September 17, 2014  
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China’s Rush to Flush: The Rise of Toilet Paper

(Editor's Note: The following is based on an article by Shu-Ching Jean Chen that appeared in the August 28, 2014 issue of Forbes Asia magazine.)

According to an article in Forbes Asia magazine, Chinese consumers are well known for their interest in luxury goods, but enterprising manufacturers are now rushing to take advantage of their more private interest in other comforts of modern life. In the country that invented papermaking, the use of household paper—including facial tissues, wet wipes, paper tableware, and toilet paper—is finally on the rise.

Papermaking ranks as one of the four great inventions in which the Chinese take perennial pride, along with gunpowder, the compass, and block printing, the article notes. More than 1,900 years ago, Cai Lun, a Chinese eunuch in the imperial court of the Han dynasty, invented a process for making paper using tree bark and silk. Less well known is China’s subsequent invention of toilet paper by the 6th Century before the Tang Dynasty, well ahead of the availability of modern toilet paper in the U.S., where inventor Joseph Gayetty first marketed it in 1857.

Still, in ancient China, paper was mostly reserved for the production of fine works by the literati and court artists. Today, ordinary Chinese citizens can afford all kinds of paper products for daily household use. But consumption of household paper in China has remained low compared with that in developed countries.

On the average, the Chinese consumed 4.2 kilos of tissue paper per capita in 2012, up from 3.9 kilos in 2011, but still below the global average of 4.4 kilos. Their per capita consumption trails far behind Hong Kong’s 10 kilos, Japan’s 15 kilos, and North America’s high 24 kilos, according to Jefferies, a U.S. investment bank, citing data from the China National Household Paper Industry Association.

But overall consumption is trending up in spite of China’s recent mixed macro-economic picture, continues the article. The Chinese central bank’s recent economic report for the second quarter of this year shows national retail sales up by 12.1% year-on-year, or 10.8% after accounting for inflation.

That’s why top Chinese manufacturers of toilet paper are having a good run due to the country’s expanding middle class and its growing interest in upgrading its daily lifestyle. Even as 16 of the country’s 23 listed paper producers, whose products are mainly for industrial use such as containerboards and packaging, have suffered from declining sales or outright losses, three manufacturers specialized in household paper, Hengan International, Vinda International (in which Svenska Cellulosa AB, Sweden, last year took a 51% stake), and C&S Paper, are thriving, the Forbes Asia article reports.

The China National Household Paper Industry Association calculates that the trio each racked up revenue growth year-on-year by 15.2% for Hengan International to HK$10.415 billion,14.8% for Vinda International to HKD$3.31 billion, and 4.6% for C&S Paper to HK$1.14 billion in their 2013 first half results. Global giants Kimberly-Clark (USA), and SCA (Sweden) are also active players in the China tissue market.


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