1. Characteristics of Chinese Printing Industry Over the Past Few Years
(1) While the government is pushing hard in building laws and regulations and in strengthening supervision, the industrial policy gradually opens up. As a result, the market environment has been further improved.
July 2001, promulgated by the State Council was the new 'Regulations on Printing Industry Administration', which stipulates that the Press and Publication of Administration of China (PPA) is the only government body for administering and supervising graphic arts and printing industries in China. Since then, PPA and other related departments have drawn a number of follow up policies and regulations, such as 'Temporary Regulations on Ownership of Printing Business', 'Temporary Regulations on Setting Up Foreign Invested Printing Enterprise'(which allows foreign investment in packaging printing sector), 'Regulations on Accepting and Producing Printed Products', 'Guidelines on Annual Inspection and Ratification of Printing Enterprises' and etc. These policies and regulations have constituted a new framework of law system for the printing industry. The concerned department and local government followed up and published policies favorable for development and investment.
In 2002 and 2003, the long lasting administrative examination and approval systems of 'Special Enterprise Permission for Establishing Printing Business', 'Special Enterprise Permission for Individual Engagement in Printing Business' and 'National- and Provincial-specified Enterprises for Book and Magazine Printing' were terminated one after another. Central and local government departments conducted nationwide powerful campaign of rectifying the printing market and cracking down illegal activities in printing, such as illegal publications, fake and inferior label, mark, package, paper of certificate and etc. The Government increasingly places emphasis on the role of industrial associations and organizations, while intensifies self-discipline and faithful service in the industry. The market becomes more regularized and ordered, and lawful operations are ensured and protected. All these efforts have worked to drive the industry in the health and ordered direction.
(2)The industry maintains a dynamic momentum in development with the fast growing economy and culture.
Some provinces in relatively developed areas have already grown up as large provinces of printing, while pushing hard on their way to the goal of strong province of printing. Some of them place printing industry in the position of urban industry in their long term development planning and adopt favorable policies for developing the industry. In recent years, printing industry has become the second largest industry in Hong Kong Special Administrative Region, with more than 4,800 printing houses, 40,000 employees and an annual industry turnover of 30 billions HK$. Hong Kong's printing industry is now in a strategic move to north (the direction toward the mainland) and about 70 % of Hong Kong's printing enterprises have already moved their productions to or invested joint ventures in the mainland of China. Taiwan's printing industry is also on its way of drift to west (the direction toward the mainland) and about 400 Taiwanese printing enterprises have already been relocated in the mainland. Besides these two steams, printing enterprises in other nations are also looking for their fortunes in Chinese printing market.
Thanks to the developed economy in some coastal areas, the strong momentum brought about by the reform & opening-up policy and China's acquisition of WTO membership, regional printing industrial zones are taking shape rapidly. Two regional printing industrial zones have been formed and growing rapidly in Zhujiang River Delta and Yangtse Rive Delta areas, respectively. Zhujiang River Delta, being centered in Guangdong province, is in neighbor with Hong Kong and Macao and is recognized as the World Sixth City Circle, while Yangtse River Delta is centered in Jiangsu and Zhejiang provinces. In these two areas, printing enterprises are relatively large in scale, armed with advanced technologies and equipment, and the total sales income accounts for 3/4 of the national ones. In Bo Hai Economic Area as represented by Beijing and Tianjin cities, printing industry is also on the track of fast growing. With the progress of the Great West Development as well as reconstruction of the old industrial bases in northern China, printing industry in western provinces, especially in Sichuan and Shanxi provinces and also in northern area of China will gain new momentum in development.
(3) Introduction of overseas capitals into Chinese printing industry has been greatly accelerated. After China's successful acquisition of WTO membership, the government newly approved 170 printing enterprises with foreign investments in 2002 and 2003, and the total investment exceeded 1 billion US$. Currently, the country already has 2,200 foreign invested printing enterprises, most of them are clustered in the coastal line areas, about 1,600 in Guangdong Province (,in which 90% are of investments from Hong Kong) and 200 in Shanghai.
