Business Overview

Business Overview

Business Overview

The global economic situation in 2019 still experienced ups and downs due to the US-China trade negotiations, slowing down global economic growth and triggering the relocation and restructuring of the global supply chains. With the subsiding benefits of US tax reduction, limited effect of interest rate cuts, as well as the influence of geopolitical factors, such as the Japan-Korea trade war, the political situation in Hong Kong, the overall economic downturn in Europe, and Brexit, the weak demand from the world's major economies has worsened. This has prompted various industries to take a wait-and-see attitude toward the future global economy. Although the world's major countries have boosted their economies by focusing on domestic markets, international trade has continued to lose momentum. Global Insight estimated that the global economic growth rate in 2019 was 2.6%, which was lower than the 3.2% in 2018.

Taiwan's paper industry was affected by the ban on the import of waste imposed by China; as a result, the market for recycled paper has continued to decline. As the global economic and trade situation has fluctuated, industrial paper mills have adopted more conservative strategies; as such, the paper prices have remained stable. The export market was affected by the trade war and the downturn of the China's market, so, compared to the business boom last year, the sales volume have been sluggish this year. However, the domestic market of industrial paper has become better because orders were transferred back to the domestic supply chains and Taiwanese business returned their investment from China back to Taiwan. In general, the changes in the business environment in 2019 and the relatively higher domestic and foreign sales volume in the same period last year, the production and sales of industrial paper decreased this year. However, the export of other paperboards increased, so the total paper sales increased slightly. According to statistics from the Taiwan Paper Industry Association, total production volume of Taiwan's paper made in Taiwan decreased by 0.1% year-on-year to 4.25 million tons, and the total sales volume grew by 0.4% to 4.26 million tons. The paper market in the China continued to tighten the control of the import of recycled paper and the trade war has led to the slight downturn in the China's market and the volatility in the price and volume. The economic growth rate in Vietnam is 6.9% in 2019, which was a decline compared to last year. However, the subsequent US-China trade war has prompted the global supply chain to restructure, bringing about the transfer of orders to Vietnam. Also, the demographic dividend has driven strong domestic demand with an increasing need for packaging paper. Thus, its prospects were promising.

In 2019, total consolidated revenue of the whole group was around NT$40,387.58 million, a decrease of 2% compared with the previous year, and net profit after taxes amounted to approximately of NT$2,347.1 million, a decreased by 43%. The group's overall revenue has decreased slightly compared to last year. However, benefited from the continued low price of recycled paper, with the reorganization of corrugated container plants in China and the movement of paper-making and corrugated container sectors in Vietnam onto the right track, the profit of main business has grown from last year. The overall profile of production and sales is as follows:

97.2% 1,803,450 metric tons of paper & paperboard was produced, an increase of 7%, and the budget target attainment rate was 97.2%.
90.4% 1,406.33 million square meters of converting products were produced, a decrease of 3%, and the budget target attainment reached 90.4%.
2.0% paper& paperboard sales reached 1,003,133 metric tons, for the growth of 8%; and sales of converting products reached 1,370.64 million square meters, a decrease of 2.0%.

Our efforts and achievements in management and operations in 2019 are as follows:

  • By tapping into the favorable market environment and working collectively, the company's operating gross profit has gradually increased.
  • The company plans to establish a new Yenchao modern paper container factory, a biomass thermoelectric system in Chupei while expanding Vietnam's paper-making and paper container factories to strengthen its domestic and foreign production and sales capabilities so as to contribute to the group's momentum.
  • The company has won multiple awards in circular economy as well as energy saving and carbon reduction. Three household paper products of its “Dandelion” and “Andante” brands have obtained carbon reduction labels.
  • The company has also actively participated in green promotion and CSR investment, which supported Cheng Loong's 60th anniversary events and sponsored 2019 Taichung World Flora Exposition.

In 2020, global economic and trade estimates are still affected by the situation of Wuhan pneumonia and US-China trade negotiations, but China ’s policy on the import of recycled paper and trade wars have led to restructuring of raw materials and global supply chains. It will be another wave of challenges and opportunities for Cheng Loong's business in Taiwan, China, and Vietnam. With the company's optimization of production and sales and investment expansion in various places, it is expected to reap rewards in this wave of opportunities. In the coming year, factories at home and abroad will jointly adopt sustainable development as the goal to keep abreast of the market with flexible production and sales strategies so as to usher in a new prosperous project for Cheng Loong in the following 60 years. In 2020, the company's main business strategy:

  • 1. Improve talent and management capabilities, be committed to domestic and overseas development, and become a local leading benchmark manufacturer.
  • 2. Coordinate production and sales operations, bring the group's synergy into play, undertake digital transformation, and establish a smart production and sales system. 
  • 3. Keep abreast of market trends, ensure competitive high-quality sources of materials, and win the competition in green supply chains. 
  • 4. Integrate the packaging service system, increase clients' value, implement brand marketing, and expand market share. 
  • 5. Create a green-cycle operating system, fulfill corporate citizenship responsibilities, and pursue sustainable development of the group.