Study Details Far East Packaging Threat
Study Details Far East Packaging Threat
According to a new study by Packaging Strategies (West Chester, PA), countries such as China and India are well on their way to becoming pack-aging powerhouses—competing with the United States and Europe in the process.
The report’s authors point out that packaging manufacturing is quickly migrating to China, India, and the Far East in general, thanks to the emergence of quality producers and vital support processes like digital work flow. In fact, industrial product as a whole grew by approximately 40% in Asia between 2002 and 2004, compared with only 5% in developed Western economies.
West China appears to be the fastest- growing and biggest packaging market, with pharmaceutical and medical packaging accounting for a large chunk. India remains the country with the greatest medium-term potential, say the authors, while countries such as Sri Lanka, Malaysia, and Vietnam have the potential to develop good quality specialty businesses. The study also identifies more than 60 Eastern companies that have the potential to become world-class players in different areas and different material technologies.
Much of the new capacity investments in the Far East are latest-generation equipment, in contrast to the past when those countries tended to acquire secondhand, out-of-date equipment from the West. The newest machines are of world-class standards and indeed in many areas the investments being made at this time will be among the world’s best technologies in each area. Also, these processes are heavily computer linked and managed, which provides better management control and is ideal when the labor and management teams are inexperienced. With this advanced technology, the learning curve for Far Eastern companies to catch the leading Western companies will be short and the effects seen very rapidly.
Itemized by materials, the study notes that plastic packaging is moving the fastest. However, exceptional growth is also being created in specialty packaging films such as biaxially oriented polypropylene (BOPP). World consumption of BOPP films was actually 3 million tn in 2002, and is expected to hit 6 million by 2010. Within that figure, China will likely consume 1 million tn of BOPP films. China is also leading growth in the folding carton market, with an expected doubling of demand from 2000 to 2010. In addition, pressure-sensitive labels in China are growing by more than 20%. Elsewhere, the growth rate of stretch-and-shrink PE films and extrusion-coated and laminated materials is at least 10%.
The study shows that companies in the Far East are also developing sophisticated products such as multilayer coextrusions and barrier and advance- printed materials. More importantly, say the authors, the speed of technology transfer from the West to the East is a big growth factor. In less than a generation, China and India will likely have high-tech operations that rival those of all major Western countries.
The authors predict that as processes change and develop, countries such as India, China, and Malaysia will become centers of excellence in specific technologies and markets. The net effect of this increased capacity will be a reduction in the long-term demand opportunities for basic material producers in Western countries.
As a result, the study concludes that European and North American packaging companies should look at the opportunities to develop alliances and partnerships that provide leverage and advantage over the Far East. Unless these companies can use advanced technologies to cut costs and remain globally competitive, their future is more dependent on having partnerships and relationships that allow them to use their technical expertise with the cost advantages from these new territories.
Finally, the study suggests that significant volumes of packaging materials are expected to progressively migrate from the West into the Far Eastern region. However, the authors say, there is a risk of excess production developing in China on basic materials such as BOPP films, cartonboard, and some converted products.