Nine Dragons (tkr: 2689 HK) - Puzzling Depreciation

Have you wondered why many capex intensive (commodity) industries in China seem to have far better income margins than their U.S. and European peers?

Part of the issue seems to lie in a puzzlingly low (under) depreciation phenomenon (putting aside companies with blatantly fraudulent accounting).  Take a quick look at Nine Dragons (tkr: 2689 HK), the largest corrugated packaging company in China.  Without getting into too much accounting details, depreciation is basically a way to recognize the gradual decrease of economic value of PP&E over its useful life.  PP&E is recorded at historical cost, but what is a sensible estimate of useful life of plants and equipment for the containerboard industry?  Let's compare Nine Dragons, side-by-side, with Smurfit Kappa and Rock-Tenn (also the largest in their respective regions):

I think you get the gist (sorry the table is blurry).  A large part of a paper company's PP&E is simply plant and machinery - it is a bit of a stretch to depreciate it over 25 years (especially machinery).  And while Smurfit Kappa and Rock-Tenn has older assets, they've done a pretty good job maintaining them and ensuring competitiveness.

I seem to see a lot of this under-depreciation phenomenon with many capex intensive commodity businesses in China (less so with SOEs).  I guess it is an easy way to boost earnings.  It would be interesting to see what happens to Nine Dragons' earnings if and when it goes back to a more reasonable depreciation schedule.