The changing nature of e-commerce has brought potential market growth to cardboard industry as the global trading will go from containers to packages. Also, as the population in China is aging, the need for packaging in medicine and cosmetic products is on the rise.
“As global e-commerce shifts from B2B to B2C, you’ll see a spike in the volume of the parcels consumed. The demand for good-quality packaging grows in line with the growth of long-haul transportation,” says Brian McClay, Principal from Brian McClay & Associates Inc.
“Thanks to the rise in e-commerce and express delivery, the packaging cardboard industry has had robust growth,” says Hongxin Li, Chairman of the Sun Paper Group.
The Sun Paper Group is the industry’s market leader in China, and one of Metsä Fibre’s biggest clients.
Consumption increases – more high-end products needed
“China has a long history of sending gifts. The domestic demand driven by 1.4 billion people is huge. We are confident about the future growth of mid- and high-end packaging products,” Mr Li says.
At present cardboard consumption in China is 10 kg per person per year compared with 30 kg in South Korea and 40 kg in USA.
When China gets richer and consumption increases, the demand will catch up. The numbers demonstrate the growth potential and Sun Paper came up with a strategy accordingly.
“Our featured products are all premium ones that can be used for food, cigarettes and industrial packaging. The growth of the market will also push us to develop more high-quality products,” Mr Li says.
Developing lighter, stronger and greener products
In Mr Li’s global strategy plan, innovation is one of the key elements in the race for Sun Paper to become the market leader. The company is moving fast in biomaterials and FMCG (fast-moving consumer goods) and is exploring the possibility of opening a biorefinery.
“Sun Paper has a world-class, hard-working and loyal team that places high value on safety, environmental friendliness and quality,” says Mr Li.
Recently the company launched the next generation of food packaging cardboard, which can be used in containers for hot drinks and drinks, ice-cream and meal boxes – for example for making cups directly.
“We are working hard on developing products that are lighter, stronger and greener in order to lower our carbon emissions and the consumption of raw materials.”
Time for sustainable fibre-based materials
Brian McClay believes the global packaging market is moving forward to provide sustainable solutions and replace plastics in packaging solutions.
However, whether fibre-based materials will get a bigger market share in the future will depend on different key elements such as product performance and affordability.
McClay believes that more and more Chinese organizations are taking an interest in high-quality cardboard. For instance, the Sun Paper Group has strict quality control in its products, including the selection of pulp suppliers.
Changes in the future supply in China
In China, the government’s ban on importing recycled paper affects production in the low-end market. McClay believes this policy will make the role of bigger paper producers more significant.
“Chinese-based producers will become even more dependent on imported virgin and recovered paper pulp, and they will need to expand and increase their global wood fibre supply chains”, McClay says.
This move could also have a positive impact on the environment since big companies tend to have more advanced environmental protection policies and practices.
“It might even help reduce pulp market volatility in the future with its potentially more stable and larger-volume buying dynamics. For sure, a win-win result for the entire pulp-cartonboard supply chain.”
Photos: SUN PAPER