Asia: The fastest growing packaging market in the world
Wong Tsz Hin
Asia Pacific Food Industry
Summarizing the Asian packaging market trends in one column is not an easy task. Asia is characterised by a wide spectrum of markets. On one end, there are the developed countries like Singapore, Japan and South Korea, where packaging markets are mature and behave very much like that of North America. On the other end of the spectrum are the developing economies like Laos and Myanmar, where purchasing power is low and packaging is only required to fulfil its basic functions. In between, there are fast growing markets like China, Indonesia and Thailand.
One common trend: plastic, in particular polyolefins, is the prominent packaging material
China is the world’s top polyolefin consumer, a volume mostly supplied by South East Asia. Sourcing for plastic is carried out between the 14 member countries of the ASEAN (Association of Southeast Asian Nations) that allows trade at zero import duty. The China-ASEAN Free Trade Agreement (CAFTA) also offers zero import duty on most goods including plastics and since it was implemented in January 2010, has helped boost trade in the region significantly.
The principal motivation behind the prevalence of plastic is cost, as consumers in developing countries place this criteria at the top of their requirements.
As both China and Southeast Asia continue to develop their economies, the ever-increasing demand for polyolefins and the ease and affordability of trade is expected to see polyolefin imports to China continue to boom, and this will in turn boost the plastic packaging industry in Asia, which is already seeing high growth rates.
In the plastics array, flexible packaging is gaining market share
Asia will be the leading market for flexible packaging in terms of value by 2016. Its major advantage is that it is lightweight and thin, so more cost effective. For the consumer, it is easier to compact and dispose of than a rigid package. Another consumer benefit of flexible packaging is that it is more often than not re-sealable and maintains its content crisp and dry, a major concern as the Asian climate is humid.
Packaged food is increasingly popular in the developing countries
The number of women joining the workforce is increasing, time is accelerating, and cooking is no longer considered a priority in the women’s daily routine. China has taken the lead on the baby formula milk market, as mothers give up breastfeeding. The long shelf life packaged goods are gaining market share, as they are more convenient to purchase and store than bulk. Rice, a staple food in the area, is also evolving in its packaging. The launches of packaged rices have soared, a significant share of which are microwaveable.
Recycling is not a critical issue yet
As the region’s developing countries favour cost over environment, consumers are not ready to pay the premium that comes with recyclable materials. In the mature markets, re-using packaging is motivated more by aesthetics than by environmental considerations. Consumers are attached to brands and image. They will readily re-use packaging that displays the brands they associate themselves to. In other cases, packages are disposed of after use.
Food traceability concerns
China is the stage for a long list of food contamination crises, from melamine in baby formula milk to bacteria-laden pork that glows in the dark and repackaged cooking oil siphoned from the gutters outside restaurants.
Asian consumers have become wary of traceability, in particular in regards to China-sourced products. In March of this year, Beijing elevated the political status of the country’s food and drug watchdog, in the hope that consumers would learn to trust the products produced within China.
Overall Southeast Asian countries are export oriented and need to maintain a high level of consumer confidence and make sure that their products meet the standards of their export destination.
Automated versus labour-intensive lines
While automated lines have been prevalent in the mature markets for a while now, hiring local labour is still the rule in developing markets. However labour costs are increasing in China, Malaysia, Vietnam and Thailand, so the manufacturers are gradually integrating modular systems that carry out part of the packaging process automatically.
According to a report by the International Federation of Robots (IFR), Asia Pacific is the most promising market for industrial robots. The combined effects of the harsher competition due to the ASEAN free trade agreement, the volatile raw material prices and increasing consumer demand pave the way for exciting business opportunities for automated packaging equipment manufacturers.
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