China has traditionally fostered a vibrant market with tremendous growth. As home to over 1.35 billion people, China maintains a vast workforce. In comparison, India has 1.25 billion residents while the United States houses (just) 316 million people.

The Chinese government has recently announced the lowest growth rate since 1990, however. Those rates might be somewhat misleading since China has a growth domestic product rate that increased by 7.4% in 2014. That mark fell below the country’s intended goal of 7.5%.

Even though the market has experienced a slight dip, label industry suppliers are not hesitant to continue investing in the market.
“Despite the short-term slowdown of the market, we are still committed to the Chinese market and will increase 50% of our capacity in Q1 2015,” says Jari Haavisto, vice president of Greater China, UPM Raflatac. “This investment will not only increase our capacity but also bring some new, special technology to allow us to produce more high-added value specialty products and reinforce our service and quality leadership in China.”

Historically, double-digit expansion has boosted China to the world’s second leading economy ($10 trillion), behind only the United States ($17.5 trillion).

“While the pressure sensitive penetration rate remains low, Avery Dennison believes that the market will grow at a slow but healthy rate over the next several years,” says Carmen Chua, vice president and general manager of Avery Dennison, Greater China. “We have seen positive trends such as the increased need for high productivity in converting and label application, as well as the desire for more sustainable labeling solutions. These trends may shape the future of the pressure sensitive label industry.”

The label industry is not foreign to China, though.

Based on its success in the Australian wine market, UPM Raflatac has chosen to launch a new wine range in China.
“We have long-term expertise and knowledge of the Australian wine market, and now all of that has been transferred to our facility in Changshu,” adds Haavisto. “The China wine market is rapidly developing, and the market is needing more quality products for product branding. China is now the biggest consumer of red wine in the world.”

Haavisto believes there will be several key trends in the Chinese packaging industry. “The packaging industry – especially the labeling sector – will move more towards automatic labeling. This is partly due to the fact that labor costs are increasing,” says Haavisto. “This will set a certain standard on the material itself, as automatic lines do not have possibilities to stop after each label that does not dispense, and consequentially, costs will be high. High-quality material suppliers will have an advantage on this situation.” 
In addition, the shift toward environmental friendliness will continue to ingratiate itself into the Chinese label market. Although green practices are not as pronounced as they are in the West, companies will continue to lean that way.

“Companies are not always thinking about what materials they are using and whether all of the components are safe enough for the purpose,” explains Haavisto. “This is highly regulated in other countries and all companies who are exporting goods will face this challenge. For example, are the label materials you are purchasing and using for food packing certified for that application? Are the labels used for toys approved for that application and/or fulfill the necessary certification? We are doing continuous work in this area to prove that our products are safe to use.”

According to Chua of Avery Dennison, UV flexo, UV letterpress, UV offset and digital printing are the preferred printing methods in the area. Avery Dennison’s traditional market segments include industrial and domestic applications, such as food, beverage, spirits, household products, pharmaceuticals, health and beauty, electronics, durables, retail and logistics.

“While more paper labels are consumed than film labels today, Avery Dennison expects the share of film to increase because of film labels’ many advantages,” says Chua. “Film labels can create a transparent packaging effect to deliver a premium look and increase shelf appeal. Additionally, film labels can meet the end user’s need for better durability.”

Chua emphasizes that Avery Dennison maintains a strong presence in the region. “Avery Dennison is still the leading brand of high quality pressure sensitive label materials in the area,” he adds. “We have built strong relationships with our customers by providing them with reliable products and dedicated services and we look forward to growing along with them.”

Avery Dennison has made strides with semi-conformable films, which are a primary film technology for health and personal care labels, as well as food. The company has also developed Global MDO, a conformable clear labeling material that enhances product shelf appeal and performs without wrinkles or peeling on many squeezable containers.

The country plays host to two international label expositions: Labelexpo South China, which was held from December 3-5, 2014 in Guangzhou, and the China International Exhibition on Label Printing Technology 2015 (Sino-Label 2015), held from March 9-11, 2015 in Guangzhou. Sino-Label 2015 has several focal points, including green technologies and anti-counterfeiting measures. Two of the presentations are “Green label printing materials” and the “RFID-Digital Labeling & Anti-Counterfeit Zone.”

The exhibition also highlights one of the region’s growing trends: in-mold labeling. Sino-Label has teamed with Sino-Pack to present the “IML Industry Chain Show,” which covers injection molding, blow molding, in-mold label materials and the entire IML supply chain.
At Sino-Label, more than 260 professional exhibitors will be on hand from over 16 different countries.

Flexo Press Presence
According to Mike Russell, international sales director at Mark Andy, the company has nearly 150 installations in the region. Russell notes that popular printing processes in China include flatbed, semi-rotary and full rotary letterpress. The company has also noticed the expanded use of sheetfed offset equipment in order to capitalize on the prevalence of glue-applied labels in the area.