I like to take Zhongshan City, Guangdong Province, as an example. It is a city in neighbor with Hong Kong and Macao, and well known as the Town of Oversea Chinese (because of the fact that most of the households have relatives either living in foreign country or being returnees from overseas). There are more than 1,300 printing enterprises, among which, 70 enterprises are of foreign investments. China Packaging & Printing Production Base was nominated and setup in that city. The base occupies a land of 5,000 mu (equivalent to 333 hectare) and has 35 packaging printing enterprises. In 2003, the total industrial production in the base exceeded 6 billions RMB. Another example is Heshan Astros Printing Ltd., which is invested independently by Hong Kong company (with a registered capital of 1 billion Hong Kong dollar), occupies about 65 hectares' land, has 180,000 square meter constructions, 40 sets of large format sheet-fed color off-set presses and 10,000 staffs. And, the annual production value reaches 2 billion RMB and all the products are exported to overseas market. Printing enterprises cited above are characterized by large scale, high-tech, advanced equipment, diversified products and good performances. And high profit is another typical feature of these companies, which is believed to be brought about by cooperation among the clustered enterprises in the base.
American R R Donnelley invested and built printing operations in Shenzhen and Shanghai, which have already been running commercially. Toppan Printing Co., Ltd., Japan, is planning to invest 90 millions US$ to set up a large-scale packaging printing and ink manufacturing enterprises in Shanghai with its Chinese partners, after successfully landed a large printing company in Shenzhen 10 years ago. NIPPO Printing CO., Ltd. and Nishiguchi Printing CO., Ltd., Japan, successfully landed in Beijing and Shanghai few years ago. Asian Packaging Center named by the World Packaging Organization and approved by the former State Economy & Trade Committee has settled in Hangzhou City, Jiangsu Province. And the construction is already started under a planed investment of 10 billion US$. China South International Industrial Materials City, occupying 1.5 square km lands and with 2.2 million square meters' constructions, is jointly invested by 5 Hong Kong based companies, i.e., Carrianna Group, Man Sang Group, Kin Hip Metal & Plastic Factory Ltd and Luk Ka International Ltd. The total invest was 2.6 billion RMB. These movements provide a good platform for Chinese packaging printing industry to enter and play in international market under the trend of economy globalization, while the huge and fast growing printing market in western China renders a new territory to foresighted investors abroad and inside the country.
(4) Transformation of traditional printing industries by using high-tech has made breakthrough. In 1980s, the industry widely adopted the more advanced technology based on computerized laser typesetting and offset press, after eliminated the elder 'Hot Process' based on metallic type and casting, which had been in use for more than one and half century. This was marked as a historical jump for the industry. As a result, technological level of the industry was greatly improved. Some printing enterprises even started to build information management network and carried out enterprises resource planning and business reorganization. This greatly improved business operation and increased the whole management and core competitiveness. In recent two years, initiated has been a new round of revolution, as exemplified by the widespread use of CTP, digital color proofing, commercial web-fed press and sheet-fed 8 color perfect off-set press. Now, CTP installations have already exceeded 250 sets nationwide. Import of commercial web-fed press maintains a dynamic momentum and about 100 sets have been installed and started commercial operation. Recently, Komori, Mitsubishi, Akiyama International and Heidelberg have released sheet-fed 8 color perfect off-set presses, targeting mid- and short-run high-end market. This type of press has already gained wide recognition and about 10 sets have already been ordered or installed. China's printing equipment has been, therefore, greatly improved and raised to a higher level.
In publication printing sector, off-set printing accounts for 90% of the total market and in package printing sector, off-set, gravure, flexography and silk printing account for over 40%, 25%, 8% and 55, respectively.
(5) Structural reform of the industry has also made great progress. Within the current 92,400 printing houses, state-owned and collective enterprises take up 35%; limited and joint-stock companies, foreign invested enterprises and joint ventures take up 21%; private enterprises take up 40%. Coexistence of different types of enterprises is now a new structural pattern of the industry. Reform of stated-owned printing enterprise also shows new progresses. Some non-state-owned printing enterprises have also successfully conducted internal reform.
(6)With the constant growing of the industry, printing education shows new flourish. Right now, there have been about 12 universities and institutes (including departments) that offer graphic arts related programs, with nearly 16,000 full time students registered in the undergraduate and associate programs and more than 380 full time students registered in the postgraduate programs. This is the most booming period of time for higher graphic arts education in China. Beijing Institute of Graphic Communication, the School of Publishing & Printing of Shanghai University of Science and Technology, the School of Printing & Packaging Engineering of Xian University of Science and Technology, the School of Journalism & Communication of Wuhan University are well known, because of their long history of involvement in graphic education and quality curricula. These schools, along with some new comers over the past two years, have already prepared and delivered tens of thousands graduates of various types to the industry, having greatly improved the knowledge structure and the quality of human resources of the industry. In addition, vocational education and training of various types have also been progressing. Japan Association of Graphic Arts Technology (JAGAT) and European Funding for Asia Investment have down a lot of work in supporting continued education for Chinese printing industry and already achieved good results.
