Global competition in flexible packaging intensifies

The global flexible packaging market for consumer goods is worth US$30 billion. With the globalization of consumer goods production (such as food groups Nestl e and Mars), the internationalization of packaging substrate supply is no longer a new concept. However, the globalization of the packaging and processing group is still relatively new.

Fifteen years ago, some of the larger packaging and processing groups were attracted to invest in distant overseas markets, partly because of customer expectations. However, apart from a few successful examples, few of these joint ventures have achieved commercial success. On the contrary, these processors of overseas investment suffer from cultural obstacles, costs, language, policies and regulations and high expectations. In spite of this, the trend of investing in overseas markets has become more intense. What are the reasons?

There are two types of investment environments in the two types of markets today. With the advent of new communications technologies, changes in political structure, and increase in disposable income, emerging markets such as Southeast Asia, Central and South America, etc. are usually more attractive than many mature markets, while the demand for mature markets is growing more slowly. Some areas even showed a downward trend.

Many regions of the global market are in an oversaturated state such as printing, compound processing, and substrate production. Therefore, the merger of enterprises has become a common phenomenon. Small-scale processors (usually family-style) face higher investment costs; larger-scale processors also face increasing price pressures, both in the global market.

Processors in order to survive vigorously to reduce costs. Some processors obtain some processing orders from overseas partners or corporate acquisitions (profits tend to be lower), and then get domestic processing; while medium-sized and large flexible packaging groups guarantee by adopting new technologies and searching for fast-growing emerging markets. Its competitive position in the market.

Emerging Markets In the past 10 years, the global flexible packaging market has become polarized: large-scale and mature markets, such as North America, Western Europe, and Japan; smaller, developing emerging markets, such as India, China, and Southeast Asia. Eastern and South American markets, etc.

Although the emerging soft packaging market also has problems of oversupply, these emerging markets have lower costs and have stronger demand growth potential than mature markets. The following factors promote the growth of the emerging flexible packaging market:

â—† International investments already established by Western consumer product manufacturers, such as some Western sweets, small food and tobacco companies, have already invested in emerging markets;

â—† The continuous development of strong and technologically competitive emerging market processors;

â—† The consumption of packaging products continues to grow, especially processed convenience foods;

â—† The disposable income of the urban population continues to increase;

â—† End-use consumer products in the global market adopt standard packaging methods;

â—† A more effective retail system has been gradually developed and improved.

Another way of thinking if one of the ways to commercial success is to explore rapidly growing emerging markets, another way is to ensure the leading position of technology or to ensure consumer satisfaction. There are new technologies in mature and emerging markets, but processors in mature markets can more easily adopt new technologies by providing funding, training, release and marketing skills. Global consumers may prefer domestic processors who are cooperating/supporting/joint ventures with the Western Packaging Group.

It seems that Western big groups are seizing the global market. However, this is not the case. Processors from Western countries are no longer simply “meeting” the market. For example, IHP Bemis, a joint venture between Bemis of the United States and ITAP of Brazil, is a win-win business case. The parent company of ITAP resold 1/3 of the company's shares to Bemis, which made up for the lack of new technologies and marketing skills of ITAP. Bemis, through such cooperation, opened the Brazilian market.

Therefore, in the emerging markets, some ambitious local companies are cooperating internationally to ensure their competitiveness, and actively seek international cooperation with Western processors with unique technologies and marketing methods.

Prospects How will the pressure faced by processors in mature markets continue to increase in the next five years, in the face of shrinking margins and increasingly rationalized markets in Europe and the United States. This pressure will lead to the closure of some factories, and will also prompt manufacturers to take measures to reduce the excess production capacity in the market.

Some companies have taken steps to connect more closely with customers. By working with partners to improve service levels and reduce costs in all directions. A typical example is often sending some of the company's technical staff to the customer's place, providing customers with technical support, material procurement guidance and after-sales support. Processors also work with raw material suppliers in the same way. For example, ink production merchants send technicians to package processing factories to manage the supply of ink.

Southeast Asian and South American markets are currently the most attractive markets for large-scale processing companies that want to develop into emerging markets. These areas have a large population, increasing disposable income and so on. Also worth mentioning are markets such as India, China, Indonesia, Brazil and Argentina. Argentina is not currently the best-invested region, mainly because of its unfavorable economic situation.

Some smaller processing companies can also find suitable markets, technologies, or "complete solutions" in some limited areas and markets in the process of opening up the market.

Some savvy companies in emerging markets will become more and more powerful. These companies mainly follow and learn from the development model of mature markets. In addition, these companies will increasingly seek the following support from overseas markets:

â—† Technologies with competitive advantages (such as high barrier coating technology);

â—† Establish supply partnerships with other processing companies;

â—† Mergers (especially mergers with domestic companies and mergers with surrounding markets).

The right business strategy depends on the size of the company, its goals and its attractiveness to potential partners.

In order to maintain their competitive position and explore new markets, a fierce battle is being waged among the major processing companies in mature markets. They not only face competition but also face strong local power from emerging markets. Eager to seize competitors in more markets. In order to be invincible in the future, packaging and processing companies must be able to know each other, to adapt to the market, and to increase the market share according to the information they possess, and to seize potential investment opportunities as soon as possible.