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2016 China Paper Industry Development Situation and Strategic Measures
Guo YongxinDeputy Director of China Light Industry Information Center
June 2016
Summary
Macro environmental impact
Operation analysis on Paper Industry
Future trends
Strategic measures
Macro environmental impact
12.714.2
9.6 9.210.4
9.37.8 7.67 7.35 6.9
4 3.94
1.33
‐2.25
4.342.73 2.2 2.17 2.47 3
‐4
‐2
0
2
4
6
8
10
12
14
16
2006年 2007年 2008年 2009年 2010年 2011年 2012年 2013年 2014年 2015年
中国GDP增速
世界GDP增速
Chinese economy has entered a period of adjustment of structure optimization, and the growth is slowing, but the growth potential is huge.
China 2015 GDP growth is 6.9%, with the growth rate less than 7% for the first time since 1990.
The total GDP reaches RMB 67.6708 trillion, and China’s economic growth is far better than the world average.
China’s per capita GDP ranks 90th in the world, and the future development space is large.
Chinese GDP growth rateThe world's GDP growth rate
Macro environmental impact Chinese authorities predict that long-term trends in China's economic
development will show a L-type situation, indicating that the economy will not have a big shock.
Premier Li Keqiang:
- Since this year, the Chinese economic operation is overall smooth, and structural adjustment and transformation and upgrading appears a good momentum.
- The comprehensive deepening reform and active opening up can keep the economic operation at a reasonable range and towards a long-term and good orientation.
Chinese government “Thirteen Five-Year" plan puts forward economic growth of not less than 6.5%.
Chinese economic overall good development momentum forms a strong support for the development of the paper industry.
Macro environmental impactWith the impact by rigid demands, the light industry develops well in the
first quarter and is thriving among the national industries. The profit growth of the light industry is higher than the revenue growth of main businesses, and the operation quality improves.
Consumer goods industry has a good momentum of development, increasing the demand for packaging and leading the development of theentire paper industry.
13.2
29.2 27.9
23.5
18.3 17.5 15.3
13.5 12.5 12.5 12.1
6.2 4.1
9.4 10.4
4.9 7.5
8.7 6.3
0.4
5.9 5.1
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
轻工业 乳品 玩具 日化 饮料 食品 家具 塑料 家电 自行车 农副食品
利润增长%
主营收入增长%
Growth of profit (%)Growth of revenue of main businesses (%)
Light industry
Dairy products
Toy Daily Chemical Products
Drink Food FurniturePlasticsAppliancesBicycle
Agrifoods
Operation analysis onPaper Industry
In recent years, the paper industry enters into the era of great change. Results of the change and adjustment in the industry have been initially apparent.Since this year, in the dual role of markets and policies, the overall development of the paper industry is good.
- Rapid growth of paper outputFrom January 2016 to April 2016, the national large-scale machine paper and
paperboard enterprises has completed an output of 38,806,800 tons, with a year-on-year growth of 5.13% and a “good start” for the first time in recent years.
- Tissue and packaging paper maintains a strong growthThe output of tissue increases 3.24%, and the output of containerboard increases
5.19%.- Graphic paper is still accelerating the structural adjustment
The output of uncoated printing paper is 2.4879 million tons, reducing by 4.03% on a year-on-year basis.The output of newsprint is 1.0732 million tons, reducing by 11.76% on a year-on-
year basis.The output of coated printing paper is 2.1321 million tons, reducing by 3.89% on a
year-on-year basis.
Operation analysis onPaper Industry
The industry profitability has an overall rapid growth, but the profitability varies.
‐6
6 7
‐74
17 7
‐80
‐60
‐40
‐20
0
20
40
纸浆制造 造纸 纸制品制造
主营增长%利润增长%
Pulp industry loss; the profit declines 74%
Paper industry enjoys the policy support of waste paper material products VAT refund of 50% since July 1, 2015, and the profit surges 17%.
The revenue and profit of main businesses of paper products industry increase 7%.
Comparison of revenue and profit growth of main businesses of industry in the first quarter of 2016
Growth of main businesses (%)Growth of profit (%)
Pulp Manufacturing
Papermaking Paper Products Manufacturing
2603
2430 2387
220023002400250026002700
2014年底 2015年底 2016年3月Change of the number of machine paper and paperboard
companies
Paper Industry increases the degree of concentration As the market survival of the fittest and the government forcing out backward enterprises, the number of machine paper and paperboard companies reduces by 216 compared to 2014, namely 8.3% of paper companies are forced out.
