China has been one of the world’s fastest growing economies for over three decades. Today, it is the world’s second largest economy, the fastest growing consumer market, and an e-commerce wonderland second to none.
In 2018, China’s online retail sales totalled about USD 1.33 trillion, with sales up nearly 24% from 2017, reports China’s National Bureau of Statistics. China’s e-commerce market is currently larger than the whole of North America and Europe combined. According to estimates by The Economist, China’s growing world domination will continue: by 2020, it is expected to account for 60% of the global e-commerce market.
Internet shopping has transformed daily life in China. People shop whenever they want, wherever they want, and have it express-delivered at minimum cost – in a matter of hours in larger cities. Advanced logistic networks utilising big data, cloud computing, smart robots and drone-based delivery ensure speedy delivery to almost anywhere in China.
According to China’s State Post Bureau, the number of parcels delivered annually in China has increased by 10 billion over the past three years. In 2018, over 50 billion packages were delivered across China by express delivery. As many as one billion packages were delivered solely after the “Singles Day” shopping festival last year.
The e-commerce boom in China has had a tremendous impact on the demand for label and packaging materials. Alongside the use of advanced technologies, artificial intelligence and cloud computing, sophisticated labels are also needed to ensure high efficiency in handling the enormous volume of parcels.
Seamless future of shopping
China’s online shopping market is not only the world’s largest, but also the most innovative. Many believe that China’s e-commerce sphere offers a glimpse of how the future of e-commerce will eventually look all over the world.
With e-commerce apps becoming more diverse and user-friendly, they are penetrating almost every aspect of peoples’ daily lives, especially through convergence with social media. Marketing, merchandising, customer service, and order delivery are being bundled together as a seamless shopping experience.
The online and off-line worlds have become interconnected with the advent of “new retail”, a concept introduced by Jack Ma, co-founder of Alibaba. Instead of e-commerce competing with traditional brick-and-mortar stores, the two complement each other. For example, fresh food bought online is delivered to customers from a nearby physical grocery store or restaurant, clothes bought online can be returned to an adjacent store, and customers are able to make payments through a mobile app for in-store purchases.
Tailor-made to market demand
UPM is the global market leader in both labelling materials and glassine release liners, which are used for labels, stickers, tapes as well as other packaging, production, and logistics applications.
“About half of global glassine demand growth comes from Asia, and China alone accounts for about one third of global growth. There is opportunity for us to be part of this growth,” says Ali Malassu, Director, Business development & Intelligence, Specialty Papers, APAC.
After the successful startup of paper machine 3 at its Changshu mill, UPM decided to further increase its release liner capacity last year by installing a second supercalender at the mill. Valued at EUR 33 million, the investment will increase the mill’s glassine production capacity by more than 40,000 tonnes by early 2020.
“Parcel delivery in China has been growing 30 to 35% annually in the past years. When you calculate what that means for paper, it’s quite a large market in terms of volume,” Ali says.
“We have identified the logistic label segment as a sizeable and fast-growing segment. Last year, we launched a new glassine product, UPM Brilliant™ Express, specifically tailored for this end use. Other new products that address growth in this area are also in the pipeline.”
The government recently issued new standards promoting the use of sustainable packaging materials, and consumers are showing a clear preference for sustainably packaged products.
“UPM is certainly recognised as the leader in sustainable labelling and packaging materials. That’s one of the reasons we are looking at new opportunities in these segments. We believe our sustainability credentials can create more value for our customers on this sizeable and growing market”.
Text: Ni Xiao Hong
