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On the occasion of the great change in corrugated packaging: analysis of the operating conditions of leading enterprises

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On the occasion of the great change in corrugated packaging: analysis of the operating conditions of leading enterprises

Release date:2017-06-29 Author: Click:

In recent years, with the rise of wrapping paper raw materials and the saturation of the terminal consumption field, China's corrugated packaging industry has undergone a restructuring phase, a large number of bankruptcy reshuffle is inevitable, production capacity quickly to the leading enterprises become inevitable. 

Then, what is the current situation and living environment of China's corrugated packaging industry?Here, small series of corrugated packaging leading enterprise he xing packaging as an example, for you to perspective the future of the industry to provide some useful reference. 

The main products of hexing packaging are medium and high grade corrugated cartons and paperboard. The specific business covers packaging r&d, design, production, sales and service.Among all kinds of products, corrugated boxes with high gross profit rate contribute the most to the company's operating revenue and profit, and have been maintained at over 80% in recent years. They are the most important products of the company. 

Along with the rapid development of modern business, the logistics industry, the application range of the corrugated paper products are also constantly expanding, the corrugated board has become one of the most widely used in modern packaging packaging materials, packaging or sales packing, by its processed corrugated carton has became a major commodity packaging, packaging of goods is exports and domestic market prerequisite products, become a modern commercial and trade on the most widely used packaging container. 

According to the future global corrugated box packaging market research report released by Passion Consultant, the global corrugated box packaging market value has exceeded 140 billion us dollars in 2013, accounting for nearly 30% of the global total, and its output value has accounted for about 85% of the total output value of China's paper packaging industry.As shown in the figure below, although the annual output of corrugated boxes in China fluctuates due to short-term supply and demand, the average growth rate since 2000 is above 20%. 

Corrugated carton packaging industry downstream is a variety of consumer goods industries, such as food and beverage, electronics, household appliances, fast consumer goods.In the context of economic transformation and consumption upgrading, the demand in these industries continues to be strong, and more and more high-end customers are in urgent need of high-quality corrugated boxes and additional services. However, the manufacturers that can provide such products and services are still unable to keep pace with the increasing demand in such markets. 

For example, the competition in the field of home appliances is increasingly fierce. Haier, hisense, changhong and other big manufacturers not only need to compete with each other in terms of product technical quality, but also must surpass their competitors in terms of the logistics speed of product delivery, the cost control of warehouse storage, and the exquisite publicity effect of packaging and printing. 

The result of this competition is a growing demand for high-end corrugated boxes and additional services (fine print, logistics optimization, stock saving solutions, etc.).The high profitability of high-end customers themselves makes them less sensitive to carton packaging costs. Coupled with their urgent demand for high-quality cartons and services, they are also more willing to accept flexible pricing. 

Most of the downstream customers of hexing packaging are leading enterprises in the consumer goods industry, whose orders account for as much as 60-70%.We observe the average gross profit margin of listed companies in industries such as household appliances, consumer electronics, FMCG and food and beverage in recent years. It can be found that in the past five years, household appliances, consumer electronics and food have ranged from 20% to 25%, beer and beverage have ranged from 35% to 40%, and white wine has ranged from 55% to 65%. 

The leading enterprises in these industries have good operating conditions, strong profitability and high sustainability of business development. At the same time, they pay more attention to the design and differentiation of packaging, and emphasize the promotion effect of packaging on brand positioning, quality and sales, so they are relatively insensitive to the price of packaging.In addition, in order to ensure the continuity of supply, high-end customers will not easily change suppliers, customer stickiness is higher than other ordinary customers. 

By contrast, the gross profit margin of hexing packaging in the past three years is 19.14%, 19.71% and 19.72% respectively.The gross margin to a certain extent affects the size of the yield space.Because the downstream customer's gross profit is relatively high and the profit margin is large, hexing packaging is able to provide more value-added services in addition to packaging materials. 

As the leader of paper packaging, hexing packaging benefits from the strong bargaining power gained from group procurement. The raw materials of corrugated boxes upstream of hexing packaging are lower than those of its peers and relatively stable. 

The raw materials of corrugated carton/cardboard are corrugated base paper and box board paper. At present, the largest domestic production capacity is nine dragons paper and liwen paper, in addition to the largest scale of tai sheng group, fujian liansheng, huang yong paper, rong cheng paper, zhejiang jingxing, guangdong wanlida, yongfengyu, shandong century sunshine.It can be seen from the comparison of annual production capacity in 2014 that the prices of nine dragons and liwen have the greatest influence on the market and are important reference objects for the prices of corrugated paper and carton paper. 

