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Digital Printing



With a population of 1.31 billion and the highest consistent growth rate of any major global economy over the last 16 years, it is natural that the Chinese market should be of interest to us all. Earlier in 2004, China passed Japan to become Asia’s largest oil consumer and overtook Italy to become the world’s sixth largest economy, based on current exchange rates. In terms of purchasing-power parity, China is already the second in the world. For the purposes of this discussion, however, we will focus only on China’s projected effects on the global wide-and grand-format inkjet industry.

With approximately 1.1 million billboard sites, China has more than any other country in the world, including the USA with only 400,000. Add to this the extensive use of building wraps and some transport graphics, and you have–by volume–the world’s largest outdoor-advertising industry. It accounts for more than 17% of total advertising revenues in China–a much higher figure than the typical 5-7% found in many western countries. Okay, so China has a huge population, a very large outdoor-advertising industry, and an economy that continues to grow faster than any in Europe or the Americas. So what?

Well, China has a few more surprises in store. The first is the adoption rate of digital printing in the graphics industry. Because the Chinese graphics screen- and offset-printing industries developed later than their counterparts in many other countries, much more of the Chinese wide-and grand-format graphics market is serviced by inkjet printing. Our best current estimate is 54% inkjet, 45% screen printing, and 1% digital photoimaging. A typical western country may have as little as 16-17% for inkjet, with the remaining capacity held by screen printing, offset, computer-aided sign cutting, and a small amount of wide-format photo.

The Chinese have more grand-format, solvent-based inkjet printers than any other country, and they use them more regularly–24/7 is not uncommon. The net result is that China has developed to become the most competitive grand-format market on the planet. What does this mean for the future?

Emergence of Chinese printer manufacturers

There are now approximately 25 active Chinese manufacturers of wide- or grand-format solvent inkjet printers. Over the last four years, these domestic manufacturers have come to dominate their local market, reducing the combined sales of western manufacturers, such as Nur, Scitex Vision, and VUTEk, to a fraction of their former levels in China. Water-based inkjet plotters and printers are a different story, with HP, Epson, and others holding their own well, as it has been difficult for Chinese manufacturers to source appropriate printheads.

The early Chinese solvent-based machines were built on Xaar printhead technologies (the XJ128, XJ500, and more recently XJ126 platforms), but now several other printhead manufacturers have a strong presence in China. Spectra leads the pack, followed by the likes of Konica and Ricoh (formerly Hitachi Koki, which was previously known as Dataproducts).

As the Chinese domestic market became saturated with new machine entrants, the inevitable price war affected profitability of the manufacturers and end users. Prices of some machines halved over an 18-month period from January 2002, and new models tended to hit the market almost faster than we could research and document them. The erosion of margins in the domestic market led more and more Chinese man-ufacturers to turn towards exporting.

By 2002, we saw the early attempts of certain Chinese printer manufacturers to export, with companies such as Fei Yung Union (Infiniti brand), Yaselan, and Runjiang (Flora brand) selling some machines into a few selected markets. This process appeared to have gained momentum by the following year, with no less than eight Chinese printer manufacturers exhibiting at SGIA 2003. And then things seemed to quiet down. ISA 2004 and DRUPA 2004 showed fewer Chinese printer exhibitors than in earlier years. Had the Chinese decided that exporting was a bad idea?

Actually no, the picture is rather more complex than this, and many events have conspired to create a different landscape for the digital industry. The first issue was that the Chinese realized that developing international business was not easy and was a very expensive and prolonged process. Exhibiting at international trade shows was costly, and most Chinese manufacturers did not have the ability to run their stands effectively to maximize business opportunities. Several had difficulty in assessing or selecting the right distributors, and they were not well equipped with technicians who could train or set up an effective service network based on a foreign language. And cash flow was a problem, primarily because the domestic Chinese market is crowded with more than 20 competitors that use similar printhead technology. The SARS epidemic that hit in early 2003 added to the already complicated situation and created a business environment in which the manufacturers were not profitable enough to generate the revenue needed to fund their ambitions of global distribution.

A further factor was that by the time the distributors added their service costs and margins to the printer costs, and manufacturers from Israel and USA ad launched newer models engineered to lower selling prices, the Chinese value proposition was not quite as attractive as before. But perhaps the biggest issue was a lack of confidence in western markets that Chinese machines would be reliable and could be effectively serviced and maintained–a view reinforced by some early experiences.

