China's In-mold Label Market: Current Status And Analysis (Ⅰ)

Current status of the in-mold label market

As a supreme process in label application, the in-mold label is nearly perfect in comparison with the pressure-sensitive label. For this reason, during recent years, in-mold label industry, integrating such sectors as label raw materials, printing processes, manufacturing molds and plastic forming equipments (such as blow molding machines and injection molding machines), has experienced a rapid development in developed countries.

Regarding the overseas markets, the United States and Europe are the biggest ones for the in-mold label. In terms of bottle manufacturing process, blowing molding is popular in the United States, while in Europe, injection molding prevails. According to the report of IMDA (In-Mold Decorating Association), in 2005 the United States consumed 2 billion square meters of raw materials to manufacture in-mold labels, covering 7% of the world' s label industry. In contrast, China consumed about 10 million square meters in 2006. The per capita consumption of the pressure-sensitive label raw materials is below 1 square meter, though the total consumption reached 1.3 billion square meters.

Based on the analysis of the above data, we can find that China' s consumption of the in-mold label raw materials constitutes only 1/200 of the United States, and at the same time, 0.7% of China' s consumption of the raw materials for pressure-sensitive label raw materials. If we take the other types of labels into consideration, the in-mold label will only constitute a very tiny proportion in China' s whole label industry. From an optimistic perspective, this is just a reflection of China' s tremendous potential market, a large room for development as well as the possible acceleration of development. However, during recent years, the in-mold label has covered a tortuous way in China.

The in-mold label boasts the best decorative effect among the label family. After being applied, it creates a flat surface for the container and elevates it to a refined class. Therefore, it has gained great popularity and even become a fashion.

Since 2000, when the in-mold label was initiated as a new packaging method in the Chinese market, it has experienced 6 years of rapid development. The consumption of raw materials has risen from the original less than 1 million square meters to the current nearly 10 million square meters.

In terms of consumption of raw materials, the in-mold label is increasing at an astonishing speed, and almost indicating an exponential increase. However, this is only a superficial phenomenon. The low cardinal number in the domestic market has magnified the growth rate. In fact, the development of the in-mold label is affected by many negative factors, which can not be eliminated in a short term. During the recent one or two years, in particular, the growth rate of the in-mold label has been evidently reduced. Some in-mold label users even turned back to use the pressure-sensitive label.

Problems hindering the development of the in-mold label in China

Which factors on earth are hindering the development of the in-mold label? Currently, the price of the in-mold label is over 200% of that of the pressure-sensitive label. This is caused by several factors, including the price of raw materials, consumption during label manufacturing and application, the cost of the mould, etc.

1. Price

(1) Price of raw materials

Currently, the average price of the common raw materials used in printing presses is over RMB 6 Yuan per square meter. The price of pressure-sensitive raw materials such as white PE is equal to or slightly lower than that of in-mold label raw materials. At present, BOPP is the only kind of raw material in the market that has been generally recognized by the customer, while the new raw materials from other suppliers are just being validated by the market. Under such circumstances, the printing works tends to select the prevalent pressure-sensitive raw materials manufactured through a mature process.

In China, in-mold label application is still at a preliminary stage, and it has a long way to go. The shortage of products and the less competitive supply chain have both contributed to a high price. In a sense, this does not comply with the market rules, because label manufacturers and bottle blowing mills are expecting more options. In the United States, there are more than 10 in-mold label raw material suppliers. In-mold label materials should be divided into high, intermediate and low classes in the same way as pressure-sensitive raw materials. Thus, a diversity of options will be offered. Through competition, a compromise can be reached between improved quality and the price which can be accepted by the customer.