Severe competition:
In China, the egg tray or other paper pulp production is very centralized, which will cause severe competition between enterprises. When the raw material increase, it’s very difficult to move this stress to the downstream purchaser. The price competition is the only solution for the egg tray machine owners. By merging small scatter manufacturers, this situation will be much improved, as well as the pricing and profit margin percentages. In that circumstance, the threshold of entering egg tray production will be higher, the poorly-managed producers will be eliminated. Apart from that, it will be difficult among producers to compete each other by reducing prices. The price alliance will be established so when the raw material increased, the cost will be moved together instead of cut-throat competition.
Raw material risks:
The raw material is a major cost for egg tray production, it occupies 70% of the total investment, making all producers sensitive in its price fluctuation. It’s a major factor deciding the final profit rate.
Technical risks:
Although most egg tray can be recycled, but once poorly managed, the unqualified products will still cause pollution against the environment. The existing fragment will remain in the natural, causing damage to soil, water and air. Therefore, the technical feature of the egg tray remains a big headache for most producers.