The Baekpanji Industry Faces Intensified Survival Competition in the Second Half of the Year

A paper mill producing white cardboard.
[Photo by Asia Economy DB]

[Asia Economy Reporter Kim Jong-hwa] The domestic white cardboard industry is shaking up in the second half of this year. As Hanchang Paper embarks on aggressive management through large-scale facility investments, fierce competition in quality and price is expected alongside market expansion.

According to the industry on the 12th, white cardboard used for packaging food, cosmetics, and pharmaceuticals is dominated by the 'Big 4' in the domestic market: Hansol Paper (market share 46%), Clean Country (Kkaekkeutan Nara, 28%), Seha (18%), and Hanchang Paper (8%). In the white cardboard industry, the absolute leader Hansol Paper and the solid second place Clean Country form the front runners, while Seha and Hanchang Paper have been competing closely for third place.

Seha, acquired by Korea Paper in March 2020, has increased its market share from the mid-teens to 18% over the past two years with steady support from its parent company. Hanchang Paper, in October of the same year, acquired white cardboard manufacturing facilities from Sinpung Paper, briefly surpassing Seha with a combined market share of 19%, but chose a strategic retreat for a two-step forward approach.

From November 2020 until last month, Hanchang Paper has been replacing and expanding the acquired white cardboard manufacturing facilities and other aging equipment over a period of 1 year and 7 months. Hanchang Paper invested 90.6 billion KRW, equivalent to about five years of operating profit, into the new and expanded facility project as a decisive move. The new and expanded facility project was completed last month, and trial operations began this month, with full-scale product launches planned from next month. Currently, Hanchang Paper’s market share has dropped to 5% due to production halts caused by the facility replacement and expansion.

A Hanchang Paper representative expressed confidence, saying, "We will complete trial operations this month and expect to start full-scale shipments as early as August. With increased production volume and improved cost and quality competitiveness, profitability will also improve significantly."

With this facility expansion, Hanchang Paper’s annual production capacity will increase 3.75 times, from 56,000 tons to 210,000 tons. This means an additional 154,000 tons, equivalent to 10.7% of the 1.44 million tons of white cardboard produced annually by the industry, will be supplied to the market. As Hanchang Paper secures additional market share, competing companies are on high alert.

An industry insider said, "Hanchang Paper can now supply nearly four times more volume than before, achieving economies of scale and cost reduction effects. While the market size will gradually expand with more than 10% additional supply, competition in quality and price will become fiercer than before." In fact, some companies like Clean Country, stimulated by Hanchang Paper’s supply expansion, are reportedly planning to expand their white cardboard facilities by the end of this year or early next year.

The industry expects that the trend of expanding supply volume due to increased domestic packaging material demand will continue. Another industry official said, "As domestic demand for packaging materials steadily increases, market supply will also gradually rise. However, domestic market growth has its limits. It would be more advantageous to increase export channels and develop overseas markets rather than competing within the narrow domestic market."

This content was produced with the assistance of AI translation services.