A new Chinese approach to exporting

Having found limited success in export markets, most leading Chinese manufacturers were forced to re-evaluate their strategy. Fortunately for the Chinese, their reassessment coincided with a similar process in Europe, the US, and Japan, where many leading distributors and some key OEMs were looking to develop relationships and partnerships with good manufacturers in countries with lower manufacturing costs, such as China and Korea. Over the last 24 months or so, a lot of confidential, high-level meetings have happened behind closed doors in China and at international trade shows.

Evidence of such meetings could be seen at several 2004 international trade shows, including ISA, SGIA, DRUPA, and Photokina. There are now several western manufacturers that are beginning to use their own brand names to promote Chinese-manufactured machines. Examples include DuPont Inkjet (Runjiang), Tiara (Yaselan grand-format added to their Mutoh wide-format range), RasterPrint (Runjiang), Gerber (Teckwin grand-format printer complements the Solara, Gerber’s newly launched UV roll-fed machine), Redhill (Yaselan), Ninja (Yaselan), and Matan (dual-branding with Teckwin). There are also rumors of an emerging relationship between Scitex Vision and Chinese offset-machine-manufacturer Beiren, and of NUR partnering with a Shanghai-based company. No doubt many other relationships will emerge in the next two years, among them some global leading brands.

This market evolution has several implications. First, by using their own brands, these western companies are showing a commitment to the belief that Chinese-manufactured printers are already, or will soon be, worthy of owning their western brand names–and that the necessary support and servicing infrastructure can be put in place. Western-manufactured machines continue to advance in performance, so to bring even a leading Chinese manufacturer right up to the current performance standards required by the international industry implies considerable commitment of personnel, as well as technical and financial resourcing by both parties in the deal.

Secondly, the Chinese manufacturers’ most influential customers, those that can most effectively drive their quality and product performance forward, are now these new western OEM partners. These are also the companies that will, supplied with the right products, provide profitable business growth to the Chinese. Inevitably, this will lead us to a position where, in many cases, those Chinese companies with most effective western relationships will start to gain a competitive edge in their technology, financial performance, and internal business systems, which will help them to defeat other domestic Chinese competitors. In short, there will be a clear out in the Chinese market.

Since China has entered WTO and will, over the next three years, move through the necessary phases of implementation, its restrictive import taxes will erode, which removes barriers to Chinese manufacturers sourcing good-quality western raw materials and components. We can also expect to see greater transparency of business transactions in China and increasing opportunities for western companies to invest directly into the market, with reasonable protection under Chinese law. Some Chinese players may even become owned by western investors.

The challenge for all western investors into relationships and businesses in China is to find mechanisms to protect their investment–and particularly to discourage the departure of key Chinese knowledge-rich employees who wish to start up new competitive businesses, as has been the case in the past. However, there will inevitably be some fallout, and as a consequence, we predict that China will emerge as one of the global powerhouses in the manufacture of inkjet printers, inks, and media/substrates. Although in the early stages such manufacturers have focused on imitating western products, we should look forward to a time when more creative machines and inkjet solutions come out of China.

China has become the workshop of the world. As it strengthens its position in the inkjet industry, we expect more than just graphics to be affected–novel textile-printing and industrial inkjet systems will sometimes be pioneered in China before they are developed in the West.

As Alan Barrett of Redhill puts it, “We are putting some safety into the relationship between the Chinese and the end user and guaranteeing to support the product,” As more western partners place their seal of approval on (often upgraded or modified) Chinese machines, more American and European buyers will be encouraged to invest.

Author’s note: This column was prepared with the assistance of Minglei Yang and Wu Yuanshi of Web Consulting’s Asia Pacific office, based in Shanghai, China.

About the author

Stewart Partridge is managing director of Web Consulting Ltd., a global digital-strategy and market-research consultancy with offices in Boston, MA, Abingdon, UK, and Shanghai, China. Partridge frequently authors articles and speaks worldwide at trade events for the digital-imaging, screen-printing, and textile industries. To contact Partridge or learn more about Web Consulting and its activities, visit the company’s Website at


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