Year in Review: Top News in Chinese Tissue Paper Industry in 2014
China National Household Paper Industry Association
I In the past few years, there were too many investment projects in Chinese tissue paper industry, which were constructed in much too fast pace. With the successive launch of those projects, lots of production capacity was released. In 2014, the unbalance between supply and demand became more obvious, and the market competition became more intense. The overall growth of tissue paper industry slowed down. The elimination of backward capacity, transformation and upgrade in the industry speeded up.
1. The leading companies continued expansion. But the speed was not as fast as before. The planned expansion projects were adjusted or delayed generally.
In 2014, the leading tissue paper manufacturers, such as Gold Hongye (APP), Hengan, Vinda, C&S and Dongshun, all increased their production capacity, but the speed was slowed down. Their projects were delayed in comparison with original plan, except the projects of Vinda.
l Gold Hongye (APP) speeded up the mill construction in Hainan, adding 300,000tpy new capacity. It also added 60,000tpy new capacity in Jiangsu and Hubei respectively. The total new capacity reached 420,000tpy, making its overall capacity in China 1.39 million tpy. The launch plan for another 120,000tpy project was postponed.
l Hengan increased 60,000tpy capacity in its mill in Hunan, making its overall capacity 960,000tpy. The launch plan for another 180,000tpy project was postponed.
l According to its plan, Vinda increased 130,000tpy capacity totally in its mills in Guangdong and Zhejiang. Its overall capacity reached 890,000tpy.
l C&S increased 120,000 tpy capacity in its mill in Guangdong. Its overall capacity reached 445,000tpy. The launch plan for another 60,000tpy project was postponed.
l Dongshun increased 36,000tpy capacity in its mills in Shandong and Heilongjiang. Its overall capacity reached 316,000tpy. The launch plan for another 100,000tpy project was postponed.
l Yuen Foong Yu increased 50,000tpy capacity in its mill in Jiangsu, making its overall capacity 150,000tpy. The launch plan for another 50,000tpy project was postponed.
l Orient Champion had a total capacity of 140,000tpy and it basically reached the balance between production and sales. The original investment plan was postponed. It will purchase parent tissue roll to increase the production.
2. The projects which were invested by big pulp and paper enterprises and social capital in the previous years were launched one after another. The capacity was released. This heated up the market competition and made their own operations difficult at the same time. The number of newly entered enterprises decreased obviously and the enterprises made investment more cautiously.
Owing to the underestimation of their ability in tissue products marketing and brand cultivating, most of enterprise producing other paper grades or from other industries mainly only sold the parent tissue roll after launching their tissue paper projects. They faced difficulty in selling the converted products due to the lack of brand cultivation, and could only get the modest margin. Some of the planned capacity expansion projects were postponed.
l In March 2014, Guangxi Hwagain Group launched its second Andritz new crescent tissue machine with the capacity of 60,000tpy in Ganzhou, Jiangxi. Its overall capacity increased to 120,000tpy.
l Hebei Baoding Yihoucheng launched one tissue machine with the capacity of 25,000tpy in May 2014. The launch of the second one was delayed.
l In June 2014, Shandong Sun Paper launched its first Andritz new crescent tissue machine with the capacity of 60,000tpy for its phase one project. The second tissue machine with the same model will be launched in early 2015. The company had made a “4-3-3” plan——the profit share of FMCG disposable products, such as tissue paper, wet wipes and diapers will increase to 30% in the future.
l In July 2014, Hong Kong Lee & Man started up 2 BF tissue machines supplied by Kawanoe Zoki, with the total capacity of 30,000tpy, in Chongqing. It also planned to increase 2 new crescent tissue machines, with the capacity of 60,000tpy respectively, provided by Voith and Valmet. They are expected to be launched in the first half and second half of 2015 respectively.
l In August 2014, Yunnan Yunjing launched its first Valmet new crescent tissue machine with the capacity of 30,000tpy.
l Chenming Paper was facing big pressure in sales after its two tissue machines, with the total capacity of 120,000tpy, launched in 2010 and 2013 respectively. It has negotiated with the supplier to postpone the delivery of three new signed tissue machines.
l Yinge launched two tissue machines with the total capacity of 120,000tpy in 2012. It mainly sold the parent tissue roll. Its plan to add two more new crescent tissue machines with the capacity of 60,000tpy was postponed.
l In 2014, Tralin increased 150,000tpy new capacity in its Shandong mill, making its total capacity 230,000tpy.
l In September 2014, Guangdong Shaoneng Group announced that it would install an Andritz new crescent tissue machine with the capacity of 30,000tpy in its subsidiary Nanxiong Zhuji Paper. The machine was expected to be launched in 2015.
