Packaging Industry Report

Industry Overview & Prospects

The recent spread of European debts crisis fear looms over the global economies. The China credit crunch has affected many businesses in PRC and consequently exerts difficulty to sustain local economy growth.

In near term, the Group continues to operate under a challenging environment with different uncertainties, stiff competition, rising raw material prices and general inflation in the PRC to name a few. The Group faces keen competitions in some of the market segments due to new industry players. The fluctuation of crude oil price will continue to affect our raw material cost and margins. Inflation concern also caused China to strengthen its austerity measures, which intensified the overall increase in supplemental material price, overheads cost and operating expenses.

As a result, the Group maintains a cautious view on a possible economic slowdown which may affect the performance of the Group for the coming financial year 2012.

To mitigate such impact, the Group will attempt to pass on the increases in cost to its customers by revisiting the selling prices of our products. The Group will also put further marketing efforts to capture more market share all our business segments including metalized CPP film.

Regarding the future development of the packaging business, there is certainly room for improvement for the industry in PRC. A majority of the products are simple and primitive products, with little deep processing and refined products; ordinary plastic packaging is heavily proportioned with inadequate functional products. The industry puts an emphasis on packaging products, machineries and production; and looks past packaging materials, technologies and R&D. Regenerating of new products are slow which forms an irrational structure that fails to adapt to market changes.

Future development of the packaging industry is not limited to the R&D of the packaging materials, but also...