As China`s consumer-driven economy takes root and expands, domestic tissue consumption could easily double – even at the same population

China is papermaking`s birthplace and possibly the first to use hygienic paper frequently and consistently.

Papermaking then kickstarted a whole new age in Europe before spreading to North America with the Fourdrinier continuous paper machine`s invention.

The development of tissue-making technology started in North America over 100 years ago in order to create a new class of consumer hygienic paper use that eventually spread to developed countries worldwide.

However, China`s rapid economic development has now returned to become the centre of global papermaking. In less than 15 years, tissue production and consumption grew swiftly to make the country the new centre of the tissue business. Figure 1 shows the current top ten tissue producing countries with their relative production rates. As we can see, China has more than double the production rate of the United States, the next largest producer.

Because of this rapid growth, the installation of new tissue machines each year was required, as shown in Figure 2. This recent growth period from 2007 to projected 2022 saw China driving most new global tissue machine installations (about 65 to 95%) each year. This has been a boom to both the European tissue machine builders and the development of home-based tissue production machine builders in China. This addition rate slowed in 2015 as we see some machines were taken out as replacements came in. 2018 and 2019 saw more machine reductions as older mills with high pollution effects were removed.

The trend also shows that commercial tissue or AfH tissue production capacity began to grow. In 2021, we will see the pace of new machines increase and the 2022 rate shown is expected to be revised upward. Fisher International`s China Insights February report projects that around three million tonnes of new tissue capacity will be released in 2021.

China`s tissue machines have not employed advanced technology to produce textured or structured tissue except for anecdotal evidence of home-grown TAD experimentation. This has changed as Hengan International Group announced two Toscotec TADVISION TAD tissue machines in 2022 at its Shandong and Hunan mills.

This technology is [designed to ensure superior bulk, softness, and absorbency". Hengan`s announcement claims to [break through the barrier of conventional and textured tissue in the Chinese market, aiming to manufacture top quality structured tissue with the highest bulk, softness and absorbency properties" - which is not as surprising as it may first appear. Consumer kitchen roll towels are becoming more popular with consumers in the big coastal cities. Since China must import pulp, this technology will help with the efficiency in producing the most absorbency of water from a gram of pulp.

This rapid growth in tissue capacity has resulted in a very fragmented market. Figure 3 shows the current hyper fragmented share of production by the numerous Chinese tissue companies and suggests that market consolidation can be expected in the intermediate-term after the current growth phase.

China can build this colossal tissue manufacturing business due to its large population and low tissue consumption base per capita. Its population is forecasted to reach 1,397,897,720 by July 2021 according to the World Factbook. Tissue consumption per capita was estimated at 6.9kg per year in 2019, however, the country`s consumer culture is in different stages of development in other areas. The Southeast coastal areas tend to lead, and the Northeast follows with the Western regions lagging. The overall consumption rate is about one-third to one-half the South Korea and Japan rate and one-quarter the United States, making it easy to expect that China`s tissue consumption and production could double in the next decade.