[China Packaging Network] The development of China's paper packaging industry is synchronized with China's reform and opening up. After 35 years of hard work, China has become the world's largest paper packaging producer, but it is not yet a manufacturing powerhouse. Our development is experiencing real challenges. Reform is the key to determining fate. Our most important task at present is to analyze where the biggest obstacle in the development of the industry lies, and to explore new ways of sustained and healthy development.
China's paper packaging industry is taking a different road from Europe and the United States and other countries and regions. According to China's actual national conditions, the industry's transformation and development can not be completely copied and imitated. How to get out of a new road is a major issue before us.
Hard to avoid price war?
Strictly speaking, the paper industry and the carton industry belong to the same industry. However, in China, these two industries are relatively independent and distinct. Why is this? Apart from the influence of the background of China's economic development, the small-scale peasant awareness in the carton industry is also a very important reason. It is this awareness that blocks the penetration of the industry chain. In the end, the scale of papermaking companies is getting bigger and bigger. Carton companies can only rely on eternal “guerrilla warfare” in order to defend their own three-acre land.
In fact, it is very difficult for the carton industry to take a place in the national economy as an independent industry. First of all, our carton enterprises still go it alone. The market radius of 300 kilometers is the ceiling for its growth. Second, it competes with the upstream paper-making enterprises, fights with downstream end-users, and competes with the peers. Enterprises suffer from their enemies. This mode of operation ultimately determines the pattern of small, scattered, and chaos in the carton industry.
At present, the output of China's paper products has already ranked among the top in the world. In 2011, the world produced a total of 20.22 billion square meters of corrugated cardboard, and China’s output reached 53.55 billion square meters, accounting for a quarter. This proportion has been very alarming. However, due to the difference in statistical caliber, in fact, China's corrugated board production may be far more than this value. China's carton companies are like "Tubachi Road" and are everywhere and everywhere. In Shanxi, there were 108 cartons on a single street. There are more than 100 carton companies in the street like this across the country, not only in Shanxi. In Heshang Town, Xiaoshan District, Hangzhou, the entire town is home to many carton companies.
At the same time, there is another serious fact that needs our attention. The profit of cartons is already very low due to the high cost of production. The cost of raw materials accounts for about 70% of the total cost. Faced with the harsh market competition among peers, carton companies seem to have no other choice, the only means is to use low prices for the living space. However, the price approach is the lowest-end form of commercial competition. If we all rely on price wars to seek development, there is virtually no way out. Therefore, we have seen that even if there are a number of companies with financial strength in the industry, they have the ability to invest tens of millions of yuan or even billions of dollars to develop the carton business. However, the final problem is still the same problem: it is difficult for enterprises to do great work. Strong, difficult to achieve scale effect.
It seems that the carton industry is experiencing a systemic bottleneck, not a specific issue. In other words, the current operation or business model of the entire carton industry has touched the ceiling of development. We have no way to go and we must explore new models.
How to jump out of the development cycle?
According to the incomplete statistics of the China Packaging Federation Paper Product Packaging Committee, there are currently 4,500 corrugated board production lines nationwide. In this kind of production pattern, not to mention the survival and development of the enterprise, it is just to adapt to the national environmental protection requirements. For many carton companies blindly pursuing production capacity, it is a sad level. At present, some places require that all enterprises that need to emit pollutants to the atmosphere must pass environmental protection acceptance within the next three years. This may be a fatal blow for many profitable carton companies. Some phenomena worthy of reflection have already emerged. Some cartons companies do not make money selling cartons. They might as well make profits from renting out production sites. From the above, we can also see that some carton companies are in dire straits.
This is the case with small businesses. Large projects may not be easy. A Chongqing-based company has invested heavily in corrugated cardboard boxes. The first phase of the project has invested 500 million yuan, but it is a pity that the original mode of production and operation did not break through the products and services themselves.
There is a project in Jiangsu, and now it has invested 1.05 billion yuan. This carton company is the largest single plant in the world. Its production process and logistics are arranged very rationally, so the operation is also relatively good. The company plans to re-clon a factory 500 kilometers away. Is this form a breakthrough to the existing model? The author believes that it will take time to test.
The packaging industry is involved in a wide range and is closely related to people's consumer life. Now that the country is vigorously advancing the construction of urbanization, it means that more producers will gradually become consumers, so that the development space of the packaging industry will become even greater. Therefore, the growth rate of the packaging industry in 2014 will not be less than 12%, and the range of use and application of paper packaging will also be more and more. This is an enormous opportunity for our industry. However, we also saw that the upstream papermaking industry is trying to open up manufacturing channels for paper and paper packaging production, and hopes to get in direct contact with end users. End-users are also trying to change the mode of operation, and some brands are doing their own carton business. Can we adapt to a new round of market competition if the production and operation models of carton enterprises do not change?
With the rapid development of the Internet and the rapid renewal of technology, cartons companies must come up with new ideas and new approaches as soon as possible. The biggest problem and confusion in the entire industry is the issue of concepts and ideas. The reason why many smart people do not have the idea to blindly find a way on the inherent track of the industry, the key is not to jump out of this inherent thinking circle.
Let us take a look at how "outsiders" work on the carton project.
In 2013, Shandong Century Sunshine Paper Group Co., Ltd. (hereafter referred to as “Century Sunshine”) launched the “Sunlight Concept Packaging Pre-printing Project”. This project provides creative design as the lead, relying on preprinted projects, and innovating in business models. As a means to ensure the technological revolution, we provide end-customers with one-stop printing and packaging solutions, from ideas, design to packaging, and logistics, namely the Sunshine New Concept Packaging Solutions.
This is a new attempt by the papermaking companies to open up the industrial chain. In European and American countries and regions, 40% of corrugated cartons are produced by papermaking companies. In China, the upstream papermaking companies blindly pursue the scale and grow bigger and bigger. The downstream carton enterprises are characterized by a large number, small scale and scattered industries. At present, there are more than 40,000 cartons in China. The huge difference between "elephant" and "ant" in terms of volume makes papermaking and carton companies not intervene and form a fragmented situation. The many links and participants involved not only make the production cost of the packaging high and the cycle long, but also bring difficulties to the downstream companies in terms of management and control. Century Sunshine's new concept packaging solution is not only a company's innovation and transformation, but also actively explored the healthy development of the traditional carton industry.
At the end of Century Sunshine, we will continue to follow observations. I believe that in the key nodes of transformation and development, the entire industry needs to think carefully and boldly conceive. Only by changing the inherent ideas can we have a subversive breakthrough in order to usher in greater development.
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