The Chinese Ink Market

By Dave Savastano, Editor | 11.15.13

China continues to enjoy economic growth, and ink manufacturers are seeing plenty of opportunities for expansion, particularly on the packaging ink side.

With a population of more than 1.35 billion, China has roughly 20% of the world’s population. That figure alone would make China one of the largest engines for economic growth in the world. With the country’s expansion into manufacturing, the country has enjoyed tremendous economic growth; China has had nearly double-digit economic growth annually for the past decade.

Here’s another statistic of note: China’s gross domestic product, per capita, has risen from US$945.60 in 2000 to US$5,183.86 in 2011.That is a large rise in terms of buying power for the population as a whole, and has led to increasing interest in buying goods. That requires packaging.

As a result, ink manufacturers, multinational and domestic alike, have found opportunities in the Chinese market.

Among the leading international ink manufacturers, DIC Corporation, Toyo Ink, Sakata INX and T&K Toka have long been in the China market, with joint ventures Hangzhou Toka Ink (T&K Toka) and Tianjin Toyo Ink Co., Ltd. (Toyo Ink) two of the largest ink companies.

Photo courtesy of Hangzhou Toka Ink.
Domestic ink producers also have a major position within the ink segment, with Bauhinia Variegata Ink & Chemicals, Xinxiang Wende Xiangchuan Printing Ink Co., Ltd.and Letong Chemical Products Co., Ltd. among the largest manufacturers.

Bauhinia Variegata Ink & Chemicals, a wholly owned subsidiary company of Yip’s Chemical Holdings, enjoyed a strong 2012 with sales of HKD 1,403 million ($181 million), achieving 14% growth in sales in spite of the challenging economic and raw material situations. According to the company, it ranks first in production capacity with an annual production capacity of 95,000 metric tons and sales within China’s ink industry. A Yipsink official noted that growth continues in China’s printing and ink businesses.

“The official industry report shows the Chinese printing and ink industry has seen rapid development in the past year,” the Yipsink official said. “In 2005-2012, China’s printing ink output witnessed a great surge to 784,700 tons, with the CAGR at 14.59%. Moreover, China’s printing ink industry has forged three main industrial belts - the Pearl River Delta industrial belt centering on Guangdong, the Yangtze River Delta industrial belt surrounding Shanghai and Zhejiang, and the circum-Bohai-sea industrial belt around Beijing, Tianjin and Liaoning, with the combined output in 2012 standing at 66.76%.

“Nevertheless, China has yet to become a strong country in the printing ink industry, and foreign brands occupy a lion’s share of 70%,” the official added. “Due to the stagnant economic development worldwide, China’s printing ink industry has slowed down its advance. However, given the status quo and downstream demand market, the CAGR of output in China’s printing ink industry is expected to realize around 14% in 2013-2015.”

The Yipsink official reported that offset printing ink is projected to see the highest demand in China in the next three years, despite overall mild development, while package printing ink will still see the greatest growth potential, in particular when it comes to the development of gravure ink. Meanwhile, with increasing environmental protection standards targeting the printing ink industry, the demand for environmental-friendly printing ink is on the rise.

A. Takamizawa, president of Hangzhou Toka Ink, said that publication ink sales were slow, but gravure enjoyed strong growth.

“The publishing area was low, but the gravure printing area grew in China last year,” said Mr. Takamizawa. “The economy in China has been slower, as financial uncertainty hampers its growth.”

Masanori Asano of DIC Corporation noted that because economic growth decelerated, the demand for printing inks was lower than expected.

“Our sales were down primarily due to the drop of news and offset inks despite the stable growth of packaging inks,” Mr. Asano added. “We expect the Chinese economy to grow continuously at a stable rate, not a high rate.”

“The remarkable growth of the economies in China’s printing market has recently decelerated, turning lukewarm,” said Yu Adachi, corporate communication department, Toyo Ink SC Holdings Co., Ltd. “Commercial publishing market growth was sluggish while offset ink demand stagnated.

“On the other hand, prompted by lifestyle changes of the Chinese people, packaging demand for products such as alcohol, tobacco and cosmetics grew, and UV ink sales remained firm,” Mr. Adachi added. “Likewise, demand for packaging gravure inks rose due to population increase and changes in food culture. These circumstances are expected to continue for the time being.”

“Printing ink sales showed steady increases throughout the year, but the Chinese economy has slowed somewhat in 2013,” said Toshihiko Fukunaga, International Operations Division general manager for Sakata INX. “Printing ink sales in Asia increased nearly 24%, so our operating income increased.”

Packaging Ink in China

As the Chinese ink industry leaders noted, the publication ink market has slowed some during the past year. However, packaging continues to expand, which is good news for ink manufacturers.
“Packaging inks (liquid inks and UV inks) have been showing steady growth in China as its living standard has improved,” Mr. Asano noted. “We consider the packaging market promising since packaging consumption has steadily increased according to standard of living improvements and increasing demand for food security and attractive appearance.”

