Annie Zhu, Associate Editor, Pulp & Paper International magazine
Nov. 26, 2012
Tissue paper producers, especially the larger ones, are planning to maintain their current momentum for expansion despite the worldwide economic uncertainty. This was the overwhelming message heard from those producers attending the China Paper Sustainable Growth Forum recently held in Wuhan.
"APP's tissue capacity will reach two million tonnes per year, spread throughout different regions of China in the next five years," said Hus His-Tuu, CEO of Gold Hongye Paper Group, APP China. "We are drawing a cross in China, in the directions of North and South, East and West, to supply the products to the local market."
The tissue market's appetite for expansion should come as no surprise to the industry, especially from the recent reports. But the market is also becoming more and more consolidated.
"China's leading four companies, including Hengan, Weida, Zhongshun and APP account for almost 30% of the total capacity in the country. Their sales are expected to account for 35%", said Jiang Manxia, secretary general of China National Household Industry Association (CNHPIA).
In addition to rapid expansion by larger companies, small and medium companies, and those that do not normally produce tissue paper, are also investing heavily in the industry. The fast growing tissue market is catering to the growing hygienic needs in China, especially in inland China where rural areas continue to develop.
"China's new capacity this year is 1.5 million tonnes, and we expect another 1 million tonnes in the following year," added Jiang. "China's tissue consumption reached 5.28 million tonnes in 2011, up 12.7% compared to 2010, and an 8.6 fold increase compared to that in 1990. China now accounts for 17.3% of world consumption, following North America and Western Europe."
China's practice of shutting down old and polluting plants is also leaving space for further growth by ambitious producers. Though China's other paper grades are having a tough time, due to a slowing down economy and oversupply concerns, tissue seems to be quite different in the paper industry. "Once you are used to a high standard tissue, it is very difficult for you to lower your standard," said Tuu.
Currently, 8% of China's tissue production is exported to foreign markets. Base tissue paper is exported to Australia, Taiwan and Japan. Tissue paper is exported to Hong Kong, Taiwan, North America and the Middle East.
"China exports to 100 countries and regions," said Jiang. "It has become a trend now to build up converting plants in foreign countries and export base tissue there to cater for the foreign market."
However, it might not be sustainable for everyone who joins in such fierce competition. For those small and medium companies and non-traditional tissue paper producers, there are the risks of closure or losing money should they fail to build up good sales and marketing channels.
"Tissue paper is very different from other paper grades, and sales and marketing accounts for a big role in its whole success. Also, its channels and brands are not built up in one day," said Jiang.
Other measures for competing in the current market include exploring those tissue products with special functions. "We have been doing high end product development, say, for people who get the flu, or are allergic, etc," said Tuu.
Despite all the challenges, China of course has a lot of potential for further growth. "Currently, consumption per person is 3.9 kg, far behind developed countries," concludes Jiang.