In the current situation of extremely fragmented industry competition, it is more effective to seize the incremental market. Existing leading companies already have capital advantages, scale advantages, customer resources, and service integration capabilities. They will be the main players and major beneficiaries of cross-regional competition. Companies that are actively expanding their regions are expected to emerge.

Industry perspective

The long-term growth of the industry is optimistic: corrugated boxes are widely penetrated in various fields of light industry manufacturing, and are the most important branch of the paper packaging industry. In 2010, the market size of corrugated box industry in China reached 189.5 billion yuan, accounting for approximately 60% of the paper packaging industry. The share of the entire packaging industry is about 24%. However, at present, China’s per capita paper packaging consumption is only US$23, which is lower than the global average of US$32 per person, which is even more disparity with developed countries. We believe that the domestic corrugated box industry is in a period of growth, and the high-speed growth of downstream industries will continue. To stimulate the demand for corrugated cartons, we expect the growth rate to be maintained at 10%-15% for the next five years.

The increase in industry concentration is an inevitable trend: the corrugated box industry is a typical downstream driven industry, and the demand of the downstream industry determines the development of the corrugated box industry. Through the analysis of the development history of the US carton industry, the increase in the degree of concentration in the downstream industry will inevitably lead to the consolidation of carton suppliers. At present, the concentration of some industries in the lower reaches of the carton in China is already high or is increasing. We expect that the concentration of corrugated box industry in China will inevitably enter the period of rapid improvement under the impetus of the downstream industry.

The expansion and control of raw materials is the growth path of the company: US leading companies continue to expand across regions during the growth phase of the industry. After reaching a certain scale, they all extend upstream to control raw materials. The difference between China's corrugated paper box industry and the United States lies in the fact that the concentration of corrugated paper in boxboards is relatively high at the present stage and the strength of leading companies is strong. Although carton enterprises have the desire to control raw materials, the threshold of the paper industry is relatively high. At present, the second-level carton enterprises do not have the strength to extend upstream. However, we believe that in the fast-growing stage of the industry, the layout of grab points is the key to winning a business. When a company expands to a certain scale across regions, it is only a matter of time before it is united with the upstream.

In the spring and autumn, hegemony and crowds competed against each other: By studying the relatively complete life cycle of the corrugated paper box industry in the United States, compared with the period of the spring and autumn period, the corrugated paper box industry in China was in the initial stage of growth.