Enterprises in packaging industry "confront" challenges

Many enterprises have invested to increase production capacity. In the photo: A production line of carton boxes of Tetra Pak Company.

Big prospects for exports

According to a recent survey by Vietnam Report on the business performance of packaging enterprises under the impact of the Covid-19 pandemic, 37.5% of enterprises thought that the business situation had deteriorated slightly; 25% were not affected; 25% of them gave a slightly better review, and 12.5% of enterprises responded much better.

Enterprises reflected that the consumption market of many packaging groups was favourable, causing the revenue of many enterprises to grow. However, fluctuations in the price of input materials and transportation costs narrowed profit margins.

The survey by Vietnam Report also said that the packaging industry still has many motivations and room to promote growth in the future. Specifically, Vietnam and many countries that are the main export markets of packaging enterprises have also switched to a strategy of living with Covid-19, the economy has many prospects for recovery and high consumption, which will open growth opportunities for the packaging industry.

On the other hand, free trade agreements such as EVFTA, CPTPP, and RCEP continue to open up export opportunities for industries that use a lot of packaging such as agriculture, forestry, fishery, and processing industry, along with the large demand for high-quality packaging in the world such as high-grade (coated) packaging paper, which presents great export opportunities for Vietnam's packaging industry.

In addition, according to the Vietnam Pulp and Paper Association, packaging enterprises also have opportunities from the trend of moving industrial plants of foreign-invested enterprises (FDI).

Therefore, many enterprises have seized the opportunity to strengthen cooperation and expand production plants. For example, Tetra Pak, a Swedish supplier of food processing and packaging solutions, and Dong Tien Paper and Packaging Co., Ltd. have announced an investment of more than 3.4 million euros to upgrade and expand the recycling capacity of used beverage cartons in Vietnam.

Some enterprises have also invested in production, such as BBP Company in Phu Tho with a capacity of 50,000 tons per year, Cheng Loong Paper Company with a capacity of 350,000 tons per year, Quang Binh Cellulose Company with a capacity of 20,000 tons per year.

Solve challenges

Along with the above opportunities, the Vietnam Pulp and Paper Association said that packaging enterprises still faced many challenges. Specifically, consumption competition among domestic enterprises due to many new production lines being put into production; competition with imported paper: imported paper was expected to come more strongly from countries in the region such as Laos (800,000 new tons), Malaysia (1,000,000 new tons) and from Indonesia, Thailand.

On the other hand, enterprises still faced challenges including lack of raw materials, raw material prices and transportation costs are forecast to remain high.

Moreover, the market is also experiencing many changes in packaging trends and demands. For example, in the face of climate change, concerns about business sustainability are more important than ever, with a particular focus on packaging, and waste generated from the packaging of food, beverages and consumer products.

Therefore, to solve these challenges, domestic enterprises must also grasp this trend in order to make the necessary changes.

Accordingly, a number of enterprises have converted packaging production technology from recycled PP plastic pellets - a material with abundant domestic supply, both meeting the requirements of environmental protection and avoiding affecting manufacturing costs.

According to a representative of Dong Tien Paper and Packaging Co., Ltd., consumers' awareness was increasing regarding the classification and recycling of waste, but recycling in Vietnam faced many obstacles due to the lack of collection infrastructure as well as the low quality of output materials due to old technology, leading to commercial recycled products not having high value.

Therefore, the company had invested 2.3 million euros in a system of factories and production lines for toilet paper and packaging from recycled materials.

Similarly, Tetra Pak is also trying to use renewable materials and reduce emissions throughout its value chain. The goal of the company is to increase the rate of using recycled materials up to 100%.

Along with that, Tetra Pak together with leading beverage and food manufacturers founded the Vietnam Packaging Recycling Alliance (PRO) with the goal that all packaging provided by its members for the Vietnamese market will be collected and recycled by 2030.