China targets world domination in global packaging
The report, Paper and Packaging Sector M&A Update, says that China intends to increase their packaging market share “aggressively,” over the next year.
“Their stated aim is to become the world’s largest packaging producers by the end of 2012, which will further intensify competition and will alter the global market dynamic,” said the report.
The Chinese packaging market, which is the second largest after the US, had a gross industrial output of $183.9bn in 2010 according to the Chinese Packaging Federation.
Huge growth in the Chinese packaging sector has been partly attributed to the packaged food industry which has seen up to 20% growth per annum in recent years.
The research, which was produced by Catalysts Corporate Finance, also states that foreign packaging investment has been made in Turkey and BRIC (Brazil, Russia, India and China) nations – something they expect will continue.
European effect
The emergence of these of BRIC countries in the packaging industry, which has been attributed to growth in disposable income and consumer sectors in these nations, has had an impact on the European packaging sector.
Catalyst Corporate Finance partner Richard Sanders said, “The packaging sector is largely GDP linked, so consequently there has been growth in these countries where consumer growth has been strongest.”
“At the start of the downturn I believe there was some uncertainty as to how resilient many of the BRIC economies would be however these have largely held up well. The focus now will switch to how much the consumers in these markets can drive packaging growth”
“European consumers in all sectors aren’t spending, so the drive for packaging isn’t there.”
As a result, an increasing number of European and American companies have begun investing in the BRIC nation’s packaging sectors.
Foreign investment
“For the last two or three years, there has been this expectation of growth, which is why there has been so much investment from Europe and America.
“People and businesses are going to be looking to these markets to make investments,” said Richard Sanders, “if they have £1 to invest it’s going to be going to these markets, so inevitably there is going to be further growth and the prospects for Europe look challenging as a consequence.”
