It is one of the biggest packaging industries. As far as packaging, everybody knows that there are 6 or 7 categories ? glass, metal, flexible, paper, plastic, etc., and then the corrugated worldwide has been growing 3% to 4% per annum.
In majority of the South East Asian countries, the corrugated industry started only after Second World War, when there was demand in the market especially for exports. In Hong Kong now, the requirement of corrugated packaging is very minimum. Majority of them are manufacturing in Southern China. In China, if I remember in 1984?85 the total consumption for corrugated cartons was less than 2 million tons. But today, after about 15 years, the figure has gone up to 8 million tons. At one time the growth rate was 15%, 20% or even 30%. But recently it has come down, may be about to 9% or 8%.
In Indonesia, the industry started only in the late 60s and as a matter of fact the first real corrugated company started only in 1972. The name is called R P. Group. That is our company. The growth rate in Indonesia is very fantastic, especially in 1991?92. Even after 93, we have 10%?12% growth per annum. When we come to 95?96 the figure went up to 20% per annum which is over a million tons. But unfortunately in 1997 when the financial crisis creeped in Indonesia it got hurt the most. The demand has suddenly dropped about 40%. Fortunately in 2001 the figure has gone back to million over.
In Malaysia, the corrugated industry started in mid 60s. There were about six, seven Corrugators. Because of the strong demand, a lot of new entries came in. Today there are about over 60 Corrugators ? out of which 53 are in the market.
The Philippines, though also affected by the crisis, but in terms of demand it is not dropping so much as the other countries. There is still about 5%?6% growth. As per the information I got ? in 1998 they still have something about 500 thousand tons per year.
In Singapore, the first corrugated manufacturer was in 1953 by an Australian company called ? ACR Company. The real demand grew after Singapore became independent. The government gave lot of incentives to foreign investors to set up their manufacturing units in Singapore. The market has grown. The base was small in 70s. If we summarise, there was about 15% growth. When you come to the 80s, even Singapore had negative growth. But as the corrugated field grew a little bit, we have about 8% to 9% growth. When you come to the 90s, up to 94, in five years, they still had about 5% to 6% growth. But unfortunately after 94 starting 95-96, the market dropped a little bit. We have negative growth about 5 or 6% per annum. This was even before the crisis. Today the market is about one fifth of what we had in 1994, approximately 230 thousand tons.
In Taiwan, the market is quite okay. Today it is close to almost 2 million tons consumption. They too have computer related industry over there.
Thailand also has been growing because of their quite big size and population. There, manufacturing costs are also very competitive but only the shortfall I personally think is, they have infrastructure limitations. If you know Thailand, there is only one port that can reach you to Bangkok. Today, their consumption of box requirement is getting back to 900 thousand tons. This is very briefly about the situation, the local demand and past brief history of the industry in South East Asia.
We go back again to the impact on the corrugated industry. In the manufacturing, corrugated industry has been changing. There is reduced market demand. Everyone is using lighter weight. Only USA is maintaining heavy grammages. But in Europe, it is now down to about 510?520 gsm. 2?3 years ago it was 550?570 gsm. Imagine 550 to 500 is 10%. Even if you grow 2?3% in terms of area, that offsets in terms of tonnage.
In Indonesia, market has grown. But the price is still competitive. Because the added capacity is faster than demand. In China, box demand is very high ? 15% to 20% per annum constantly, for the last 6?7 years. But the box makers in China, now should be very efficient to make money.
Founder President, ACCA