The Value Orientation of Packaging (below)

Social formation and market evolution challenges

The fast-moving consumer goods market in China has been continuously evolving rapidly, from the era of shortages to the era of regional differences, to the era of truly personalized consumption. Manufacturers and suppliers need to change from time to time to be able to dance in the wind. The most significant challenge faced by the market in the next decade will be more clearly defined market segments. How to meet this differentiated demand requires industry leaders and management backbones to take precautions.

The basis of changes in market segments is the profound changes in society itself. For example, the only child born in the early 1980s became the mainstream as a completely economically independent consumer class; the de facto hedonic social class emerged and was not satisfied with major road and general merchandise; Old age society brings new consumer demand.

We also need to be clear about future growth opportunities marked by national and global activities. The 2008 Beijing Olympic Games and the 2010 Shanghai World Expo are comprehensive international events that also belong to the Chinese food industry. The 60th anniversary of the founding of the People’s Republic of China in 2009 represented a new height of national power.

Let’s look at some important trends in the social environment in China that are continuing and are continuing:

1. In the urban market, the pyramid of consumer purchasing power is gradually emerging, and the distance from the spire to the bottom of the tower is getting more and more open. The purchase of different ladders is becoming more and more obvious. For the food industry at this stage, lions eating meat and sheep grazing can co-exist for a short period of time and can find the people who need them. With China's population density and the base of each group, the scale of China's consumer market is unimaginably large. For managers, strategic and marketing positioning is challenging enough.

2. The emergence of a true hedonistic class and a middle class is even more of a challenge for Chinese companies accustomed to producing high-volume, customized products. For example, the professional class, management, and business people dominate the middle class. Although the number of people in these classes is relatively limited, their role as social opinion leaders cannot be ignored. The economic strength of the only-child generation is far from reaching the hedonic class. However, no matter whether it is an only child or a carefree hedonistic class, they are willing to try new life and new concepts and become chameleon consumers. This also constitutes one of the basic driving forces for fast-moving consumer goods to constantly change marketing methods. When the entire PET packaging industry struggles to reduce costs, high-end consumer needs should not be overlooked. This is also one of the possible means to crack the price war. With the characteristics of PET container packaging, beverage packaging with very high added value and flexible performance can be made.

3. In the next two five-year plans, the country’s strategy of sustaining domestic demand will lead to a significant increase in domestic consumption, especially in rural areas. The increase in consumption will be the first priority. The beneficiary economy is the development of the food industry, and it is directly driven by it. The beneficiaries necessarily include the packaging industry. Moreover, plastic packaging performs well against harsh logistics conditions.

4. Because of the ubiquitous power of the media, the influence of the brand will grow. This means that the food industry will tend to choose high-end, reliable, easy-to-market, easy-to-change packaging. This echoes the advantages of PET packaging that are good at cooperating with marketing and is also an opportunity to explore its expressiveness and potential.

5. The circular economy has become a national policy, which means that traditional disposable packaging faces challenges. PET's recyclability is a strategic advantage over other packaging. Aseptic PET technology does save material and energy consumption and should continue to strengthen applied research. In 2005, the international oil price escalated several times. The recycling performance of PET led to a rapid increase in the recycling rate in Chinese cities. It is the most popular high-price recycling product. This is the strategic opportunity and window for the entire industry.

6. Finally, the industry understands the importance of event marketing to market development and growth. From figure 2, we can see that in the next few years, there are intensive sports or international events taking place in China. This is of great significance to the food industry, especially the beverage industry.

Challenge to food manufacturers

1. Existing profit models must be constantly changed and fine-tuned. There are no eternal secrets, there is no permanent way to make money. The era of relying on cheap land, policy support, natural materials, low labor costs, and ultra-low interest rates is over. This is effective in the era of supply shortage, but it does not apply to the free competition market.

