while there has been a significant upgrade in both technology and quality
This is not surprising given that just China’s manufacturing exports are estimated to have exceeded US$ 1 trillion and this naturally means that the packaging required for these would largely have to come from China itself. According to one estimate, while there has been a significant upgrade in both technology and quality, the variety and quality can still not fully meet the requirements of exports, especially those of high-grade products, and about 25 per cent of the packaging products needed for exports still have to be imported.
China’s domestic economy has also seen significant growth that has been sustained for several years. With this economic development and the resultant improvement in living standards, there has been a surge in the demand for consumer goods, particularly processed foods like instant foods, snack foods, frozen foods, microwavable products and other convenience foods and beverages (China overtook the USA a couple of years ago as the world’s largest beer consumer).
So, where does the packaging industry in China stand today? Several reports have been published which attempt to establish the correct numbers.While there is a fair bit of variance between the figures quoted, the one thing that they all seem to agree upon is that the output of the domestic packaging industry in China should have reached 410 billion RMB Yuan (approximately US$ 55.6 billion or INR 2.2 trillion) during 2005. Even assuming that the current rate of growth is about 18 per cent per annum, this figure should have hit 484 billion RMB Yuan (US$ 66 billion or INR 2.6 trillion) in 2006. Some sources quote this figure as being as much as 600 billion RMB Yuan; we suspect that this number includes imports. If one were to really include the value of packaging products imported to take care of exports of packaged goods, China’s total packaging spend would be quite formidable.
This is quite some achievement considering that the output in 1980 was only 7.2 billion RMB Yuan. There are now more than 11,000 packaging producers in China. There are reported to be more than 4,000 corrugation lines in operation, which is more than the number for theUSA, Japan or Europe.
Future projections seem to indicate that China’s packaging spend will not only sustain this rate of growth but probably exceed it. During the period 2011 to 2015, the industry is slated to grow at about 16 per cent per annum to reach a level in excess of 1,000 billion RMB Yuan. One report has forecast that the output by 2015 will be 36 million tons of paper packaging, 9.46 million tons of plastics packaging, 4.91 tons of metal packaging, 15,5 million tons of glass packaging and 1.2 million units of packaging machines. A big area of growth is expected to be demand for packaging machines. According to a report compiled by the US Department of Commerce, the packaging machinery market in China in 2002 was US$ 1542 million showing a year-on-year growth of over 18 per cent between 2000 and 2002.
Of this figure, local supply (i.e. production net of exports) accounted for US$ 1056 million and the balance US$ 566 million worth of machinery was imported. The major components of this demand were as follows:
–50 per cent : filling and closing machinery
–30 per cent : packing and wrapping machinery
–15 per cent :– parts
The recycling economy is expected to become the main model in the development of the packaging industry. The recycling and application of packaging waste resources is already highly organised (our last issue
carries a detailed report on this) and will contribute substantially to material availability and sustainability.
One packaging segment that is going great guns in China is labels. China recently overtook Japan as the world’s second largest label market after theUSA and demand is expected to continue to exhibit growth rates between 15 and 20 per cent per annum right through to 2011. According to the latest World Labels study conducted by the Freedonia Group, China already accounts for 14 per cent of global label consumption in area terms and this will touch 5 billion RMB Yuan (US$ 680 million or INR 27 billion) by 2010. China will be the world’s largest market for RFID tags and smart cards during 2007 and early 2008 as it plans to issue citizen ID cards and automate highway toll collection in preparation for the 2008 Olympic Games in Beijing. Their per capita label consumption is presently less than 1 square meter but the potential for growth is enormous given their projected double-digit growth rates for the economy and manufacturing exports.Already, a lot of leaders in label stock technology like Avery Dennison and UPM Raflatac have set up large state-of-the-art manufacturing plants in China and many others like large label printers and labelling equipment leaders are also setting up shop.
The General Administration ofQuality Supervision, Inspection and Quarantine of the People’s Republic of China has recently regulated that 3C certification (China Compulsory Certification) is mandatory for 132 types of products in 19 major categories including electronics, electrical appliances and air-conditioners. Earlier, in 2005, it had enforced certification for 550 types of food products in 28 major categories. The Certification Committee has also recently launched regulations for various food packaging products like boxes, plastic bags and beverage bags.All this should create large additional demand for labels and anti-counterfeiting systems.
According to projections, China will overtake even the USA as the world’s largest label market during the next decade. The Asia-Pacific region has already gone past North America to become the world’s largest print market in area terms and, if we add to this the fact that the Indian label market will also grow at between 18 and 23 per cent per annum till 2010 (the Label Manufacturers Association of India forecast last year that India will account for 6.3 per cent of global label consumption by then), we can look forward to seeing a lot of action in these burgeoning Asian packaging markets.