The Asian Ink Market

By Mike Agosta, Ink World Associate Editor | 09.09.05

The economic slump has taken its toll, but with markets such as China's expanding at an amazing rate, the future of the ink industry in Asia is a bright one indeed.

American filmmaker Woody Allen once said, “I’m amazed by people who want to know the universe, when it’s hard enough to find your way around Chinatown.” The reference to New York City’s downtown area aside, parallels between this statement and the ink markets in Asia are strong. It’s tough to know the whole, because there are so many things to take into account.

Ask what’s going on in Asia, and you’ll get several different responses, depending on who you ask and where you are.

Japan, Taiwan, Indonesia and New Zealand are all experiencing slow economies and growth. China and India are powerhouses.

With so many countries in Asia, it’s difficult to make a broad sweeping statement that can encompass everyone. There are always exceptions.

The economy in Japan, home of the most dominant ink companies in Asia and the second largest economy in the world, is stagnant.

“The economy in Japan is weak, and price competition is becoming more critical,” said Hideo Sato, general manager, foreign trade department, Tokyo Printing Ink Mfg. Co., Ltd., an offset and gravure ink specialist.

Economic reforms initiated by Prime Minister Junichiro Koizumi have stalled or failed to materialize, leading recently to a downgrading of the country’s sovereign credit rating by Standard and Poor’s.

According to Tak O’Haru, president of Toyo Ink America LLC, the forecasted gross domestic product rate is expected to drop 0.2 percent this year.

There are, however, slight signs of improvement in the Japanese economy.

“Small growth is expected in commercial printing and fair growth can be seen in the area of UV inks,” said Mr. O’Haru.

At the recent G7 meeting in Washington, D.C., Japan was expected to announce that the health of Japan’s banking system and economy was improving slightly.

“I don't think they (Japanese officials) are going to present an overly bullish view, just a mild cyclical upturn,” Ken Landon, senior currency strategist at Deutsche Bank, told the New York Times.

With industry suffering in Japan, companies there and in other countries must look to other markets for success. One statement no one who watches the ink market in Asia will dispute is that the Chinese market is the potential giant of the industry.

It makes sense that China is fast becoming the dominant ink market in Asia. The population of China stands at nearly 1.3 billion people, and until recently, was a relatively closed market. As China attains favored nation status and opens its markets more and more, this previously untapped market is starting to realize its potential. “Continued liberalization of the Chinese market will accelerate competition in industry,” said Mr. Sato. “The printing industry is no exception to this.”

The Chinese GDP is expected to grow 7.4 percent, according to Mr. O’Haru. Kazua Sakuma of Sakata Inx Corp. added that the ink market in China is expected to grow at a rate higher than the GDP growth rate.

According to Damian Johnson, president of Flint Ink Asia/Pacific, the Chinese ink market will grow 12 percent this year. Evidence suggests this remarkable growth will continue. Ink World estimates show that between 1980 and 1999, the ink industry in China has grown from an estimated volume of 21,000 tons to nearly 190,000 tons.

“There is tremendous growth in China and India,” said Wayne Johnstone of Independent Ink Technologies. “These two markets will dominate Asia over the next 20 years.”

Flexographic Printing for Labeling Grows
Quickly in China, Aided by Booming Beer Market

Compared to gravure, flexographic printing has developed very quickly in China. Because of low price, gravure is still controlling the packaging market, but flexo equipment and ink have made great strides in recent years. The use of flexo in soft packaging, envelope and newspaper printing is not noticeable yet. In the beer label printing segment, flexo printing holds nearly 10 percent market share. Tianjin Toyo Ink Co., Ltd., Shanxi New Century Print Material Co., Ltd. and Jinan Luyang Ink Chemical Co., Ltd. are key suppliers of water-based flexo ink and UV varnish.

The beer industry is growing quickly in China. Beer output in 2000 reached more than 22 million tons, a 25 percent increase over 1999. The quick growth of the beer industry has led to the fast growth of beer label printing in China. It is estimated that the market demand of the beer body and neck label has reached more than 34 billion pieces in 2000. The demand for beer cap labels has reached 7 billion pieces; 30 percent of Qingdao beer uses cap labels, and the market for aluminum foil cap labels is developing quickly in China.

Solvent-based ink’s market share for beer label printing is more than 50 percent, while water-based ink and UV ink market share combined is nearly 38 percent. Companies in China are still mainly using the gravure printing now for beer labels, with 46 percent of labels being done by gravure, 35 percent by offset and 12 percent by flexo.

