Paper packaging refers to the commodity packaging made of paper and pulp as the main raw materials. It has high strength, low moisture content, low permeability, no corrosion, and has certain water resistance. In addition, the paper used for food packaging also requires sanitation, sterility, and no pollution impurities.
According to the Research Report on the Development Status Analysis and Investment Prospects of China's Paper Packaging Industry (2022-2029) released by INSIGHT AND INFO, from the perspective of China's paper packaging industry chain, its upstream is the supplier of raw materials, mainly involved in the paper industry, ink industry and other auxiliary material industries; Its midstream is manufacturing of paper products, mainly by processing paper packaging materials such as white top liner, carton board, packaging paper, and corrugated fluting into cartons boxes, paper bags, paper tubes, and other products; The downstream of the industry is the terminal application of paper packaging products. The downstream terminals of paper packaging products are widely used, covering various fields of national production and life, including consumer electronics, tobacco and wine, daily chemicals, packaged food, medicine, express delivery and many other industries.
After years of development, China's paper packaging industry has now formed a complete and reasonable industrial system, and entered a stable development stage. From the perspective of the development course of China's paper packaging industry, it can be roughly summarized into four stages since China's reform and opening-up: the initial stage, the unordered growth stage, the rapid growth stage and the stable development stage.
Since the 1980s, with the development of China's reform and opening-up, the national management organization of packaging industry has started to operate, and the number of paper packaging product manufacturers has gradually increased. A few enterprises have begun to introduce single-sided machines or automatic production lines, and the industry has entered the initial stage of development; Then in the 1990s, the industry was relatively overcapacity, and the price competition was also mainly fierce in the market. The industry entered a stage of unordered growth, and the average profit also declined. At the same time, some middle and high-end paper packaging product manufacturers gradually expanded their market share by virtue of cost management, quality advantages and marketing promotion differentiation.
At the beginning of the 21st century, China's paper packaging industry entered a rapid growth stage. After the unordered growth, more and more enterprises began to focus on cost control, internal management, update of production technology and equipment, marketing integration and innovation of service mode, and some enterprises began to implement the integrated packaging business model. During this period, the market scale of the industry grew rapidly. At the same time, the competition among enterprises was not limited at the price level. The quality and service of products, internal management and business model of enterprises gradually became the key factors to improve the competitiveness of major enterprises. Therefore, the competition within the industry was gradually standardized; After the global economic crisis from 2007 to 2009, the global demand was sluggish. The recession in the consumer goods industry was transmitted to the paper product packaging industry, which began to integrate on a large scale, and the number of enterprises declined significantly. Therefore, since 2011, the development of China's paper packaging industry has tended to be stable, and the market growth has slowed down. At this stage, the leading enterprises in the paper packaging industry in China further expanded their leading advantages and market share, and the small and medium-sized enterprises with backward production capacity were faced with the dilemma of elimination. While eliminating the backward production capacity, the surviving enterprises also began to explore new development directions. The concentration of the paper packaging industry in China was further improved, and the market was becoming more mature.
The development of China's paper packaging industry is largely affected by upstream raw materials, especially the paper industry. The main raw materials of the paper industry are wood pulp, bagasse pulp, bamboo pulp and other pulp. In recent years, with the supply-side reform and the implementation of environmental protection policies, China's total pulp production has declined significantly from 2017 to 2020; By 2021, the operating rate of national leading papermaking enterprises will increase significantly, and the pulp output will increase accordingly. According to the data, China's total pulp production will rise to 81.77 million tons in 2021, with a year-on-year growth of 10.83%.
From the perspective of the market scale of China's paper packaging industry, affected by the changes in the output of upstream raw materials and pulp, the change trend of the market scale from 2017 to 2021 is basically consistent with that of pulp output. According to the data, from 2017 to 2021, the operating income of some enterprises in China's paper packaging industry showed a downward trend. In 2017, the operating income of some enterprises designated size in China's paper packaging industry was about 331.09 billion yuan; It will decrease to 288.47 billion yuan by 2021; However, by 2021, affected by the recovery of upstream pulp output, the total operating income of enterprises above designated size in the paper packaging industry will also resume growth. In 2021, the operating income of enterprises above designated size in the paper packaging industry in China will reach 319.203 billion yuan, an increase of 30.733 billion yuan over 2020, with a year-on-year growth of 10.65%.
In addition, in 2020, the scale of China's paper packaging industry will resume its growth due to not only the changes in raw materials, but also domestic environmental protection packaging policies. In 2021, China's environmental protection packaging related policies will emerge frequently, in which it has repeatedly mentioned that we should encourage the selection of green materials, implement green procurement and promote green packaging. In this context, paper packaging is obviously more green than plastic packaging. Therefore, driven by such related policies, the market scale of China's paper packaging industry will recover in 2021. In the first half of 2022, it will still maintain a good trend.
Due to the compression of their profit space, the operating income of some enterprises in China's paper packaging industry has increased while the total profit has declined. Since the official cancellation of waste paper import on January 1, 2021, the cost advantage of domestic paper enterprises with foreign waste quotas has disappeared. At the same time, China's paper pulp is highly dependent on imports, which affects the stable supply of papermaking raw materials in the upstream of the industry, causing the price of cardboard and corrugated base paper to rise, thus increasing the cost of raw materials in the paper packaging industry, and thus compressing the profit space of enterprises.
In general, China's paper packaging has entered a stable development stage since 2011. However, in recent years, with the wide application of new packaging materials in the packaging of food, beverages, industrial products and daily necessities, especially plastic packaging materials and containers, as well as the impact of domestic paper packaging raw materials, the operating income of some enterprises in this industry has declined. In spite of this, paper packaging still occupies an unshakable position in various packaging materials. With the continuous improvement of national social environmental awareness and the continuous promotion of the dual carbon strategy, China's environmental protection packaging policies have been formulated successively. In 2021, the operating revenue of some enterprises will rise, and there will be a sustained growth trend in the first half of 2022. Moreover, according to the bulletin of some leading paper enterprises, in the second half of 2022, five Chinese enterprises will release capacity, and the release of upstream paper enterprises' capacity will also provide guarantee for the growth of the market scale of China's packaging paper industry.
In June 2022, the Ministry of Industry and Information Technology of China released the Guiding Opinions on Promoting the High Quality Development of Light Industry, which mentioned that it is necessary to promote the consumption of green and energy-saving light industrial products such as degradable materials and products, and the use of plastic products in daily life is gradually limited. It can be seen that green environmental protection packaging will become an important development trend of China's packaging industry, and paper packaging, as one of green environmental protection packaging, In this environment, its development prospects will be very clear.
In the future, the market of China's packaging paper industry may once again face a steady growth. Facing the problem of the current decline in total profits, enterprises in the industry need to better control the cost of raw materials procurement, pay attention to the reasons for the changes in raw materials prices and gas, strengthen the prediction of the future market, and layout in advance to better reduce costs and increase efficiency. On the other hand, enterprises also need to improve their competitiveness, comply with the trend of market consumption upgrading, continue to improve product quality and service capabilities, develop high-value products and professional packaging services, and extend the industrial chain to explore new packaging formats.