Second Corrugated Industry
AICC Members Land in Beijing
Participants in AICC's Corrugated Industry Study Tour to China, tired but enthusiastic, arrived in Beijing Saturday, March 24, to begin an eight-day tour of China's cultural landmarks, economic muscle and corrugated and related manufacturing capacity. The 29-member group departed Los Angeles International Airport on Friday, March 23, and is making stops in Beijing, Quin'an, Tianjin, Guangzhou and Dong Guan City, Shenzhen, and ending the trip in Shanghai.
The first full day of the trip - Sunday, March 25 - was spent sight-seeing in Beijing and surrounding areas. The group first traveled to Badaling, about 50 miles north of the city, to visit The Great Wall of China. Sarah Chang, our Chinese guide, discusses various aspects of Chinese life: education - which is rigorous and competitive for the best schools; social policy - the one-child policy has now been relaxed to two; and real-estate prices - about US$ 300 per square foot for high-rise condos being built in Beijing suburbs.
Once at the Wall, Sarah tells us it was built beginning in 600 BC and extends, in various sections and pieces, for nearly 4,000 miles across the northern provinces of China. It is one of the Seven Man-Made Wonders of the World. The day of our visit, being a Sunday, the place was a mass of people - half locals or world tourists like us and the other half aggressive vendors of various kinds of t-shirts, baseball caps, books and post cards. Their bull-dog approach prompts many in the group to consider job-offers for corrugated sales back home. So we bought the t-shirts and moved on to our next stop, The Forbidden City and Tiananmen Square.
The Forbidden City covers 176 acres in the heart of Beijing and for centuries served as the imperial residence for China's dynasties. The complex contains a reputed 9,999 individual rooms, a good many of which were said to have housed the 3,000 some concubines for the emperor and his court. But that is another story. Unfortunately for us we cannot visit many of the public areas because they are under extensive renovation, part of an Olympic face lift going on all around the city.
Tiananmen Square is said to be the largest public plaza in the world, and we believe it. The day of our visit it was jammed with locals enjoying a Sunday outing and tourists taking pictures of the mausoleum of Mao Tse Tung and the China State Museum, both of which are also closed for renovations anticipating next year's Olympics.
We close the day with a traditional dinner of Peking Duck at Chef Dong's Peking Duck restaurant. We are happy that the restaurant is not closed for renovations in anticipation of next year's Olympics. We'll begin the business portion of our meeting on Monday, March 26, with a briefing from US Embassy officials, and then it's off to Quin'an for a tour in Inpack Delta Packaging. More to come.
-- Steve Young
China Economic Update, Plant Tour on First Day's Agenda
AICC's China Study Tour participants heard from the United States' Embassy's Commercial Attache on current economic conditions and trade issues before heading to Qian'an for its first plant visit of the tour.
Brian Buckley, President of Brian Thomas Display & Packaging and Chairman of AICC, welcomed members to a breakfast meeting and introduced David L. Gossack, Commercial Attache for the US Embassy in Beijing, who outlined what he said were four major forces influencing China's growth:
First, the transition from a tradition-bound, Confucian culture to world power, evidenced by the way simple business exchanges are surrounded by courtesies and protocol.
Second is the transition from Communism to a Socialist, market driven economy. The political system is still one-party rule, and rights which we take for granted in our capitalist system - such as the right to private property - are still being debated.
Transition and contrast from rural to urban economy. Although 450 million people in China live in its cities, where there is a rapidly growing middle class, there are still 850 million people living in the countryside, where the per capita income is only about $400 per year.
Finally, China is emerging from an isolated economy to a world economy, having joined the World Trade Organization in 2001. Today China is the fourth largest economy in the world and has surpassed the United States as the world's leading trading nation. China is the largest trading partner for many countries in Asia, for example, a trend that will only continue to grow.
Gossack said that China's economy will continue to grow, although not as rapidly. The government is trying to control growth by limiting lending, which economists consider a positive step due to the reported large number of nonperforming loans in China - estimated to be as high as 40% of all outstanding loans.
Gossack was optimistic that North American trade relations with China will improve. He cited US exports to China have risen 35% since China joined the WTO, up to $55 billion last year. This excludes exports of services, which he estimated to be $15 billion or more.
The group had an opportunity to ask questions, and many of these focused on ongoing efforts to level the playing field between US and China. Hap Perkins, CEO of Unicorr Group, expressed his opinion that the US government has to get serious about enforcing some of the trade agreements currently in place, a sentiment which everyone shared.
Inpac Group: A Very Large One-Stop Shop
AICC's China Study Tour group rode about three hours northeast of Beijing Monday to visit Inpac Group, an international independent producing high-end folding carton, set up boxes and corrugated packaging for a host of multinational consumer brand items. The company was founded in 1992 by Mr. Guo, Chairman, and it has since grown to become a major player serving companies such as Samsung, Motorola, NEC, McDonalds and Master Foods.
On the way we were briefed by Winston Zhu, Marketing Manager for Inpac, and Melvin Yang, Supply Chain Manager, on Inpac's operations and the general corrugated market in China.
Our first indication of Inpac's hospitality first appeared as a police escort which appeared at the offramp of the freeway all the way to a lunch hosted at a local hotel. There the group was greeted by the mayor of Qian'an and led into an elaborate dining hall. After welcoming us with several toasts and a traditional Chinese lunch, Mr. Guo and Chief Executive Officer Henry Loo briefed us on the company's structure, core values and specialty products.
