CHINA’S CARDBOARD MARKET IS CHANGING
As e-commerce, sustainability standards and demand for high-quality packaging spice up the cardboard business in China, Sun Paper Group’s Chairman, Hongxin Li, has a solid strategy to make his company thrive.
HAIYAN SUN photos SUN PAPER
At the 2018 Global Smart Logistics Summit, the retired business tycoon Jack Ma commented that global trading will go from containers to packages. What impact will this trend have on the cardboard industry? Brian McClay , Principal from Brian McClay & Associ- ates Inc., is optimistic about this potential market growth, which has been brought about by the changing nature of e-commerce. “As global e-commerce shifts from B2B to B2C, you’ll see a spike in the volume of the parcels consumed. The demand for good-quality packaging grows in line with the growth of long-haul transportation. This is a very positive opportunity for the coated cardboard business,” he says. Brian McClay’s prediction echoes the claims of Hongxin Li , Chairman of the Sun Paper Group. “Thanks to the rise in e-commerce and express delivery, the packaging cardboard industry has had robust growth,” Li says. As the leader of the Sun Paper Group, Li founded his company in 1980s. He has a sharp business sense about the cardboard market. “China has a long history of sending gifts. The domes- tic demand driven by 140 million people is huge. Mean- while, with the income level continuously going up, the demand for packaging generated by e-commerce has also increased,” he explains.
Last year in the annual ‘Double 11’ -sale of the digi- tal commerce websites of China on November 11th, the consumption of cardboard grew by 110 million pieces. “We are confident about the future growth of mid-and- high end packaging products,” Li says. The Sun Paper Group is the industry’s market leader in China, and one of Metsä Fibre’s biggest clients. WEALTH INCREASES CONSUMPTION Both Jack Ma and Hongxin Li are confident about the potential of the domestic market. Consumers’ demand for the quantity and quality of cardboard will rise as the econ- omy develops. This is a trend observed in other markets. At present cardboard consumption in China is 10 kg per person per year, compared with 40 kg in USA. Not many countries can match the USA, but nevertheless con- sumption is still strong. For example, in South Korea, the consumption is 30 kg per person annually, which is three times the consumption of China. “When China gets richer and consumption increases, the demand will catch up. It will take a while for the con- sumption in China to grow to the same level as South Korea, but the numbers demonstrate the growth poten- tial,” says Brian McClay. For the Sun Paper Group, this analysis is good news, and Hongxin Li came up with a strategy accordingly.
Brian McClay Principal at Brian McClay & Associates, a pulp and related end-uses market intelligence consultancy.
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