Packaging & Printing Firms Push Beyond Their Trade: Robots, Big Health and Baijiu

The boundaries of the printing and flexible packaging sector are being redrawn on purpose by a growing number of players. In recent years, the room for cross-industry collaboration in printing and packaging has widened steadily, with the sector's reach stretching from publishing and cultural-creative merchandise all the way to healthcare. Rather than staying inside their traditional lane, many printing businesses are now testing a diversified model in which printing and non-printing operations advance side by side.

Hongbo Co.: a printing firm that wants to build robot vacuum cleaners

Founded in 1999 and listed on China's A-share market in 2008, Hongbo Co., Ltd. drew heavy market attention by venturing into internet lotteries. That online lottery arm, however, has remained suspended to this day because of policy constraints. In search of fresh profit engines, the company has repeatedly pushed across sector lines, with big data, mobile gaming, IoT technical services and 5G all appearing on its wish list at different points.

Even now, this printing enterprise — still known by its "first internet lottery stock" label — keeps pressing ahead on its cross-sector transformation path.

In an announcement dated April 18, 2021, Hongbo disclosed plans to inject RMB 40 million in cash into Guangzhou Keyu Robot Co., Ltd., taking a 5% stake in Guangzhou Keyu after the capital increase. At the same time, it planned to sign an equity transfer letter of intent with Guangdong Baole Robot Co., Ltd., a Guangzhou Keyu shareholder, and its actual controller Wang Lilei, to acquire the 46% stake in Guangzhou Keyu held by Guangdong Baole. Once the transaction closes, Hongbo would obtain control of Guangzhou Keyu.

Had the cooperation gone through, Guangzhou Keyu — backed by solid technical depth and a mature supply chain — could have accelerated its growth with the power of capital. What is more, its annual output capacity of one million robot vacuum cleaners, and the packaging of those products, could have created synergies with Hongbo's own packaging and printing operations. So far, though, there has been no further news on the matter.

ORG Packaging: reaching across sectors into the big health industry

In an announcement issued on the evening of May 18, 2021, ORG Packaging said it had signed a strategic cooperation agreement with Yunnan Industrial Hemp Industry Investment Co., Ltd. The two sides will pursue complementary, strategic cooperation centred on the medicine-food homologous big health industry within the industrial hemp value chain.

According to the filing, Yunnan Industrial Hemp Investment will integrate the plant pharmaceutical resources and industrial hemp resources of Yunnan Industrial Investment Holding Group Co., Ltd. and, through a "project plus park" approach, drive strategic cooperation along the industry value chain in big health. Under the agreement, the partners will develop industrial hemp medicine-food homologous consumer goods, jointly build a laboratory for medicine-food homologous plant health products, and set up promotion mechanisms for industrial hemp medicine-food homologous mass consumer and big health products. They may also jointly create medicine-food homologous big health products, and ORG Packaging can site related projects in the park according to its own needs.

Public information shows that ORG Packaging is mainly engaged in metal packaging production and beverage filling services. With well-developed production capacity and a certain level of supply chain supporting resources, it can draw on integrated capabilities — product planning, packaging design and manufacturing, food and beverage filling, and digital, network-enabled marketing services — to deliver close, high-quality service to customers.

In this cooperation, ORG Packaging combines those core capabilities with Yunnan hemp's resource advantages and industrial platform strengths; the two sides will jointly research and develop a series of functional food and beverage products, cultivate functional food and beverage brands, and carry out related investment activities. Some observers nonetheless questioned whether entering this field carries related risks. For that reason, on May 19 ORG Packaging issued a supplementary announcement stating that the production and sale of the industrial hemp CBD medicine-food homologous products covered by the agreement has obtained government approval in some overseas countries and regions, while in China they fall within the range of products that are not licensed — hence the uncertainty.

It is worth noting that ORG Packaging is also speeding up its layout in new beverage business areas. On May 14, the company announced a planned investment of RMB 510 million to build a can production project inside the Tsingtao Beer industrial park in Xuecheng District, Zaozhuang, Shandong.

Jihong Co.: dipping a toe into sauce-aroma baijiu

Within the baijiu category, sauce-aroma liquor holds a relatively high market position, and sauce-flavour baijiu from the Maotai core production area is widely prized as collectible because of scarce origin resources, a distinctive brewing craft and a long brewing cycle. Good wine needs no bush — which is precisely why printing companies have also started to "cross over for a drink."

It is reported that, after long-term market research and planning, Jihong Co. obtained in early 2021 the exclusive internet operating rights for the "Zunyi Production Area · Good Chinese Sauce Liquor" project, along with first-tier distributor qualification for the Guizhou brand - Jingyu Shengyan series liquor of the Technology Development Company of Kweichow Moutai Distillery Group. That served as its entry point into the sauce-aroma baijiu field, letting it broaden its business scope through existing channels and build new profit growth points.

To develop this field further, Jihong Co. announced on the evening of June 28, 2021, that it planned to hold the assets of Guizhou Province Renhuai City Maotai Town Gujiao Liquor Co., Ltd. by holding equity in Guizhou Diaotai Gong Liquor Co., Ltd.

Unexpectedly, word that the acquisition had been terminated arrived just over three months later. A relevant person in charge said the main reason for the termination was changes in the macro market environment, but the company will continue to build its baijiu brand and its existing baijiu business remains unaffected. Whether or not the acquisition succeeded, Jihong's move still opened up a new line of thinking for the printing industry's transformation and development.

Cross-sector integrated development is a new trend. Over the years, printing enterprises have never lacked pioneers, with both successes and failures. But for traditional printing companies, keeping pace with the times in mindset, knowing how to integrate resources and actually taking the first step into cross-sector integration is itself a new beginning!

——Reprinted from China Packaging Network (pack.cn). Original link: http://news.pack.cn/show-378487.html