China has developed into a global super power with giant strides. According to estimates of the German professional association VDMA Chinese machinery manufacturers took the lead for the first time in 2008. The packaging industry has also posted stable growth for years and countries such as India and Vietnam hold exciting potential.

Mechanical engineering in China generated sales worth EUR 271 billion in 2008. In this ranking China is followed by Germany with sales of EUR 233 billion and the USA with EUR 231 billion. According to VDMA estimates machinery and plants worth EUR 1.6 trillion were produced worldwide last year. At present, it is assumed that global sales will drop by about 1 tenth this year. For Western Europe turnover is expected to fall by 13 % and for Japan by 25 %. In the USA a 15% decline can be expected.

While consumption habits and, hence, the demands made on packaging, are changing rapidly in China and the standard of living is rising continuously the packaging industry is developing in lockstep. According to estimates, approximately 36 million tons of packaging will be produced here in 2015 – the lion’s share for the food industry. Flexible packaging is experiencing the fastest growth but there are also bright prospects for Chinese pharmaceuticals packaging and label production.

India: Packaging Industry is Growing

Other Asian countries have also been part of the game for quite some time now. According to data furnished by Germany Trade and Invest, the market volume of the Indian packaging industry amounts to about US$ 16 billion and has constantly grown by approximately 15% year on year. Potential, however, is expected to be substantially higher and estimates say that the pace of growth will accelerate to between 20 % and 25 % over the next years.
As India’s economy grows the demand for packaging rises. There is a constantly rising demand particularly for food and (fast-moving) consumer goods. As a result the highest demand for packaging and the associated equipment will come from the food processing industry at 50 % and from the pharmaceutical industry at 25 %. Needless to say, the financial crisis has also left its mark on India but it has only put a relatively moderate damper on the Indian packaging industry so far. The demand for fast-moving consumer goods seems to be as high as ever for the time being. According to a study of Wirtschaftsberatung AC Nielsen, this market will grow by 16% (compared to the same period of the previous year) to about US$ 19 billion towards to end of FY 2008/2009.
Growth potential is huge. In 2007 the per-capita consumption of packaging was as low as U$ 15 – as against an international average of US$ 100. Rising incomes drive consumption while organised retail is growing with super and hypermarkets as well as modern shopping centres. Food and pharmaceutical industries are growing fast. The Indian food market is estimated to total US$ 182 billion according to the “India Food Report 2008” published by Research and Markets. Consultants McKinsey & Co. expect food retail turnover to grow from the current US$ 70 billion mark to 150 billion by 2025. In the pharmaceutical industry average annual growth of 16% is forecast until 2012. The market volume is said to stand at approx. US$ 7.3 billion at present. The Indian packaging industry is still in its infancy. Many domestic products are still retailed in very simple packaging. For competitive reasons, however, Indian companies are also placing increasing emphasis on attractive and hygienic packaging. This promises enormous potential for the future.

Vietnam: Expansion and Modernisation

Another case study: Vietnamese exporters make ever higher demands on the suppliers of printed materials and packaging products. Add to this the rising backlog demand on the domestic market. Things are looking good for expansion and modernisation. As a result, there are more business opportunities arising for foreign machinery suppliers in this sector. The driving force for modernisation projects in the Vietnamese printing and packaging industry are primarily the exporters; and the demand for printing machines is exclusively covered by imports. The required equipment comes primarily from Germany, Japan, Korea, the USA, India and China. Domestic printing press production is not in sight in the foreseeable future. Furthermore, Vietnamese printed materials are often still of a low quality. Positive momentum is expected from customers who produce packaging, manual or operating instructions for export. Companies such as Canon assemble and package for the world market in Vietnam and tolerate no deviations in terms of colour or other elements from their specifications. So far most companies here lacked both the know-how for achieving better results and the funds required for the necessary investment. So some movement can be expected here. Germany Trade and Invest estimates that the market will be divided in two: well-equipped, export-focused print shops on the one hand, and those serving the domestic market with the cheapest products possible, on the other.