Guangdong Province Investment Spurs Corrugated Machine Industry Recovery

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CHINA - In the face of the global economic crisis, the Chinese government’s RMB 4 trillion stimulus package is helping the corrugated industry withstand the harshest effects. The latest statistics from the Guangdong Province Statistical Bureau show that Guangdong's economy recovered steadily from January to August.

The effect of expanding domestic demand is now clearly visible; the growth of investment and consumption is increasing monthly; external demand continues to narrow and the corrugated packaging industry has benefited.

Corrugated equipment production companies have also begun to recover, showing extremely high interest in participating in SinoCorrugated 2010 in Dongguan next year, even before the official launch of the application period. Over 300 exhibitors, including BHS, BOBST, Shanghai Xu Heng and Hainan Nantai, will participate in the exhibition, showcasing their latest equipment and technologies.

A Goldman Sachs research report shows that through Chinese government incentives, local economic growth is changing from an export oriented model to a domestic investment oriented one. This is leading to the revitalization of Guangdong’s economic development now and in the future. From January to August this, Guangdong invested RMB 616.8 billion in fixed assets, up 18.5% from the previous year. Of this capital:

• RMB 287.6 billion was invested into capital construction, up 15.5% from the previous year;
• RMB 65.3 billion was invested in renovation, up 7.4% from the previous year;
• RMB 177.9 billion was invested in real estate development, up 27.7% from the previous year, and
• RMB 85.9 billion was invested in other items, up 20.3% from the previous year.

Guangdong businesses benefited from these investments. According to Luo Weibin, General Manager of Guangdong Wanlian Machinery Co., Ltd., an exhibitor at SinoCorrugated 2010, this year's domestic orders increased significantly, while overseas orders fell, compared to last year. Mr. Luo said that the packaging industry’s demand was driven further by the development of the manufacturing industry that had been boosted by government incentives.

As a result, the impact of international orders falling because of the financial crisis was offset by rising domestic orders. After SinoCorrugated 2009, Mr. Luo said that domestic companies should not focus solely on the saturated domestic market; they should look at international markets too and improve the performance and technical content of their products.

According to incomplete statistics, China-produced corrugated packaging equipment takes up a 90% share in the domestic market; about 28% of the Asian market and only 8% of the rest of the world.  This highlights low market penetration of domestic corrugated packaging equipment in global markets and points to great potential for development.

For domestic corrugated carton equipment suppliers, the priority is to explore emerging overseas markets and diversify the range of export markets. To do this, experts recommend:

• reducing costs and maintaining price advantage
• improving product quality and technical content
• improving post-sales service and actively looking for reliable local agents.

As long as Chinese corrugated packaging equipment suppliers maintain their advantage on price, while optimizing product structure, speeding up industrial upgrading and adding value at the same time, they will definitely boost their export competitiveness. The upcoming SinoCorrugated 2010 show to be held next April in Dongguan will be an ideal export and trading platform for Chinese enterprises.