“China’s printing industry is developing rapidly as a whole, but the sub-industries feature unbalanced development,” the Yipsink official said. “In terms of scale, the packaging and decoration printing holds the largest proportion, up to 33.3%; book and periodical printing, newspaper printing and foreign trade printing rank second to fourth separately. As far as the growth rate is concerned, label printing, commercial printing, packaging and decoration, foreign trade printing, etc. perform better, while newspaper performs the worst.”

Keys to Success in China

In speaking with leading ink industry executives, the key to growth in China’s ink industry is hard work.

The Yipsink official noted that Bauhinia Ink experienced some challenges, primarily due to raw materials cost increases. However, with all the staff united and of one mind, combined with a progressive spirit of hard work, Bauhinia has increased revenue by bucking raw material trends and is harvesting good results.

“In the future, we will secure existing market share with good quality products and our customer’s good feedback, and excellent service for our customers,” the Yipsink official added, noting that the company is also looking to accelerate mergers and acquisitions and bring Bauhinia to the world stage.

Mr. Asano said that the whole market in China is too large to cover, and market situations vary dependent on its ranges (from low-end to high-end), which requires DIC to focus on specific markets.
“DIC has focused primarily on the middle to high-end markets where our expertise can be utilized the most,” Mr. Asano said. “Geographically, DIC has already covered the most demanding areas such as Huanan, Huadong and Huabei in China.”

Mr. Takamizawa said that Hangzhou Toka Ink focuses on its employees, giving them the ability to bring top-notch service to their customers.

“We emphasize manpower training, such as receiving a lot of employees from Hangzhou Toka Ink for special training and education in Japan, T&K Toka, and we have kept providing a support of technical, manufacturing, quality control etc., which will lead to more development of Hangzhou Toka Ink,” Mr. Takamizawa said. “The key of growth is human resources, which contributes to the growth of the company.”

Developing environmentally friendly products is important for the Chinese ink market.

“Environmental regulations have strengthened in developing countries such as China, so the demand to produce environmentally friendly inks is increasing,” said Mr. Fukunaga.

As part of its commitment to being socially responsible, Bauhinia has taken many major steps to promote environmentally friendly products and processes, maximizing energy conservation and reducing VOC emissions, among other important moves.

“There is growing emphasis on environmental protection,” the Yipsink official said. “The industry standard for environmentally friendly products has been clearly identified, and Bauhinia’s lithographic ink products have passed the ‘China Environmental Labeling Certification,’ and in the Chinese printing industry, outreach activities to promote green technologies received the ‘Green Technology Award.’”

Plans for Expansion

With the growth of printing in China on the rise, it comes as no surprise that ink manufacturers are expanding their operations within China.

“Bauhinia Variegata Inks specializes in offset printing inks, UV offset inks, gravure inks and screen printing inks, and enjoys an excellent reputation in the international market,” the Yipsink official noted. “In 2005, it was named as ‘Guangdong Famous Trademark,’ and was also granted ‘China Famous Trademark’ by the Trademark Office of The State Administration For Industry and Commerce of the People’s Republic of China in 2010. In order to improve the group’s market competitiveness, Yip’s Chemical Holdings Limited restructured the company between businesses in 2012. Among them, the paper products business of Hang Cheung Petrochemical Ltd. was integrated into Bauhinia’s business. It will enrich our product system and expand our finishing area.”

“DIC has just completed the construction of a mother plant for environmentally-friendly packaging inks in the city of Nantong, Jiangsu Province, China,” Mr. Asano said. “This will continue to strengthen our packaging ink business in the Chinese market. The plant has just started its operation and boosted our production capacity for packaging inks in China from 25,000 tons per year to 70,000 tons per year. DIC aims to significantly expand market share of packaging inks in China by 2020.”

“We have enough space in our present facility to extend our manufacturing and business capacity, so we do not plan to establish a new facility in near future,” Mr. Takamizawa said. “We expect that printing demand in China will keep expanding more to compare with other regions in the world.”

“China is a strategic growth country for the Toyo Ink Group across all our business segments, and we have been rapidly developing our operations,” said Mr. Adachi. “Due to ongoing market expansion and changes in consumer lifestyle in both nations, we believe the packaging field will grow to even higher levels.

“In April 2012, Toyo Ink SC Holdings Co., Ltd. and Yabang Investment Holding Group Co., Ltd. set up a joint venture in Jiangsu Province, China to strengthen sales of pigments in China and overseas,” Mr. Adachi added. “The new company will supply organic pigment products that are highly competitive in the international market in terms of performance, quality and price. We also plan to launch a sales and color-mixing base at Chengdu Toyo Ink Co., Ltd. (inland China) by fall of 2013, with sights set on gravure ink production here at some point in the near future.”