Paper prices have risen again!! Since December, paper prices have once again surged. Since September last year, paper manufacturers and their upstream and downstream suppliers, who haven't had a single good day, are about to fall into a new round of worry and anxiety... Soaring, plummeting, and soaring again, paper prices are like a rollercoaster. It's no exaggeration to say this year's paper market has been like a rollercoaster.

In September 2016, paper prices began to rise, especially in the fourth quarter of last year.

In April 2017, a new round of price increases began.

In August 2017, prices were raised 3-4 times in just one month, with a new price every day being the real scenario during the boom. From August to September, domestic base paper rose by 300 to 900 yuan per ton.

In October 2017, price hikes accelerated again, continuing until mid-October when they peaked.

In November 2017, prices suddenly plummeted, with four price cuts starting on the 6th, cumulatively exceeding 2,000 yuan per ton, almost matching the total increase from the four hikes in September.

In December 2017, paper mills announced price increases starting in December... With such ups and downs, many merchants who have been in business for over a decade say they've never experienced such a bizarre market. "I really don't want to play this game of wild fluctuations anymore!" industry insiders said. According to CCTV Finance's investigation: Although paper prices will continue to fluctuate in the future, macro policies will remain an important clue affecting the future "paper market." Currently, China's environmental protection efforts are unprecedented, and this backdrop will have a profound impact on China's paper industry for a considerable period. In short, the factors influencing domestic paper prices are now more diverse, making it difficult to judge based on simple seasonal supply and demand, posing new challenges for all players in the industry chain. According to a query on China Paper Network, the largest paper trading market and portal in China:

A paper mill in Anhui took the lead in announcing a 200 yuan/ton increase in corrugated paper prices from November 27;

Hangzhou Xinyuan Paper raised finished paper prices by 100 yuan/ton from November 30, and expects another 200 yuan/ton increase on December 5;

Zhejiang Fuyang Kangnan Paper and Zhejiang Huaxin Paper both announced a 100 yuan/ton increase from December 1;

Hebei Baoding Dongfang Paper will raise all product prices by 200 yuan/ton from December 1;

Tianjin Guangjuyuan Paper, Tianjin Houde Jinyuan Trading, and Tianjin Shengxianglong Paper Products will raise high-strength corrugated paper and recycled linerboard prices by 200 yuan/ton from December 1;

Fujian Huafa will raise high-strength corrugated paper prices by 200 yuan/ton from December 1... Domestic paper products, which had fallen sharply for over a month, have quickly announced price increases, indicating this is not just the action of one or two companies. Is this the wave of price hikes that the industry has been expecting, roaring in? As 2017 draws to a close and the year-end approaches, price hikes! stockouts! bankruptcies! Facing wave after wave of onslaught, dealers in the FMCG industry, are you ready? Challenges brought by price increases to dealers:

  1. To "advance" or "retreat"? Facing rising costs, if manufacturers raise prices, most dealers, under pressure from market terminals, dare not or find it difficult to raise retail prices, squeezing their original profit margins further. Additionally, market share battles are basically fought through price wars. Dealers, already weak in price competitiveness, face the strong offensive of e-commerce platforms. After digesting existing inventory, many dealers must carefully consider whether to "advance" or "retreat." Most dealers have to face transformation or simply exit the market.
  2. Creating a false impression of high market demand Dealers may blindly stock up under the temptation of manufacturers' price hike policies, but actual market demand hasn't truly improved. If retail prices are raised, market demand will shrink further. This "inventory hostage" situation may force dealers, especially small and medium-sized ones, to pay for manufacturers' price hikes. It seems manufacturers are shipping large volumes, but in reality, the goods are piled up in dealers' warehouses unsold. At this point, dealers need to accurately estimate how much policy they should take, how much inventory to hold, what products to stock, and when to stock, and what their actual throughput capacity is—to maximize their own profits while minimizing risks.
  3. Channels being hijacked Many small and medium-sized manufacturers lack brand strength; they can't survive without raising prices, but raising prices risks being undermined by competitors. Therefore, more and more companies want to bypass dealers and face terminals or even consumers directly. The role of dealers has been greatly weakened, and some dealers have even transformed into delivery roles, with their control over channels gradually eroding. Opportunities brought by price increases to dealers: Challenges and opportunities coexist; where there are challenges, there are bound to be rare development opportunities. For many dealers, this is actually a good chance to break through the status quo and build a new marketing structure.
  4. Accelerating traditional dealers to seek change Price increases compress profits and raise costs. Dealers must adjust their thinking and complete a role transformation. They can no longer rely on making money from brand owners but must seek sales and profits from the market. This forces traditional dealers to further think about and explore ways to change, using a more efficient model to replace the traditional one—that is, the transformation and upgrading path to the internet that we often talk about. Isn't this an opportunity to rebuild oneself and get rich again?
  5. Building core competitiveness Dealers who no longer have a competitive advantage in price must now be "faster," "more cost-effective," and "provide better service." Doing these three things well builds their core competitiveness. Among these, "service" is particularly important, as any development requires supporting services. This requires dealers to have limited personnel serve customers better, maintain good customer relationships and visits, and improve per-store output.
  6. Resource combination and channel reconstruction A clear product line combination with high and low ends, primary and secondary products, is the foundation for dealers' survival. Price adjustments will inevitably eliminate low-price, low-quality products and companies, benefiting the overall market environment and further integrating industry resources. Facing this situation, dealers must be rational and reasonable in choosing products to represent. Comprehensive dealers with multi-brand, multi-category complementary combinations will become one of the future development models. At the same time, team integration and channel reconstruction are imperative, not only to maintain existing channels but also to open new incremental channels through internet means. Dealers should not only see the new challenges, new situations, and new problems facing the industry but also the new opportunities, new momentum, and new demands they bring. They should follow the market's inherent, essential, and inevitable laws, while continuously creating conditions and leveraging their advantages of fully understanding the local regional market to fight a beautiful Spring Festival sales battle! -END-