Packaging Machinery Industry in China Going through Transformation
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Manufacturers in China are now confronted with a decoupling global supply chain and are urged to go for transformation so as to find their new global market positioning and to be competitive tomorrow.
In the past few decades, China’s manufacturers have been enacting the key to the global supply chain by offering competitive packaging automation equipment to end-users worldwide. However, the eroding cost advantage that China has had over countries in the rest of the world was caused by rising wages, a gradually witnessed labor shortage due to expansion of higher education and fewer workers in the factory, apart from the disruptive impact of Covid and international lockdown upon the global supply chain has compelled them to re-anchor their position in the global market.
What is the Situation in the Packaging Machinery Industry?
In the case of the packaging machinery industry, the manufacturers of which are primarily located in southeastern China and in locations such as Wenzhou, Guangzhou, Shanghai, situations are getting worse and worse for both external factors and own problems of the industry.
Homogeneity Competition
The fact is that most of the packaging machines offered by China’s manufacturers are of quite a rudiment level that there are weak or even no entry barriers. Another fact that makes the matter worse is the lack of copyright awareness and protection against infringement. For example. it is quite easy for a company to get a cartoning machine for its competitor and makes a copy of it now that most of the cartoning machines made in China are of simple and rudimentary structure. The outcome of such a vicious loop is that new competitors keep emerging and launching price wars with cheaper products of almost the same quality, sacrificing to their own revenue expecting to kick other players in the market out of the game.
International Competition
The lack of entry barriers does not only exist at the national level but as well internationally. Manufacturers in countries such as Vietnam and India are step by step taking over the market share of “made-in-China” and thus replacing gradually China as a “world factory”, though it seems to take more course to happen.
An Urgent Need to Take Transformation
The problems faced by China’s manufacturers in the packaging machinery industry have indicated that the demand for smart manufacturing to take transformation and industrial upgrading is becoming more and more urgent. To step out of the vicious loop of price ware, homogeneous competition, and stereotype of inferior quality, the way is to invest more in R+D+I so as to build entry barriers that keep other manufacturers out. However, what would hinder manufacturer are basically the lack of adequate talent, technologies, and auxiliary industries.
What’s Next with Packaging Machinery Made in China?
Within a predictable period, it could be foreseen that manufacturers in the packaging machinery industry who do not attach importance to innovation and dwell on the game of price and copy will be rolled out. While there might come another developing country that takes over China’s position as the “world factory”, packaging machines in China will step into a higher level of market niche and find their new market positioning among the global supply chain.
About the Author
Zixin Yuan – Digital Marketing Coordinator at ÉLITER Packaging Machinery.
ÉLITER Packaging Machinery, a Huaneng Company, is a trademark set to reinforce the international presence of the family business which is going through its third generation. ÉLITER Packaging Machinery is a manufacturer and global supplier of Cartoning Machines, Overwrapping Machines, and Wrap-Around Sleevers.
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