3. Speed up the elimination of backward capacity, and push forward transformation and upgrade.
The government put more efforts on eliminating backward production capacity. The Ministry of Industry and Information forced some mills to eliminate their backward capacity in groups in 2014. At the same time, the role of market elimination in the tissue paper industry became more obvious. Some of the mills voluntarily shut down the small tissue machines with high energy consumption one after another. In addition, some of small and middle sized companies stopped operation due to the pressure from capital, market, etc.
Forced to eliminate:
l From July to November 2014, the Ministry of Industry and Information published the list of companies in paper industry in three separate groups to force them to eliminate their backward capacity in 2014. There were 54 tissue paper related companies on the list. A total of 420,000 tons capacity was eliminated.
l In September 2014, the government of Dongguan decided to shut down tissue paper companies with the capacity below 50,000tpy by the end of 2015.
l Dongguan White Swan Paper: it will successively get rid of the current forty tissue machines (Type 1575) from 2014 and install the medium and high speed tissue machines.
l Jiangsu Sund Paper: it planned to get rid of all its small tissue machines within 3 years from 2014, and install medium and high speed tissue machines (Type 2800 and 4000).
l Guangxi Huamei Paper: it planned to get rid of hundreds of small tissue machines progressively, and install the medium and high speed tissue machines.
Eliminate by the market:
l In 2014, Xiamen Sinyang Paper, Guangxi Phoenix Pulp & Paper, Fujian Annuo Paper and Dongguan Xuantong Paper, etc. stopped production for their own reasons.
Transform and upgrade
l Hebei Mancheng invested 5 billion Yuan to build the economical and industrial park, with an area of about one million m2, for tissue paper converting and co-generation and circulation of heat and energy. It promoted the green development in every aspect and speeded up the transformation and upgrade.
l Dongshun started to build the integrated heat and gas supply project in Dongping Economical Development Zone. It installed the environment friendly and energy saving powdered coal boiler for producing steam to substitute for high energy consuming small boiler which caused serious pollution in Dongping Economical Development Zone.
l Gold Hongye invested a lot to build solar pv (photovoltaic) power project. It built a solar pv power demo station on the 300,000 m2 roof constructed by colored steel frame in its Suzhou mill. In June 2014, the 20 MW solar pv power project was integrated to the grid and started to generate power. The investment of the project reached more than 200 million Yuan. It can generate 20 million kWh electricity per year, which was equal to one-third of Suzhou mill’s annual total power consumption.
4. The wood pulp price remained stable. Straw pulp had no price advantage any more. More production lines using straw pulp were stopped.
The factors such as the increased labor cost led to the difficulty in straw collection and cost raise. And the environmental regulations became stricter. In this case, there was no big difference between the price of straw pulp and wood pulp. The difference in price was only hundreds of Yuan in 2014. So the straw pulp had no price advantage any more. In the period of 2004-2005, the capacity of toilet tissue made by straw pulp reached 400,000tpy in northwest region. Now most of those companies have been closed. The biggest tissue paper company in the northwest is Bauhinia Paper. It eliminated 25,000tpy capacity of straw pulp tissue paper in 2013. It only has about 50,000tpy capacity of straw pulp tissue paper at present.
Most of the tissue production lines using straw pulp in Henan were stopped because of high collection cost and strict environmental regulations.
