Red giant - how will China impact on world packaging?
It’s almost a cliché to say it, but the emergence of China as an economic superpower is causing ripples across the packaging industry. Michael Bennett finds out why from Steve Pye, Stuart Lendrum, David McGowan and Victor Wong.
Does China represent a threat or an opportunity to the packaging industry?
SP ‘China is both a threat and an opportunity. It seeks to source valuable raw materials from the west to fill empty containers going back to China (having carried goods previously to the west). However, it is a country full of enthusiasm with a “can do” attitude and that is why my company set up manufacturing there to service the Asia-Pacific region.’
SL ‘Both – from a supply and demand perspective.’
DMG ‘As a continually expanding major market, China presents a great opportunity for growth for the overall packaging industry. However, growth is likely to be limited to within China for the time being, as domestic consumption continues to grow rapidly.’
VW ‘I believe China represents both a threat and an opportunity for the western-based packaging industry. Chinese printers are providing keen competition, especially in relation to prices. On the other hand, the growth of demand from China and the other Asia-Pacific countries presents an opportunity for everyone.’
What impact will China have on the world packaging market?
SP ‘The possibility of undercutting and undervaluing western manufacturing remains, as does the risk of counterfeit goods and packaging. However, like any other manufacturer, the [Chinese companies] will seek to maximise profits once established in the market place.’
VW ‘Although demand from Chinese consumers is growing, I don’t believe this will offset the downward pressure that lower cost material supplied from China has on prices. As a result, overall material costs in the worldwide marketplace will tend to decline and those working in the packaging sector will have to find new and creative ways to add value to brand packaging.’
SL ‘[It could result in] a more truly global market in [terms of] production, conversion and consumption.’
DMG ‘A huge percentage of packaging is already manufactured and shipped from China, especially packaging that relies upon manual labour to be produced. Huge internal investment means the Chinese packaging market is expected to continue to grow incrementally, and [it will] have surpassed the USA in size by 2020. As China’s industrial development continues, there will be a push to export products globally resulting in Chinese companies investing in local markets.’
Could China’s growth in the sector have environmental implications?
SL ‘Yes, but that’s not to say it won’t be positive.’
DMG ‘Yes, but in a positive way. The Chinese government is stringent in ensuring that environmentally thoughtful manufacturing procedures are established from word go.’
SP ‘China is well aware of its reputation in this field. It seeks to be market leader in all aspects of manufacturing but it cannot do this without due consideration to its own and its customers’ environment. Legislation and international agreements and standards will ultimately be complied with, but as yet this is not being done to the west's satisfaction.’
What new trends do you predict for consumer packs in China?
DMG ‘Conversion of local produce to packaged goods, greater variety of portions and increased single serve products.’
SL ‘Premium brand, convenience, quality and safety.’
VW ‘China is no longer just about low prices, and Chinese producers are already looking to match the worldwide standards expected by the top name brands.’
SP ‘Standards of product and manufacturing conditions will rise to match those of more traditional supplying countries. It will take time, but retailers and specifiers will steer China in the right direction so that they will meet the full requirements of its widening customer base.’
How will China’s growing influence affect material costs?
DMG ‘I’d predict that future Chinese expansion would mean packaging material costs decrease, but for a limited period. As the Chinese economy grows, material costs will rise in line with higher quality of living and wage costs.’
SP ‘This depends on which packaging medium you choose. It will not be economic to ship heavy-duty, glass or metal packaging half way around the world but the effects on plastics and fibre based materials could see further restructuring within the European packaging manufacturing arena.’