China Market

Nineteen members of AICC having 10-day working trip to China.The purpose of the trip is to learn, explore and understand the economic and business practices of this booming economy and to see first-hand the Chinese corrugated industry and its level of sophistication. They made visit to the China National Packaging Association follow by a visit Beijing Number One Corrugated Box Factory, a state-owned enterprise. Some main points between China and US were:

  • The US trade deficit with China is the largest bilateral trade deficit in history: $103 billion in 2002. It is mostly in agricultural products like cotton and grain.
  • US import from China were up 40% last year. This increase was not just in the items we normally expect – clothing, footwear – but in machinery (up 15%) and electrical equipment (up 13%).
  • China has enjoyed a 9% average annual growth rate for the past 20 years; China expects to quadruple the size of its economy within the next five years

Beijing Number One Corrugated Box Factory
A corrugator plant in a huge, 450,000 square foot facility, employs 180 people and produces 330 million square feet per year. Production mostly on two- or three-color RSC’s using a four-color Emba flexo folder gluer, TCY two-color flexo printer and Bobst platen die cutter. The corrugator is a Yeuli machine.

Mr. Wang Shuli, General Manager say that the company enjoys a 13% profit margin. Ninety percent of their production goes to private customers, only 10% to state-run businesses. Quality expectations from international customers such as Nabisco and M&M Mars have been rising dramatically, and the plant received its ISO 9001 certification last year.

Shanghai. 60% of China ‘s economy is export driven and most of this muscle is centered in the Shanghai-Guangzhou corridor. There are 205 corrugators and more than 2,000 so-called sheet plants in the Shanghai area producing a total of $680 million/month in sales.

Shanghai-Rengo Packaging Co., Ltd. Shanghai -Rengo is a ten year old project. On 265,000 square foot facility, running a 2.2 meter (about 87″) Mitsubishi corrugator line with A and B flute single facers. Annual Sales: $30 million with production of 38-45 million square feet per month. Average order size: Two-three thousand pieces. Forty percent of the company’s customer base are Japanese companies with direct investments in manufacturing facilities in Japan . Other customers include 3M, Unilever and Sony.

Guangzhou-Yangcheng is a state owned company. They claim to be a “low-end,” plant and he’s right, but his world-brand customer base – Panasonic, Sony, Procter & Gamble and Wrigley Co. – demands a high level of quality and service and he delivers it. And low prices. Although the company enjoys annual sales of $12-13 million, he gets by on net profit of barely 1%.

Dong Fang Carton Machinery Co ., a privately held manufacturer of bottom print flexographic printing equipment, rotary die cutters, and flexo folder gluers for the corrugated packaging industry. Dong Fang says they will sell 298 machines across all its company lines this year . Their forecast is to sell 315 in 2004, and 340 units in 2005. The equipment we’ll see today is not yet sold in North America, but the Dong Fang Company will have a machine at SuperCorrExpo 2004 next year in Atlanta.