In order to cope with the market competition, the enterprises increased channel cost and their profitability declined than 2013. Here are some examples of listed companies:
According to the half year reports in 2014, the profitability of Hengan International, Vinda International and C&S all declined in different degrees over the same period of 2013.
l The revenue of Vinda International rose by 11.1% than the same period of 2013 to 3.68 billion HK Dollars. The gross profit rose by 13.3% than the same period of 2013 to 1.086 billion HK Dollars. The net profit ratio was 6.0%, down 2.6 percentage points than the same period of 2013. The profit attributable to equity holders declined by 21.8% than the same period of 2013 to 222 million HK Dollars. The basic earnings per share declined by 21.5% than the same period of 2013 to 0.223 HK Dollars.
l C&S s revenue declined by 0.92% than the same period of 2013 to 1.129 billion Yuan. The main business revenue rose by 0.37% than the same period of 2013 to 1125.8206 million Yuan. The net profit attributable to the parent company owners declined by 55.65% than the same period of 2013 to 36.1559 million Yuan.
l C&S launched C&S LOTION super mini handkerchief tissue, which feels soft, moist and smooth. It has obtained two national patents.
l Nepia launched moisturizing handkerchief tissue with the function of moisturizing and skin care. The product is suitable for women, patients who catch cold/ rhinitis, skin sensitive persons, etc.
l Vanov Group launched unbleached bamboo pulp facial tissue and toilet tissue. It focused on the promotion of square toilet tissue using together with sanitary napkins.
l Guangdong Shaoneng and Sichuan Yongfeng planned to move in the unbleached bamboo pulp tissue paper market.
l Tralin received relatively good result in promoting unbleached straw pulp tissue paper.
IV Tissue paper enterprises expanded diversified development patterns
1. Vinda enhanced brand cooperation with SCA
In July 2014，Vinda International announced to sign an agreement with its largest shareholder SCA. Vinda acquired SCA s commercial operating business in mainland China, Hong Kong and Macao, with the total cost about 1.14 billion HK Dollars in cash. After the completion of the acquisition, Vinda will also obtain the rights to use SCA s brand Tempo in China mainland, Hong Kong and Macao perpetually and exclusively with free patent fee. Vinda will also acquire the ownership of trademarks Dr.P and Sealer in China mainland, Hong Kong and Macao, as well as the exclusive right to use SCA s global brands TORK, TENA, Libresse and Libero in China mainland, Hong Kong and Macao. Vinda Group will be responsible for the brands operation in China mainland, Hong Kong and Macao, while SCA will also continue to provide support for product innovation and professional technology. New business integration will help Vinda to expand disposable hygiene products business, and improve the group s overall market share through different market positioning and marketing strategy of each brand.
2. Dongshun Group increased investment in disposable hygiene products
3. Orient Champion moved in sanitary napkin market
In 2014, it increased new sanitary napkin production line in Wujiang Jiangsu. Mia sanitary napkin sold well in east China market.
V A variety of sales channels coexisted. The enterprises chose the appropriate channels to open up the market according to their scale, brand positioning, regional market, consumer groups, etc. Modern channel and traditional channel were still the mainstream marketing mode. Although the share of online sales channel was still very small, it’s a trend of future development and the enterprises were actively cultivating this channel.
VI The promoting methods became diversified. The enterprises made many attempts in social marketing, fans marketing, Wechat marketing, implantation marketing, etc.
l Hengan’s Mind Act Upon Mind Tea Classical Sixiang series tissues were implanted in the show “12 Dishes of Xie Tingfeng”. Hengan organized the Tea Classical “Sixiang Heart World” activity and “Pick upGold Coin with Wet Tissues” game together with Tencent, and Tea Classical Sixiang “Wet Tissues Creative Ideas Competition” which attracted millions of netizens to click and participate.
l Vinda became the title sponsor of the show “Fashion Kids World”. It launched the second season of the “Vinda Ultra Strong All People Witness China Bus Tour” activity. By traveling in 14 cities in China, it promoted the Vinda Ultra Strong series tissue paper through diversified interactive activities, such as “Cute Baby Challenges Resilience Machine” funny video and parent-child wedding dress show.
l Gold Hongye signed with pop star Jimmy Lin and his son Kimi as the product image spokesperson of Clear Wind Ultra series tissue paper products, and conducted a series of TV and network promotion activities.
l Yihoucheng signed with Olympic champion Liu Xuan to be the spokesperson of its Nihao tissue paper and increased brand publicity on the media such as TV.
