Contributed by Forest Li, Managing Director, Schawk, Inc.
The Chinese government is engaged in “relentless reform” of product packaging, according to the consultancy Euromonitor International, adding another challenge for ambitious, growing brands. A process that took decades in Western nations – the evolution of more sustainable packaging and associated regulations – has happened in less than a decade in China, with the Package Recycling Master Plan quickly surpassing Western efforts in its effect on all stages of the packaging supply chain.
It is expected to touch every facet of the Chinese packaging industry, which recently has seen 35 percent annual growth. The result: brands are under pressure to master the competing challenges of government regulation, materials technology, consumer preferences and the production demands of sustainable and compelling packaging.
Add in the volatility in commodity prices and a Chinese push for food safety, and packaged-goods companies can find themselves dangerously pre-occupied with practical demands and at risk of losing competitive advantage.
One of the first components of the Master Plan is a set of regulations on food, tea, cosmetics and some beverages. Packaging costs can’t exceed more than 12 percent of a product’s sales price, nor can packaging exceed three layers. And the regulations limit the amount of free space within the package. Not only is the government concerned about pollution, but the regulations also aim to dampen inflation by limiting the cost of packaging materials.
Although the sprawling Chinese economy is known for many lax standards and the evasion of standards by some producers, Western retailers are likely to draw more scrutiny. This puts a premium on the retailers’ capacity to design compelling packaging with less material and with flexible material, which is also cheaper, lighter and very moldable, and can be made re-sealable.
But flexible material requires sophistication in premedia – to ensure accuracy in dielines and colors – and in printing processes – to ensure color-fast inking and brand accuracy in colors.
There are also consumer trends to adapt to. Currently there is a “divergence” in shopper preferences in food product sizes in China. Both smaller single-serving and very large “family-size” offerings are increasingly in demand. Agile brands must adapt their materials to those sizes while staying true to brand values for creative and production.
The Euromonitor International is forecasting “remarkable” growth for packaged consumables in China, across food, beverages and tobacco, as the country’s economic maturing continues. It expects a boom in packaging-related industries, such as premedia and printing, but this trend will also put pressure on those service providers to meet the demands of clients who themselves are acting at the behest of consumers and government regulation. Which premedia providers can execute with quality and consistency? Which printers? Are there consultants with the institutional knowledge and contact network to ensure quality by overseeing this service continuum?
“This law will have an immediate impact on the food, beverage and cosmetic sector, but as more standards are issued, it will affect the entire packaging supply chain,” writes Stuart Hoggard, author of a report on the regulations. “Brand owners, package designers, converters and even retailers bundling products as part of a promotion, will all have to comply.”
Sources: “Country Report: Packaging Industry in China.” Euromonitor International, April 2011. “Discussing Excessive Packaging legislation in China.” PackWebAsia.com, April 6, 2011. “China’s Excessive Packaging Regulations.” PackWebAsia.com, February 10, 2011. “Conference: Understanding China’s Excessive Packaging Legislation.” PackWebAsia.com, January 25, 2011.
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