Having just returned from an extensive trip to Vietnam, Laos and Cambodia, I would like to reflect on the packaging market in these countries and how it relates to opportunities for businesses in the UK.
Expanding packaging industry in Vietnam
Dealing with Vietnam first, there is a tremendous amount of investment currently going into the country. Vietnam is a third bigger than the UK in size and has a burgeoning population of over 86 million. The growth in production has been phenomenal and it is not unusual to see textiles in the British market now bearing the inscription “made in Vietnam”. Along with India and China the country is forecast to have the strongest export growth in the world over the 2013-20 period ,with double digit expansion each year according to the HSBC Global Connections report. China is shifting to higher value –added sectors and opportunities exist for low-cost labour countries such as Vietnam.
As regards the packaging market there is evidence of growing indigenous production, although inevitably there are imports from surrounding territories, such as Indonesia and Thailand. Pepsico, Nestle and Kraft Foods are active in the country and I came across Tetra Brik packaging in several cities. Also in evidence were imported plastic milk containers produced by S&C Containers.
The incredible growth in consumer goods production is transforming Vietnam, particularly in sectors such as textiles. Low labour costs are a major driver and the packaging for these types of products will experience an exponential rise. The quality of the goods is improving and the quality of the packaging will likewise experience an upward spiral. Consumer electronics production is also expanding, often linked to commercial partnerships with other Asian countries, such as South Korea. Ceramics is another sector with production growth. All of which means that the tilt of the world packaging market, which was already strongly gravitating to the Far East, will swing even more so in this direction over the next 10-20 years as countries like Vietnam continue to expand their industrial base.
Packaging market in Laos and Cambodia.
Things are very different in Laos and Cambodia. Taking Laos first, the country is only slightly smaller than the UK, yet has a population of only 6 million. However this is rapidly expanding.
Over 60% of goods are imported from China, with others coming from Vietnam and Thailand. I saw Procter and Gamble Pantene toiletries imported from Thailand in the capital Vientiane, Nestle “Coffee-Mate” powdered milk imported from Thailand and Pepsi-Cola in recyclable metal cans marketed by the Lao Beer Company, also imported from Thailand. There is much bottled water in PET containers in many parts of the country. This is inevitably a two speed economy of tourist products and indigenous cheaper products for local demand, often found in local markets. In hotels I can across attractively printed “Nitrogen packed” flexible packs for cashew and peanuts, produced in Thailand.
It was a similar story in Cambodia which is slightly smaller than the size of England and Scotland combined, yet with a population of only 13 million. It is inevitably the story again of a two-speed economy, consisting of tourist outlets and the indigenous local markets and products. I came across some impressive packaging in hotels in Phnom Penh the capital, including Japanese Technology Mineral Water, “Water O”, in PET bottles. This is a hi-tech natural filtration and UV system, produced by Yakumo F&B Co. Ltd, a Japanese joint venture company. The technology was by Taiyo Suna Koubou Co. Ltd. In Siem Reap, near the Angkor Wat temples, there was “Aqua 02” water in RPET containers, bottled by Ice Down Beverages Inc of Ontario, Canada. This was identified as “water with added oxygen, bottled with 100% medical grade oxygen”. The quality of the packaging in tourist shops and hotels in Siem Reap was outstanding, but with an indigenous population living on an average income of less than half a dollar a day this will never be within the reach of most of them.
And this really is the problem in Laos and Cambodia. Both nations are still recovering from major wars which has scared the landscape and decimated and maimed the population. Aid agencies and national governments are doing all they can to help, but it will take many years before these economies return to any semblance of normality.
Vietnam however is another story and one we should watch with interest from the packaging viewpoint over the next decade. British companies, not much in evidence at present, should take note and act accordingly.