China's labels beckon attention

This is a significant structural shift away from an export-based economic model founded on low cost labor and offers opportunities for more sustainable growth.

The implications of a consumer-driven economy are wide ranging. Not only will there be more demand for consumer goods, but also for higher quality goods as spending power increases. Wage inflation in the major east coast cities like Shanghai is already putting more spending money in the pockets of consumers at the same time as it makes manufacturing in China more expensive.

This in turn is pushing Chinese brands to up their game in terms of decoration and marketing to compete with the major global brands – and across all product sectors from household chemicals to toiletries and cosmetics.

This was the clear message from keynote speakers from UPM Raflatac and from Avery Dennison at Labelexpo Asia in December, and helps explain the major investment global converting group Rako has announced in China (see report by our China editor Kevin Liu in this edition).

Indeed Rako sees China as being its key area for growth in the ‘developing’ economies, with the European group announcing its intention to become China’s leading label converter. Significant investments were announced at the Rako China factory opening in high-end combination and digital presses, and a new local management structure is in place allowing the company to marry the best of German organization and technical training with the best of Chinese local knowledge and enthusiasm.

At the same time the global retailers continue to expand their logistics and retail infrastructure into the second and third tier Chinese cities away from the south and east coastal hubs, further increasing the sustainability of the new consumer-based growth model. It will be interesting to see how these trends impact Labelexpo South China to be held in Guangzhou this December.