Gift box industry in China
Economic growth and new consumer behavior and preference
Over the past decades of reform and opening up policy China has achieved remarkable economic success with continuously going strong GDP increase and average income growth of its people. China’s industrialization and urbanization took its economy to another level, converting large population to urban dwellers and economic growth has never stopped and soared up high and it is more developed into a market based economy. This is followed by the rising income and disposable income level and a constant improvement of living standards of Chinese people and has resulted in increased awareness of modernized lifestyle.China’s burgeoning middle class offers tremendous potential for businesses worldwide, especially for foreign companies who have entered into Chinese market or are planning to bring their presence into the market. The pace of change has been extraordinary, and newfound affluence also changes the way middle class behave in comparison with the past and leads to new behaviors in this group. Having grown up in an environment of non-stop economic growth and abundance, mass middle class are more confident that their personal incomes will rise. They also tend to be more brand loyal, more willing to trade up to premium products and occasionally more adventurous in adopting new products and services according to McKinsey’s research on forecast China market.
Gift giving culture in China
It is well known that Chinese care so much about “ face” and are accustomed to prepare gifts for dear friends, families during festival or special occasions. Gift giving has been one of the means used in workplace or unprofessional ordinary life for the sake of relationship in China; in fact, it has been a tradition as the Chinese saying goes “courtesy demands reciprocity” or “Li Shang Wang Lai”. The relationship between these two people or business partners is made stronger by such friendly gesture of gift giving, and it is usually not a one-sided random behavior but equal and reciprocal, more like keeping a tally. For instance, when one party receives a gift, the party somehow is expected and compelled to return the kindness at a future date with a gift of at least an equal value to the offering party to keep the balanced and harmonious relationship.
The differenceis that nowadays Chinese people are sending out more expensive gifts such as iphone, watch, computer or fashionable clothing rather than snacks or malted milk like in the 80s of last century, consequently they prefer high-end, gorgeous looking gift packaging to meet the quality of their gift products or to show personal or individual taste, even cultural flavor. Gift box industry in China has also experienced leaping progress from infancy stage. By the end of 2003 gross output value of gift box industry in China had overpassed about 270 billion RMB, at a year-on-year increase rate of 20%. According to relevant statistics, in year 2002 alone around 1.99 billion pairs of shoes were produced by relatively large scale shoe makers, while the number for shirt producing by clothing manufacturing enterprises was 2.16 billion pieces, that is to say, in year 2002 gift box required for shoes and shirts were amounting to 4.15 billion pieces. China undoubtedly has become one of the largest gift boxing markets in the world. As China keeps consecutive annual GDP increase of around 10% and rapid growth of domestic consumption, it will greatly stimulate the development of gift box industry in China and provide an unprecedented opportunity for market players to exploit gift box industry in China.
How to define the Gift box industry in China
There are a vast variety of gift packaging in gift box industry in China, such as moon cake box, tea box, wine box, shirt box, underwear box, tie box, shoe box, mobile phone box, audio and video box, hardbound cigarette case etc. And it involves a wide range of fields like cosmetics, jewelry, cigarette, medical health care products, mobile phone and other sub-industries. Currently cardboard box, folding carton, PVC, density board are the main raw materials used in producing packaging box in gift box industry in China, among which cardboard box is the best and most popular. At present gift box sold on the markets vary in types of design and forms and is being innovative and upgrading to not only meet the quality requirement of gift products but also the requirements from consumers. In the meantime, constantly upgrading gift box has also improved the added value of gift products which makes the product makers more competitive. However, 90% of gift boxes are handmade, and those enterprises producing gift box are mostly small scale with relatively lower level of industrialization and poor product quality, still labor-intensive by relying on cheap labors. As the market is upgrading, gift box producing enterprises will inevitably face new problems such as high labor cost and increasing rent and other expenses which could have great impact on enterprises future development. Certainly the present gift box production enterprises are still in the stage of handmade mode and far from forming industrialized packaging work process, which makes it difficult for those enterprises to grow bigger and stronger. In order to enhance productivity and competitiveness in the market, industrialization and mass production is the possible way for the future development of the whole industry. Currently some of the machinery enterprises gradually introduce semi-automatic and full automatic machine equipment applicable in gift box producing business and completely or in part replacing handmade producing mode, productivity of gift box making speeds up more than 5 times which reduces labor cost and expands production scale and is obviously helping Gift box industry in China.
In addition, according to the requirements of current national policy guidance,energy saving and environmental protection will become the main focus in the future for a considerable period of time for gift box manufacturers, since cardboard is environment-friendly and recyclable, it will be used as major raw material in gift box industry in China.