Home Companies Industry Politics Money Opinion LoungeMultimedia Science Education Sports TechnologyConsumerSpecialsMint on Sunday

China will beat West in battle for printed word

China will beat West in battle for printed word
Comment E-mail Print Share
First Published: Tue, Mar 20 2007. 02 17 PM IST
Updated: Tue, Mar 20 2007. 02 17 PM IST
Last year, Remi Marcoux, chairman of Transcontinental Inc., the Canadian printer of Harry Potter books and Time magazine, went to China. What he saw of his rivals there impressed him.
“The biggest advantage Chinese printers have is their very low prices,” Marcoux said at a business gathering in Montreal in October. “A press operator, for example, earns $1,000 a year, whereas here the salary would be $60,000.
“We came back to Canada with two conclusions: that we would encounter increasing competition from China in some segments of our industry; and that the most vulnerable activity for Transcontinental is book printing.”
So will China become the world’s printer? In some ways, it already is: from Daikin Industries Ltd.’s air-conditioners to Dell Inc.’s personal computers, the user manual for every conceivable consumer product selling anywhere in the world is increasingly being printed in southern China, close to where most of these goods are assembled.
Yet when it comes to printing books, journals, company annual reports and other high-value documents, China is just beginning a journey that will see it emerge as a serious outsourcing destination. Printers that have the savvy to invest now in China may reap rich rewards.
R.R. Donnelley & Sons Co., the largest North American printing company, opened a factory in China in 2002.It now offers publishers the option to use its network in China for any job that involves extensive manual work. Some of its clients, such as World Book Inc., the publisher of the World Book Encyclopedia, like to print in China in order to cut the cost of reaching final customers in the Asia-Pacific region.
Fragmented Industry
For books targeted at the US market and requiring quick schedules, Mexico still remains the top outsourcing location.
That may change with consolidation in China’s fragmented industry, which has more than 94,000 printers. Most of these are state-owned, a legacy of communist control of the printed word.
Following China’s 2001 entry into the World Trade Organization, foreign publishers are allowed to print in China for export. The Chinese government still maintains strict control on books distributed locally. Only Chinese publishers may cater to the domestic market. All foreign books sold in China go through them. This restriction, which does impede the growth of the Chinese printing industry, won’t change in a hurry. Ideology, however, won’t be able to keep China’s printing industry stunted forever. Market forces won’t allow it.
The big push is coming from the world of money: Chinese companies are forecast to raise $55 billion in initial public offerings this year, according to JPMorgan Chase & Co.
A large Chinese IPO requires a few million application forms to be printed, not to mention anything between 5,000 to half a million copies of a prospectus. Industrial & Commercial Bank of China Ltd., which sold shares simultaneously in Hong Kong and China in October, issued a 656-page prospectus in English and a 369-page offer document in Chinese.
Executing such complex, time-critical projects requires scale. Financial printing also needs sophisticated customer service, which a small Chinese printer, used to churning out propaganda booklets for the local government, can’t provide.
That’s where investors such as K.K. Fong, the chief operating officer of Xpress Holdings Ltd., a small Singapore- based financial printing company, have big ambitions.
Xpress Control
Through acquisitions and strategic tie-ups, Fong has over the past two years created a seamless nationwide production network where graphic artists in Singapore prepare the designs and the layouts. These can then be printed in Beijing, Shanghai, Shenzhen, Chengdu or Hong Kong.
Using this model, Xpress has come to control 75 % of the Chinese market for printing financial research. Clients include UBS AG and Citic Securities Co., China’s biggest publicly traded brokerage.
Xpress last week announced a 51% jump in profit in the six months ended 31 January.That came on top of a 170 % surge in net income in the previous year. To further boost its presence in China, the company is now opening FedEx Kinko-type stores to accept walk-in corporate orders.Another impetus to the growth of the printing industry in China will come from corporate governance.
At present, some commercial lenders, which are required by the Chinese central bank to publish annual financial reports, get away by printing 10,000 copies even when they have more than 250,000 shareholders.
Comment E-mail Print Share
First Published: Tue, Mar 20 2007. 02 17 PM IST
More Topics: International News | Asia |