Booming market of packaging in China 

China's packaging industry is currently undergoing a growth rate that is set to turn the sector into one of the country leading industries.

In the pharmaceutical sector, one of the key drivers for growth in the future is the country's recent adoption of Good Manufacturing Practice standards, which has hiked the compliance requirements for packaging companies serving the drug industry.

In the past, pharmaceutical packaging in China was often below international standards in terms of its resistance to factors such as humidity and ultraviolet light, which compromised the shelf life of medicines. Now, the development of the country's pharmaceutical industry with turnover up 19 per cent to 32.7 billion in 2002 and the development of an export industry has prompted a hike in standards.

According to market specialists Access Asia, China's packaging industry is enjoying steady and significant growth, with an annual growth rate of 18 per cent in 2001. This has meant that the industry has emerged as the country's 15th largest industry - up from a lowly 40th place the previous decade and a welcome recovery after a sharp slowdown at the end of the 1990s.

As China's packaging industry has developed, so the country's packaging machinery industry has grown. China currently has some 1,600 local packaging machinery manufacturers, 25 per cent of which are classed by the government as 'large operations' (with more than 1,000 employees), 35 per cent 'medium-sized' (300-1,000 employees) and 40 per cent 'small-sized' (with fewer than 300 employees).

These companies can produce roughly 2,700 of the 4,000 types of packaging machinery currently manufactured in the global market, a figure that just 10 years ago would have been thought inconceivable.

Indicative of the importance of the China market is the fact that UK trade body Packaging & Processing Machinery Association now has an office in Shanghai, China. The office, which was pioneering when it opened in 1999, is designed to offer a bridge between UK equipment suppliers and Chinese manufacturers.

"We were the first foreign trade body to set up a China office," said PPMA secretary Andrew Manly. "We are still gathering momentum with our operation, but have also achieved a great deal to encourage UK machinery suppliers to make moves on this market, which is now the largest in the world.

"Currently most of the imported equipment in China comes from within the Asia Pacific region, with suppliers from Taiwan and South Korea being amongst the most successful," he noted, adding that this is mainly because of their proximity to the market.

"The normal approach for a western manufacturer is to find a manufacturing partner. This procedure can throw up challenges, but that is what we are there for, to enable the process is smooth and as trouble-free as possible," said Manly.

The fact that the domestic industry is still relatively young and undeveloped means that a great deal of the market for packaging equipment suppliers is still fed by established western players. The US Commercial Service estimates that China imported in the region of $800 million (650m) worth of packaging equipment into the country in 2002, a figure which had grown to $1 billion by 2003.

The US government body states that generally basic equipment is sourced from the domestic market, whereas more advanced equipment is sourced from overseas manufacturers. Accordingly, China packaging firms are said to be prepared to pay a sizeable premium for foreign-made equipment, given that it is generally deemed to be more reliable and faster.

"Although the China machinery market is still relatively basic, progress in this market has proved rapid and is likely to continue in the future," said Manly. "We were saying much the same thing about the Taiwan and South Korean markets just ten years ago, and now suppliers there are amongst the most advanced in the world."

Bolstered by surging demand, China's packaging machinery industry has helped to fuel development in the packaging industry itself. Today, there are more than 20,000 packaging companies employing well over three million employees across the country.

The Access Asia report highlights every area of the packaging industry, including the food and beverage, pharmaceutical and cosmetics sectors. It also details the leading players in the packaging equipment market, as well as outlining various studies in macro and micro economics which are directly related.