In terms of industry concentration, the total share of the top ten domestic paper packaging enterprises is less than 10%.This is mainly due to the corrugated carton packaging industry entry threshold is low, resulting in the outsourcing processing carton factory (third level factory) of mass existence, corrugated carton market share is very dispersed.The market share of the top five leading companies in the corrugated box market in the United States is above 10%, among which the international paper industry occupies the first place, reaching 27%. The market share of the top five paper packaging enterprises in developed markets such as Australia and Taiwan is also over 50%, and the industry concentration ratio is significantly higher than that in China. 

Compared with overseas, China's corrugated carton packaging industry is still in its growth period, with less than 10% of the industry concentration significantly lower than the mature corrugated carton market.We believe that with the upgrading of the branding and concentration of the downstream consumer goods industry, China's paper packaging industry will also show a trend of gradual integration in the future, and the enterprises with customer resource advantages and national layout advantages will win the initiative to develop. 

As mentioned above, most of the downstream customers of hexing packaging are leading enterprises in the consumer goods industry. The development strategy of such high-end customers is changing the purchasing mode of corrugated boxes.Under the traditional mode, factories in different regions are responsible for selecting carton suppliers in their respective regions, which has such defects as uncoordinated product packaging and printing services, high management costs, and difficulty in timely feedback to the headquarters of key customers. 

The integrated procurement mode under the strategy of key customers: the headquarters directly signs agreements with high-quality suppliers nationwide to conduct unified procurement, and the suppliers are responsible for logistics and distribution services.In this way, it is convenient for the headquarters to directly control the suppliers, while the branch is responsible for the feedback of the service quality of the suppliers to the headquarters, thus greatly improving the supervision and management efficiency.Hexing packaging, a leading carton enterprise with a wide distribution throughout the country, has more advantages in the increasingly fierce competition. On this basis, extensive mergers and acquisitions can further activate capacity, improve efficiency, better serve customers and create commercial value. 

Hexing packaging has started its national layout since its listing. By March 2016, it has nearly 30 production bases in 26 cities across the country. It is the largest enterprise in the corrugated industry in China, and it has formed a network effect by co-existing with large customers.We believe that the downstream industry demand for high-speed development and the competitive landscape, for the development and strength of corrugated carton packaging industry leading gave birth to the huge opportunity, and xing packing with research and development design, optimization, and the advantages of the logistics distribution, customer service, is expected to be consolidated by means of endogenous growth and extension mergers and acquisitions own industry leader status. 

Tri-industry fund promotes the growth of extension. It has acquired some businesses of International Paper industry. International Paper mentioned above is the leader of corrugated Paper industry in the United States, ranking the first with a 27% market share in the United States.Hexing packaging actively promotes the industry integration, establishes the industrial merger and acquisition fund and buys the international paper industry in China and southeast Asia corrugated packaging business, which is expected to produce good synergies and network effects in the future. 

In 2016, hexing packaging co., ltd. and bridge-building capital co., ltd. plan to invest and set up an industrial merger and acquisition fund. The total scale of the fund is no more than RMB 680 million.This mode of "equity investment fund + listed company" occupies less capital, has high merger and acquisition efficiency, and has relatively stronger risk control power. 

In March 2016, the bridge hexing merger and acquisition fund signed the "share transfer agreement" with international paper (Asia) co., ltd. and other parties to acquire international paper's corrugated packaging business in China and southeast Asia for 625 million yuan.Founded in 1898, international paper is a global paper and packaging company with operations in North America, Latin America, Europe, Asia and north Africa. It is the world's largest paper and forest products company.The international paper industry acquired by duqiao hexing is mainly engaged in the production and sales of paper packaging products in China and southeast Asia, and its main products are corrugated board, corrugated boxes, paper pallets, buffer products and display racks. 

International paper disclosed in its 2015 annual report that it has 16 corrugated box production bases in 13 cities in China and one corrugated box production base in 5 cities in 4 countries in southeast Asia.The 13 cities in China are dalian, shenyang, Hohhot, Beijing, tianjin (2), baoding, Shanghai (2), suzhou, nanjing, wuhan, chengdu, guangzhou (2) and dongguan.Hexing packaging layout in China includes tianjin, Qingdao (2), shaoxing, chuzhou, hefei (2), haining, xiamen (4), fuzhou, zhangzhou (2), zhengzhou, xinxiang, hanchuan (2), foshan, zhuhai (2), chengdu, chongqing, zunyi. 


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