2. Profit comes from internal innovation and creativity. It is very difficult to guarantee the stability of the price for ordinary general cargo and mass customization industries. For various reasons, China is a typical oversupply market. All manufactured products are surplus, and prices can hardly be avoided. But creativity is scarce. From strategy and tactics to product design and marketing, not just "me too" (me, me, too) products.

3. Adopting a differentiation strategy is not a choice but a must. Otherwise, it can only fall into the homogenization and deflation circles. In fact, the Chinese people's cultural connotation and diversity in food are enough to dominate the world. Compared to international companies, Chinese companies currently do not have sufficient basic research on local products and their modernization. On the contrary, international companies are more active and far-sighted. For example, granular chicken is dressed in the coat of Chinese culture. The technology is purely Western. How to commercialize the essence of traditional products is a common topic of "supplier-producer-brand owners". The main engine of this proposition should be a food producer.

4. Finding profitable sources from new methods is not simply relying on single factors and endowments. Advertisements bombarded alone, sensational leaders alone, or unique products are not enough to eventually win the market. Not only do we need to win heroes for the moment, but we also need entrepreneurs who can lead the market in the long term and have great aspirations. Leading Chinese companies in the market should learn to consider profits from the perspective of the entire value chain. The healthier the value chain as a whole, the healthier the company will be. Food companies, as the main body of the value chain, should take proper care of suppliers. Almost all product innovations require the joint efforts of food companies and packaging suppliers. This close relationship cannot be imagined by other industries. For example, in recent years, any new popular beverage will not only have different formulas, but will also require new bottle types and new capacity. This is a direct response to market segments.

Combining the analysis of changes in the above market and social environment and grasping subtle market changes and growth trends is a matter of survival for every Chinese entrepreneur. Entrepreneurs must break down the "mainstream" and seize the latest, key trends. Chinese companies need real differentiation. Moreover, with the size of the Chinese market, the subdivision of the tributaries may be as large as an unimaginable market.

Challenges to packaging suppliers

Continuous improvement of service levels and sensitive discovery and proactive change to meet the needs of the core industry are the first recommendations; continuous improvement in listening ability is the second recommendation for packaging suppliers.

1. It is important that suppliers collectively and systematically strengthen technical services to help users improve their management level and reduce operating and management costs. For international manufacturers, the focus is on digesting advanced technologies and effective localization. Even based on the needs of Chinese customers to explore and find deficiencies, provide a useful knowledge transfer of the design and manufacture of the production line. To reduce costs, we must also increase the proportion of localization. One approach is to provide services nearby, and the other is to reduce fees. Localization and localization do not have to worry about "stealing secrets." The more full the exchange, the more rewarding the return. Moreover, China’s intellectual property protection is also improving.

2. "Listen to your heart" customer needs. As the market evolves, Chinese manufacturers will become very confident and picky, and will be smarter than blind. For a long time, China's packaging equipment buyers often can only accept the choices provided by suppliers, but this does not reflect the Chinese market's buying preferences and requirements, especially the cost control and product process characteristics. The large number of visitors to the Olympics and the Expo must have foods (and packaging) with Chinese characteristics, not just the familiar Coke curve bottles. If we look at the development of the world economy in the next decade, the major purchasing power and market growth will definitely come from the so-called BRICS BRICS countries headed by China. Now we must work hard on research and development to increase the level of localization and deeply understand the Chinese market and consumers.

The winners of the food industry in the Chinese market must be “balanced masters who can master internal and external environmental challenges; at the same time, they are also the most adaptable of profitability and difference”. As for the success factors of the past, such as the largest scale and strong fixed assets, obviously it will not only continue to play a vital role, but it may become the cause of failure and become exhausted.

The best packaging supplier in the Chinese market must be the best audience for direct users and markets, and can properly anticipate the future. Do your best to bring value to the value chain, or bring positive contribution to the overall competitiveness of the value chain, so as to ensure that the whole is invincible in competition or change!

Source: Tiantian Chemical Network

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