Dow Says Chinese E-Commerce Boosts its Packaging Biz

China's growing e-commerce market, which now accounts for about 40 percent of global retail e-commerce sales, is giving a surprising boost to Dow Chemical Co.'s packaging business in Asia-Pacific, company executives said at the recent Chinaplas trade fair.

While it was not exactly a strategically planned market, it's been a boon for the enhanced expanded polyethylene foam packaging business, said Lawrence Cheng, commercial director of packaging and specialty plastics for Greater China.

He spoke in an interview at the fair, held in mid-May in Guangzhou.

"Five or 10 years ago, we didn't expect e-commerce to grow rapidly in China," Cheng said. "But e-commerce platforms like Jingdong and Alibaba, their service is not just China. So, if we enter in that market, the packaging material will come from global market."

Dow said other markets in Asia Pacific, such as India, Indonesia, Singapore and Malaysia, are also seeing rapid growth in e-commerce.

"Because when you ship a lot of products, then you want it to be lightweight to save the freight costs," he said. "At the same time when you ship the stuff it could be having some soft points. You want puncture resistance. This new technology basically gives us a lot of potential to grow a lot faster."

The EPE foam is a mix of low and linear low density PE. Dow executives said it offered potential for significant downgauging and recyclability.

Dow said the April launch of its high pressure LDPE line at its Sadara joint venture in Jubail, Saudi Arabia, along with a mixed-feed cracker and three other PE units already operating there, has helped it manage demand in Asia Pacific. Cheng said 70 percent of the output from Sadara, a joint venture with oil firm Saudi Aramco, is going to Asia Pacific.

"We were tight on supply, but with Sadara starting up our growth, it has been double for the last, almost every quarter, every month, we've broke all the records," Cheng said.

The April startup marked the commercialization of the entire plastics output from the facility, Dow said.

Company executives also pointed to their Pack Studios innovation center in Shanghai as allowing faster access to rapidly changing markets.

"E-commerce is a prime example of that, having been so disruptive," said Mark Saurin, commercial vice president of packaging and specialty plastics, Asia Pacific. "No one could have expected it. Time and speed become the name of the game."