The Japanese packaging market will undergo drastic changes, including mergers and acquisitions activity, an emphasis on exports, and capitalization in economically emerging Asian countries, according to Toshio Arita, the Japan editor for ``Packaging Strategies'' newsletter.
Another revolutionary influence is the globalization of a packaging market that primarily had been a domestic business.
``This is one of the most emerging issues for the Japanese packaging industry and its leaders as they target sustainable growth to expand the market outside Japan and also to compensate their less-profitable domestic businesses,'' Arita said.
The country's packaging industry struggles because of deflation and hard competition between retailers, he said, despite an overall upturn in the Japanese economy.
In spite of steep increases in raw material prices during the past two years, ``the packaging industry has not been able to pass its additional cost to the end users, particularly in the food and beverage segments,'' Arita said. At the same time, more imported and locally produced multinational brands are being launched on Japanese store shelves at competitive prices.
In addition to M&A activity in Japan and on the global front, the country's industry is affected by an acceleration of raw material exports for products and packaging. Companies are capitalizing on production facilities, especially in regions like China, Indonesia and Thailand.
Private equity firm Blackstone Group LP and buyout firm Kohlberg Kravis Roberts & Co., among others, have announced plans to initiate investments in Japan; but, so far, there has been no sign of their actual involvement in the country's packaging industry, Arita said.
Those types of investors are seeking out packaging companies capable of developing new technology and of restructuring by themselves. They also are interested in businesses they can expand quickly.