The increasing use of paper packaging and the reduction in Chinese paper production are bringing dual benefits to Vietnamese manufacturers.
In Vietnam, where e-commerce is developing at lightning speed, the demand for paper packaging has been increasing rapidly because of its advantages over plastic, metal and wood. Steady export growth has also fuelled demand. In addition, new policies are expected to turn China into a net importer of industrial paper.
In Vietnam, packaging paper is the major product of the paper industry, accounting for 50 percent of total consumption and 45 percent of total import turnover. The demand for packaging paper depends on processing industries, including food, cosmetics, consumer goods, electronics, footwear and seafood.
According to the Vietnam Pulp and Paper Association, Vietnam consumes 3.5 million tons of paper each year, including 350,000 tons of printing paper, 2.5 million tons of packaging paper, 195,000 tons tissue and other types of paper. The paper demand is predicted to increase by 10 percent in next 10 years, and by 15 percent for packaging paper.
Dong Hai Ben Tre JSC (DHC) has invested in the industry. In terms of production capability, DHC holds 4 percent of the domestic market. It is one of the five largest industrial paper manufacturers in Vietnam. The other four are Sai Gon Paper in Ba Ria-Vung Tau province, Vina Kraft in Binh Duong, Chang Yuen Paper in Binh Duong and An Binh Paper in Binh Duong.
DHC’s new plant, Giao Long 2, is expected to become operational in early 2019. It will raise its kraft paper manufacturing capacity by 3.5 times to 840 tons per day and 205,000 tons of kraft paper a year.
DHC can supply most of its own kraft paper to serve the carton production line (150,000 products per day). This allows the company to cut costs and minimize risks caused by the input material price fluctuations.
DHC’s gross profit margin is higher than the other companies in the same industry.
DHC is one of 300 joint stock companies, private and foreign invested enterprises that produce paper. There is one state-owned paper manufacturer, the Vietnam Paper Corporation.
Reports show that most paper enterprises in Vietnam have small production of below 100,000 tons per annum. Fewer than 20 enterprises have capacity over 100,000 tons.
Vietnam’s manufacturers have been trying to scale up production. Tan Mai Mien Dong last September received a license to build a new 150,000 ton per annum packaging paper plant.