Paper and Packaging from China
Paper machine at Mudanjiang Hengfeng’s plant.
An elegant looking filter tip and laser printing-enhanced packaging go a long way in establishing brand appeal among consumers – and nobody knows that better than China’s paper and packaging suppliers.
By Thomas Schmid
Chinese cigarette manufacturers look back at a long history of embellishing their products and packaging with garish colors and decorative printing. The practice hasn’t materialized out of nowhere, but is based on a cultural preference. To China’s consumers, visually appealing goods – and in extension their packaging – simply make them more desirable and appear more luxurious. This also applies to cigarettes, and China is awash with a plethora of brands that thrive exactly on that consumer perception. But ornamental tipping papers, inner liners, and vibrantly designed outer packaging also serve clear brand recognition purposes.
Drawing from culture and history to prevail in the present
“Apart from the historical and cultural reasons [behind visually appealing merchandise], abundant and colorful patterns also can help express a brand’s history and positioning much more clearly,” explains Carol Li, sales and marketing manager of Mudanjiang Hengfeng Paper Co. Ltd., whose company has supplied the local tobacco industry since it was founded in 1952. Over the years, the firm, which today has about 2,500 employees, has greatly expanded its tobacco product-related portfolio and today manufactures a broad variety of cigarette papers (including MYO and RYO), plug wraps, tipping papers, and inner liners. A natural progression of the paper making business was of course to also provide in-house design and printing services as value-added services for the company’s clients.
“Elaborate printing makes any cigarette component more attractive and impressive and also suggests a powerful, desirable brand,” Li said. She added it also could be a safeguard against counterfeiting if tipping papers, for example, are embossed or hot-stamped with the brand name.
Innovation to attract future business
While Mudanjiang Hengfeng currently does not produce inner frames and outer packaging, the company boasts extraordinary expertise in handling every other component with resourcefulness and innovation. For instance, apart from offering common aluminum foil papers as inner liners, the company has recently introduced aluminum-free inner liner base paper as the latest addition to its portfolio.
“We developed it to address customer’s environmental concerns, because without an aluminum content this new inner liner type is completely degradable and fully recyclable,” asserted Li, adding the factory’s current “equipment and machinery is most advanced” and included several pulping, paper-making and printing, as well as cutting and perforation lines.
Product diversity for diverse markets
The diversity of its product range has made the company a household name among local cigarette producers. Calculated by sales volume 85% of its customers are located in China. As per the remaining 15%, Mudanjiang Hengfeng exports to numerous Asian countries such as Indonesia, South Korea, Philippines, Taiwan, India, Pakistan, Singapore, Thailand, and Vietnam, and also has made great strides in securing a customer base in Europe (Germany, Poland, Turkey, Greece, Bulgaria, Russia). “But we’d like to further increase our presence in Europe, as it is still much smaller there than in our other markets,” disclosed Li. Another coveted market for the company would be North America, and the United States in particular. “But the US is rather difficult to penetrate, as it is near impossible to comply with the very challenging certification rules enforced by FDA. Yet the US would be a very, very big market for us, not only for our cigarette packaging products but also our cigarette papers, including RYO’s.”
And opening new markets may not just be a matter of the company’s expansion but also of its long-term sustainability. Li admitted that in 2015 total company revenues had declined by 6.8% compared to 2014, and in the current year Mudanjiang Hengfeng expects a slump of another 3%. One reason for that decline might be that – simply speaking – the numbers of cigarette smokers are shrinking worldwide, resulting in slowing sales. “And if our customers are affected, it indirectly also affects us,” said Li.
Established in 2004 and currently employing about 70 workers, Zhejiang Techmay New Materials Co. Ltd. primarily supplies plug wraps, tipping papers, aluminum foil (inner liner), and inner frame cardboard. While competitor Mudanjiang Hengfeng reported revenue losses for 2015, Zhejiang Techmay claims to have enjoyed a revenue increase of almost 5%, according to chairman assistant Zhou You. This might be due to a concerted effort in approaching the still largely untapped African market. While 80% of the company’s sales by volume are still going to Asian countries (including its home base China but also Thailand, the Philippines, and the U.A.E.) and 10% are shipped to Europe, sales administrator Belinda Xiong related during an earlier interview with Tobacco Asia, 10% of all product sales were now headed for Africa.
