RECOGNISE THE OPPORTUNITY:
A. DEVELOP AN IDEA:
Celmacch is eyeing China for the production of their new flexo printing machine. While the rest of the world is plagued by the financial crisis, overall packaging output in China was valued at US$125 billion (RMB860 billion). The country's lower costs have lured manufacturing and production across all industries. Global manufacturing is expected to continue migrating towards China, and the rest of Asia, over the next few years (Wong, P).
China is divided into 3 key production regions where corrugated packaging production is highly concentrated: The Pearl River Delta region (Guangdong, Fujian) has a total annual corrugated carton production capacity of 550-600 million tons; Yangtze River Delta, (Jiangsu, Zhejiang, and Anhui) has a total annual corrugated production capacity of 550 million tons; and Bohai Sea Area (Beijing, Tianjin, Hebei, and Shandong) has an annual production capacity that reaches 500 million tons (Wong, P).
B. TRIGGER EVENTS:
The increased demand for accuracy and customization in the carton packaging market has led to the popularity of die-cutting equipment. The development in the packaging and printing industries led to the need for automatic stitchers and gluers as a response to rising labour costs (Overview of Latest Technologies and Manufacturers in Corrugated Cardboard Manufacturing Industry 2011).
Chinese carton factories look for high speed, wide width, and high performance coupled with the latest technological advances when purchasing corrugated packaging production lines (Overview of Latest Technologies and Manufacturers in Corrugated Cardboard Manufacturing Industry).
Corrugated boxes need to compete against reusable plastic shipping crates and other types of plastic packaging. This, however, is a minor threat. First, corrugated boxes have an environmentally friendly reputation. Second, old corrugated boxes may be disposed off to recycling companies, instead of the cleaning and returning costs that plastic crates are subjected to (World Corrugated Boxes Market 2009).
Some players in the industry like Boix, Serra, Insun, Tangcheng Machinery, Godswill Paper Machinery, Shanghai Eterna, Shenyang Jinchuan, Shanghai Jiayi and Shanghai Hongjing are promoting energy-saving products to promote environment friendly production options (Overview of Latest Technologies and Manufacturers in Corrugated Cardboard Manufacturing Industry 2011).
C. PRE-START PLANNING AND PREPARATION:
As a small company, Celmacch does not have the resources to build a factory. The solution is to partner with another company - this is where China comes into the picture.
Celmacch's plan is to partner with a Chinese company for the production of their new flexo printing machine. They also plan to give their Chinese partner the opportunity to sell this product in Asia in exchange for a royalty commission.
D. ENTRY AND LAUNCH
As Celmacch translates it's plans into action, the company's entrepreneurial team will begin the process of exploring the available resources in China (see MARSHAL RESOURCES for more details) .
The entrepreneurial team will aim to address the issues that the global corrugated carton industry is currently facing. The global corrugated carton industry needs to address production costs and the supply of comprehensive services. There is also the need to address safety issues and reconcile globalization with standardization (Wong, P). Lightweight, quantification, resource saving and cost reduction - this is the expected future of corrugated carton as a result of scientific and technological development (Overview of Latest Technologies and Manufacturers in Corrugated Cardboard Manufacturing Industry 2011).
E. ESTABLISH AND GROW AN ENTERPRISE:
Celmacch's plan has the following key strengths:
1. The new flexo printing machine will satisfy the need for cost reduction without sacrificing quality;
2. Celmacch is subject to the rules of an organization which not only aims to protect the environment but also upholds consumer health and safety;
3. Celmacch is providing China with the opportunity for business expansion with it's Asian neighbours while also imparting technical knowledge.
The launch of this planned partnership will allow Celmacch to grow it's enterprise beyond it's European comfort zone and into the emerging market of Asia.
2. MARSHAL RESOURCES
China's apparent immunity from the credit crunch has made it the economic capital today. The improved standard of living has developed a well educated human capital. As the Chinese government slowly opens it's doors to the rest of the world, the people are gaining contacts and may even become a social capital. Combining these available resources, Celmacch's entrepreneurial team is on it's way to developing a legitimate business idea to also make China the symbolic capital for other markets to emulate.