In addition, flexographic ink is used for printing corrugated paper box packages, plastic flexible packages and glue tape. Advanced narrow web inks have been developed and sold in the market right now by international ink companies and major domestic companies. Hangzhou Toka, Shanxi New Century, Guangzhou Akzo Nobel and Beijing Airuisi are the main companies supplying flexo inks for the label printing market. Hangzhou Toka’s sales and products are more than 10,000 tons and 250 million RMB yuan sales. The company produces water-based, narrow web and UV flexo ink, gravure ink for aluminum foil label as well as other inks to the market.

The domestic flexographic ink companies are satisfying package print demand, particularly for boxes. Gong Zhangshui of Hangzhou Toka said that advanced narrow web printing ink has been developed and produced by some companies in China, and the price is lower than imported inks.

“Now the domestic water-based inks used in paper and aluminum label are close to the level of foreign products, and some products even have the same quality as the foreign products,” said Zhu Meisheng, Shanxi New Century Print Material Co., Ltd’s general manager.

Xi’an Sanwei is a narrow web flexographic print company. Xi’an Sanwei’s He Xiaohu said that 60 percent of the company’s inks are supplied by Shanxi New Century Print Material and the other 40 percent is manufactured by Akzo Nobel.

Zhu Meisheng added that now China should increase the study of pigment, resin emulsion and additive used in the water based flexographic ink and at the same time China should make up a national standard and industry standard for flexo ink.

David Wang, Asian Correspondent

Another market in Asia with potential for growth is Australia. Ninety percent of the Australian market is controlled by multinational corporations, which suggests that you don’t have to be from the Outback to make it down under.

The largest company in Australia, SICPA, has a large share in all sectors and in both paste and liquid ink.

Toyo is very large in heatset, holding 60 percent of the market share, but is not a major player in other segments. Flint, relatively new to Australia, has made progress in coldset news, heatset and liquid ink through its acquisition of Creanova.

Coates DIC is a major player in coldset news ink with 45 percent of the market share and, through sister company DIC Colortron, is also successful in sheetfed.

“The major trends in the region are similar to those around the world,” said Mr. Johnstone. “Companies are merging in both the print and ink sectors and there is an increase in specialization as companies build value added products.

“At present, Australia is undergoing a housing boom,” said Mr. Johnstone, “which has helped to pull the rest of the economy (including ink markets) along. Presently, the Australian economy is growing at 4.2 percent.

“Currently, prices are falling,” Mr. Johnstone continued. “This is particularly true in heatset and sheetfed, where quality products are being imported from Europe, China and India.”

One concern with the Australian market is residual effect from other slumping markets in Asia.

“Australia is affected by trends in Asia, as Japan is Australia’s largest trading partner,” Mr. Johnstone said. “The Australian print market is fully developed, and in fact, is one of the most advanced in the world. Growth is more moderate as a result.”

Mr. Johnson of Flint Ink said that he does not think Australia’s economy and ink markets will slow in the near future. “Steady growth is predicted in Australia,” he said.

General Trends
Though it is hard to characterize many trends that are standard throughout the whole of Asia, there are a few. One of the major trends taking shape in Asia is the demand for quality printed goods.

“Currently growth in Asia is highest in high value added fields, such as packaging, magazine, publication and advertising,” said Helmut Unkel, director, H.J. Unkel (China) Ltd. “Had you walked through an Asian supermarket several years ago you would have seen attractively packaged import goods and very poorly packed or bundled locally made wares. Today you won´t find much difference because the vendors have recognized the value of flashy, interesting packaging.”

This trend is reflected throughout the different countries in Asia.

“The demand for high value added products will grow. Flexible packaging for foods and sanitary products is expected to grow, especially in Thailand and Indonesia,” said Mr. O’Haru.

Mr. Johnson of Flint Ink agreed, stating that packaging is strong throughout Asia.

Interestingly, in spite of this trend towards high quality for uses such as advertising, Mr. Unkel noted that cheaper inks used for that purpose are still popular in China.

“In countries like China, cheap news inks and the likes utilizing only locally produced raw materials are still big sellers,” he said. As explanation, he noted that every commercial transaction, no matter how small, still requires multiple pieces of printed paper.

Anther issue surfacing in Asia and the rest of the world is concern for the environment in product formulation.

“Environmental pressure affects much more on packaging material and it proceeds the shift to less VOC and non-VOC products such as water-based and radcure inks,” said Mr. O’Haru. “This shift in Japan will also be affecting other Asian countries as well.”

“Environmental issues are a trend developing, not just in Japan, but in all Asian countries,” said Mr. Sakuma.

Sakata Inx Corp. has been developing an environmentally friendly ink system, and has recently launched a hybrid sheetfed offset ink, Diatone Ecopure Dream Cure. This VOC- and petroleum distillate-free ink has high gloss with UV coating and an economical performance, according to Mr. Sakuma.

Ink jet products, though not a major force yet, are gaining steam throughout Asia.

“New ink and print technologies such as direct computer-to-substrate printing using mainly ink jet inks are gathering strength quickly,” said Mr. Unkel. “Of course, in volume terms these do not represent a lot—yet.”