“And we are planning to develop our business there even more, because Africa is an enormous market,” she said.
Bespoke product development
Offering tipping papers of any thickness and porosity, Xiong stressed that it was the lower price paired with uncompromising quality that helped Zhejiang Techmay in maintaining its markets. Customers also liked the company’s willingness to accommodate even unusual product specifications by “developing bespoke production techniques at a very favorable cost.” Furthermore, added Xiong, placing orders was a simple procedure while the company also would handle all shipping documentation.
“It’s really easy to buy from us,” Xiong insisted. In terms of manufacturing techniques, Xiong said, the company availed a high-tech line-up of equipment like regular printing, hot-stamping, and perforation machines that will satisfy even the most discerning client in search for cigarette and packaging components of the highest standard. Those efforts evidently bear well-deserved fruit: While the company in 2014 enjoyed a total sales volume turnover worth US$10 million, this figure had risen to $12 million in 2015 thanks to stable market development. An estimated figure for 2016 was not provided.
Photo courtesy of Mudanjiang Hengfeng Paper Co. Ltd.
Paper and Packaging from China
Textured cigarette papers by Mudanjiang Hengfeng.
“Packaging is like a work of art”
Both Mudanjiang Hengfeng and Zhejiang Techmay may fall short in the manufacture of high-end softbox and hardbox blanks as well as cartons, but this is exactly one of the areas of expertise of another Chinese company, VE Packaging Technology Co. Ltd., located in Jiangsu province. Only founded in 2010, it is a relatively newcomer to the scene but in this short time has nevertheless already built a solid customer base at home and abroad thanks to its inventive design capabilities and impressive production quality.
“We have our own professional design groups which besides incredible creativity boast rich experience in production technology and thus can turn even the flimsiest customer idea into a design that takes into account the respective brand culture,” said Yana Chen, the company’s sales director. To her, packaging is not simply a piece of printed paper or cardboard but indeed “it must feel like a work of art” and clearly and unmistakably reflect the brand identity.
High-tech effects for product appeal
To carry out the often very complex and color-rich designs particularly in high demand by Chinese and Asian tobacco companies, VE Packaging has invested in a host of the latest machinery (see table 3), including equipment for laser printing, which produces hologram-like effects on laminated papers and foils alike.
Another specialty of the company are metallic looking packaging paper surfaces that exude an alluring iridescence, while it also excels at a process called pearl-lustring, which lends surfaces a smooth-touch, silky, mother of pearl-like sheen. Chen also gave herself particularly proud about her company’s expertise of even producing tipping paper with aluminum bands on which, for example, the cigarette brand can be laser-printed to give it a hologram-like appearance. “It makes that kind of cigarettes very hard to counterfeit,” she said.
Another outstanding product that might potentially appeal to overseas customers are VE Packaging’s ingenious bi-colored (usually gold/silver but other colors are also possible) inner liners and inner frames. An array of state-of-the-art testing equipment to check products on parameters like abrasion resistance, whiteness, stiffness, tension strength, interlamination peeling strength and others ensures that every batch manufactured meets the client’s standard requirements in every point. VE Packaging cited a current annual production capacity of up to 3 million cases for packaging blank and 4,000 tons for inner liner paper.
Seeking and keeping a foothold abroad
With China’s domestic market having almost reached saturation point, competition among Chinese paper and packaging manufacturers has been heating up abroad, where those companies are scrambling to establish and keep their footholds. It is arguably only through continued innovation and product development as described in this article that individual manufacturers will be able to succeed. But while packaging shimmering in all colors of the rainbow or filters featuring holographic silver bands may not be to the liking of the majority of cigarette manufacturers outside of China, sticking with it is by no means compulsory. Even plainer cigarette or packaging components still demand a high level of production standards. And this is where China’s paper and packaging producers certainly have garnered more than enough expertise and technological capability.