The company has folding carton, gift box, corrugated and preprint operations, molded pulp tray, fulfillment and metal can operations in three major areas in China: Qian'an, Guang Dong province and Tianjin. Inpac is a large printer of user manuals for cell phone manufacturers. In addition, the company also has operations in India, printing user manuals and making gift boxes.
The group first toured the litho printing operations, where we had to don protective gear for the "clean room" environment. The company has eight Heidelberg presses, plus specialty gluers and die cutters from Bobst and Thompson. We also visited a folding carton and set up box assembly operation, where about 200 workers, all young women, were assembling cell phone packaging for Motorola.
On the corrugated side, the company has Hycorr die cutters and is planning a major upgrade to its corrugator. A Conprinta pre-print machine was crated awaiting installation starting next month.
Like many companies in China, Inpac provides housing for most of its workers. We were shown the construction of new buildings where up to 1800 workers would live.
To be continued.
High-Tech Image, Hand-Labor Reality
AICC's China Study delegates took a detour away from packaging operations on the second day of the tour to focus on some of the consumer goods industries which supply part of China's huge export stream.
The group traveled to the Tianjin Economic Development Area, or TEDA, in the port city of Tianjin. Tianjin has 10 million people and is located about two hours east/northeast of Beijing. There we visited Successer Artware Leather Products Limited, which produces cell phone cases and accessories exclusively for Motorola and Nokia. Unfortunately, a planned trip to Motorola's major facility in Tianjin was canceled at the last minute.
We were ushered into the company's conference room and briefed by Alan Wang, the company's operations manager. As the principal supplier to Motorola and Nokia, Successer is in what Mr. Wang called the "fashion lifestyle" business which targets a young, mostly female consumer in the 25-35 age range. The company has a sophisticated design center which works with the cell phone makers to develop concepts, prototypes and market research.
Behind it all in this facility are 300 employees, mostly young women, producing 1.5 million units every six months. They make the "in-box" pouches and cases shipped with cell phones and the "out-of-box" accessories. Due to sensitive nature of cell phone marketing and product releases we weren't permitted to take any product shots, but the attached pictures show the kinds of fabricating and assembling operations at Successer, illustrating China's competitive advantage in labor.
Next stop: Guangzhou in the south
In Guangzhou, Delegates Visit High End Litho Print, Laminating Operation and Nine Dragons Paper
We arrived in Guangzhou Tuesday evening and were on the bus sharp at 8:00 a.m. Wednesday. Today we're set to visit Main Choice Printing and Packaging and Nine Dragons Paper Mill in Dong Guan Province.
The tour starts with GeFei Lei, principal of Cynergy Global, briefing the group on the economic characteristics of Dong Guan province, which is now dominated by computer and toy industries. The first stop is Main Choice Printing and Packaging, a high-end litho printing and laminating operation about an hour and a half south of Guangzhou. Stephen Wong, Global Marketing Manager, briefs the group and we tour the facility. The company has a narrow corrugator - about 1.5 meters wide, or 63 inches - and a primitive but efficient single facer and sheeter for the laminating operations. The bulk of its work, however, is in litho printing - top sheets and commercial printing jobs such as user manuals, greeting cards, books and games.
Following Main Choice we head to Nine Dragons Paper and its mill complex in Mayong Town, Dong Guan Province. The Nine Dragons complex is the most concentrated containerboard production site in the world. There we meet with Mr. Ming Chung Liu, the Deputy Chairman and CEO, who hosted us for lunch and then a briefing in the company's headquarters conference room. Chinese containerboard capacity is of keen interest in North America and the group listened attentively. Mr. Liu said Nine Dragons will be increased to 5.35 million tons by June 2007, with projections of 7.75 million tons by June of 2008. The company produces linerboard, high performance medium and coated duplex board for folding carton at the Dong Guan facility.
Next Stops: Shenzhen and Shanghai
Members Wrapping Up Trip in Shenzhen, Shanghai
Old Chinese proverb says "one picture worth a thousand words," and with that piece of advice the attached photos will start our wrap up of AICC's Second Corrugated Industry Study Tour to China. Our tours at Brilliant Circle Group, printing and converting operation in Shenzhen area, the visit to the Sino-Corrugated Show and Eterna Machinery in Shanghai illustrate that China's rapid economic growth and growing corrugated demand are attracting the best of western technology while also allowing ample room for home-grown suppliers.
Our first night in Shanghai, the "North American Delegation" of AICC members was hosted by Reed-Huayin and Sino Corrugated for a reception and dinner. Members joining the study tour group at the reception were Justin Hill of Lawrence Paper; Larry and Ann-Marie Cooper of C&B Corrugated; Barry Silver of Terrace Paper; Fred and Nan Harrison of Hycorr Machine; Ken and Linda Anderson of the Haire Group; Tom Phillips of Bobst Group, John Cheng of Brausse, John Bird of JB Machinery and many more. Robby He, managing director of Reed-Huayin Media, addressed the group and thanked the study tour for making the Sino Corrugated Show one of its stops on the tour.
The Sino-Corrugated Machinery Show occupies three halls at the New Shanghai Exposition Centre and 23,000 square meters of exhibits. There are many US-based AICC member companies represented here, including in part, Automatan, Geo. M. Martin Company, JB Machinery, Alliance Technical Services, US Corrugated Machine, Hycorr Machine Co., Haire Group, CUE, Sun Automation, Goetsch International, Dicar, MarquipWardUnited and many others.
On Saturday, March 31, we toured Eterna Machinery in Shanghai for a look at a local Chinese machinery maker. Jason Chen, plant manager, lead us around for a look at the machining and assembly operations for the company's flat bed die cutter and specialty folder gluer lines.
© 2012 Association of Independent Corrugated Converters
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