Having recently returned from an extensive trip to China, (where I traversed large parts of the country from Beijing in the east to Kashgar in the west and Guilin in the south), I have been able to gain some insight into the dynamics of the country and what the future might hold for those involved in the packaging industry-from an economic viewpoint.
Without doubt the face of the Chinese economy is changing. You only have to look at the large swaths of trucks and other vehicles, carrying huge amounts of minerals and materials across the country, on the ever expanding network of roads and highways, to know that China is experiencing a boom. Figures recently published show that China could have overtaken Japan as the world’s second largest economy. Economic growth for the whole of last year was estimated at just below 9% and this growth is set to continue.
Despite concerns about China’s undervalued currency and the effect this is having on world trade, the fact is that China produces many products that the world wants and it does this economically and efficiently.
According to The China Packaging Network, China is the world’s second largest packaging market next to the USA and is expected to generate sales of RMB1.2 trillion by the end of 2010. The same organisation also reported that sustainable packaging will grow to 32% of the total packaging market in China in 2014, up from 21% in 2009.
As I saw as I walked around the streets of many big cities in China, there is a wealth of goods on display in the stores and in the markets. Increased demand for food, beverages, cosmetics, toiletries, household products and more expensive electronic goods is all a function of a consumer economy which is booming.
All of which begs the question how do Western companies gain a foothold in the Chinese market? The obvious answer is through strategic partnerships and joint ventures. There are many international companies who have established joint venture partnerships in China, but Britain is lagging behind. These types of relationships do not happen quickly and need to be cultivated and developed over a long period of time.
The benefit of a well known brand name in China is considerable. Branded goods proliferate and glossy adverts encourage aspirational western lifestyles. Major retailers are showing renewed interest in China. Those who are already there are there for the long term; those who are looking are weighing up the long term potential. This is probably the best way to succeed in the Chinese market – undertake research, evaluate all the coefficients and come to a considered opinion.
Of course China is a communist state, with the all inherent controls and regulations this system imposes. However the economy is experiencing rapid change and the nature of business relationships have moved on also, encouraged by a government which is considered by many to be more enlightened and internationally aware. There is a greater freedom and sense of entrepreneurial flair in much of the country.
Technological innovation and investment in packaging and processing technology is undoubtedly high on the agenda for Chinese companies. For Western businesses active in these markets, opportunities abound. China has a vast population of 1.3 billion to feed and any advances in producing goods and services more efficiently and economically will be evaluated with great enthusiasm by indigenous Chinese companies.
As the world already knows, China has much to do in improving environmental standards. Investment in more regulated and controlled plastic recycling has been called for. China is currently the second largest emitter of carbon dioxide in the world. Emission reduction is therefore an important issue and one which is gradually being addressed.
Notwithstanding these issues, China has come a long way economically over the last 10 years and has much further to go on the world stage. The Chinese are hard working and increasingly entrepreneurial. For progressive companies with ideas, technology and a commitment to building long term relationships, China promises an exciting future. The market will continue to grow and there seems little to stop the rise of the economy of the “Middle Kingdom”, as the Chinese sometimes refer to their country.