Sun Paper’s general manager Kevin Liu’s English is near-perfect, so when he says “the tissue industry in China is just starting,” the full impact of his words sinks in immediately. Had we been operating through a translator I would certainly have asked if he wouldn’t mind repeating what he’d just said.
I spent six days in east China for this issue’s regional report and as ever emerged hugely impressed by the country’s drive, energy, achievements and massive potential.
Almost 9% average tissue consumption growth over a decade. If that’s just starting, even given a start from a low base, then the future is immense.
There’s a tangible sense of a great machine rolling unstoppably forward, and ‘just starting’ is an accurate historical perspective.
Then that other word kept occurring to me: balance. The dangers of overcapacity and the current price war have been met within the industry with an extensive response seeing overheating development put on hold, or scrapped. Will it be extensive enough?
Every one of the leading tissue players I spoke to is poised at the starting line of a sprint race … ready to dash for the rich rewards of the finishing line.
To strain the metaphor a little further, it’s just that the man with the starting gun has asked them to break, take a little breather and re-settle in their blocks. But the runners are eager to get moving again. The medals are there, waiting to be won.
Cultural habits of tissue use are rapidly changing across the country. The powerhouse of the south east and first and second tier cities see consumers paying greater attention to tissue product quality, variety of product and variety of use. Consumers in the north want a product that is tough and not easy to tear. There, toilet paper is versatile and put to use all over the house, including at the dinner table. In the south a soft product is preferred and it tends to be used solely for the bathroom. Urbanisation is now encroaching more on third, fourth and fifth tier cities.
Squeezed pulp and paper manufacturers are rushing into tissue. Mr Liu’s conglomerate is one, and already targets a top five position in ten years.
There is little brand loyalty. Hebei Yihoucheng, which I also visited for this issue, stressed the significance of brand identity. A strong and well-established brand is also crucial in tackling the ongoing price war.
The area’s potential remains clear: there is an immense number of inhabitants and a low penetration of hygiene products. Total retail tissue per capita consumption across the East China region was 5.5kg in 2013, opposed to the 8kg average in Japan. If the current 10% CAGR per capita volume growth is maintained, average consumption in the East will be on a par with Japan’s by the end of the decade. Forgive me, but I enjoyed my metaphor so I’ll finish with it. The race has to be paced properly … go off too rapidly and we break down half way. Then it’s tough to get back on track.
Tissue World Istanbul 2014
During 25-26 September, Tissue World will be hosting the newest event in its portfolio: a two day conference at the WOW Convention Center in Istanbul. It will feature conference, exhibiting-sponsors and social functions offering visitors the latest news, developments and opinions from the growing tissue industry and economies in Eastern Europe, Russia, CIS, Middle East, Central Asia and Africa.
For those that can’t attend, watch out for the next issue of TWM which will summarise the key talks and opinions.