包装産業の発展現状と発展動向の分析

At present, China's packaging industry has already formed an independent, complete and full-range industrial system with paper packaging, plastic packaging, metal packaging, glass packaging, packaging printing and packaging machinery as its main products. The rapid development of China's packaging industry has not only basically met the needs of domestic consumption and commodity exports, but has also played an important role in protecting commodities, facilitating logistics, promoting sales and serving consumption.

Affected by the slowdown in downstream consumption growth, the revenue side of key packaging companies grew slightly in 2022H1. Revenue in 2022H1 increased by 3.8% year on year, while the single quarter of 2022Q2 declined by -4.2% year on year. The slowdown was mainly due to: total retail sales of consumer goods in 2022H1 grew by 8.4% year on year, among which typical downstream sectors of listed packaging companies, such as tobacco and liquor retail sales, fell 1.7% year on year, soft drink output growth was only 3.3%, and mobile phone shipments fell 5.1% year on year, all of which had a certain impact on manufacturers producing corrugated boxboard packaging, color boxes, cigarette labels and plastic packaging; revenue of paper packaging, cigarette label, metal packaging and plastic packaging companies in 2022H1 increased by 4.3%, 8.0%, 2.5% and 1.5% year on year; on the other hand, the pricing of some products followed the decline in raw material prices, which also slowed revenue growth (such as corrugated boxboard packaging).

Leading companies continue to drive industry consolidation, with obvious competitive advantages: in previous years, against the backdrop of tightening environmental protection policies and rising labor and raw material prices, the industry's M&A and consolidation process accelerated, significantly enhancing the bargaining power of leading companies in the industrial chain. Sub-industries such as metal, plastic and paper packaging all benefited from the increased concentration of downstream customers, with orders continuously concentrating toward packaging leaders. On the other hand, through high-quality services and nationwide coverage, leaders consolidated the stickiness of existing customers, also accelerated the layout of new markets, and continued to expand market share.

Building comprehensive packaging service providers, expanding new businesses and enhancing the added value of products and services: downstream customers' products are becoming increasingly diverse, their demand for packaging is rising, and they prefer packaging leaders with comprehensive service capabilities. Through acquisitions and technological R&D, packaging enterprises are continuously extending the depth of the industrial chain, such as cross-sector social packaging, smart packaging IoT, and one-stop design and development services.

2022H1: Growth in total retail sales of consumer goods slowed

2022H1: Growth in beverage output slowed

Against the backdrop of relatively weak overall utilization in the first half of the year, packaging profitability still improved somewhat.

1. From a macro perspective, the CPI-PPI scissors gap widened. PPI represents raw material prices, and CPI represents product prices. The difference between PPI and CPI peaked in 2018Q2 (at 4.7% and 1.9% respectively), then reversed rapidly, and continued to widen until July 2019 (at -0.3% and 2.8% respectively), which is fairly consistent with the trend of packaging companies' gross margins moving from low to high; considering the raw material inventory factor, profitability is expected to continue improving in subsequent quarters.
2. Bargaining power drives profitability: with industry consolidation and the increase in leaders' market share and bargaining power, the expansion of profitability drove gross margin improvement (notably in the metal two-piece can industry and the corrugated boxboard paper packaging industry).

2022Q2: The difference between PPI and CPI widened

Paper packaging: key companies (Jinjia Co., Yuto Technology, Hexing Packaging, Meiyingsen) saw a relatively large year-on-year improvement in gross margin in 2019Q2, up about 2.1pct year on year. The profitability improvement was due to:

1. Decline in raw material prices: paper prices were relatively high in 2018Q2, and in 2019Q2 paper prices fell noticeably year on year (coated paper, offset paper, ivory board, white board and kraft linerboard fell 19%, 14%, 13%, 12% and 20% year on year); considering the raw material inventory cycle, industry profitability is expected to continue improving quarter on quarter in 2022Q3.
2. Increased say in industry integration: the paper packaging industry continued to consolidate; for example, corrugated boxboard paper leader Hexing Packaging saw its order volume continue to grow against the trend, and industry consolidation pushed industry profitability to bottom out and rebound.
3. Enhancing value chain added value: using paper packaging as a carrier to provide high value-added services to brand owners and raise overall gross margins. For example, Jihong Co. uses packaging as a carrier to expand across sectors into precision marketing and cross-border e-commerce, achieving deep integration of online advertising and offline packaging businesses.

Metal packaging: the arithmetic average gross margin of key companies (Org Technology, CPMC Holdings (0906.HK), Baosteel Packaging, Shengxing Group) in 2019H1 was 17.8%, up 0.7pct year on year. The profitability improvement was due to:

1. The two-piece can industry returning to an upward channel. After experiencing excessive capacity deployment, the two-piece can industry suffered consecutive losses in 2016-2017, while leaders increased consolidation efforts (including Org Technology taking a stake in CPMC Holdings and acquiring Ball Asia Pacific, and Shengxing acquiring Pacific Can, etc.). At present, the CR4 market share has reached as high as 70%, bargaining power has increased markedly, and the industry has entered an upward profit channel. In early 2019, two-piece cans successfully raised prices by 0.7-0.8 fen/can, and the gross margin of the two-piece can business of Org Technology, Baosteel Packaging and CPMC Holdings increased by 6.5pct, 2.2pct and 0.2pct year on year in 2022H1. 2) Raw material prices fell slightly while remaining stable. In 2022H1, the price of aluminum ingots fell 4% year on year, and the overseas LME aluminum spot price fell 17% year on year, driving up the gross margin of the two-piece can industry.

Changes in paper packaging profitability and the trend of raw material prices

Price increases for two-piece cans drive a rebound in two-piece can gross margins

Future development trends of China's packaging industry: green, low-carbon and environmental protection become the main axis of development

1. The regional landscape will gradually change

The packaging industry landscape with the "Yangtze River Delta", "Pearl River Delta" and "Bohai Rim" as key regions will not change quickly for a considerable period of time and will still develop in step with the regional economy. However, with the large-scale development of the western region and the revitalization of the old industrial base in Northeast China, the overall imbalanced development of the packaging industry will change markedly. For outstanding packaging enterprises in the "three major blocks", this is an opportunity for expansion and development.

1. Developing in a holistic and systematic direction

Developing in a holistic and systematic direction In the traditional sense, systematic packaging solutions such as buying packaging materials and getting machines free, etc., as the market matures, suppliers that cannot provide complete solutions will have their bargaining power with customers weakened because they cannot systematically reduce packaging costs; packaging enterprises need holistic and systematic packaging approaches.

1. Structural adjustment will accelerate

With changes in the domestic and international development environment and the combined impact of quality-related and structural contradictions across the economy, China's packaging industry will enter a critical period of development, namely the stage from a golden development period to a period with frequent problems. Long-standing structural and quality-related defects such as overcapacity, excessive reliance on energy and resource consumption, weak independent innovation capability, weak corporate competitiveness, and a mismatch between industry scale and economic benefits will become increasingly obvious, which will make regional industrial structural adjustment in recent years unavoidable. Structural adjustment is a process of survival of the fittest, a process of optimization and reorganization, and also an opportunity for advantageous enterprises to soar.

1. "Green, low-carbon and environmental protection" will be the main axis of the future development of the packaging industry

With the introduction of the implementation plan for promoting green packaging in the express delivery industry, relevant implementation plans will first restrict the use of a series of non-degradable plastic packaging in industries such as e-commerce, express delivery and food delivery, and urge local governments, especially cities, to step up implementation.

——This article is reprinted from China Packaging Network (pack.cn), original link: http://news.pack.cn/show-379430.html