Products of Shanghai Binhoo Packaging Materials
By Allen Liao
Chinese cigarette packaging manufacturers are actively engaging overseas markets with a strategy that aims to optimize their packaging products and services at a time of sluggish growth in sales of tobacco products.
As a result of growing public health concerns and increasingly stringent and numerous tobacco control measures, China’s tobacco industry has had to deal with slower rates of growth in domestic cigarette sales over the past few years. That, in turn, resulted in reduced growth in traditional income on the part of the country’s cigarette packaging manufacturers.
In response, cigarette packaging enterprises, particularly Shanghai Binhoo Packaging Materials (BINHOO) and Shanghai Luxin Packaging Evotech (LUXIN), have taken active steps to try and maintain cigarette packaging production and sales by expanding their international operations.
BINHOO mainly produces and sells sheet of cigarette paper and cigarette packaging materials. In 2014, the domestic market sales of the company’s traditional packaging materials including tipping paper, aluminum-foil paper, and cigarette packs have slowed down considerably and even declined, at times. The company then made the decision to focus their energy on producing and marketing cigarette filter tow products of general specifications. At the same time, along with launching its new production lines, the company has also managed to enhance its capacity of meeting individualized client demands in terms of supplying cigarette filter tow products of special specifications.
In 2014, BINHOO succeeded in expanding its product sales to more countries and regions. Besides its existing export markets in Southeast Asia and the Middle East, the company has met with success moving into Africa.
Overseas, the most serious challenge met by cigarette packaging manufacturers is the increasingly stern measures of international tobacco control, and this trend of harsher tobacco control measures is evident in more and more countries and regions. In light of such developments, BINHOO took steps to satisfy the individualized demand of customers as much as possible and has provided them with new solutions relevant to their specialized needs. In the meantime, the company has also managed to streamline its management decision-making procedures, which took their entire operation to a whole new level. The company has also made great strides in lowering production costs, improving the quality of its products, and enhancing its rapid response capacity.
In 2015, BINHOO plans to deploy new equipment for producing traditional cigarette packaging materials in order to further improve production efficiency and lower production costs. The company’s aim is to eventually be able to offer its customers a variety of products with a high performance-to-price ratio.
As for LUXIN, its main area of business is the production and marketing of aluminized paper. Over the past few years, LUXIN has been able to continue growing by strengthening its capacity building as well as mergers and acquisitions, and they have managed to achieve and maintain the largest market share for several consecutive years. Close cooperation between cigarette packaging manufacturers and tobacco manufacturers is a leading competitive advantage, so acquisitions to increase market shares proved to be a relatively feasible approach for enhancing competitiveness. LUXIN has succeeded in acquiring new production capacities, increasing its market shares, and extending operations into printing thanks to its acquisitions of businesses within the same industrial sector.
Over the past few years, LUXIN has acquired several companies including three cigarette pack printing enterprises in 2014, and the remaining 15% of the shares in its subsidiary Fujian Taixing Special Paper. All these developments clearly demonstrate LUXIN’s development strategy of growth through mergers and acquisitions.
The recent reform of the cigarette packaging manufacturing sector has managed to improve the lot of the decentralized cigarette packaging manufacturers in China, and LUXIN was one of the companies that benefited most. It is expected that its strategy of mergers and acquisitions that has brought LUXIN so many dividends as well as sustainable growth will only gather steam in the future.
At a time when cigarette sales in China remain sluggish, LUXIN has been aggressively expanding into overseas markets. After obtaining certification for qualification as a supplier for British American Tobacco, LUXIN has seen its market awareness skyrocket, and has registered sharp growth in exports. So far, the company has successfully penetrated packaging markets in many countries, in partnership with local companies, including PT Djarum, the third largest tobacco company in Indonesia, and Amcor of Australia. In July 2014, LUXIN announced that it had entered the supply chain system for Japan Tobacco International, and is developing a partnership with yet another major transnational tobacco manufacturer, which shows the strong competitiveness of LUXIN’s products. Such successful expansion into an impressive number of overseas markets will certainly mean that the company will pursue this line of development in future.
In 2013, the company exported some US$20.85 million worth of products, but preliminary data for 2014 show that the company’s exports have experienced a massive surge and may have grown by 50% or more year-on-year.
It is clear that Chinese cigarette packaging manufacturers are well prepared to meet the latest tobacco industry developments head-on, both at home and abroad. Their strategy has focused on improving the quality of their products and actively seeking opportunities to enter and grow in the overseas markets by integrating resources of the cigarette packaging manufacturing sector and concerted efforts to pave the way for their greater sustainable development in the future.