Operation analysis onPaper Industry
Increased industrial degree of concentration can help the paper industry to give play to the scale economics effect, reduce pollution emissions, enhance the brand profitability and establish a good market order.
End of 2014 End of 2015 March 2016
Future trends
Recalling the past and looking to the future, look at the future trends based on the following rules:
China's paper industry has entered the era of strategy. Entrepreneurs should learn to summarize the rules of industrial development and guide the development of enterprises with the rules rather than experience.
The current two important industry rules must be noted.
- Paper output growth rate and GDP growth rate is not consistent
- Paper production and consumption are saturated in stages
At present, the total amount of paper is saturated, the output increases slowly, and some grades of paper have been saturated.
Future trends
Over the years, many research institutions have always thoughtthat paper output is positively related with the GDP growth rate,but from the current perspective, the paper output growth ratedeviates from GDP growth rate and the GDP growth rate cannot be used to measure the paper output in the future.
11.312.7
14.2
9.6 9.210.5
9.27.7 7.7 7.4 6.9
13.1
16.1
13.1
8.7
12.1 11.413.2
4.7
12.8
‐0.1‐2
0
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18
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
GDP%
纸产量%Paper output %
8095 8168 8061
8397 8289
83898366
7996
7164
7588 7508 7435 7375 7319 7260
640066006800700072007400760078008000820084008600
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
美国纸产量走势
Future trendsPaper production and consumption are saturated in stages. Since the beginning of this
century, the paper industry in the United States and Japan has experienced the trend
from slow growth of output, reaching the highest point, and then to negative growth.
Ten thousand tons Paper output trend in the United States
3072 3067 3046 3089 3095 3111
31273063
2627
2736 2661
2607 2624 2647 2619
2300
2400
2500
2600
2700
2800
2900
3000
3100
3200
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
日本纸产量走势
Future trends
Ten thousand tonsPaper output trend in Japan
3200 3780
4300 4950
5600
6804
7787 8391
9389 10036
11034 11375 11515
1178611774
3000
4000
5000
6000
7000
8000
9000
10000
11000
12000
13000
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
中国纸产量走势
Future trends
Paper output trend in ChinaTen thousand tons
Future trendsIn 2015, paper output is 117.74 million tons, appearing a turning
point for the first time.
6804
7787 8391
9389 10036
11034 11375 11515 11786 11774
4000
5000
6000
7000
8000
9000
10000
11000
12000
13000
2006年 2007年 2008年 2009年 2010年 2011年 2012年 2013年 2014年 2015年
中国造纸产量(万吨)
Rapid growth period Steady growth period
In 2013, it was predicted that 120 million tons was the output ceiling of China Paper Industry. Obviously, the forecast is still valid.
Papermaking output in China (Ten thousand tons)
401 443 462 490 429
369 390 369 359 350 264 274
204
876 877 862 842 815 809 777
221
563
741 768 709
649 663
883 931
1202
1391
1579 1669
1330
1183
1019 1044
0
200
400
600
800
1000
1200
1400
1600
1800
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
新闻纸
未涂布书写印刷纸
涂布书写印刷纸
箱板纸
Future trendsSome grades of paper are saturated in China
Negative growth of the output of newsprint in 2010
Negative growth of uncoated writing paper in 2011Negative growth of the output of containerboard in 2012
Negative growth of coated writing paper in 2013
NewsprintUncoated writing paperCoated writing paperContainerboard
Future trends
Paper production in China is saturated, so the future investment will become more rational.
In the first quarter of 2016, total investment in fixed assets of paper and paper products industry is RMB 42.4 billion, with an increase of -11.7% on a year-on-year basis, forming a sharp contrast with 6.4% of total investment growth of national manufacturing industry.
Chairman of Huatai Paper Industry said recently that the Company would not expand largely in the paper industry in the future, with emphasis on the upgrading and transformation of the paper industry towards the papermaking research and intelligent manufacturing.
Future trends
436 470 520 550 580 620730 780 795 830
885
510 520 530 560 575 600 620 640 635 650 665790
9401050
1120 11501250
1340 1390 1360 1395 1400
200
400
600
800
1000
1200
1400
1600
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
生活用纸
包装纸
白纸板 ?
