- Dec 05, 2018 -
What is the gap between the packaging and printing industry at home and abroad?
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As we all know, China's packaging and printing industry is still in the growth stage compared with the packaging and printing industry in developed countries. But where is the specific gap? What is the cause? I am afraid that few people can make it clear.
To this end, the author collected a research report of China Merchants Securities for reference by domestic enterprises. The report analyzes the difference between the demand and supply end of the packaging and printing industry at home and abroad, and the differences between the leading enterprises in terms of receivables and cash flow. I hope to bring some inspiration to the industry.
Supply and demand pattern: international maturity v.s domestic growth period
In recent years, the global packaging and printing industry has entered a mature period of stable development, and the growth rate is basically the same as the average growth rate of the world economy. According to statistics, in 2017, the global packaging and printing industry market size was 851 billion US dollars, an increase of 1.4% year-on-year, close to the natural economic growth rate of developed economies.
The growth rate of China's packaging and printing industry market is much higher than the global industry average. In 2017, the main business income of China's packaging and printing industry (excluding the packaging machinery sub-sector) was 1,104.837 billion. From 2013 to 2017, the compound annual growth rate was 6.3%, of which 2017 was 9.2% year-on-year in 2016.
There are also many differences between the supply and demand pattern of China's packaging and printing industry and the international packaging and printing industry on the basis of commonality:
On the demand side, the difference between the Chinese market and the international market is mainly due to the difference between the incremental and demand structure;
On the supply side, the difference between the Chinese market and the international market is mainly reflected in the competitive landscape and the service capabilities of leading companies.
Demand side: China's per capita packaging consumption is low, and the demand for express delivery is still strong
China's per capita packaging consumption is significantly lower than the global level, and there is still much room for improvement in the future. From the perspective of total volume, although the size of China's packaging and printing market is growing rapidly, the per capita consumption is only 12 US dollars per year, which is still far from the major countries and regions in the world.
Even considering objective factors such as price and population density, the ceiling of China's packaging and printing industry is far from being achieved. The market size of China's packaging and printing industry is expected to expand, and the supply and demand structure is expected to continue to upgrade.
From the perspective of packaging materials, the demand structure of packaging materials in China and the world is similar, and the proportion of plastic packaging and paper packaging is nearly 40% and 30% respectively.
From the point of view of use, especially in terms of storing transport packaging and displaying sales packaging, the difference between China and the world is more significant:
1, storage and transportation aspects
In developed countries, due to the high standardization of storage and transportation packaging and rapid start-up, reviewing the business structure of leading companies such as International Paper and US International Packaging, storage and transportation packaging are the main driving force for their business growth.
In China, the manufacture and export of industrial products has been the main engine for driving the growth of storage and transportation packaging demand. However, since 2011, the main kinetic energy of its growth has switched to the express packaging demand formed by the development of e-commerce business.
Since 2011, China’s express delivery business above designated size has experienced “spurt growth”. In 2010, China's express delivery business above designated size was 2.339 billion pieces, and it will grow to 40.06 billion pieces by 2017, with a compound annual growth rate of over 50%.
According to statistics, about 80% of the total express delivery business is online shopping express mail, of which 43% use paper packaging boxes. Assuming the average weight of a single piece of express delivery is 0.5kg, the corresponding packaging paper market size is 6.89 million tons, and the plastic packaging market scale is 160.24. Billion pieces. According to the annual average e-commerce express volume increase of 20%, the annual demand for new packaging paper is 1.378 million tons, and the demand for new plastic packaging is 3.205 billion pieces.
2, show sales and packaging aspects
The downstream demand for displaying sales packaging is mainly consumer goods, and the proportion of China's tobacco packaging is high, which is the main difference in the structure of consumer packaging at home and abroad. Food and beverage packaging is the most important part of consumer packaging in the world and in China. According to the statistics:
In 2018, global consumer goods packaging demand totaled about 4.5 trillion pieces, of which 3.3 trillion pieces of food and beverage demand, accounting for 73%;
China's consumer packaging demand totals about 1.1 trillion pieces, of which food and beverage packaging demand accounts for about 55%;
China's tobacco packaging market demand is significantly higher than the global average. In 2018, the demand for tobacco packaging was 419.6 billion pieces, accounting for half of the global tobacco packaging market.
The rapid change in consumer packaging and design is another major difference between Chinese consumer packaging and the global market. Compared with the international mature market, China's consumer goods market has developed rapidly, and it has also put forward new requirements for the design of display sales packaging.
