Three Chinese Printing and Packaging Leaders Cross RMB 10 Billion in 2020: Inside the Rise of Hexing, Yuto and Org

For the printing sector, 2020 stands out as a milestone year.

The pandemic's sudden arrival weighed heavily on many business owners, yet the final results proved less severe than first feared.

More notably, three leading companies crossed the RMB 10 billion revenue threshold in the same year, an unprecedented feat for China's printing industry.

Released annual reports show Hexing Packaging booked RMB 12.007 billion in 2020 revenue, up 8.20% year on year, just short of its 2018 peak of RMB 12.166 billion.

Yuto Technology posted RMB 11.789 billion, up 19.45%. After missing the RMB 10 billion mark by RMB 155 million in 2019, it reached the goal one year later.

Org Packaging generated RMB 10.561 billion, up 12.72%. Its move past RMB 10 billion was widely anticipated; a late-2018 article predicted another printing and packaging player would soon join the club, referring to Org.

At that time, Org announced a plan to acquire Ball Corporation's four China plants for USD 205 million, about RMB 1.4 billion. Ball is a global leader in metal can printing.

In 2017, Ball's four China plants together generated RMB 3.068 billion; combined with Org's RMB 7.342 billion that year, the total reached RMB 10.410 billion.

For Org, completing the deal would make RMB 10 billion revenue a near certainty.

Revenue comparison of the three leaders (unit: RMB 100 million).

Today, these breakthroughs may look inevitable, but a decade ago few in the industry expected China's printing sector to produce several RMB 10 billion companies so soon.

Public data show that in 2010 RR Donnelley China was the largest printing enterprise in China, with product sales revenue of RMB 3.197 billion, leaving a gap of RMB 6.803 billion to RMB 10 billion.

That same year, Hexing Packaging, Yuto Technology and Org Packaging reported revenue of RMB 1.521 billion, RMB 1.609 billion and RMB 1.963 billion respectively.

Why, within ten years, did these three companies become the first to enter the RMB 10 billion ranks?

01 Why them?

It may be more than coincidence that the three leaders began their journeys at close points in time.

Hexing Packaging was founded in 1993 and took about 25 years to move from zero to its first RMB 10 billion year in 2018.

Org Packaging was founded in 1994 and produced its first beverage can in 1995; its journey from zero to RMB 10 billion took about 26 years.

Yuto Technology started in 1996 and realized its RMB 10 billion dream in 2020, about 24 years later.

Among the three, Hexing Packaging focuses on corrugated cartons while Org Packaging centers on metal can printing. Their product structures are relatively simple and clear.

In 2020, Hexing's corrugated carton business brought in RMB 9.086 billion, or 75.67% of total revenue. Org's metal can printing products contributed RMB 9.352 billion, or 88.55% of its total.

The corrugated carton market can reach RMB 200–300 billion a year, while metal can printing is only about RMB 50–60 billion. Despite the size gap, why can both support RMB 10 billion enterprises?

It is easy to understand why a large market nurtures large companies.

The metal can printing market may not be huge, but it can still produce giants. A key reason may be that downstream customers are few but large, with stable demand for cans and sizeable long-run orders, giving the market naturally high concentration.

For example, Org's most important customer, Red Bull China, contributed RMB 4.855 billion in 2020, accounting for 45.97% of total revenue.

Does winning one such major customer lay the foundation for scale and strength?

Yuto Technology has a more complex product mix and is known for premium paper packaging, which generated RMB 9.109 billion in 2020, or 77.26% of total revenue.

Within premium paper packaging, it covers consumer electronics packaging, wine packaging, cigarette packaging, cosmetics packaging, food packaging and luxury packaging, among other segments.

In recent years, Yuto has also invested heavily in eco-friendly molded pulp and entered plastic packaging and commercial printing.

Yuto's most important driver in becoming a RMB 10 billion giant within 24 years may be that it captured the boom in consumer electronics led by mobile phones and won world-class customers, laying the groundwork for later leaps.

Given that others also operate in corrugated cartons, metal can printing and consumer electronics packaging, why were these three the first to pass RMB 10 billion?

The reasons are complex: they involve entrepreneurs' vision, decision-making and resource access, as well as timing and luck.

Still, the three share one trait: strong capital awareness and a proactive use of listing as a growth accelerator.

Hexing listed first on the Shenzhen Stock Exchange in 2008. Org followed in 2012 on the SZSE SME Board. Four years later, Yuto completed its IPO on the SZSE.

Listing mainly helps by widening financing channels, making it easier to secure essential capital for either organic growth or M&A expansion.

On Hexing's path to RMB 10 billion, two decisions were crucial: launching the acquisition of International Paper's 18 carton plants in China and Southeast Asia in 2016, and stepping up supply chain services from the same year.

Compared with 2016, Hexing's 2020 revenue rose by RMB 7.447 billion, with supply chain services growing by RMB 4.072 billion. Together with the 18 acquired former International Paper plants, these factors drove most of Hexing's recent revenue increase.

For Org, the 2019 acquisition of Ball Corporation's four China plants for about RMB 1.4 billion was equally critical on its road to RMB 10 billion.

After listing, Yuto did not make many large acquisitions, but it repeatedly invested heavily in plants across China, with planned investment of no less than RMB 4–5 billion.

Without capital market support, even industry leaders would find it hard to launch such major moves with ease.

02 The three leaders' growth trajectories.

How were these three RMB 10 billion companies built? The reasons are complex, and the above covers only part of the picture.

One factor cannot be ignored: all three benefited from China's rapid economic growth over the past two to three decades, which was a major advantage.

The causes are hard to explain briefly, but data are more objective and can offer useful signals.

We compiled 13 years of revenue data for the three companies from 2008 to 2020. Let's examine them below.

By 2008, Hexing Packaging, Yuto Technology and Org Packaging had been in business for about 15, 12 and 14 years respectively.

That year, both Yuto and Org had already surpassed RMB 1 billion in revenue, at RMB 1.406 billion and RMB 1.254 billion respectively.

Hexing stood at RMB 638 million, equal to 45.38% of Yuto and 50.88% of Org.

From 2010, Org accelerated first, reaching RMB 1.963 billion in revenue, up 51.12%, surpassing Yuto's RMB 1.609 billion and Hexing's RMB 1.521 billion.

Org's lead lasted until 2016, when it reported RMB 7.599 billion, compared with Yuto's RMB 5.542 billion and Hexing's RMB 4.560 billion.

From 2010 to 2016, Yuto held a scale advantage over Hexing in most years.

However, their revenues were once very close. In 2011, Hexing briefly overtook Yuto with a lead of RMB 137 million.

Revenue growth curves of the three leaders (unit: RMB 100 million).

In 2017, as the International Paper 18-plant acquisition paid off and supply chain services gained traction, Hexing surged from behind. Revenue jumped 91.83% to RMB 8.748 billion, surpassing Org's RMB 7.342 billion and Yuto's RMB 6.948 billion.

In 2018, Hexing's revenue rose another 39.08% to RMB 12.166 billion, making it the first publicly documented RMB 10 billion printing giant in China.

That year, Yuto's revenue reached RMB 8.578 billion, up 23.46%, overtaking Org, which reported RMB 8.175 billion.

The following two years for Hexing... (original report truncated here)