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China Paper Market
SECOND LARGEST CONSUMER
China has become the second largest consumer of paper in the world since 2003. The increasing demand in the market has stimulated the continuous development of paper industry and the operation situation of paper industry runs very well with a growth rate over 20%. In 2006, there are 3388 big sized enterprises in paper and paper of products with an annual income of 303.8 billion Yuan, increased by 19.32% over that in the previous year and the total profit value is as much as 15.1 billion Yuan, increased by 22.56% than that in last year. The sales income of paper industry in the period from Jan. to Aug. 2007 is 233.679 billion Yuan, increased by 21.73% compared with the same period last year and the profit value is 12.453 billion Yuan, increased by 39.46% than that in the same period last year. The benefit of the industry increases comparably fast and the profit growth is comparatively high.
CAPITAL AND TECHNOLOGY INTENSIVE INDUSTRY
Considering the fiber and water resources, environmental capacity, market demand, transportation and other conditions in China's paper industry layout, the industry is moving from north to south and the south region of the Yangtze River will become the key development area of the paper industry. Paper industry is capital-and technology-intensive industries. The eastern coastal areas of China is a region with relatively developed economy along with convenient information sources, sufficient capital inflows as well as convenient transportation conditions where the production of paper products has maintained stable development. The top four origins of paper products in 2006 are all in the eastern coastal areas, which are Shandong, Zhejiang, Guangdong, Jiangsu province.
IMPORT RATE OF RAW MATERIAL 2010 SAME AS 2006
Currently, paper for industrial use still keeps the dominant position among the major varieties in China's consumption of paper products while the consumption of tissue paper products takes up only about 6% of the total consumption. Among all the consumption of paper products, packaging paper and paper board occupy a larger proportion: in 2006, the consumption volume for wrapping paper and paperboard was 39.43 million tons, accounting for 59.74 percent of the total paper and paperboard consumption of 66 million tons. The consumption of tissue gained a rapid growth and has made Chins world second largest tissue consumption market. According to the information provided by China Paper Association, in 2006 the output of life use paper (tissue paper) products was about 4.259 million tons, an increase of 8.9 percent than that in the previous year with a consumption of about 3.979 million tons, an increase of about 8.1 percent. With the steady economic growth and raise of the income of residents, there is still great potential market and development space for the development of tissue paper products.
At the same time of the continuous increase of the market capacity in China, foreign invested enterprises with factories in China mainland engaged in paper production and domestic paper production enterprises have all enlarged the investment and enlarge the output to occupy China market. Under the circumstance of the continuous enlargement of domestic productivity, the problem of lack of raw materials in paper made industry becomes more serious. The aim submitted by China Paper Association is keep the import rate of fiber raw materials in 2010 the same as that in 2006, which is 24.75%. The future development of China paper industry will rely heavily on imported fiber raw materials.
TOP PAPER PRODUCTS IMPORTER
In recent years, though the output of domestic paper products are increasing steadily year by year, the home made varieties can not totally satisfy the consumption demand in the market and at the same time there is a lack of raw materials of high quality. All the above factors determine the import demand of paper products. China has become world top paper products importer. The import quantity in paper products in 2006 is 2.69 million tons, decreased by 16.76% than that in the previous year with an import value of USD 2.383 billion which is a decrease of 0.46% than that in last year. The import quantity In Jan. to Oct. 2007 is 2.0259 million tons, decreased by 9.63% than that in the same period of the previous year with an import value of USD 2 billion, increased by 2.2% than that in the same period of the previous year. The origins of China imported paper products are comparatively concentrated and the top origins in the rank are America, Japan, China Taiwan, South Korea, of which America and Japan are the world top one and third countries with the highest output of paper and have kept a large amount of paper products exportation to China while China Taiwan is a newly developed new origin of paper products in recent years.
INVESTMENT IN PAPER FIELD
The imported non-coated paper and paper board from Indonesia of China in 2006 is 36.3 thousand tons, accounting 73.23% of the total import paper products from Indonesia with a value of USD11.4575 million, taking up about 46.45% of the total import value of China imported paper products from Indonesia; the imported volume of non-coated kraft is 4.2 thousand tons, accounting to 8.53% of China imported paper products from Indonesia with a value of USD1.9119 million, taking up to about 7.75% of the total import value. The third goes to dyed, decorated and stamped paper, the volume of which is 3.7 thousand tons, accounting for about 7.53% of China imported paper from Indonesia; but because the unit price of this kind of paper is comparatively high, the import value has taken up to about 28.24% of the total import value with USD 6.9648 million. The above mentioned three types of paper are primary paper products and the total import volume is about 89.29% of the total import volume of China from Indonesia.
In this study, we find that the main advantage of Indonesia paper products in China market is its high ratio of quality to price. Most domestic customers reflects that Indonesian paper products have very good quality with comparatively low price; while at the same time they think Indonesian paper products suppliers are usually of small size and the supply is not steady. Paper products manufacturers in Indonesia shall ally to form an industrial alliance to unify the quality and ensure the stability of supply thus to win trust in China market and establish prestige. As far as the products structure is concerned, most paper products export from Indonesia to China currently are raw materials or primary paper with low added value. In short terms, these products meet the demand of China market. But from the long run, the added value of raw materials is comparatively low and has no obvious competitive advantage. Enterprises in Indonesia in paper industry shall enhance the research and development as well as the promotion of medium and high level paper products on the basis of enhancing the export of raw materials to China and enlarging its share in China market, thus gradually changing the products construction and find compensate projects. At the same time, Indonesia can introduce China investment to its paper field to deepen cooperation, forming benefit alliance and develop the international market together.
TAX
To carry out the promise China made when entering WTO, China decrease the taxes in four consecutive years from the end of 2001 when first entering WTO till 2005. The average tariff rate of paper and products of was decreased to 4.6% in 2005. On Jan. 1, 2006, China lower the import tariff of more than 100 tax items including paper products, thus completing the promised tax decrease obligation.
FREE COMPETITION
Currently, China has not applied quota management on the importation of paper products. As long as the products meet the inspection and quarantine regulations, they can be traded freely. Except for rice paper which is under automatic permission administration system in order to enhance import supervision, all other paper products in China market are under free competition.
