Headlines | China's Paper Industry Status: Greater Concentration Of Space, Packaging And Household Paper As The Main Growth Point

China's paper industry was affected by the tightening of the second phase of environmental protection policy. During the period from 2010 to 2015, the paper industry eliminated nearly 40 million tons of backward production capacity. The industry's de-capacity effect began to appear, and the growth rate of paper and board production and sales was released. Slowly, industry supply and demand entered a period of weak balance. The leading companies in China's paper industry are mainly Hong Kong-listed Nine Dragons Paper (2689.HK), Lee & Man Paper (2314.HK), and Sun Paper (002078.SZ) listed on the A-share market. Industry (000488.SZ), Shanying Paper (600567.SH) and so on.

From the industry's overall production and sales data, after the environmental protection policy since 2010, the CR10 of the paper industry gradually increased from 28.70% in 2011 to 39.95% in 2017, while the US paper industry is experiencing environmental protection legislation. After the industry mergers and acquisitions, CR10 has reached about 90%. According to the CR4 data calculated according to the sales data disclosed by each company, the four leading companies in Nine Dragons Paper, Lee & Man Paper, Sun Paper, and Chenming Paper accounted for only 25.34% of the market share in 2017, while the United States In the paper industry, the CR4 was 24% in 1972, and the CR4 in 1984 after 29 years of environmental protection legislation reached 29%. After environmental protection to capacity, some small and medium-sized backward production capacity has been eliminated, the industry concentration has increased, and as the industry leader gradually expands production capacity, we believe that the concentration of the paper industry is expected to further increase. From the current stage of China's paper industry concentration and the industry's leading capacity expansion, China's paper industry is currently in the middle and late stages of industry de-capacity - the environmental protection legislation will further phase out the backward production capacity of the industry, and industry leaders who meet environmental standards will start to expand production. Can increase market share.

From the data of capacity, the top four companies in the packaging paper industry are Nine Dragons Paper, Lee & Man Paper, Bohui Paper and Shanying Paper. Among them, Nine Dragons Paper and Lee & Man Paper are listed on the Hong Kong stock market. They are the two largest companies in the domestic paper industry; Bohui Paper and Shanying Paper are listed on the A-share market. Nine Dragons Paper currently has a production capacity of 13.35 million tons of packaging paper. The company has set up factories in Dongguan, Chongqing, Tianjin and other places in Guangdong. The production capacity is very extensive across the country, firmly occupying the leading position in the packaging paper industry. The second-ranked Lee & Man Paper also has nearly 7 million tons of packaging paper capacity. According to the capacity data of various companies in 2018, the CR4 of the packaging paper industry is only 30.23%, and the CR8 is only 38.92%, and the industry concentration is low.

The market concentration of cultural paper is relatively high. According to the capacity data of each company in 2018, the companies with a larger market share in the industry are Chenming Paper, Jindong Paper, Sun Paper, and Huatai. In addition to Jindong Paper, the other three companies have been listed. Chenming Paper and Sun Paper are the leading enterprises in the pulp and paper industry in China. Chenming Paper currently has production bases in Shandong, Guangdong, Hubei, Jiangxi, Jilin, Wuhan and other places, with an annual pulp and paper production capacity of more than 11 million tons. According to the production capacity data of various companies in 2018, the CR4 of the cultural paper industry is 57.48%, the CR8 is 72.74%, and the CR10 is 76.40%. Compared with other subdivided paper types, the market concentration of cultural paper is relatively higher.

The market competition of household paper is fierce, and the market concentration is relatively low. According to the statistics of Zhuo Chuang Information, the sum of the production capacity of the top 52 enterprises with large capacity in the tissue paper industry only accounts for the total production capacity of the household paper industry. 40.44%, the industry has a large amount of small capacity below 100,000 tons. In terms of production capacity, the top 4 companies in the industry's production capacity are Hengan Paper, Vinda Paper, Zhongshun Jie and Dongshun Paper. Except for Zhongshun Jierou, the other three companies are not listed. Industry leader Hengan Paper is a wholly-owned enterprise of Hengan International. It is engaged in the production of household paper products. It has well-known trademarks such as “Xinxiang Printing” and “Anerle”, and has a paper production and processing base in Chongqing, Hunan and Shandong. The annual production capacity is over 1.4 million tons. According to the company's 2018 capacity data, the CR4 of the household paper industry is only 24.65%, and the CR8 and CR10 are only 30.45% and 32.13% respectively.

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