Beyond Involution: Where Can Printing and Packaging Firms Find New Growth?

This year, “involution” has become a buzzword across economic, education, fandom, workplace, property, internet, and entertainment circles, capturing a sense of endless, self-reinforcing competition.

For packaging, the pressure shows up on two fronts: upstream inflation and downstream contraction, alongside white-hot competition that shows little sign of easing.

When zero-sum competition and price wars become the norm, printing and packaging companies can only break through and regain momentum by opening new growth avenues. Which directions merit attention next?

A Surge of New Brands Opens Fresh Order Opportunities

With consumption upgrading overlapping with the post-pandemic era, the consumer market is undergoing a broad reset. Marketing can make a brand famous overnight, while negative publicity can trigger boycotts—brand fortunes are volatile. At the same time, capital remains keen on new consumer brands, preference for domestic products keeps rising, and the new consumption wave continues to build.

Qichacha data shows 4.165 million e-commerce-related companies currently operating nationwide. On new registrations, 965,500 were added in 2019, nearing the million mark; 2020 saw 1.5 million additions; and the first half of 2021 brought another 570,700.

New brands often rely on two levers to gain traction: content seeding and eye-catching packaging. Their explosive growth is therefore a major opportunity for packaging, with smart packaging product factories that combine low-cost short-run packaging and large-batch rapid purification capabilities best positioned to benefit.

High-Appeal Packaging Emerges as a Growth Bright Spot

The love of beauty is universal, and among Gen Z it is especially strong. For these shoppers, the first look at a product often decides the purchase. Packaging with strong visual appeal can break the ice faster; only after a first trial can experience and repeat buying enter the picture.

NielsenIQ research indicates that Gen Z respondents are noticeably more appearance-driven than non-Gen Z respondents. When buying food and beverages, they pay closer attention to packaging looks; over the past year, they were significantly more likely than non-Gen Z respondents to increase spending on food and drink products with high packaging appeal and strong design. For food and beverage brands, winning Gen Z's taste buds matters—and so does winning their gaze.

In recent years, design-forward, finely printed color boxes and gift boxes have become market favorites and one of the few growth highlights in packaging.

Target Domestic Brand Customers

Young consumers are choosing domestic products. The 2020 China Consumer Brand Development Report shows that 80% of goods consumers buy on Tmall are domestic products. Alibaba Vice President Liu Bo noted that the post-95 generation differs from many post-70s and post-80s consumers: the latter often treat international brands and overseas online shopping goods as symbols of high quality, even as desired targets; Tmall, however, sees post-95s and post-00s gravitating more toward China's emerging brands and those capable of innovation and rejuvenation.

QuestMobile, a mobile internet big data research firm, states in its 2020 Insight Report on the Rise of New Domestic Brands that new domestic brands combine brand and quality, keep shifting toward digital marketing, win attention by creating value in segmented functions, and carry a degree of recognition and emotional added value. A key trait: young consumers such as post-90s and post-00s have become the main spending force.

Domestic brands continue to gain momentum and have entered a phase of explosive development. According to the 2020 Report on Cities of New Domestic Brands, domestic brands hold a 72% share of the Chinese market. Live-streaming e-commerce will further help new domestic brands “overtake on the curve.” iiMedia Research data shows China's live-streaming e-commerce transaction market will reach 961 billion yuan this year, a growth rate of 111%. With instant interaction and timeliness, new domestic brands may capture more consumers faster.

In the past, packaging businesses that had one or two major foreign brand customers could count on steady orders and generous profits. That dynamic is reversing, and new domestic brands are expected to become a main driver of order growth.

Functional Food Packaging

Data shows China's functional food market was 358.58 billion yuan in 2019. Wuling, general manager of Tmall's Big Food Industry, once said functional food could reach a 500 billion yuan market in the coming years, with functional snacks expected to account for 150 billion yuan.

Along with consumption upgrading, functional food is attracting younger consumers and taking more diverse product forms. CBNData's Young People's Health Consumption Trend Report shows more than 90% of young people have health awareness; the consumption share of post-90s and Gen Z in functional food is rising year by year, with gummy and jelly formats growing notably.

If packaging factories deliberately develop such customers, future order growth will be better secured.

China is now the world's second-largest cosmetics consumer market. Information released by the National Medical Products Administration on January 14 shows that more than 5,400 cosmetics manufacturing enterprises hold licenses in China, over 87,000 entities have registered or filed various cosmetics, and nearly 1.6 million products are validly registered or filed.

Other data shows that from 2015 to 2019, China's total retail sales of cosmetics rose from 204.9 billion yuan to 299.2 billion yuan. In 2020, retail sales of cosmetics in total social consumer goods reached 340.02 billion yuan, with the overall cosmetics consumption market showing steady growth.

On August 25, JD.com released the 2021 Back-to-School Season - College Students' Online Shopping Fun Insight Report. It shows that post-00 college students spend the most on color cosmetics, with transaction value for men's sun protection and color cosmetics sets both rising by more than 270% year on year.

“Back-to-school season on the map” also reveals interesting regional consumption traits: universities in North China and Northeast China have a higher share of book spending; East China universities spend more on computers bought online; South China and Southwest China universities have a higher share of skincare and beauty spending; and Central China and Northwest China universities have a higher share of spending on sports and outdoor goods.

The overlap of the lipstick economy and the era of male beauty has kept the cosmetics industry hot. At present, leading enterprises have set their acquisition focus on cosmetics packaging companies. If an opportunity to develop cosmetics customers arises, it should not be missed. For many traditional packaging enterprises, the packaging industry's many categories, broad depth and constant stream of hotspots are an important support for smooth transformation and upgrading. Yet more capital and outside players have their eyes on this pie, new challengers keep arriving, and uncertainties will only multiply...

—This article is republished from China Packaging Network (pack.cn). Original link: http://news.pack.cn/show-378711.html