One truism for Asian printers is that they are never afraid to experiment with the high-tech and invest in the latest printing machinery. The ink makers have no choice but to follow this lead.

“More important is that Asian printers are not afraid or reluctant to invest heavily in the latest (and expensive) printing machines, pressuring their ink suppliers to up-grade as well in manufacturing, quality and quality control,” said Mr. Unkel. “If an ink maker cannot reproduce a high-speed press’ performance on his lab equipment he has a problem.

“Specialized exhibitions demonstrate clearly how much serious interest there is in state-of-the-art printing techniques such as digital imaging,” he added.

One trend in Asia that cannot be overlooked in importance is multinationalism. Though many of the major ink manufacturers in Asia are based in Japan, they all have multiple offices outside the country throughout Asia.

“One of the most important aspects of the ink picture in Asia is the nearly total pre-dominance of the Japanese,” said Mr. Unkel. “The largest ink maker in Indonesia, for example, is a joint venture between the Jakarta city government and a Japanese giant ink maker. In China, many of the huge, old state-owned ink plants are now subsidiaries of famous Japanese brands and capture a large part of the quality ink market. The U.S. and European influence is far less—after all, some of the best-known U.S. and European brands are now under Japanese ownership as well,” he added.

“To this we must add the fact that quite a few more Japanese plants will set up in Asia in the near future, and many if not most of those who are already operating outside Japan are planning to actively move more and more of their production to Asian sites.”

The reason behind the proliferation of multiple sites in Asia is simple: the main focus of the ink industry is and always has been service. It is much easier to provide high quality service to a customer when the company has a base in that country.

“We see that plants outside Japan are mainly for the respective domestic market,” said Mr. Sakuma of Sakata Inx. “When you consider our highly developed technology, the technical service and timely delivery to customers we offer, we think we should operate a plant in each country.”

Sakata Inx Corp. currently operates plants in Taiwan, Indonesia, India, the Philipines, Malaysia, China and Thailand, in addition to its number of plants in mainland Japan.

New Products, Investments
Help to Fuel the Markets

Leading foreign ink companies are increasing their investment in China or introducing more new products into the market in order to expand market share and meet quickly increasing demand. Dainippon Ink and Chemicals Co., Ltd. has selected Nantong Economic and Technical Development Zone to construct a wholly-owned project. Dainippon will invest about US$30 million in the first phase pigment and ink project. After the whole construction is completed, Dainippon’s investment is estimated to be more than US$70 million. The Nantong project is expected to begin production in October 2002.

It is not just the new investment showed the market development but the machinery companies sales. Heidelberg’s sales in 2000 has increased by 17 percent to Eur 300 million and China has become the fifth market for the company and has been the fastest growing market in Asia.

U.S.-based Environmental Inks and Coatings’ offset, gravure, UV and flexo inks and different varnishes are being sold in the Chinese market throughout its agencies. Coates of France and Taiyuan Ink Factory’s joint venture to manufacture color inks has been constructed in Shenzhen, Guangdong province. The 25,000 square meter project, which cost nearly 55 million yuan, will go into production in 2002.

After10 months of construction, Clariant Pigments (Tianjin) Ltd.’s new organic pigment facility was inaugurated last fall. Clariant Pigments (Tianjin) Ltd. is a joint venture between the Swiss speciality chemical giant Clariant and Tianjin No. 8 Chemical and Dyestuff Factory, which belongs to the Bohai Chemical Industry Group Corp. The state-of-the-art plant utilizes the synthesis capacity of the existing workshops and optimizes isolation, drying, grinding and packing of red and yellow azo pigments. Included in the project was an expansion of the biological wastewater treatment plant which satisfies international standards.

SICPA has sold its shares in its joint venture with Shanghai Sicpa, which has changed its name to Shanghai Peony, but SICPA is building another new plant near its old company. Toyo also has planned to build a new plant in Tianjin and the company planned to increase its export rate from 10 percent to 30 percent. Besides the new investment, Toyo also planned to increase production of some new specialty inks such as metal, screen and UV ink.

David Wang, Asian Correspondent

The ink markets in Asia are doing well. The economic slump has taken its toll, but with countries like China seemingly recession-proof at the moment, the future for ink in Asia is all but assured.

“Due to increasing prosperity in the Asian markets and the pick-up in exports to western countries after the recession, we feel with confidence that the outlook for the Asian ink/printing industry is bright,especially for high quality value-added products,” said Mr. Unkel. “This is despite the fact that overall the Asian economies as a whole are not yet completely out of the doldrums - but they are on the way.

“Inks and Asia are very closely linked: after all the Chinese have been using ink for over 4600 years,” he added. “Today inks and printing are big business in Asia.”