??
Reflection:
When tissue, packaging paper and boxboard with a substantial investment and rapid growth will have a turning point?
TissuePackaging paperBoxboard
Future trends Product structure is optimized and the proportion of high-grade paper
further increases.
With the progress of living standards and improvement of technology, the proportion of high-grade paper further increases, high-grade paper will force out mid-grade paper, mid-grade paper will force out low-grade paper and low-grade paper will be eliminated in the future.
The industrial chain of paper enterprises extends and will provide consumers with personalized, customized and high value-added products.
- Develop from the industrial paper to tissue
- Develop from the production of pulp paper to the downstream paper packaging
- Develop from bulk industrial goods to daily necessities of consumers
Future trends
From paper making to fiber comprehensive utilization, the biomass project develops rapidly.
Papermaking can utilize the plant fiber. With the advancement of science and technology, paper enterprises are entering the biofuels industry. Finnish companies have become the leaders in the trend.
Paper production may slowly grow, but the comprehensive utilization on the plant fiber will be explored and is very important for social progress.
Trend: China Paper Industry enters a balanced and optimization period.
The total output of China Paper Industry enters a balanced development period.
The structure of China Paper Industry enters an optimization period.
Strategic MeasuresIn face of the future development trend of the industry, the paper industry should take the initiative to respond, to consolidate strengths and to enhance competitiveness through quality manufacturing, product cost improvement, corporate M & A and global distribution and other strategic measures, so as to cope with future challenges.
Quality manufacturing strategy
Cost performance strategy
M & A strategy
Global distribution strategy
Strategic Measures
Quality manufacturing strategy
The new high-end products can make huge profits in the paper industry. According to market demands, the production of high-grade paper is an important measure to improve product profitability.
China imports large quantities of paper and paperboard every year, remaining at around 2.6 million tons in recent years, so it is necessary to produce high-end domestic products to replace import.
652597 562
637 635 614524
441 401 358 334 336 331 311257 255 260
0
100
200
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400
500
600
700
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Strategic Measures
Cost performance strategy
Under the premise of ensuring product quality, lowering investment and operating costs and increase production.
- Optimization of equipment, saving investment
- Process optimization, saving energy and increasing yield
- A revolutionary brand-new technology in the slurrying and environmental protection, significantly reducing investment costs
Strategic Measures
M & A strategy
In next period, enterprises will expand through M &A instead of the investment in new projects.
- M & A between the upstream and downstream of the industry chain
- M & A between domestic and foreign companies
- M & A between the industry and other industries
Strategic Measures Global distribution strategy
- “One Belt and One Road” area is the key area of global distribution of Chinese
enterprises
China currently exports about 4 million tons of paper and paper products to One Belt and One Road
area, and the import amount is about $ 7 billion. In 2015, China papermaking machinery and
equipment export amount was $ 1.222 billion, with an increase of 15.51%, mainly in Vietnam,
Indonesia, India, the United States, Belarus, Malaysia, Iran, Taiwan, Turkey, South Korea and other
areas, including $ 146 million in Vietnam, $ 141 million in Indonesia and $ 105 million in India.
Vietnam Indonesia IndiaThe United StatesBelarusMalaysiaIranTaiwanTurkeySouth KoreaOther areas
Strategic Measures
- Countries with market and resource superiority are also the key area of global distribution
Chinese enterprises are actively walking out. Shandong Quanlin Paper Industry is investing $ 2 billion in Virginia to construct the 600,000 tons of wheat straw papermaking project.
Shandong Sun Paper Industry invests in building a bio-refinery project with an annual capacity of 700,000 tons in Arkansas, with the total investment about $ 1 to 1.3 billion.
Nine Dragons Paper (Holdings) Limited and Lee & Man Paper Manufacturing Limited built a packaging paper factory in Vietnam.
Conclusions Chinese government puts forward the “innovation,
coordination, green, opening and sharing” development concept as the guiding ideology of “Thirteen Five-Year” period.
Paper industry stems from the use of green fiber and is one of the most potential industries with green features in “Thirteen Five-Year” period.
Facing the new situation in Chinese “Thirteen Five-Year” period, the paper industry should seriously sum up the rule of industry, scientifically make strategic plans, assess the situation, achieve a strategic breakthrough for the Chinese paper industry and make a brilliant contribution to the global pulp paper industry.