When judged from a different angle, the great achievements, which have been made by the industry, are diluted to a very low level by the huge population of 1.3 billions of this country. For example, the annual average paper consumption per capita is 33 kg and the annual printing production per capita is about 21 US$, only about 1/10 of that in developed country.
As stimulated by China's entry into the WTO, global manufacturing industry is accelerating its strategic shift to China. Compared with this movement, the reform of printing industry seems to be lack of power and depth, and has a long way to go. This frustrates the industry from gaining all-sided, coordinated and sustainable development, in the following ways: The implementation of market mechanism by printing industry is lag behind;
(1) Weak points still exist in the administration chain;
2. Chinese Printing Machinery and Materials Industries
(2) Industrial structure is not rationalized, leaving behind problems, such as, the weight of state-owned economy is too large, while that of non-state-owned economy is not enough; the number of small enterprises largely exceeds that of large enterprises. According a survey conducted by 'Printing Manager', an industrial magazine, the total production value by the 100 top printing enterprises was 23.4 billion RMB, accounting for only 11% of that of the whole nation's printing enterprises. Production capacity for high-end printed market is inadequate, while that for low-end printed market is in large surplus. Most domestic printing enterprises are lack of competitiveness. In R&D, no breakthrough has been made in printing related technologies with the exception of that in Chinese processing technology, when judged by the standard of technology originality which leads to possession of intellectual property. A large gap in development still exists between east and south;
(3) The reform of state-owned printing enterprise is facing many challenges and difficulties, and still has a long way to go.
The sustained and rapid development of China printing industry has greatly stimulated the machinery, equipment and material industries.
In China, mid- and low-end printing equipment and materials are already self-supplied, and part of domestically made products are now even exported to overseas market, while the high-end printing equipment and materials still rely on import.
Printing Machinery：Right now, there are about 500 printing press manufacturers in China. In 2003, the total value of production and export reached approximately 7 billion RMB and 100 million US$, respectively, while annual import between 2001 and 2003 remained at the level of about 1.3 billion US$ (The data for 2003 was 1.345 billion US$). Apparently, the volume of import largely exceeded that of export. Between 2001 and 2003, about 2,363 sets of sheet-fed color presses were imported and the total value reached 1.202 billion US$. The data for sheet-fed in 2003 was 933 sets and 507 million US$. Between the same period of time, about 539 sets of web-fed presses with a total value of 456 million US$ were imported and the data for 2003 was 131 sets and 126 million US$. The total number of imported press was ranked world three.
Paper manufacturing：There are 3,500 paper manufacturers all over the country with 780,000 employees (in which, foreign invested enterprises are 280, taking up 8.1%, but occupy 30% of the total sales revenue, profit and tax). In 2002, production of paper and cardboard reached 37.8 million tons, an increased of 18% over the previous 2001 and the total production value reached 139.8 billion RMB，an increased of 16% over the previous year, while imported paper and cardboard reached about 6 million tons. The industry consumed 43.32 million tons of paper and cardboard in 2002 and the consumption per capita was 33kg. In detail, for publication printing, about 12.85 million tons of paper was produced, an increase of 32% over the previous year, while 14.17 million tons of paper were consumed, an increase of 33% over the previous year and imported paper reached 1.36 million tons; for newspaper printing, about 1.85 million tons of paper were produced, while 2.04 million tons were consumed and 190,000 were imported; about 1.8 million tons of coated paper were produced, while 2.76 and 1 million tons were consumed and imported, respectively；about 9.2 million tons of uncoated paper were produced, while 9.37 million tons and 170,000 tons were consumed and imported, respectively.
Ink：Currently there are more than 400 ink manufacturers. In 2002, the total production volume of ink was more than 220,000 tons, with more than 50 kinds of product and more than 1,000 different colors, and the sales revenue was 4.6 billions RMB. China have gown up to be the forth largest ink manufacturer in the world (U.S.A: 1.12 million tons per year；Japan: 470,000 tons per year; Germany: 370,000 tons per year) .
