By Martin Bayliss
This month Tissue World Asia opens its doors in Shanghai, commercial
centre of the most dynamic market in the world, China. If any
confirmation of the importance of China to the tissue business
were needed, take a look at Tissue World's Projects Survey in
this issue of the magazine. China dominates, with close to 40
new machines in the list.
They are not all small machines, either. Most are in the 15,000-30,000
ton/yr range, while a couple are large machines with capacity
of 60,000 tons each. While APP in particular is adding a series
of Chinese (or part-Chinese) machines - many of them from its
own workshops - there are dozens of others from western or Japanese
suppliers.
APP, operating under a bewildering array of different names,
may be the biggest of the new breed of Chinese producer catering
to this vast and dynamic market but it is far from alone. Vinda
(part-owned by SCA), Hengan, Fook Woo and others are also adding
significant new capacity.
And the list is not comprehensive. It includes above all projects
for which machine contracts with major machine suppliers are
signed and information made available. Small Chinese machinery
manufacturers are no doubt making many more, though smaller,
machines. And projects in the planning stage could add significantly
to the total, assuming that financing can still be found in the
current precarious economic climate.
How much of the new capacity will be for export is not clear.
APP is a pan-Asian organisation with its roots - and plenty of
production - in Indonesia. The whole of Asia and Australasia
are already its back yard and it has signalled its intention
to become a player in the North American market, both as a converter
and producer. But for China's other producers the domestic market
dominates overwhelmingly.
Indeed, until now they have been hard-pressed to keep pace
with booming demand. How this will continue is a matter for speculation.
China's economic growth rate has slowed, according to the financial
indicators. How badly it will be affected by the recession in
the west is not known but as a major exporter it will certainly
suffer.
Fortunately for the tissue business, demand cannot easily be
switched off, as it can for new cars or white goods. But in a
nascent market such as China's some new consumers may be forced
to reduce consumption. At very least one might expect a reduction
in the qualities bought. There is a wide choice in Chinese shops
today, from premium qualities to very basic. Some of the new
machines now coming on stream may experience slower-thanexpected
growth curves for their output.
There is only one way to find out what is happening in the
Chinese market, though, and that is to come to Shanghai for the
show on 19-21 November. Many thousands of the most important
Chinese tissue producers and converters will be there, as will
a wide range of suppliers, from the biggest western specialists
to a host of smaller but potentially important local companies.
For further information, www.tissueworld.com.
Supermarket stranglehold
The complaint I hear
most often from tissue producers and converters is that the big
retailers are too powerful, with devastating effect on the price
of their products.
Of course this varies from one country to another, hitting
the European industry harder than most because of the preponderance
of private label. Not much point just complaining if a supermarket
chain squeezes prices, charges for shelf space, demands promotional
expenditure, imposes set-up charges and so on. But what to do?
In one of our two CEO interviews Jan Johansson says that SCA
is "not going to continue to invest and work with customers
who never give us a return on [capital]. We have actively been
leaving PL customers where we don't see any profitability. We
prefer to leave them to someone else and instead work with customers
who want to develop together and recognize that there has to
be some profitability all along the chain."
For SCA, there are more options than for the small tissue producer
or standalone converter, of course. It has strong brands, economic
strength and wide-ranging expertise. It has the financial resources
to be innovative, though perhaps innovation is an overused word
in our highly constrained industry.
For the smaller producers is there any option but to accept
the terms laid down by the Carrefours and Tescos of this world?
Or are there alternatives? Could the internet offer the chance
to bypass - or at least supplement - sales, as some companies
seem to believe? Or are the costs too high? Or the risk of retaliation
from the retailers too great? Tissue World welcomes your views. TW
Write to me at martin_bayliss@tissueworld.com with
your comments.
The
lure of Shanghai - and the internet
