Asian Printers: Stable in Tough Times

Playing for keeps in the face of mounting challenges

by Teri Tan -- Publishers Weekly, 6/24/2002

There is no subject so old," novelist Fyodor Dostoyevsky once remarked, "that something new cannot be said about it." That PW has pursued the above topic, with a focus on Hong Kong/China suppliers, for 17 consecutive years bears out the truth of that. For years, these suppliers have never failed to amaze industry watchers. Their versatility, resilience and strength is undeniable, and publishers around the world have come to rely on them for lower cost, faster turnaround and unsurpassed quality. Having outgrown the me-too mass production stage years ago, Asian suppliers are going from strength to strength to create the dominant print manufacturing/ sourcing center that exists today.

When it comes to economic highs and lows, these suppliers have seen it all.. After all, nothing could beat the tumultuous months that preceded and followed the Asian economic crisis and the handover of Hong Kong to China. Now even the cheap-good-and-fast rule no longer performs the same magic it did several years ago; everyone is looking beyond that, far into the publishing/manufacturing/sourcing future. And contrary to the usual practice of tightening purse-strings during slow economic times, these suppliers continue their relentless marketing efforts everywhere. In addition to their strategy of underpromise and overdeliver, leading exporters in the region have no shortage of ideas for utilizing their expertise and technologies to merge paper, ink and glue.

In a year that was decidedly short of good news--with the global economy in recessionary pattern, the seemingly invincible dot-com world imploding and the aftermath of the September 11 attacks--the book manufacturing industry in Asia, particularly in Hong Kong/China, has done pretty well. In 2001, imports from Hong Kong/China (based on CIF value) amounted to $738 million, compared to $736 million in 2000, and therefore remained stable despite the lackluster economy, indicating an industry that's fundamentally healthy.

While some report a decline of 10%-20% in their 2001 U.S. sales, especially during the last quarter, in general the suppliers have weathered the year well. Many commended U.S. publishers for allocating longer project lead time when Customs delays were predicted following September 11. So far, no serious disruptions of this nature have been reported. Disruptions to the usual manufacturing seasons, however, are more evident. Says Ken Lee, director and assistant general manager at C&C Offset, "There's a lull in the habitual year-end dash to make it to the stores for Christmas and New Year. We are seeing a spike in first-quarter and even second-quarter scheduling, the latter normally regarded as the low season. It looks like publishers are making up for lost time.".

The financial reasons driving publishers to manufacture their products in Asia have not eroded. Novelty books, boardbooks, book-plus and nonpaper components are still cheaper to produce here than anywhere else in the world. The publisher stampede to the region, while not accelerating, shows no sign of slowing, either.

In this ever-more digital world, electronic communication is the name of the game. But human beings still like to communicate through tone of voice, gestures and facial expressions. So perhaps we shouldn't be surprised that export companies such as Wing King Tong, Hua Yang and New Island--all accustomed to dealing directly with their customers--are either setting up offices in the U.S. or seriously contemplating such a move.

"We want to bring ourselves closer to customers. Despite all the technological advances around us, it's still the human element that requires much attention," explains Jeremy Kuo, marketing director at Wing King Tong, which now has Arthur Quek in New York. For Hua Yang, dispatching marketing manager Richard Burgess to New York makes perfect sense, since he knows the working of the Hong Kong/Shenzhen operations inside and out. In New Island's case, U.S. representation is seen as a positive addition to its customer support, an enhancement of its market expansion strategy. Each supplier is preparing a pervasive marketing assault to convert even the most stubborn buy-local-only publisher.

The latest business buzzword in the West, customer relationship management (CRM). is not a novel concept in Asia. It may not sport the same name, but it's a practice that has been tirelessly and continually used by these suppliers for years.

Without mainland China in the equation, Hong Kong suppliers would have arrived at the same crossroad Singapore printers have faced--limited space, spiraling cost structure and a relatively small labor pool. As it is, Hong Kong printers have almost limitless resources waiting just across the border. Close to 90% of the total books produced by these suppliers are actually manufactured in Southern China nowadays. It has become a familiar scenario: Western technology, China assembly lines.

Without modern printing technologies, we would still be using camera-ready copies, lithography, manual binding, etc. to produce limited copies of a simple book. So kudos to equipment suppliers--a modest term indeed, considering their extensive influence on prepress/digital workflow, printing consumables, post-press, etc.--for their innovation and proactive vision for the print/ publishing industry.

With publishers clamoring for fluorescents, metallics, holograms with thermography, multicolor foil-stamping and anything to make their products sing a little louder, suppliers often have to go out of their way to deliver the goods. But most of the time, publishers have only a vague idea of the processes involved. Because prepress and printing are not their areas of specialization, many publishers/designers regard manufacturing and prepress houses as their troubleshooters. However, Ken Cheung of Everbest notes that "publishers and designers are now more inclined to learn, and they have a better grasp of what's going on at the prepress, platemaking, printing and binding areas."

For publishers manufacturing in Hong Kong/China or other Asian countries, it's still a good place to be. For suppliers, it's a bumpy ride ahead. The toughest part of the business now is that profit margins are shrinking, and the publishing pie either remains the same or is getting smaller, while technology continues to change, making new investment a must.

The pressing need, according to Kelly Fok of Leo Paper, is "to always increase our customer base and perform beyond customer expectation, because that's the only way to either retain or increase profitability. The job is to find partners in the industry to grow the business together." Publishers, he says, "are looking at us to reduce cycle time and wastage, shorten make-ready and to invest in new technologies." Printing/manufacturing is a high-capital industry to start with, but now the return on investment (ROI) is going to take longer due to those diminishing margins.

So Asian suppliers are going the extra mile to woo customers. C&C Offset, for example, has started offering digital asset management (DAM) service to all clients. According to Ken Lee, "If our customer provides films, we offer to take over the archiving of the electronic files, scan in the images or to convert those files into PDF format for cross-media transfers." Wing King Tong, on the other hand, offers to undertake sourcing of add-ons and plush, plastic or other nonpaper components for its customers, even though it is not a print broker.

But the questions remain: How can these suppliers survive the onslaught of advancing technologies, diminishing returns, rising overheads and ever-changing customer demands? Will some of them lose their competitive edge and drop out of sight? What will the future bring for both publishing and print manufacturing industries?