29 Aug 2016
Packaging Materials Industry in Hong Kong
- The Chinese mainland is Hong Kong's largest market for packaging materials. Many Hong Kong manufacturers have relocated their production to the mainland, considering the lower operation costs and proximity to the market.
- Laws and regulations restricting the use of packaging materials become more stringent worldwide. Packaging manufacturers are required to mould their packaging materials to meet higher environmental standards, so that their customers can meet the environmental standards in the respective countries where their products are sold.
- Packaging tends to be lighter in weight and made of less material in order to meet the increasing recycling or recovery targets which are measured by weight. For food and beverage packaging, the general trend is improved hygiene and safety, additional functionality and added convenience.
The packaging materials industry can be divided into consumer packaging and industrial packaging. The former refers to the packaging of goods sold to consumers, primarily involving shopping bags, packaging bags, padded mailers, boxes and gift wraps, etc. Food and beverage packages, such as PET bottles, laminated paper packages and flexible packaging, also fall within this category. Industrial packaging is mainly used for protection and transportation purposes. They include vacuum packs, heat seal, shrink packaging films, cartons, paperboard boxes, PS foam, air-bubble blister stuffing and foam sheets.
Hong Kong manufacturers produce a wide range of packaging materials, including paper containers (such as corrugated carton boxes, paper carrier bags, paperboard boxes and pulp moulds out of newsprint and corrugated paper), polyethylene (PE) packages (such as bags for food and garment packaging, stretch films for wrapping purposes and shrink films for multiple items packaging), polyvinyl chloride (PVC) packages (such as films/tubings for wrapping consumer items and plates for blister cards) and metal containers for beverages and edible oils.
Hong Kong companies are famous for quick response, flexibility in customising products for their customers and short delivery lead time. The local packaging materials industry is also supported by a strong printing industry. Some Hong Kong companies can offer more value-added services such as developing the packaging design along with the customer’s product development. For example, in toy industry, the packing can be integrated as part of the play set to reduce wastage in packaging materials. Hong Kong companies are also following closely with technology trends, for example, retort packaging for food, and more advanced hygienic standard required by customers.
Performance of Hong Kong's Exports of Packaging Materials ^
The Chinese mainland is the largest export market of Hong Kong's packaging materials industry, accounting for 62.4% of total exports in 2015. Demand for packaging materials on the mainland has been mainly driven by local production activities.
Items under SITC 582, which include plastics plates, sheets, film, foil and strip, are the major packaging materials exports of Hong Kong. This category made up 62.1% of total exports in 2015. It is also the major category of packaging materials exported to the Chinese mainland and ASEAN, and it accounted for over 80% of total exports of packaging materials to the mainland and 50% to ASEAN. On the other hand, plastic articles for the conveyance or packing of goods (SITC 89319) are the major products exported to other markets, including the US and the EU.
Hong Kong's exporters of consumer goods, such as garments, electronics products, toys, shoes, timepieces, jewellery, housewares and giftware, are the major customers of local packaging materials suppliers. Bag and container makers usually export their products directly to manufacturers or distributors overseas. These products include consumer packs, such as gift boxes, packaging bags, as well as cans and bottles.
In the US and Japan, local packaging companies are capable of producing packaging containers on a large scale. Therefore, Hong Kong exporters generally target at the small/medium factories in these countries, whose smaller orders are usually not accommodated by the domestic large packaging factories.
The Chinese mainland has been a major consumer goods production centre which generates mammoth demand for packaging materials. The growth in other businesses on the mainland has also boosted the demand for advertising, packaging and printing. In the meantime, more consumer goods manufacturers outsource their packaging production to specialized packagers. These developments have created business opportunities for packaging subcontractors.
In this respect, Hong Kong packagers have competitive advantages over other foreign companies, considering their well-established and long-term relationship with the consumer goods manufacturers while many of them are in fact Hong Kong companies. Hong Kong companies also possess more advanced facilities and better management when compared with Chinese indigenous manufacturers.
Digital printing is already used in package label design and the production of commodity labels for branded liquor, food, beverage and other products. The technology enables direct plate-making via computer without using films in pre-pressing. In addition, digital printing also plays an important role in flexible packaging, which is gaining popularity in the industry.
The Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA) was concluded in June 2003 and subsequently expanded in following years. All products made in Hong Kong, subject to CEPA's rules of origin, enjoy duty-free access to the Chinese mainland. Detailed information is available from the following hyperlink: http://www.tid.gov.hk/english/cepa/tradegoods/files/mainland_2016.pdf
On the whole, the CEPA origin criteria for packaging materials mainly include the principal manufacturing or processing operations carried out in Hong Kong, which confer essential characteristics to the final product. For example, for semi-chemical fluting paper, other thin uncoated paper and paperboard, as well as other coated, impregnated or covered paper and paperboard that are all manufactured from waste paper/wood pulp and coating materials, the principal processes for the purpose of delineating their origin are forming, drying, calendaring and coating. All these processes are required to be carried out in Hong Kong. For cartons, boxes and cases of corrugated paper or paperboard, the principal processes are plate-making, printing, cutting and assembling. If type-setting is required after plate-making, it must also be done in Hong Kong. The same rules also apply to folding cartons, boxes and cases of non-corrugated paper or paperboard.
General Trade Measures Affecting Exports of Packaging Materials
Many countries have imposed laws to regulate producer's responsibility for packaging materials. For example, the EU has obliged the industry to cut down on packaging, and consequently its waste, in a harmonised fashion since the adoption of Directive 94/62/EC in 1994. In order to further reduce the impact of packaging waste on the environment, the development trend is for a continued increase in the recycling and recovery targets. The minimum targets of recycling specific materials, including glass, paper, metals, plastics and wood, will also be increased.
Canada also introduces some policies to regulate the use and recycling of packaging materials. In the province of Ontario, Bill 90 or the Waste Diversion Act was enacted in June 2002 to help in the collection and recycling of packaging waste. The Bill requires that the net cost of recycling retail packaging materials be borne equally by the municipalities and by the brand owner or importer.
In China, the Circular Economy Promotion Law has been enforced since January 2009. It is reported that China is planning to revised the law in order to strengthen its implementation.
Environmental-friendly packaging: The growing concern of environmental issues and the more stringent legislations on the use of packaging materials worldwide are influencing the choice of materials. Manufacturers use more recycled content in their production and make their products more readily recyclable. The use of biodegradable plastics will reduce the proportion of non-biodegradable and ozone depleting plastic bags. Biopolymers, which are generated from renewable natural sources, are also used. They are often biodegradable and not toxic to produce. New materials are being developed such as bioplastics from renewable biomass sources rather than fossil-fuel plastics. Packaging also tends to be lighter in weight and made of less material in order to meet the increasing recycling or recovery targets. Using less materials will also speed up packing and unpacking times. Using refilling reusable containers can also reduce packaging waste.
Edible films: The major concern for food packaging is whether it contains any toxic constituents, particularly for packages which have direct contact with food. PVC has gradually faded out in packaging for direct food contact and outer packaging. Films made of other materials, e.g. OPP, BOPP, PET and PS, become popular in the sector. Besides, edible coatings and films, such as very pure soy protein films, milk-based edible films and cellulose surface coatings, are expected to have promising prospects. These protective films are made from fruit and vegetables. Some of them match the colour, taste and smell of a food product and can simply be digested as part of a prepared dish.
Longer shelf life: In the US, researchers have developed anti-microbial plastic films which inhibit bacterial growth. Food companies also make use of the new aseptic technology packaging systems to extend the shelf life of their products. Demand for flexible packaging is expected to continue to rise since it offers longer shelf life for fresh foods, more consumer convenience, better economies for retailers and packaged goods manufacturers as well as reduction of packaging waste.
Convenient packaging: Apart from improved safety, additional functionality and added convenience would be the general trend in food and beverage packaging market. For example, there are pouches which feature handles and pouring spouts. These pouches can be heated in boiling water and stored under refrigeration and are especially ideal for soup and sauces packaging. There is also the trend for retail ready packaging which refers to retail goods which are ready to be displayed or with little set up for retail consumption. There are also more easy-open and easy-reclose options for flexible packaging.