PS Plate：PS plate is one of the rapidest growing industries in China. Through severe competition，the degree of optimized and efficient production is rapidly increased. According to a survey conducted over 30 PS plate manufacturers，the production capability has already reached 100 million square meters per year. In 2002, about 80 million square meters were produced and sold，an increase of 30% over the previous year and in 2003, 90 million square meters were produced. In 2002, about 9.72 million square meters' PS plates were exported，an increase of 32% over the previous year, while 3.19 million square meters' PS plates with a total value of 13.44 million US$ were imported.
In recent years, one of the features in Chinese printing machinery and material industries' development is to combine scientific research, manufacturing and application into a integrated system and to build 'macro' industrial chains with Chinese characteristics. The printing machinery industry has made pronounced progresses in capital operation, developing new product and extending industrial chains. In 2001, Shanghai Electronics Group Cooperation, in cooperation with an American company, successfully purchased the good asset of Akiyama, Japan and sent people to chair the newly formed company: Akiyama International. After the first year's successful test operation, its new product of sheet-fed folio perfecting multi-color press won gold medal in 2002 Shanghai Industry Expo and gained wide recognition among experts and users in Dongguan Industrial Show (Guangdong Province) in March 2003. It is the first time that a Chinese company purchased a global company of well known brand, accepted its personals and made successful re-entry into the global market. An article, which appeared in Washington Post, said that the newly built Akiyama International was a great expansion.
Adopting OEM mode, Beiren Group Cooperation, the largest printing press manufacturer in China reached agreement with Tokyo Shuppan Kikai (TSK) on putting Beiren's brand on TSK's postpress equipment for sale in Chinese market. Recently, Beiren established another joint venture with Gun Ze Business Corporation, Japan, to produce automatic paper stacker used in newspaper printing, and reached consensus on CTP cooperation with Creo, Canada. Shanghai Printing & Packaging Machinery Co. Ltd. cooperated with American Fang Brothers Graphic Co. to develop prepress equipment. All these projects work to extend the industrial chains and will bring new business opportunities to the printing machinery industry.
In recent two years, there has been an apparent move for foreign printing material manufacturers to invest building factories in the mainland of China. This is widely accepted as part of their strategy of localization. For example, AGFA and KPG have successfully set up operations in Wuxi and Tianjin to produce high quality PS and CTP plates, respectively. In Wuxi, Agfa has built a PS production line with the capability of producing 25 million square meters per year. Fuji Film has established a joint venture, Fuji Starlight Co., Ltd. in Beijing, with Chinese Academy of Printing Technology (CAPT) to produce high quality PS plate and CTP plate. Over the past few years, a number of overseas paper manufacturers, such as those from Indonesia, Finland and Taiwan area, have built up factories in Jiangsu Province, Zhejiang Province, Shanghai Municipal City and etc. For example, January 2004, Shanghai Light Industry Group Corporation signed agreement on a paper project for news paper printing with Sinar Mas Group(Indonesia), one of the global paper giants. The project, with a total investment of 20 billions RMB, occupying a land of 2500 mu (equivalent to 163 hectares) and with the ultimate production capability of 2 million tons of paper per year, is aiming at creating a paper producing base in Shanghai and will be completed in 4 steps. Sinar Mas Group already takes 1/3 of the paper market in China and is heavily engaged in forest cultivation in Hainan, Guangxi and Yunnan provinces, in an attempt to create a circumstance of balanced paper production and forest protection. Several Japanese and Switzerland ink manufacturers have set up joint ventures successively in Tianjin Municipal City, Shenzhen（Guangzhou Province）, Shanghai Municipal City, Hangzhou（Jiangsu Province）, Guangzhou（Guangzhou Province）and Shanxi Province. Japan Meiji Gum Co. Ltd. has set up a blanket factory in Shanghai. In short, the localization of global material manufacturers has consolidated their production and business bases in China, gradually making the local market internationalized. The localization of overseas material enterprises have apparently been progressing at a much faster pace than the machinery enterprises. This is an issue worth of study.
We must stick to opening-up policy all the time. Even if one day, our printing machinery and material industries have grown up, we still need to introduce and absorb advanced technology, equipment and material, and to improve technology structure of the industry and quality of our products.