How are Megatrends Shaping the Plastics Industry Today?
Megatrends that are Looming over the Plastic Industry in the Perspective of Economists, Entrepreneurs, and Businesspeople
In the ever-changing world, it is well recognized that technological advances will set off tectonic shifts in the business sphere. However, there are many more factors that will bring about changes, and their effects will be far-reaching, seeping into our daily life and lifestyle and transforming our economy and society.
For the first 2019 issue of All Around Plastics, Assoc. Prof. Somprawin Manprasert, Executive Vice President and Head of Research Division at the Bank of Ayudhya PCL., Mr. Paradorn Chulajata, Head of the Thai Plastic Industry Club at the Federation of Thai Industries, Dr. Pirun Hemmondharop, Executive Committee at Panjawattana Plastic PCL., and Mr. Sakchai Patiparnpreechavud, Vice President – Polyolefins and Vinyl Business at Chemicals Business, SCG, sat down with us to discuss megatrends and other changes in the world that will affect the plastic industry.
Let’s take a closer look at five megatrends that we will soon be faced with, so that we can prepare ourselves and adjust our business plans to keep up with ever-shifting consumer needs and create long-term business opportunities.
An Economist’s Overview of Megatrends to Watch
As an economist, Assoc. Prof. Somprawin started off with a megatrend that is now in the spotlight across the world: aging society. “The world will become an aging society completely in the next 35 years. Did you know that Thailand has the second largest aging population in the region after Singapore?”
He said that this megatrend means new opportunities for entrepreneurs. As the elderly become the majority of Thailand’s population, they will bring with them not only enormous purchasing power but also opportunities for new businesses that will cater to lifestyle changes resulting from their ascendancy, and only business owners who can develop products and services geared specifically towards older people will be able to take advantage of this phenomenon.
Another megatrend to keep an eye on is the rise of the middle-income class. Assoc. Prof. Somprawin said, “If we look at the world’s population and purchasing power per capita, we will see that the middle class forms the majority of the world population and is a group that we cannot afford to overlook, especially in emerging market countries like China and India, where demand for products and services has been growing.
Assoc. Prof. Somprawin found that the transformation of developed cities into smart cities, this trend also includes urbanization, which refers to the emergence of new cities. As urban areas expand, development and prosperity will no longer be concentrated in any specific location, resulting in changes in lifestyle.
Also growing more influential will be individualism, a trend will impact the nature of workforce and consumer behaviors. “Everybody now seeks personalization. Therefore, entrepreneurs must embrace the fact that each market will only become smaller and more niche.”
The final megatrend that Assoc. Prof. Somprawin touched upon was climate change and resource scarcity. “We will see that people are beginning to take environmental issues seriously. This is true not only for the general public. Entrepreneurs are also starting to take notes of problems around them and link them to consumers’ lifestyles,” concluded the economist.
HOW TO: Start Something New
The key is to ask yourself: “How can I change my business?” As megatrends are major shifts that generally unfurl over time, we might not experience it until 3-5 years from now. Therefore, there is still time for businesses to adapt.
“The first phase of adaptation is usually dedicated to investment or R&D. It’s an incubation phase, so it might take extra patience. For instance, if you know that the economy will improve next year, then you might want to build a plant right now. If you wait until then, it might be too late, and you might miss all the opportunities you could otherwise enjoy,” said Assoc. Prof. Somprawin
Keep Track of Megatrends, and Turn Crisis into Opportunity
The first megatrend Paradorn chose to tackle was climate change and resource scarcity. “Discussion on the global level is now moving beyond single use plastics; people are now talking about the anti-plastic trend and producer responsibility, which are hot topics in Europe right now.”
Paradorn discussed the importance of fostering an understanding of the circular economy among plastic business owners. “Apart from educating the public on the proper use of plastics, what entrepreneurs can do is to keep track of latest trends in the industry to learn what people are now ‘not using’ and educate themselves on the circular economy. They should think of how they can keep their raw materials and products in the cycle of reuse for as long as possible, so that they are not simply used and disposed of as they are now. The 3Rs (reduce, reuse, and recycle) principle is still as relevant as ever. We need to slowly change consumer behavior towards responsible plastic use and return as much plastic as possible to the recycling process.” Paradorn added that the plastic industry will definitely be disrupted by environmental trends and both governmental and private sectors need to come together to seriously address these issues.
Disruption can already be seen, for example, in the plastic bottle packing business, where large drinking water companies announced they would no longer use cap seals. However, Paradorn said that thanks were due to the government, which urged these companies to stop using cap seals at the same time, so none suffered marketing disadvantages. Although these drinking water manufacturers saved at least 100-200 million baht, that translated to losses for cap seal business owners.
As for the trend of aging sociey, the representative of the plastic industry said, “Product design must be friendly to older people and take into account physical changes that come with age. This megatrend will also affect the industrial sector as it will trigger shortages of a key factor of production, which is labor.”
