2023 China Paper Packaging Outlook: Premiumization Accelerates as Exports and Consolidation Reshape the Sector

In terms of product mix, paper packaging can be grouped into three main categories: cartons, folding cartons and cigarette labels.

Key product features of the paper products packaging and printing industry

Source: Ruiguan Consulting

Paper packaging ranks as the most widely used packaging material worldwide. China's packaging paper output has maintained steady, moderate growth in recent years: between 2015 and 2021, it climbed from 6.65 million tonnes to 7.15 million tonnes, representing an average annual compound growth rate of 1.22%. The output and growth trend for 2015-2021 is shown in the chart.

Source: China Paper Association, Ruiguan Consulting

Data from the China Packaging Federation show that in 2021, China's packaging industry reached RMB 1,204.181 billion, with the paper packaging segment at RMB 319.203 billion, up 10.65% year on year and accounting for 26.51% of the total. The segment's CAGR from 2016 to 2021 was -0.9%. In H1 2022, paper packaging reached RMB 155.862 billion, up 1.48% year on year, while total industry profit was RMB 4.985 billion, down 14.06% year on year. The profit decline was mainly driven by higher raw material prices in the first half of 2022. The scale and total profit of China's paper packaging industry in 2017-H1 2022 are shown in the chart.

Source: China Packaging Federation, Ruiguan Consulting

On the export side, China's paper and paperboard container industry recorded cumulative exports of US$4.606 billion in H1 2022, up 25.44% year on year. Since 2019, export growth has consistently outpaced the expansion of the domestic paper packaging market, allowing Chinese paper packaging suppliers to benefit from rising overseas demand. Export value and growth for China's paper packaging sector in 2019-H1 2022 are shown in the chart.

Source: China Packaging Federation, Ruiguan Consulting

By destination, the top five countries and regions by export value in H1 2022 were the United States (23.80%), Australia (5.10%), the United Kingdom (4.20%), Hong Kong, China (4.09%) and Vietnam (4.03%). Over the same period, export growth to Singapore (157.1%), Malaysia (62.1%), the United States (31.0%) and Germany (28.3%) exceeded the overall export growth rate of 25.44%. The share of China's paper packaging export value in H1 2022 is shown in the chart.

Source: China Packaging Federation, Ruiguan Consulting

In 2020, only 20 companies in China's paper packaging segment generated annual operating revenue of RMB 1 billion or more, with the top three reaching RMB 10 billion. In 2021, 2,517 companies recorded paper packaging operating revenue above RMB 20 million. The industry shows a long-tail structure because entry barriers are relatively low and packaging quality is hard to evaluate. Small workshops across regions still capture a sizable market share by relying on cheap, lower-quality pulp and lower labour costs in tier-three and tier-four cities. In recent years, tighter environmental packaging regulation has raised operating costs for some small workshops, accelerating the exit of small and medium-sized enterprises. The number of Chinese paper packaging companies with revenue above RMB 20 million in 2019-2021 is shown in the chart.

Source: Ruiguan Consulting

High-end players in folding carton packaging are concentrated mainly in the Pearl River Delta, the Yangtze River Delta and the Bohai Rim, with foreign-funded or joint-venture firms making up the majority. In recent years, more multinationals have been drawn to the Chinese market, and many have already set up or are planning to set up their own factories in China. Across different sub-sectors, a group of high-end representative companies has emerged.

Leading high-end companies and competitive advantages in folding carton packaging sub-sectors

Source: Ruiguan Consulting

Development trends in China's paper products packaging industry

Development trends in the sub-markets of China's folding carton packaging industry

Source: Ruiguan Consulting

— This article is reprinted from China Packaging Network (pack.cn); original link: http://news.pack.cn/show-379446.html