corrugated recycling symbol promoted in China
RECYCLING AND THE ENVIRONMENT
Enhanced regulation in recycling
Profiting from recycling liquid cartons
Manufacturers take more responsibility for recycling
Table 1 Overview of Packaging Recycling and Recovery in China 2004/2005 and Proposals for 2007
CORPORATE ACTIVITY IN PACKAGING
Major trend towards increased production capacity
State authority took control of China’s largest packaging group
First joint venture in producing aseptic packaging material
MAJOR MARKET PLAYERS (LOCAL COMPANY PROFILES)
CHINA NATIONAL PACKAGING CORPORATION
Leading state-owned enterprise taken over by State Development & Investment Corp
Service extension and its merger and acquisition strategy
Joint ventures with renowned international packaging companies
Core competence and new product development
Summary 1 Major End-Use Markets for China National Packaging Corporation by Pack Type 2005
SHANGHAI ZIJIANG ENTERPRISE GROUP CO LTD
The largest listed packaging company
Holding key customers in soft drinks
Strategies remain faithful to technology innovation
Summary 2 Shanghai Zijiang Enterprise Group Co Ltd Operational Indicators 2005
Summary 3 Major End-Use Markets for Shanghai Zijiang Enterprise Group Co Ltd by Pack Type 2005
ZHUHAI ZHONGFU GROUP
Largest domestic PET producer
Company benefits from economies of scale
Summary 4 Zhuhai Zhongfu Group: Operational Indicators 2005
Summary 5 Major End-Use Markets for Zhuhai Zhongfu Group by Pack Type 2005
TSINGDAO JINGHUA GLASS CO LTD
Summary 6 Tsingdao Jinghua Glass Co Ltd Operational Indicators 2005
Summary 7 Major End-Use Markets for Tsingdao Jinghua Glass Co Ltd by Pack Type 2005
TETRA PAK CHINA
World’s leading group in flexible packaging
China – core element in Tetra Pak’s international strategy
Products and services in China
Strong industry measures
Forecast favourable but challenging
Summary 8 Tetra Pak China: Operational Indicators 2005
Summary 9 Major End-Use Markets for Tetra Pak China by Pack Type 2005
REXAM DER KWEI LIMITED
China becoming increasingly important in Rexam’s global vision
Full ownership of Chinese operations
Potential for growth in northern China
Summary 10 Rexam Der Kwei Limited: Operational Indicators 2005
Summary 11 Major End-Use Markets for Rexam Der Kwei Limited by Pack Type 2005
PROPACK INTERNATIONAL HOLDINGS LTD
Summary 12 Propack International Holdings Ltd: Operational Indicators 2005
Summary 13 Major End-Use Markets for Propack International Holdings Ltd by Pack Type 2005
FIRSTA GROUP
The largest sheet film manufacturer in central China
Summary 14 Firsta Group: Operational Indicators 2005
Summary 15 Major End-Use Markets for Firsta Group by Pack Type 2005
BALL ASIA-PACIFIC (CHINA) LTD
Summary 16 Ball Asia Pacific Ltd Operational Indicators 2005
Summary 17 Major End-Use Markets for Ball Asia Pacific Ltd by Pack Type 2005
ACI CHINA
Summary 18 ACI Group Operational Indicators 2005
Summary 19 Major End-Use Markets for ACI Group by Pack Type 2005
YANTAI BC PACKING CO LTD
Strong technology background
Close cooperation with major brewery
Strong domestic and overseas sales network
Summary 20 Yantai BC Packing Co Ltd: Operational Indicators 2005
Summary 21 Major End-Use Markets for Yantai BC Packing Co Ltd by Pack Type 2005
FOSHAN HUAXIN PACKAGING CO LTD
Summary 22 Foshan Huaxin Packaging Co Ltd Operational Indicators 2005
Summary 23 Major End-Use Markets for Foshan Huaxin Packaging Co Ltd by Pack Type 2005
HUAXI PACKAGING (GROUP) CO LTD
Summary 24 Major End-Use Markets for Huaxi Packaging (Group) Co Ltd by Pack Type 2005
BROTHER PACKING MACHINERY CO LTD
Summary 25 Major End-Use Markets for Foshan Huaxin Packaging Co Ltd by Pack Type 2005
ZHEJIANG IDEAL PACKAGING CO LTD
Summary 26 Zhejiang Ideal Packaging Co Ltd Operational Indicators 2005
Summary 27 Major End-Use Markets for Zhejiang Ideal Packaging Co Ltd by Pack Type 2005
MAJOR MARKET PLAYERS BY PACK TYPE
RIGID PLASTIC
Surge in PET production boosted by demand from soft drinks, beer and OTC industries
Declining profit due to rising raw material costs
Summary 28 Major Rigid Plastic Packaging Manufacturers by Pack Type 2005
METAL
Manufacturing highly concentrated in the coastal areas of China
Joint ventures prominent in metal packaging
Domestic players continue to lead the industry
Summary 29 Ranking of Major Glass Packaging Manufacturers 2005
Summary 30 Major Metal Packaging Manufacturers by Pack Type 2005
FLEXIBLE PACKAGING
Monopolistic industry structure in flexible packaging
Rapid production expansion for BOPET film
Flexible paper highly profitable boosted by prosperous tobacco industry
Summary 31 Ranking of Major Flexible Packaging Manufacturers 2005
GLASS
Industry reconstruction continues apace
Summary 32 Ranking of Major Glass Packaging Manufacturers 2005
LIQUID CARTONS
Domestic players begin to vie with multinational giants
Multinational giants lead on
Summary 33 Share of Major Liquid Carton Manufacturers 2005
PAPER-BASED PACKAGING
Competition reduces the number of manufacturers
Summary 34 Major Paper-based Packaging Manufacturers by Pack Type 2005
CLOSURES
Large packaging groups characterise closures
Summary 35 Ranking of Major Closure Manufacturers 2005
APPENDIX
Table 2 Total Value for Packaging in China 2002-2004
Table 3 Production volume growth for Packaging in China in 2004
Table 4 Production volume for Packaging in China in 2004
Table 5 Number of Middle and Large-Sized Manufacturers for Packaging in China in 2004
Table 6 Official Forecast of Production Value Growth