VII The growth process of leading enterprises such as Hengan andVinda, from starting up to success, is epitome of the development of China tissue paper products industry. These enterprises played an active leading role in promoting the industry progress and made an important contribution to the industry development.
l On December 18, 2014, Hengan Group organized the 30 years anniversary press conference with the theme of “Love, Change Life” and the 200 million Yuan charity donation ceremony. Hengan started the third management reform. It constructed the supply chain integration platform together with the international giants such as IBM and SAP, and designed brand new supply chain integration platform targeted at the trends of large data sets, O2O online marketing and mobile technology, etc. It promoted the visualized, controllable and sustainable development of Hengan’s supply chain. This once again made Hengan industry’s attention.
l Go beyond the dream, win the future together. Vinda Group will soon celebrate its 30 years anniversary. It is the one of the earliest tissue paper manufacturers in China. After 30 years development, its products covered both tissue paper and disposable hygiene product industry and it became the leading manufacturer in China with multiple brands.
VIII Theexport trade of tissue paper industry became active. The volume and value of import and export trade both increased. The export price of toilet tissue increased substantially. In the first three quarters of 2014, the import volume and value of tissuepaper products increased by 5.15% and 11.1% respectively than the same period of 2013. The export volume and value rose by27.82% and 87.83% respectively.
IX Competition between Chinese and foreign equiment suppliers became intensified.
1. Imported tissue machinery suppliers continued to promote localization, maintaining their territory in China market
l The first DCT tissue machine cooperated by Kawanoe Zoki and Valmet will be launched soon.
In July 2014, the first DCT60 tissue machine cooperated by Kawanoe Zoki and Valmet finished the preassembly at Kawanoe Zoki (Jiaxing) Co., Ltd., and was expected to be put into operation in Shandong Dongshun Group in the first half of 2015.
l Voith’s China training center opened in Kunshan. Its steel yankee cylinder production line invested in China was launched and started to supply cylinder to the customers.
In April 2014, the China training center of Germany Voith Group was completed in Kunshan Jiangsu. This training center is the largest one of Voith outside Germany, and aims to train local personnel with professional skills and comprehensive management ability. It is one of Voith’s strategies to be further rooted in China and promote the process of localization.
In 2012, Voith invested in building the steel yankee cylinder production line in China. The production line was launched in 2013 and has an annual capacity of 12-15 cylinders. In 2014, two cylinders had been delivered, with one in China and one in Indonesia.
l Valmet strengthened service in China market.
In December 2014, Valmet announced that it would increase investment in the two service centers in Waigaoqiao and Guangzhou. It would further improve the converting ability of the roller coating and other parts.
l Andritz will launch steel yankee cylinder production line in China.
In 2014, Andritz strengthened the manufacturing ability in China and built steel yankee cylinder production line in its Foshan factory. It built new plant with an area of 4,200 m2 and annual production ability of 10-15 steel yankee cylinders. The largest diameter of the cylinder could reach 20 feet. By the end of 2014, all the converting and surface treating equipment had been installed in the plant. Most pieces of the production line are in the process of debugging and test running. The entire production line is expected to be put into operation in Feb. 2015, which will start the localization process of key components of Andritz’s tissue machines.
2. Homemade tissue machines developed steadily and achieved gratifying results
l In 2014, Weifang Hicredit had an outstanding performance. It delivered 19 vacuum cylinder tissue machines in total, which were launched respectively in Gaotang Luyin Environment Protecting Technology Co., Ltd. (Tralin, 15 machines), Jiajiang Huifeng Paper (2 machines), Sichuan Mianyang Chaolan (1 machine), Yunnan Hanguang Paper (1 machine). The trimmed width of tissue machine is 2820-2850mm, speed is 900m/min, and production capacity is 10,000tpy.