At the same time, in the ever-changing consumer goods market, consumer goods companies not only need to create enduring classic products, but also to create "explosive models" that can ignite the excitement of the market. These items have a short life cycle and a large demand in the short term, which puts new demands on design and production efficiency.
Supply side: low domestic industry concentration, weak industrial chain extension service capacity
On the supply side, the difference between the Chinese market and the international market is mainly reflected in the two main aspects of the competitive landscape and the service capabilities of leading enterprises.
1. Competitive landscape
China's packaging and printing industry is fragmented and market concentration is low. In the paper packaging industry, for example, the US paper packaging industry CR4 reached 70%, Australia and Taiwan CR2 reached 90% and 62%, respectively, while the Chinese paper packaging industry CR10 less than 5%.
At present, China's packaging and printing industry is still in a state of scattered competition. The total number of enterprises above designated size in the packaging and printing industry has increased from 4,321 in 2013 to 5,693 in 2017. Small and medium-sized packaging companies are the main players in the market, and a few leading companies do not occupy a significant position in the packaging and printing market.
2, service capabilities
China's domestic printing and packaging industry, which is dominated by small and medium-sized enterprises, is still dominated by packaging production, and its industrial chain extension service capability is weak. Throughout the global packaging and printing market, packaging production accounts for about 73.7% of the market size, and the market for packaging design, market research, material testing and equipment maintenance accounts for more than a quarter.
For the display and sales packaging manufacturers downstream of consumer goods, it is difficult to stand out in the fiercely competitive decentralized market with only the production capacity. The comprehensive service capability of providing packaged overall solutions is the key to establishing a moat and improving profitability.
International leading companies in the packaging and printing industry, such as Tetra Pak, Naifan, and American International Packaging, are positioned as packaging solutions providers, extending from the low-end packaging production and processing of the value chain to design, research and service.
However, at present, the domestic printing and packaging industry, which mainly focuses on small and medium-sized enterprises, still has a relatively large number of relatively low value-added links in packaging processing and production, while the industrial chain extension service capability such as packaging design is relatively weak.
Benchmarking: Commercial business differences lead to less credit to domestic companies than international
Compared with the performance of international printing and packaging faucets, domestic companies have a large gap in terms of receivables, income and net profit.
The domestic packaging and printing enterprises are relatively small in scale and scattered in the market, making them more dependent on a single large customer than international leading enterprises. In contrast, due to the high market concentration of the international packaging and printing market, the downstream customers can choose a narrow range. A leading manufacturer of packaging and printing usually serves many large customers at the same time.
From the perspective of receivables turnover, the good commercial format of the foreign printing industry has also brought more stable cash flow to the international leader. In the past ten years (or since its listing), the turnover days of accounts receivable of leading enterprises in the domestic packaging and printing industry have been significantly higher than those of international companies.
Taking 2017 data as an example, International Paper, US Packaging, and WestRock have an average turnover of 44.14 days, while Yutong Technology, Meiyingsen, Hexing Packaging and Origen have an average of accounts receivable. The turnover days are 116.42 days.
The shorter accounts receivable turnover days make the international leading enterprises' capital utilization efficiency higher than domestic friends, and the high cash turnover makes the international leading enterprises have higher bargaining power in the raw material procurement and other aspects, reducing the cost of supply chain financing.
2. Income, net profit, cash content
From the two indicators of operating income cash content (operating net cash flow / operating income ratio) and profit cash content (operating net cash flow / net profit ratio), the leading capacity of domestic packaging and printing industry leading companies is not as good as International leading company.
From 2015 to 2017, except for Origen, the cash income of the business income of Meiyingsen, Yutong Technology and Hexing Packaging was lower than that of international leading enterprises. From the perspective of profit cash content, the gap between domestic enterprises and international leading enterprises is more obvious.
The average profit cash ratio of RKT/WRK, IP and PCA is 2.16, while the four leading domestic companies are only 0.97.
It can be seen from the above that compared with the international packaging and printing industry, China's packaging and printing industry is still in the growth stage: per capita packaging consumption is low, industry chain extension service capacity is weak, corporate voice is not big, and cash flow is not strong.
Drawing on the development experience of leading enterprises in the international packaging and printing industry, domestic enterprises should develop in the direction of providing integrated services, enhancing product design capabilities, and close-to-production capacity layout in the context of the overall fragmentation of the domestic market and the accelerated elimination of the industry.
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