Packaging / Advertising & Office

Xiaonan is an important household paper production base in the country. It has gathered 5 of the top 10 domestic household paper companies, and 60 small and medium-sized related companies have gathered together, which is the "weathervane" of the industry. Since the end of last year, pulp prices have risen all the way, which has brought a lot of impact to paper products companies. Xiaonan's leading paper products companies have established raw material bases, innovated marketing methods, and hedged against fluctuations in the raw material market through a variety of "strong chain" methods.

1 Sustained continuous price increase of raw materials

On August 11, in the daily necessities area of Wal-Mart Supermarket in Xiaonan District, Xiaogan City, Vinda, Hengan and other brand counters sold as usual. According to the person in charge of the counter, the prices of several major brands of tissue paper and pumped paper have all increased, but at different rates.

At the beginning of this year, many household paper companies such as Hengan, Zhongshun, and Gold Hongye Paper issued "price adjustment letters" one after another.

The price adjustment of tissue products is largely due to the rise in raw materials. Wood pulp is the main material for the manufacture of household paper, accounting for more than 70% of the cost of papermaking. For a long time, China's household paper companies have basically relied on imports of pulp raw materials.

The latest data from the Economic Development Bureau of Xiaonan Development Zone shows that after the sharp rise at the beginning of the year, there was a slight correction in the middle. In August, the log pulp rose again, and the pulp and paper prices went upside down.

Xiaonan has gathered five of the top 10 domestic household paper companies. Golden Hongye, Hengan, Vinda, and Golden Phoenix are all building the country’s largest production base in Xiaonan. The production capacity, output value, The product market share is the first in the country.

As the industry's "weathervane", companies can quickly perceive the slightest turmoil in the market.

"In the past, cyclical fluctuations generally lasted for 2-3 months. This time, it lasted from the end of last year to the present, and the high-level operation time was too long." Jin Hongye Group (Xiaogan) general manager Ji Fujun directly called "I can't see through."

Ji Fujun has been in the field of paper products for many years. He has experienced numerous ups and downs. Prior to this, there was a surge in 2017. However, Ji Fujun still believes that this round of rise is more abnormal.

There are various analyses in the industry for encountering the "longest rising period". Leading paper companies such as Jin Hongye and Vinda generally believe that due to the impact of the global epidemic, foreign pulp production capacity is reduced, international shipping capacity is insufficient, and the appreciation of the renminbi, various factors are superimposed, leading to continuous price increases of raw materials.

2 How do paper companies respond to the continuous rise of raw materials?

Tissue paper is the main product of Hengan Group, with annual sales revenue exceeding 10 billion yuan, and the annual demand for pulp is huge. According to Yang Yongfan, general manager of Hengan Group (Xiaogan), "We usually keep a stock of pulp for about 6 months to maintain normal production operations."

Hengan Group has production bases in Hubei, Hunan, Xinjiang and other places. The raw materials are purchased by the group, mainly from the United States, the Netherlands and other countries. Yang Yongfan introduced that due to the good strategic cooperation relationship established with the country of origin over the years, under the premise of ensuring the supply of goods, there is still a certain bargaining power. In short, compared with ordinary small paper companies, it has a higher cost advantage.

Not only that, Vinda, Hengan and other large paper products companies use financial hedging and inventory adjustments to flexibly hedge against the impact of rising pulp prices.

In response to market changes, companies have their own strategies.

Golden Hongye Paper is one of the earliest domestic enterprises to deploy the strategy of "forest-pulp-paper integration". It has a pulp production base in Indonesia, and its pulp self-sufficiency rate has reached 100%. In the Jinhongye Paper (Xiaogan) plant area, a reporter from Hubei Daily reported that the warehouse has sufficient raw material reserves and the papermaking workshop is producing normally. Ji Fujun said frankly that relying on the development of the entire industry chain, the rise in raw materials does not have much impact on the company. On the contrary, the company may strategically reduce finished paper manufacturing and ship more raw material pulp.

Compared with leading companies with strong anti-risk capabilities, downstream companies that rely on the purchase of spot paper for packaging production are facing greater pressure.

Tengrun Paper's base paper is purchased from several leading paper-making companies in Xiaonan. The rise in pulp prices will undoubtedly lead to an increase in base paper, and the company's profit margins have been greatly reduced. "Reduce production is the most direct way." Chairman Xiang Huachang pays attention to the trend of pulp prices every day. Restricted by funds, Tengrun Paper voluntarily closed a 6000 square meter warehouse to minimize the stock of raw paper.

3 Leading "Strong Chain" Seeking Long Distance

After experiencing the baptism of market volatility, paper products companies are contingency on the one hand, and more are looking for long-term prospects.

"From the perspective of industrial development, this round of rising is not a bad thing." Ji Fujun believes that with the upside down of pulp and paper prices, some low-end paper mills have been forced to cut production or stop production, and outdated production capacity will be eliminated, and the industry will accelerate the process of washing. Card.

Facing the new opportunities that may come, actively fill up positions. At the time of the reporter's interview, Gold Hongye Paper was launching new paper production capacity or launching an expansion plan. A new paper production line with a capacity of 120,000 tons will be put into trial operation in Xiaogan this year.

The dependence on imported pulp has long restricted the development of paper enterprises. Hengan Group is increasingly aware that a stable supply of pulp is essential to the long-term development of the group. Since 2018, Hengan Group has tried to expand its business to the upstream pulp production link, deploying the bio-pulp industry in Finland, the world's main pulp producing area, to ensure long-term stable supply of raw materials and purchase prices in the future.

The industrial chain extends to the front end, and the back end is also exerting force. Xiaonan has more than 100 downstream enterprises that produce pumping paper, wet tissues, and sanitary napkins. They have been operating separately and fighting each other. In August of this year, Xiaonan Economic Development Zone planned to build a paper product post-processing industrial park to gather downstream enterprises and provide integrated support in terms of capital, land, and labor.

Of course, the development of paper products companies is inseparable from the innovation of marketing models.

"Baby moms, this roll of paper is 5 layers thick, and it is wet and suitable for babies!"

In the live broadcast room of Libang Paper, the host lady put a long roll of paper into the water and lifted it up after soaking. The paper towel remained intact. This scene attracted the attention of netizens to leave messages and actively interacted with the anchor. The atmosphere in the live broadcast room was warm.

Libang Group, the northern household paper giant, has been actively exploring network marketing models while consolidating traditional marketing channels since it was put into production in Xiaonan last year. Just formed a live webcast team of more than 10 people, opened up corporate accounts on Douyin, Taobao and other platforms, grabbed important network nodes such as "618" and "Double 11", broadcast live broadcasts, and expanded "Libang" in the southern region Visibility.

Tengrun Paper is looking at business opportunities under the normalization of the epidemic, focusing on community group buying platforms, and teaming up with platforms such as Xingsheng Optimal and Meituan Takeaway to carry out "group buying into the community" activities. In addition, it cooperates with large supermarkets in Wuhan, Xiaogan and other places to carry out brand promotion.