When the stationery industry meets ESG, a life-and-death game of “surviving while being sustainable”

A spin-off that exposes a fragile core

M&G (晨光股份) announced plans on the evening of March 16 to spin off and list its controlling subsidiary KeliPu Technology Group Co., Ltd. (科力普科技集团股份有限公司) on the Hong Kong Stock Exchange — a move that, on the surface, looks like a pro‑active capital strategy but, up close, highlights a deeper problem. At the time of the announcement M&G shares were trading at RMB 26.20 and the company’s market value stood at about RMB 24.13 billion. KeliPu already accounts for more than half of group revenue: its sales rose from RMB 10.93 billion in 2022 to RMB 13.83 billion in 2024, and it contributed over 55% of M&G’s revenues in the first three quarters of 2025. Take that “organ” away and what is left of the parent company?

Low margins, weak demand and rising compliance costs

The arithmetic is brutal. KeliPu’s gross margin has slid from roughly 13% in 2019 to about 6.78% in 2025 Q3, even as it drives top‑line volume. That matters because Hong Kong investors price low‑margin, cyclical distribution platforms cautiously. Meanwhile the entire stationery sector is under structural pressure: China’s birth cohort fell from roughly 17.9 million in 2016 to about 9.0 million in 2023, and office demand is eroding with digitization. Industry profits declined sharply — industry data show a greater than 24% year‑on‑year drop in the first half of 2025. Add rising input costs for plastics, specialty paper and inks, plus tightening ESG disclosure regimes both at home (China’s sustainable reporting guidance) and abroad (EU CSRD/Omnibus and buyers demanding Scope 3 data), and the result is a triple squeeze on margins, demand and regulatory compliance.

ESG is not a free pass — nor an easy revenue driver

Some leading Chinese stationery firms have already invested heavily in ESG. M&G’s ratings and awards are notable: the company published an early ESG report, achieved CDP B and an MSCI AA in recent years, and has national green factory recognition. Yet green credentials have not translated into profitable premium sales. Consumers in this category are price‑and‑function driven; green premiums rarely stick at scale. Supply‑side complications make matters worse: fragmented suppliers complicate Scope 3 carbon accounting, and hundreds of retail outlets make uniform green execution costly and error‑prone. It has been reported that product‑level ESG claims remain sparsely disclosed in M&G’s financials — a telling omission. By contrast, examples such as Pilot’s FriXion show a possible path: align sustainability with clear consumer savings (refillable systems that cut lifecycle CO₂ and cost) and you convert ESG from a cost centre into a selling point.

Strategic gamble, uncertain payoff

The split is a calculated gamble: it isolates a high‑revenue, low‑margin B2B platform for Hong Kong valuation while leaving higher‑margin consumer products in the A‑share market. Will KeliPu be able to sell a growth and margin recovery story to offshore investors, or will it simply be priced as a commoditized distributor with long public‑sector payment cycles and limited pricing power? Competitors with deeper B‑end penetration — and design‑led brands such as KACO that command premium positioning but may lack formal ESG disclosures — further complicate the landscape. Geopolitics and trade policy add another layer: European and global buyers are increasingly embedding ESG into procurement, meaning compliance is no longer optional for exporters. The real question is this: can stationery companies turn ESG into an asset rather than an expense? It is possible, but only if firms tightly align sustainability with consumer value and harden supply‑chain data — easier said than done.