“We are also seeing semi-rotary offset gain in popularity,” says Russell. “As magnetic die technology becomes more durable and available, there is a tendency to move from flatbed dies to rotary die technology.”

Even though offset equipment has been popular in China, Mark Andy has recognized the increased growth of flexo. “While the larger local and multi-national converters are investing in newer flexo technology like the Mark Andy Performance Series line, the smaller converters, who are making the conversion from letterpress to flexo, are investing in some of the more traditional Mark Andy presses like the 2200,” adds Russell.

According to Mark Andy, it offers one of the more sophisticated lottery presses, and that market is of growing interest in China. The company’s advanced flexo presses in the Chinese region also produce higher-end health & beauty labels.

Mark Andy has noticed one specific trend in this area – the reluctance for businesses to experiment with digital technology. Although digital has picked up steam in other parts of the world, the Chinese market has been hesitant to invest for several reasons. The unfamiliarity of the press and the initial cost investments serve as deterrents to local converters. 

“Digital technology targets shorter runs, which are well managed by the semi-rotary servo letterpress technology which has a good hold in the region,” explains Russell. “Digital technology involves training and is also costly, especially with the consumables and click charges involved, making it less attractive to the local converters. We have no doubt that digital will find its place in the China label market, but it has yet to happen.”

Mark Andy will continue to focus on the growth of the flexo market, which has followed the same trend as China’s economy as a whole. Flexo technology has experienced growth but perhaps not as much as the company would have hoped. “The success of, and familiarity with letterpress technology has delayed the widespread adoption of flexo technology as a productive and efficient way to produce labels in China,” says Russell. “A transition from letterpress to flexo would involve significant operator training and management’s adoption of a new business model when evaluating the various costs that go into label production.”

The Imitation Game
Due to the more cost-effective nature of the region’s traditional print methods, Mark Andy’s Russell notes that imitation equipment is a concern. The concern involves letterpress more so than upcoming technologies like flexo and digital.

“Because the transition from letterpress to flexo is not as prevalent in the region, the local interest in copying the more advanced flexo presses is not as lucrative for a manufacturer, making imitation equipment less of a concern to us as a leading inline flexo press manufacturer,” adds Russell.

Avery Dennison has taken preventative measures to fight against imitation materials. Chua says that the company has dealt with this issue, which has affected labels and other areas, in the company’s 20-year presence in China.“We have taken actions such as announcing and sending warning letters to our customers to help them identify and distinguish Avery Dennison products from counterfeit goods,” says Chua. “We are also working on ways to provide customers and end users with easy access for tracking their orders. We don’t really believe that imitation products will pose a real threat to Avery Dennison, as the high standard of service we provide to our customers is the real differentiating factor. However, we continue to keep a close watch on counterfeits in different territories and take necessary actions to protect our customers’ benefits and promote fair competition.”

Offset for stamps
Nilpeter has an established reputation in China. The Postage Stamp Printing Bureau of China Post Group signed a contract for a 6-color Nilpeter MO-4 offset press for Chinese stamp production in 2013. Each year, China produces about two billion stamps and five billion greeting cards. That business equates to roughly $1.7 billion (1.5 billion euros).

In China, stamps are big business. The country is believed to have more than 20 million collectors. The industry is so big, in fact, that UPM Raflatac and Avery Dennison each designed special laminates that allow self-adhesive stamps to be steamed off the envelopes. Therefore, stamps escape the risk associated with damage to the substrate.

China came to purchase the Nilpeter press through networking with Post Danmark, whose Nilpeter press was then combined with an intaglio unit to produce high quality stamps. This led China to follow the same path.

Increasing eco-Awareness
According to UPM Raflatac, its Changshu mill site is the largest producer of uncoated papers in China. The site, located on the Yangtze River, has an 800,000 tpy fine paper mill, labelstock factory and R&D Center. UPM Raflatac supplies paper and film to the various converters in the region.

Of the materials produced, two thirds are sourced to China, while the remaining amount is distributed throughout the Asia Pacific region. The Asia R&D Center located at its Changshu mill site manufactures local fiber raw material research for the China and Asia Pacific markets.

UPM Raflatac performed a Chain of Custody tour in several Asian countries prior to attaining FSC and PEFC certifications. Due to the increase in environmental awareness, sustainable origin and traceability are of great importance. All of the certified materials in this region containing the FSC or PEFC logo are verified to have used wood fiber coming from sustainable and legally managed forests.

“We are also going to further market our sustainable FSC and PEFC products and introduce a new LCA calculation method in order to provide accurate information about label material sustainability,” says Haavisto.

UPM Raflatac has attained these certifications in its labelstock slitting and distribution operations in the Guangzhou and Tianjin terminals. In 2014, UPM Raflatac invested nearly $16 million in machinery in China and Malaysia. The company sought an increase in its coating line of self-adhesive labelstocks in Changshu. UPM Raflatac estimated that the additions were set to add more than 50% new coating capacity in the Asia Pacific region.