Looking for the Development of Chinese Paper Packaging in the "Breaking 8" Contrarian Trend

In the second quarter, China’s economic growth rate fell below 8%. For a time, it was full of clouds and worried. Companies are discussing how to go next.

In the past 30 years, although China’s economy has experienced several major setbacks, it is still basically making double-digit progress. Those red flag fluttering, hot and beautiful time, let us no longer get used to loneliness. It seems that only numbers can make us more confident. In fact, as far as the current data is concerned, it will not be sad. From a worldwide perspective, China’s economic growth rate is faster. According to statistics, among the five BRICS countries, the economic growth rate of India and Russia in the second quarter was about 5%, the growth rate of Brazil was about 1.2%, and the economic growth rate of South Africa was also relatively low; in developed countries, the euro area was The quarterly economic growth rate was a negative 0.3% increase, and the United States’ economic growth rate was around 1.6%. With regard to global economic relations, it is difficult for China to remain alone and not be affected. The key is whether there are conditions and measures for stability and progress.

China's economy is in a period of structural transformation, but the basic point of promoting China's long-term economic development has not changed. In the process of industrialization, urbanization, internationalization, and marketization, huge investment and consumption energy will support economic growth. There is huge room for development in the regions of the central and western regions. Recent data shows that the speed of economic development in China and the West is running at double digits. These are reliable guarantees for the steady growth of China's economy.

China's paper packaging industry is an important industry equipped with industrial and agricultural development and a barometer of economic development. We tracked the data of 11 paper packaging companies from the fourth quarter of 2011 to the second quarter of 2012: the average growth rate in the first quarter of 2012 was 15.42% compared to the fourth quarter of 2011, but the loss level reached 72.8%; the second quarter of 2012 was higher than 2012. The average growth rate in the first quarter was 10.02%, and the loss was 54.5%. The data shows that our industry is generally stable. Through visits, inspections, and research activities, we see:

First, the entire industry has maintained an upward mental outlook in the face of drastic changes in economic development. The ability of companies to resist risks has increased.

Second, large-scale leading enterprises have not been surprised at the difficulties. They have adjusted their development strategies. The main melody is still development, and development plans have been revised and formulated on the basis of stability.

Third, corporate restructuring, mergers and acquisitions have become hot spots. Shengda and Edel were able to cooperate and reorganize like a heavy bomb, which provoked industry shocks and caused deep thinking among various companies. There are also companies with good operating conditions. They plan to transfer or seek cooperation partners based on the near-term concerns. Small and micro enterprises are struggling in this situation, and some companies have closed down.

Fourth, the pace of transformation and upgrading is a consensus of enterprises. Without a unified model, enterprises have demonstrated their energies through internal management, product innovation, technological innovation, talent cultivation, and industrial extension. This has led to an encouraging situation.

Fifth, the printing industry has entered the paper packaging industry. Due to the sharp decrease in the printing industry and the printing volume of books and periodicals, the production capacity of the printing industry has shifted to packaging, which has contributed to the development of the paper packaging industry.

Sixth, the speed of economic development in China, West, North, South-West, and Northeast China has driven the rise of paper packaging.

We have seen the favorable side of maintaining steady and relatively rapid economic development, but we must also soberly realize that there are still many uncertainties in economic development. The difficulties have not passed and we have had a tight day. We often think of what factors caused the plight of the paper packaging industry. Is it policy? Is it fund? Is the market? Or upstream and downstream? Calmly analysis, these are not fundamental reasons. I think that it is ours that causes the industry's difficulties.

1. In 2011, the total amount of corrugated board produced in China (except Taiwan Province) was 53.359 billion m2, accounting for more than 26% of the global total. Why is it so bad for such a big industry? This is due to the history of the industry and the characteristics of the industry. We are in the position of supporting processing. It is the buyer's market and loses the pricing power. The profit of paper packaging products such as cartons is only a meager processing fee. How can an enterprise obtain development promotion? This is the sadness of the manufacturing industry! This model is most suitable for the survival of small and micro enterprises. The only way to change this kind of survival is to establish conditions for industry access, form a rational layout, focus on large-scale leading enterprises, and focus on excellent medium and small enterprises.

Second, at present, backward production capacity accounts for about 60%. The poor economic efficiency of enterprises is a hindrance to “tanks and cans”, resulting in high costs, high scrap rates, high labor and energy consumption. Most companies have the ability to carry out technical reforms, but after worrying about the advanced production capacity, the market can not keep up, worrying that other companies will also carry out technical reforms and will also form a capacity saturation situation. These ideas are puzzling entrepreneurs and we understand it very well. Only by relying on government regulation, strengthening industry management, and doing a good job in the regional planning of the industry can we fundamentally establish the confidence of the enterprise.

Third, in the market economy, the lowest level of competition is price competition, the industry is similar to melee price competition is everyone hated, but they have to go with the flow. This seems to be a hopeless solution. Enterprises and associations have made many moves and they have not achieved the results. In fact, no one can control the independent pricing of enterprises under legal conditions. Only through the pros and cons of the products can they measure their value. Therefore, the key issue is whether there is a uniform and reasonable standard for our products. The imperfections in the industry's raw and auxiliary materials, equipment, and paper packaging product performance, specifications, and physical indicators are the weaknesses of the healthy development of the industry.

Fourth, product innovation is the weakest link in the industry. One is that the vast majority of paper packaging is corrugated boxes, while the vast majority of corrugated boxes are five-storey. The development of new paper packaging products other than paper boxes and the promotion of three-layer corrugated paper boxes are the key to innovation in our industry. It is understood that various scientific research institutes and universities have many new products, patented products, new projects, and new topics. However, due to many reasons, enterprises cannot be informed, so the cooperation between production, education, and research must not stop at the mouth, but must establish a platform. Through exchanges, cooperation will be achieved, and scientific and technological achievements will be transformed into productivity.

We are in the period of economic development transition. The problem is that we have no experience of success or failure that we can refer to. Only under the specific conditions of our industry and our company, we can calmly face and explore in accordance with the scientific concept of development, and we can develop at a crossroads of development. Make a decision. I think that our paper packaging industry does not face the harsh winter like other industries. We are still relatively stable against the storm. The huge market and the market to be developed provide us with a development stage for the paper packaging industry. We have no reason to lose another history. Opportunity, only insisting on reform and innovation, and strengthening the ability of companies to resist risks, is the guarantee for the overall transformation and upgrading of the industry.

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