Post-processing Trends of Modern Packaging Enterprises Mechanized Automation

The second quarter of the first quarter turned weaker. “As we understand the situation, companies generally reflect that in the first quarter of this year, whether it is order sales or production, are quite good, better than last year, but the second quarter is not alright, orders are down, The price of raw materials went up.” Li Zhiwei described the packaging and printing companies’ personal experience in the first half of this year.

Inquiring into the reasons for the downturn of corporate orders in the second quarter, the reason is simple: “The upstream companies have been produced, and the packaging companies’ orders have also been followed,” said Li Zhiwei.

The China Manufacturing Purchasing Manager Index also confirms this situation. The National Bureau of Statistics announced in June that China's Manufacturing Purchasing Managers Index (PMI) was 50.9% in June, which was lower than the previous month by 1.1 percentage points and fell for three consecutive months. This index is the lowest level since March 2009, showing that China's manufacturing industry is still growing overall, but the growth rate has shown signs of slowing month by month.

On July 13, the data released by the National Bureau of Statistics in the first half of 2011 on macroeconomic operations in China further confirmed the weakening of people’s willingness to spend.

Data show that the total retail sales of social consumer goods in the first half of the year were 8583300 million yuan, a year-on-year increase of 16.8%, and the growth rate was down 1.4% from the same period of last year. The data also shows that in the first half of the year, China's GDP grew by 9.6% year-on-year. Before and after the comparison shows that in the first half of the year, the per capita income growth rate of urban residents in China is slower than the economic growth rate.

As prices continue to rise, inflationary pressures increase, affecting residents’ willingness to spend. Since the actual disposable income of residents cannot keep pace with economic growth, people will tighten their money bags. According to a depositors survey released by the central bank recently, 85.8% and 83% of urban residents in the first and second quarters respectively tend to save.

When the overall consumer demand of the market is declining, it will inevitably lead to a decline in the production of product manufacturers, which will in turn affect downstream packaging and printing companies. Therefore, it is not surprising that orders for packaging and printing companies decreased in the second quarter.

There is a single company that does not dare to take over and does not make money. The rise in raw material prices and rising labor costs are two major factors that affect the packaging companies' second-quarter operating conditions.

For packaging and printing companies, packaging paper and ink are their main production materials. Since 2011, the prices of packaging paper and ink have been rising. "The company did not expect that the price of raw materials would rise so sharply. But companies must also consider profit, make money, and not lose money," said Li Zhiwei.

Why can't we purchase more raw materials under the premise of reducing costs? According to Li Zhiwei, packaging and printing companies are different from newspapers and print enterprises, books and magazines, and enterprises. Books, newspapers, enterprises, and newspapers and print enterprises can purchase a large number of papers of the same type at once, and packaging companies cannot. Because packaging companies are doing orders one place at a time, companies do not know what papers to use for the next order, so they cannot “stock up” raw materials in large quantities in advance.

Especially in the second quarter, for some companies, the orders were there but they did not dare to answer because the orders meant a loss; even if some companies took orders, they would only make a living and drink for a long time. Li Zhiwei said: "This phenomenon is not only in small and medium-sized enterprises, but also in large companies." According to reports, a large-scale packaging and printing company in Guangdong said that in the first half of this year, the company "was busy for a long time and did not make money."

In addition, packaging and printing companies are still faced with personnel loss. Since companies need to cope with rising prices of raw materials such as paper, ink, and energy, and also control the overall operating costs of enterprises, it is difficult for companies with low profits to pay more money to hire high-skilled personnel at high salaries. This has resulted in some high-skilled talents. Can not enter the packaging and printing companies, and will not "stay" in the non-earned business.

The profitability of some enterprises was lost to the bank's one-year interest rate. According to reports from Shanghai International Printing Week, the average profit rate of the top 100 printing companies in Shanghai was 10.28%, and the average profit rate of Shanghai printing companies was 8.39%. This is still a fairly good performance in the printing industry.

If a packaging company can have a 10% profit margin, it is simply an unattainable "sweet life." Li Zhiwei said: “The profitability of general packaging companies is also between 2% and 3%, and some are even lower. Nowadays, companies are hard-working.”

Today, the profits of packaging and printing companies are not much higher than those of books, magazines, enterprises, newspapers and enterprises. Taking the performance of some listed packaging companies in 2010 as an example, the announcement shows that Zijiang's 2010 revenue increased by 24.79% year-on-year, and net profit increased by 3.73% year-on-year; Hexing Packaging's 2010 revenue increased by 71.68% year-on-year, and its net profit was Increase 5.85%. According to industry sources, the drop in profit of several PRD companies last year was also very alarming.

As it is a meager profit industry, packaging and printing companies, like those of book printing and newspaper printing, are also trapped in a “quantity of increase in profits and decrease in growth” cycle, coupled with inflation and the upward pressure on labor costs, which will have been originally profitable. The company is almost forced into a corner. Li Zhiwei said that many business owners are now saying that "doing business is too hard to do it."

Some companies evacuated the packaging market two years ago, once the industry insiders concluded that carton packaging companies, if you do not sell 100 million yuan, they did not make money. It is understood that there are packaging printing companies in the annual sales of 56 million yuan, in the sale of companies, because they can not maintain it.

Domestic packaging companies are still the case, then some foreign companies investing in the country are even more unable to withstand the "immortality" of low profits and reluctantly "cutting love".

Li Zhiwei introduced that in the first half of this year, a well-known foreign-funded company sold a number of its companies in China and withdrew from the packaging industry. The reason for selling was not to make money. It is understood that this well-known company develops, produces and sells personal care products, paper towels, packaging solutions, publication paper and wood products in dozens of countries.

After the international financial crisis, there were newspapers, magazines and enterprises in the country, and newspaper companies and printing companies wanted to enter the packaging and printing market. What is the situation now? Li Zhiwei said that in recent years there have been books, magazines, and enterprises converting to packaging and printing, but there have been few successes. Now, newspapers and Indian enterprises also have to do packaging and printing. He introduced that in the first half of this year, there were one or two powerful newspaper printing enterprises that wanted to expand their business to do packaging printing. After many consultations and investigations, they learned that the current situation of large-, medium-, and small-sized packaging companies has become “water”. Too deep.

Is packaging companies really not making money? Nor is it. "To do the same product, some companies can make money, and some companies can earn a little, and some companies do not make money at all, and sometimes even lose money." Li Zhiwei said: "The key depends on whether the company has unique skills."

The post-processing trend of mechanized automation for existing packaging companies, even if it is located in a small factory in Mohe, northeast, or a business owner who wants to build a packaging plant in Chengdu, Sichuan, they first need to ask the machine to use several people when purchasing machines. Whether all processes can be achieved can be produced by machines. Li Zhiwei emphasized in particular: "Now, all large, medium and small enterprises, all their post-processing operations are moving toward mechanization and automation."

In the post-press processing equipment, the die-cutting machine is an important equipment. In the past, the die-cutting machines were all manually operated. Now packaging companies have emphasized the need to buy die-cutting machines with waste.

“The increase in labor costs has prompted the packaging companies to mechanize the processing of post-processes, and has also promoted the 'transition' of companies in technological transformation. In the past, post-press printing was a tactic of the sea, and now the concept of companies is to use as little as possible. This is the packaging. It is a good thing for a printing company to take a development direction," said Li Zhiwei.