Tissue World asked Madam
Jiang Manxia, Secretary of General CNHPIA, how she expects the
industry to react to the global crisis and whether it can continue
to grow at historical speed
Tissue World: Madam Jiang, I heard your presentation during
the Tissue World Asia 2008 Technical Conference and found that
you are very optimistic about the tissue business in China.
Are you still optimistic? Do you think the world financial crisis
will have some influence to the China tissue market?
Madam
Jiang Manxia: Yes, I am optimistic about the tissue business in
China. The global financial crisis does have some little influence,
but not great. The future problem for the China tissue market
is that growing speed of new capacity is too fast, which may cause
overcapacity for a period. The supply will exceed the demand.
TW: What is the relationship between the capacity and demand
this year and next year?
Jiang: In the first half of 2008, the supply especially of parent
rolls, fell short of demand. In 2006, China National Household
Paper Industry Association (CNHPIA) expected that the tissue market
would face problems in 2008, due to the growing of capacity. However,
in the first half of 2008, the market was very good, because more
than 100 small mills had been stopped.
In 2008, the capacity of
premium tissue increased
by 280,000 tons/yr. In 2008, new tissue machines had come on stream
intensively. The growth rate of supply had exceeded that of demand,
although the market demand also kept increasing. Therefore nowadays
the tissue market is not as strong as in the first half of 2008
and it will face some problems in 2009.
TW: Can you say what part of the 280,000 tons of new capacity
is premium quality?
Jiang: Just now I mentioned 280,000 tons/yr of new capacity.
All of this is premier tissue, which refers to everything manufactured
on imported tissue machines. The capacity of tissue manufactured
by domestic tissue machines also keeps growing. It is estimated
to have risen by about 100,000 tons in 2008. With the increasing
of the capacity, some small mills have been closed. Old capacity
had fallen into disuse.
TW: That's to say the new capacity would be 380,000 tons, then.
The growth rate of capacity is less than 10%, but the growth rate
of demand exceeds 10%. How can that lead to overcapacity?
Jiang: The growth rate of demand is expected to be less than
10%. It will most likely be about 8%. The new capacity of tissue
manufactured by domestic tissue machines will be more than 100,000
tons, because it is difficult to do the statistics of new capacity
for many small mills. The overcapacity we mentioned refers to
the growth rate of premium tissue capacity, which is too high,
with all the new capacity coming on stream so intensively. In
addition, the figures I gave in my presentation do not include
the new 15,000 ton/yr machine at Luohe Yinge Tissue Paper Industry
Co Ltd,. which went into production in April. So the new capacity
of premium products will reach 300,000 tons.
TW: For 2009, will growth still be maintained at 8% in the China
tissue market? And is there any official data about the market
demand in different parts of China?
Jiang: In 2009, the demand growth rate will be 6-8%. It will
not be as high as before because of the large base. Another reason
that the market will face problems for new capacity of tissue
manufactured by introduced machines is that toilet paper is the
dominant sector in the product structure in China. Toilet paper
accounts for the largest part of the increase in market demand,
particularly in rural areas. However the proportion of toilet
paper in the new capacity is only 60%-70%, lower than the average
share which is 85%.
At present, our association does not have official data about
the market demand in detail for the various provinces of China.
However, in Beijing and Shanghai, the annual average per capita
consumption is about 8 kg. In the countryside, the average per
capita consumption is less than 1 kg.
But in some rural poor areas, the people do not use toilet paper.
With the quickened urbanization and the use of toilet paper by
workers who have moved from the countryside to the cities, the
consumption of toilet paper in rural areas has been increasing
year by year. Today they mainly use toilet paper based on straw
pulp or waste paper as raw materials. In the countryside, some
women use toilet paper instead of sanitary napkins in their menstrual
period. In addition, another characteristic for the China market
is that there is large consumption of handkerchief tissue, especially
in the cities.
TW: Kitchen towel demand seems insignificant in China. Is it
growing now?
Jiang: There is little consumption of kitchen towels, but it
is growing. In big cities, some families have started to use kitchen
towels. By contrast, the growth rate of hand towels is faster.
It is mainly used in the AfH market.
TW: Do Chinese consumers like to use branded or private label
products?
Jiang: In China, there are some private label products, but
not many. Chinese consumers still put the emphasis on branded
products. Especially in big cities, using branded products, especially
famous branded facial tissue, shows a position of prestige.
TW: What about exports from China? China is producing much more
tissue than it uses. Where is the surplus going?
Jiang: In 2007, the output of tissue was 4.1 million tons. Exports
were 390,000 tons, representing about 9.5%. Tissue is mainly exported
to Hong Kong, Japan, Macao, Southeast Asia, Australia, etc. Products
made by Vinda Group and Zhongshun Group have a large market share
in Hong Kong. Parent rolls and cheap low-grade hand towels are
also exported to America.
TW: Are there any Chinese tissue machine makers who export their
products to other countries? Do you expect such business to increase
in future?
Jiang: There are some domestic machines which are exported to
other countries, but not many. They are mainly exported to Southeast
Asia (Indonesia, Thailand), Middle East, Africa, etc. Now much
domestic tissue converting machinery is exported to other countries,
representing about 50% of total sales revenue. Many converting
and packaging machines including wet-wipes machines are exported
all over the world, not only in the Asia area.
TW: Outside China, companies such as Hengan, Vinda, APP-Gold
Hongye and Zhongshun are well known. What other companies are
making an impression?
Jiang: Hengan, Vinda, APP-Gold Hongye and Zhongshun are the
top four tissue manufacturers in China. There is a big gap before
one reaches the other companies which ranked after the top four.
By the end of 2008, the total capacity of the top four tissue
mills will reach 1.28 million tons. In 2009, the capacity will
increase by about 200,000-300,000 tons.
TW: I hear that some investment has been stopped. Is it true?
Jiang: Yes, some investment projects had been delayed. For example,
new tissue machine projects at APP have been slowed down. APP
aims to make one million tons by 2010. The projects are too big.
Although APP has delayed its expansion projects for various reasons,
it will have the tissue capacity of 500,000 tons by the middle
of 2009.
TW: Madam Jiang, thank you. TW
