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At present, the profitable products in the paper industry are concentrated in high-end products, such as coated paper in coated printing paper, lightweight coated paper, high-strength corrugated base paper in coated paper, coated white paperboard, and white cardboard. These papers currently have a large market demand, and they have a large share of imported paper. Foreign companies investing in factories in China also produce these high-end products.
High-end products are the profit zone of the industry, which is determined by the characteristics of the papermaking industry, the characteristics of the consumption of products, and the higher barriers to entry in the paper industry.
1.1 Process Characteristics of the Paper Industry Analysis Papermaking industry has strong process stability, and the basic process flow is unchanged for decades; most products have national and industry standards; production equipment is highly specialized, and a single paper machine generally produces only one type of product. Even for decades, only one type of paper is produced; the use of paper is unchanged for years. This production process and the characteristics of the production equipment lead to fewer new products in the paper industry, unlike the home appliances or toy industries, which have more varieties and faster product changes. The new products in the paper industry are mostly the upgrading of the original products, which is the improvement of the paper quality, and its original use is basically unchanged, which makes the high-end new products less risky in the market, and is profitable. Great success.
L.2 Product Consumption Characteristics Analysis Paper industry products have strong specificity, little complementarity, and low product price elasticity. 80% of paper products are used as raw materials for industrial production processes, such as printing for newspapers and magazines, and packaging for general consumer goods. In this way, for consumers, the value of paper products is not directly reflected in the value of the unit product, but is included in the overall value of consumer goods, such as printed magazines and magazines, household appliances with carton packaging. When paper products are shipped from the factory, they are marked with the price per ton of paper. When they are used, for example, when they are made into carton boxes for packing home appliances or the paper made of packaging wine bottles, their value is of the value of the entire product. The proportion is very small, only accounting for less than 1% of the total value of the product; for example, for coated paper for magazine covers, the difference between mid-range quality and high-grade coated paper is up to RMB 1,000 per ton. This difference is spread to one. In the magazine, it was less than 1 cent, but the effect of printing was very different. This consumption characteristic of paper products provides market opportunities for the industry to launch high-end paper products.
1.3 Characteristics of the Industry's Barriers to Entry Papermaking industry projects have large investment, high technology content, long project construction period, and high-end product production equipment must be imported from abroad. These characteristics form a high entry barrier for the paper industry. Therefore, when a company develops new high-end products and obtains higher profits, it takes a long time for other competitors to obtain the kind of advantages. This provides the company with a new product that is led by Mr. Profit opportunities.
From the above analysis, it can be seen that the main profit area of ​​the paper industry is in the high-end product market.
2 Paper Industry Value Transfer Rule Analysis Any product has a life cycle and generally undergoes the process of introduction, growth, maturity, and recession. The profitability of a project also has a life cycle, which is the value flow period, value stability period, and value outflow period.
- The value of people: new high-end products have been developed, replaced old products, welcomed by consumers, and products are in short supply. Due to the influence of the supply system, the prices of products are high, and the enterprises are profitable. The project is in the inflow stage.
- Value stabilization period: Competitors have also started to create new high-end-added products. The market supply and demand relationship has been gradually balanced, product prices have declined, corporate profits have been generally level, and projects are in a period of stable value.
——Value outflow period: There is a new round of upgrading and upgrading products in the market. The market demand for the current product of the project has decreased, resulting in the oversupply of the product in the industry, the price fell, the company is no longer profitable, or even a loss. The project is in the outflow period of value.
There are two differences in value transfer between the paper industry and other industries in the value transfer process. First, due to the high barriers to entry of the industry, after the new products are put on the market, the relationship between supply and demand changes slowly, and the value transfer cycle is relatively low. Long, that is, the profitability of new products is longer. Second, as new product development in the paper industry depends not only on equipment, but also on raw materials and auxiliary processing technology, when the industry is in a period of value stabilization or value outflow, technological transformation of existing equipment and adjustment of raw materials and auxiliary processes are required. (Such as surface coating), that is, at a relatively small cost, the project can be re-entered into the value inflow period.
Therefore, paper-making enterprises can only obtain higher returns and maintain the vitality of the industry.
3 Advantages and Disadvantages of China's Paper Industry Development 3.l Advantageous Factors 3.ll The demand of society for high-end paper has provided enterprises with new economic growth points. Along with the development of press and publishing, cultural industry and packaging industry, The amount of use continues to increase. What is more important is that society has put forward new requirements for the quality of paper. The stimulating of consumer demand provides an external motivation for the company to carry out technological transformation to realize the upgrading of products and to obtain greater profits.
3.1.2 The world's most advanced equipment can be purchased to provide enterprises with a leapfrog in the development of materials. The papermaking industry is equipped with complex technical equipment and high technology content. However, foreign countries have no artificial restrictions on China's papermaking equipment. As long as funds are available, China can buy the most advanced equipment in the world. This provides an opportunity for China's paper industry to catch up with the international advanced level.
3.2 Unfavorable factors The two key factors constraining the development of China's paper industry are the shortage of fiber materials and project construction funds.
China is a country that uses non-wood fiber as its main papermaking raw material, while papermaking raw materials for the world’s papermaking powers are dominated by wood fibers. The lack of wood fiber resources is the main reason why China's paper products do not go up.
The shortage of funds for project construction is another constraint on the development of China's paper industry. As a capital-intensive industry, the pulp and paper industry needs 100 million to 200 million yuan of capital for each additional 10,000 tons of high-end products. It is predicted that from now until 2010, China's paper industry will need to invest at least 200 billion yuan in order to meet the requirements of production development. Such a large sum of money is huge for both the country and the enterprise, and it is difficult to raise funds.
4 Selection of development mode for pulp and paper companies:
Enterprises should use their own strengths, play a comparative advantage, adopt differentiated competition strategies, persist in doing something well and do something wrong, and appropriately choose the development mode of development (Table 1 is abbreviated).
4.1 The leap-forward development of a few key enterprises For the few paper-making enterprises that are supported by the state, they will directly enter high-end new products and pursue a leap-forward development strategy in one step. ——Product positioning: High value-added high-grade new products with wood pulp as raw material and deep processing after coating.
- Market positioning: Substituting imports and exporting to neighboring countries.
- Production equipment: Direct purchase of the world's most advanced equipment, production capacity to reach 300,000 tons of economies of scale.
The high-end paper product market is the profit area for the paper industry and is also the focus of competition among foreign companies. A few key enterprises that need to be supported by the state should intervene. The issue of funds and raw materials should be assisted by relevant parties in the country. (to be continued)
Study on China's Paper Industry Development Strategies (1)
1 Analysis of Profit Zones in the Paper Industry Some enterprises in the paper industry are profitable, and some enterprises are losing money; some products in the same company are profitable and some products are in loss. Therefore, it is the key to properly formulate the development strategy of the paper industry by carefully studying the profit zone of the industry and understanding the value transfer rules of the product.