Paradorn also said that urbanization will affect the design of plastic packaging. To cater to the fast-paced life in urban areas and the demand for convenience, plastic business owners will need to come up with plastic packaging that is compact, easy to open and close, and lightweight. At the same time, some serious rethinking will also required to make sure that these products will not turn into more waste.
HOW TO: Take a Chance, Make a Change
“The anti-single use plastic trend will be on the rise. First off, we need to know our place in the industry. Thai people are only beginning to pick up on this trend this year, while business owners have been feeling its effects for about 2-3 years. Plastic business owners need to think of how they can adjust their products to cater to customer needs if one day consumers are willing to shell out a little extra money for products that make them feel like they are protecting the environment,” said Paradorn.
He also gave a piece of advice for entrepreneurs who wish to grow sustainably. “Any plastic businesses that make their products easy to recycle will survive.”
Stay Ahead of Megatrends by Fostering Collaboration
In addition to aging society and individualism, Dr. Pirun Hemmondharop, an entrepreneur and businessperson, said that the two megatrends that we should keep an eye on are the circular economy, a shift from the take, make, and dispose model towards service life extension, and urbanization, which will lead to increased consumption of energy and natural resources and cause waste to multiply.
“As an original equipment manufacturer (OEM) of plastic parts, all fingers are pointing at us, accusing us of damaging the environment. What we can do is to approach our clients to present plastic parts that are lightweight but retain the same mechanical properties and promote the use of recycled plastics in manufacturing. Therefore, we have recently focused our attention on the structural design of plastic parts and the use of engineering software. As these are areas that we wish to develop further, we are looking into the possibility of collaborating with experts, such as starting a collaborative project with SCG to develop new plastic resins that enable us to manufacture lighter plastic parts. At the same time, I believe the government should impose packaging taxes. This measure can be implemented quickly and yield tangible results.” remarked Dr. Pirun
HOW TO: Balance between Production and Consumption
The key to dealing with impacts of megatrends on plastic manufacturers is collaboration.
From the perspective of a manufacturer, Dr. Pirun believes the upstream sector will also play a vital role. If there is no governmental measure requiring a decrease in the use of plastic in production, it will be difficult for business owners to convince their customers as they won’t see the necessity.
“We can’t tell exactly what kind of plastics we need. We only use what we know is available. If upstream manufacturers can produce eco-friendly and price-competitive plastic resins for us, then we’ll choose them. Therefore, upstream organizations, both plastic producers and governmental agencies, play the most vital role in getting the ball rolling.”
Challenges of Adapting to Changes in the Business Sector
Although the world may be changing at a blinding pace, businesses well-equipped to deal with megatrends will enjoy advantages over their competitors. SCG Executive Mr. Sakchai Patiparnpreechavud believes that keeping up with megatrends will be of paramount importance for entrepreneurs in the plastic industry who wish to stay ahead of global trends and be able to create businesses that can meet consumer demand sustainably.
Discussing an megatrend overview, Sakchai said, “Urbanization has created many interesting new business models and transformed the lifestyle of city dwellers. As technology makes life more convenient, communication and lifestyle shift accordingly. Another megatrend that follows involves climate change and resource scarcity. There are concerns over how increased urbanization will affect the environment and natural resources. In addition, advances in medical technology have given people better quality of life and extended their life expectancy, while birth rates have been declining steadily, resulting in an aging society. As you can see, these megatrends are interconnected.”
Sakchai believes that megatrends will spell doom for our environment if all sectors involved fail to come together and find new ways of protecting it.
As a raw material producer, SCG’s Chemicals Business deals with both plastics that are found in daily life and those that are not, especially in packaging and logistic products. As online marketplaces continue to grow, there will be even greater demand for plastics for new applications.
“Chemicals Business, SCG has been actively studying megatrends. Our company anticipates how the behavior, way of life, and demand of people will change in the future to create action plans that will allow us to introduce new products and services in response to these shifts,” said Sakchai. With its forward-looking attitude, the company strives to find new processes with its clients, their customers, and consumers to create innovative products and services and make the most of the resources that it has.
At present, Chemicals Business, SCG is actively promoting the concept of the circular economy among its suppliers and all related parties, with the goal of bringing about eco-consciousness and encouraging them to apply this model, which encompasses product design, usage, storage, retrieval, and reuse.
HOW TO: Find Meaningful Work
Sakchai said while plastics are useful, especially when comparing its cost to utility ratio against that of other materials, it is undeniable that the retrieval process is still problematic. Even though new plastic resins that can be recycled several times are invented, their utility will remain limited and cause negative environmental impacts without better plastic recovery and recycling management.
“As entrepreneurs in the plastic industry, we need to join forces and design products that are durable, recyclable, and eco-friendly,” concluded Sakchai.