While in China recently, I participated in two major printing expositions, and I met with many of the printers, suppliers and manufacturers in the specialty graphic imaging community. As a result, I saw for myself how the Chinese specialty imaging community is developing and taking a more active role on the world stage.
If I had to choose one word to describe the specialty graphics community in China it would be "enthusiastic." They've had a great deal of success and they are eager for more. Sales of printed and imaged goods are through-the-roof. And, Chinese suppliers and manufacturers are busy providing the equipment and materials needed for production.
China's Rapid Growth has its Challenges
Today, printing is a major export for China. Low labor costs, improved international transportation and trade-friendly regulations keep the market growing and printers running at maximum production.
China has 97,391 printing companies, and reports from the China Academy of Printing Technology indicate production values in the Chinese printing industries increased an average of 15 percent per year from 2001-2004. In 2005, the increase was 11 percent, and the production value came to US$42 billion.
While printers and imagers have been looking outside of China for customers, Chinese printing equipment and supplies manufacturers have been focusing domestically, supporting the rapid production growth. Most of the printing equipment manufacturers I visited said exports accounted for only a small part of their sales (5 percent to 10 percent on average), but they expect that percentage to increase.
With the rapid growth come some large-scale challenges that the Chinese specialty graphics community must address:
Raising the Bar on Quality
Chinese manufacturers of equipment and consumables realize they need high-quality products to compete in the world market. They are quickly improving their access to raw materials, technology and expertise to raise quality standards. Many already have production capabilities that meet or exceed global quality expectations. The progress they've made in the past five years is truly amazing.
Educating Workers
While China has a huge labor pool, most workers are unskilled with little education. Demand for skilled labor, needed to drive quality improvements, supports efforts to increase wages.
Limited Access to Raw Materials & Energy
The Chinese are very strategic in their approach to growing production capability, and are taking steps now to secure future resources from countries around the globe. It's been reported that China has purchased more than 100 foreign oil fields (at a cost of US$15 billion), but this still won't meet growing demand: Experts predict at least 100 million cars on Chinese roads by 2015.
Balancing Economics and Politics
The delicate balance between free enterprise and communism is another challenge for China. While many businesses are thriving under the banner of capitalism, most major resources are government-controlled. How the Chinese free-market system and government "co-evolve" will have a huge impact on future success.
Demand for Higher Wages
Improved lifestyle options are visible to all in China. Automobiles, better housing, shopping - the material signs of success are there, but out of reach for the majority. The bottom line? Chinese workers are already demanding higher wages. The newspapers often have stories of college students and labor leaders who are vocal and aggressive in such demands.
Opportunity for Non-Chinese Brands
Today, more than 75 percent of China's urban population has an annual household income below US$3,150. That income is rising quickly, however, and creating a substantial middle class with greatly improved purchasing power. China's rapidly developing middle-class offers an exciting opportunity for Chinese and global brands.
For many Chinese workers, discretionary income is a new and welcome experience, and many non-Chinese businesses will find great profits in the growing Chinese marketplace as a result. The retail industry is well on its way to success there. For example, the shopping district in Shanghai is much like the shopping areas in major US or European cities. The increased purchasing power of the rising Chinese middle class will be felt around the world.
The Response is Clear: Innovate
Printers and imagers around the globe are feeling the impact of low Chinese labor rates as China pulls production from all corners of the world. From graphic production to garment decoration, China has changed the business landscape.
China's production capability far outpaces its purchasing power. This situation will change over time as Chinese workers gain income, but today the imbalance of production to purchasing power poses a serious challenge for printers and imagers in other countries.
The response is clear: Innovate.
Commodity production goes to the lowest bidder, but successful printers and imagers compete on a different level. They offer a blend of modern technologies, focused creativity and superior customer service. Cutting-edge, cost-effective support that helps customers maintain their competitive edge is the innovative response to increased competition and steers you away from the commodity trap.
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