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On the morning of April 28, Dongfang Precision, a leading enterprise in the corrugated packaging equipment industry, released its first annual report after selling off Pride Power, and resuming its main business. According to the report, the Company achieved steady growth in 2019. It derived an operating income of about 2,868 million yuan from “premium intelligent equipment”, up by about 20.64% than that in 2018, and the net profit attributable to the shareholders of the listed company totaled about 1,838 million yuan. Among other things, the operating income from the business of the corrugated board production line amounted to about 2,064 million yuan, while that from the business of the corrugated cartons printing line amounted to about 622 million yuan.

Boasting devotion to business, advantages in resources (research & development and innovation capacity), steady growth, and dominating market share, the Company has established itself as a leading equipment supplier for downstream corrugated packaging manufacturers, and ranked first in China and in the top 3 in the world in the field of intelligent corrugated packaging equipment.

Taking the initiative and grasping opportunities arising from integration in downstream industries

Due to the low market access threshold and the limited service coverage, the industry is comprised of many small manufacturers. The market share (CR5, Concentration Ratio 5) of the five largest enterprises is less than 10% and much smaller than that in Europe and America, which is between 40% and 70%, indicating a large space for improving.

With stricter environmental protection policies, rise in labor costs, booming of e-commerce, and the advancement of automation, end-users tend to impose increasingly more stringent requirements for corrugated packaging quality, delivery speed, and cost-effectiveness. In the industry, the market concentration ratio is improving as small and medium-sized enterprises are phased out at a faster pace, and large enterprises are gaining market share. According to the data from the National Bureau of Statistics, the number of enterprises that were above the designated size and engaging in the paper and paperboard container manufacturing industry declined from 2,696 in 2013 to 2,391 in 2018, which revealed a growing tendency towards integration in the industry.

Considering efficiency, quality, cost, environmental protection, and energy conservation, large paperboard cartons manufacturers prefer to purchase midrange or high-end intelligent corrugated packaging production lines. Such market demand will drive the upgrading of technology and equipment, and speed up industry integration. When it comes to corrugated board manufacturing equipment and corrugated board printing equipment, the equipment industry will experience an accelerated concentration of capacities and faster shutdown of outdated inefficient equipment manufacturers with little application of high technology.

The increasing trend of concentration of the corrugated cartons packaging industry, consequently, places higher demands on packaging equipment suppliers. To gain a competitive edge, Dongfang Precision embraces the philosophy of “committing to be a leading provider of comprehensive solutions for intelligent packaging equipment and a leading supplier of key spare parts in the world”, and takes the initiative in planning for intelligent manufacturing of Industry 4.0. For years, both Dongfang Precision and its subsidiaries have established their brands as the top brands in the industry, and their products have been known for their performance, smartness, stability, and reliability. By adopting service-oriented manufacturing, the Company provides customers with excellent technical support and after-sales service above expectations. The Company leverages its advantage as a leader and grasps the structural opportunities from integration in downstream industries.

Reinforcing digital transformation and promoting technological revolution in the industry

For intelligent manufacturing, Dongfang Precision actively carry forward Industry 4.0. Fosber Group, an affiliate of Dongfang Precision, has accumulated rich experience in the application of Industry 4.0, such as intelligent identification, intelligent diagnosis, intelligent correction, and self-study, in corrugated board production lines. Further, the Company independently developed a production management system that can interface with the customer’s ERP system for automatic intelligent management of orders and production capacity of corrugated cartons printing, fully improving the customer’s production efficiency.

All intelligent applications shall be based on the collection, analysis, and mining of production data, and digital transformation is the only road to intelligent manufacturing.

On the basis of the manufacturing experience in the field of intelligent packaging equipment, the deep insight of downstream customers’ production processes, and the established practice in the developed intelligent production management systems, the Company organically combines mass data on production processes and production equipment, and algorithm analysis and processing, integrates software, hardware, and outputs, expedites technological innovation, and promotes the development of the digital software systems for equipment, and the digital upgrading of intelligent packaging equipment. The Company facilitates the upgrade of intelligent packaging equipment and technologies, and promotes industrial innovation to meet the upgrade demand from downstream large corrugated cartons manufacturers, accelerates integration in the corrugated packaging industry from top to bottom. And in turn, this has an impact on the fields of corrugated board manufacturing equipment and corrugated cartons printing equipment, further quicken the pace of the corrugated packaging equipment industrial integration and capacities concentration.