In Oct. 2014, Weifang Hicredit finished the pre-installation of HC-1200 new crescent tissue machine, which was approved by its British customer Fourstones Paper Mill. This marked the formal entry of Weifang Hicredit into the European market. The trimmed width of the tissue machine is 2750mm, speed is 1200m/min, and production capacity is 56tpd.
l Four vacuum cylinder tissue machines of Baotuo were put into operation respectively in Hebei Jinguang Paper, Zhejiang Jingxing Paper, Guangdong Piaohe Paper and Nanning Jiada Paper. The trimmed width of tissue machine is 2660-2860mm, speed is 600-800m/min, and production capacity is 8000-12,000tpy.
l Two new crescent tissue machines of Shanghai Qingliang were put into operation in Baoding Chenggong Paper. The trimmed width of tissue machine is 2850mm, speed is 1200m/min, and production capacity is 18,000tpy.
l One new crescent tissue machine made by Liaoyang Allideas was put into operation in Hubei Zhenchen Paper. The trimmed width of tissue machine is 3600mm, speed is 900m/min, and production capacity is 15,000tpy.
l The scientific and technological achievements of TM2818 new crescent tissue machine of Gold Sun Machinery passed experts evaluation. The trimmed width of the tissue machine is 2860mm and speed is 1600m/min. It adopted single layer hydraulic headbox, new crescent former, vacuum press with large diameter, steel yankee cylinder with large diameter, etc. Gold Sun Machinery overcame the technological difficulties such as the uneven fiber interweaving, low dehydration and low paper sheet drying efficiency.
l The new crescent tissue machine which is suitable for the upgrading of small and medium sized enterprises was developed successfully in northeast China. This kind of tissue machine has trimmed width of 2880-3900mm, speed of 400-450m/min and production capacity of 18-24tpd. It has the characteristics of low energy consumption, high performance price ratio and adaptability to multiple pulp categories. It became another choice for the development of small and medium sized enterprises.
3. Domestic converting and packing machinery kept on improving international competitiveness
In 2014, domestic converting machinery suppliers strengthened the R&D efforts. They met the needs of domestic market and improved the international competitiveness of homemade machinery through the design concepts such as raising speed and adding multiple functions in one machine.
l Baosuo launched YH-PL fully automatic draw-out facial tissue machine, with trimmed width of 2900mm and speed of 150m/min.
l Dechangyu launched DCY60104-600 fully automatic tissue roll production line, with speed of 550m/min.
l OK Machinery launched OK-1860/2860/3600 automatic folding machine for plastic pack facial tissue, with the speed of 170m/min. It also launched multi-functional tissue roll packing machine with double feeding channels, which can pack single, two or four rolls of toilet tissue and kitchen tissue.
l Jumping launched paper napkin embossing and folding machine with double feeding channels and the speed is 300m/min.
l Onepaper launched OPR-120 fully automatic plastic pack facial tissue packing machine, with the speed of 120 packs/min.
l Soonture launched double feeding channels plastic pack tissue bundle packing machine, with the speed of 40 packs/min. It also launched tissue flat roll bundle packing machine, which can switch between flat roll, round roll with core and coreless round roll. That makes the machine usable in three different modes.
l The scientific and technological achievements of SDW2516 rewinder with single bottom roller of Gold Sun Machinery passed experts evaluation. The rewinder has trimmed width of 2480mm, adopts the technology of unwinding rack without shaft, central torque control, solid chuck, single bottom roller, etc. It overcame the technical difficulties such as paper defects on the rewinding surface and separating different tissue rolls after cutting.
X CNHPIA (China National Household Paper Industry Association) broadened and deepened its service, used new media, organisedspecialized activities, strengthened the cohesion and activity of the association and promoted the industry progress and development.
l In June 2014, CNHPIA opened its Wechat platform, which further strengthened its communication with industry enterprises, facilitated the enterprises’ fast and timely understanding of CNHPIA activities and dynamic industry information. By the end of 2014, the fans on Wechat reached more than 5,000 and the reading of some articles reached over one million times.
l On July 3, 2014, the “Green developing, transforming and upgrading, promoting the sustainable development of Mancheng-Huabei tissue paper production base” summit which was organized by the government of Mancheng county, Baoding, Hebei province, and sponsored by CNHPIA, was successfully held in Baoding.