Analysis of the Current State of China's Packaging Industry: Green Upgrading Is the General Trend

I. Current Status of the Packaging Industry

In 2020, packaging enterprises above the designated size in China's packaging industry achieved sales revenue of 10064.58 billion yuan, up 0.32 percentage points year on year. Among them, the manufacture of paper and paperboard containers completed cumulative main business revenue of 2884.74 billion yuan, down 2.53% year on year; the manufacture of plastic film completed cumulative main business revenue of 2754.35 billion yuan, down 0.55% year on year; the manufacture of plastic packaging boxes and containers completed cumulative main business revenue of 1584.62 billion yuan, down 2.49% year on year; the manufacture of metal packaging containers and materials completed cumulative main business revenue of 1083.26 billion yuan, down 7.84% year on year;

the manufacture of special equipment for packaging processing completed cumulative main business revenue of 810.56 billion yuan, up 21.05% year on year; the manufacture of glass packaging containers completed cumulative main business revenue of 576.79 billion yuan, down 1.8% year on year; the manufacture of cork products and other wood products completed cumulative main business revenue of 370.25 billion yuan, down 6.71% year on year.

Source: China Packaging Federation, compiled by Huajing Industry Research Institute

Source: China Packaging Federation, compiled by Huajing Industry Research Institute

From 2015 to 2020, the number of enterprises above the designated size in China's packaging industry (all industrial legal-person enterprises with annual main business revenue of 20 million yuan and above) showed a trend of steady rise. This reflects that more and more players are entering the industry, and market competition is becoming increasingly fierce. According to statistics from the China Packaging Federation, in 2020 there were 8,183 packaging enterprises above the designated size in China, an increase of 267 over 2019.

Source: China Packaging Federation, compiled by Huajing Industry Research Institute

II. Current Status of the Packaging Paper Industry

Divided by packaging material, the packaging industry is divided into four major categories: paper packaging, plastic packaging (including plastic film), metal packaging and glass packaging, among which paper packaging has always occupied a dominant position in the packaging industry.

According to data from the China Paper Association, in 2020 the output of packaging paper was 7.05 million tonnes, up 1.44% year on year; consumption was 6.99 million tonnes, down 0.3% year on year. Overall, domestic packaging paper depends to a certain extent on the import market.

Source: China Paper Association, compiled by Huajing Industry Research Institute

Source: China Paper Association, compiled by Huajing Industry Research Institute

Related report: "2021-2026 China Packaging Industry Market Supply and Demand Pattern and Industry Prospect Outlook Report" released by Huajing Industry Research Institute

In 2020, due to the impact of the COVID-19 pandemic, people stayed idle at home for long periods and mainly bought idle items through online shopping, which caused China's packaging paper consumption to rise rapidly. Packaging paper output could not meet domestic demand, so imports were used to meet domestic demand. This caused China's packaging paper imports to rise substantially in 2020, with an increase of 55%. At the same time, exports also maintained an upward trend, with an increase of 12.5% in 2020.

Source: China Paper Association, compiled by Huajing Industry Research Institute

Source: China Paper Association, compiled by Huajing Industry Research Institute

III. Characteristics of China's Packaging Industry

1. Low technical barriers to entry in the industry, relatively small specific differences between products, and relatively full market competition. China's packaging industry is fully open to operation and belongs to an industry in which the government encourages investment, with few restrictive measures and relatively easy entry and exit of capital. Market competition is fierce, enterprise sizes vary greatly, and industry concentration is very low.
2. Packaging enterprises are mainly concentrated in large and medium-sized cities and economically developed areas along the eastern coast; multinational companies also base their plants in developed areas and then gradually extend inland. The degree of development of the packaging industry in a region is directly related to the degree of economic development of that region, because the packaging industry serves other manufacturing industries and depends to a large extent on the development of other industries.
3. Few technical personnel and insufficient innovation capability. Packaging enterprises need to increase upfront investment in technological transformation, encourage innovation, incorporate funds from multiple parties, expand production scale, raise production concentration, and carry out the technological transformation necessary for circular production and cleaner production, so as to meet the needs of the state's macro-control under the scientific development concept and enhance market competitiveness. This should be the pressing task of China's packaging industry.
4. Competition is mainly based on price competition, and competition between brands is not obvious. Because differences in packaging product quality are small, and as the degree of packaging market segmentation increases, the focus of market competition is brand competition, carried out in the form of price wars, but there is a lack of a leading brand with an absolute advantage.

IV. Green Upgrading Measures for the Packaging Industry

1. Improve policy incentive measures

First, increase support for the green transformation and upgrading of packaging enterprises, give rewards for the adoption and promotion of green packaging materials and green packaging technologies, and give incentives to merchants and express delivery companies that use packaging products in a circular manner. Second, support research and development of common key technologies such as green design, green recycling and the use of recycled raw materials for packaging products. Third, accelerate the establishment of an exit mechanism for non-environmentally friendly packaging, and gradually achieve the full greening of packaging. Fourth, use policy instruments such as government green procurement, green taxation and green finance to accelerate the promotion of green packaging products, technologies and services.

1. Improve the standards and regulations system

First, refine and enrich packaging standards for various categories and specifications, raise energy-saving, water-saving and material-saving indicators and measurement requirements, accelerate the formulation and revision of standards for energy consumption, water consumption, carbon emissions and cleaner production, and improve the level of standardization for green development in the packaging industry. Second, accelerate the formulation of green design evaluation standards for express packaging materials and products, and continue to release lists of green design packaging materials and products. Third, formulate management measures for the recovery and disposal of packaging waste, especially express packaging waste, and improve the standards and specifications for the recovery and disposal of packaging waste as well as group standards in the field of extended producer responsibility. Fourth, accelerate the revision of relevant provisions of the "Cleaner Production Promotion Law" and the "Circular Economy Promotion Law" and add mandatory provisions; it is suggested to carry out basic research on special legislation for packaging, draw on international experience, and consider formulating relevant regulations on packaging.

1. Strengthen the supply of green products

First, support express packaging enterprises in implementing green design, promote simplified, reduced, reusable and refined green design technologies, design and produce green express packaging products, and promote the green upgrading of the express packaging industry. Second, support packaging enterprises in developing, applying and promoting new green packaging materials, gradually prohibit the production of non-degradable ultra-thin plastic and other packaging materials, and promote the use of degradable tape, eco-friendly fillers, renewable paper and packaging items printed with eco-friendly ink and other auxiliary materials. Third, increase research and development efforts in green and intelligent packaging technologies, equipment and processes, and promote the expansion and upgrading of the supply of green packaging products.

1. Build a green supply chain

First, support packaging enterprises in carrying out green design, selecting green materials, adopting green technologies and processes, and properly recycling and disposing of waste packaging products, so as to achieve green and environmentally friendly packaging products throughout their full life cycle. Second, encourage downstream enterprises and merchants to choose green packaging products, driving the green development of upstream packaging materials, packaging design and packaging manufacturing. Third, select appropriate packaging product varieties (such as paper packaging products and plastic products), promote the implementation of the extended producer responsibility system by packaging enterprises, and improve the packaging waste recovery and disposal system through reverse logistics.

——This article is reprinted from China Packaging Network (pack.cn). Original link: http://news.pack.cn/show-379433.html