It should come as no surprise that China is quickly becoming the largest global economy. With a population of more than 1.357 billion, China has approximately 20% of the world’s population. China’s gross domestic product (GDP) was $9.24 trillion in 2013, according to the World Bank, and while its economic growth has slowed somewhat from its double-digit expansion prior to the global recession, it still was a healthy 7.7% in 2013, according to the World Bank.
Part of this growth is due to the rapid expansion of China’s manufacturing base. The country has a huge domestic market, but it also has a sizable export business, particularly on the packaging side. There are a wide variety of estimates as to the size of the printing markets in China, with USD$150 billion being a common figure.
ThePrint Industries Market Information and Research Organization (PRIMIR), the market research association of NPES The Association for Suppliers of Printing, Publishing and Converting Technologies, recently offered its estimates of the Chinese packaging market in its 2014 study, “Packaging in Emerging Markets” Latin America and Asia-Pacific.” PRIMIR estimated that China’s total printed packaging revenue in 2013 for key markets in USD was:
• Tag & Labels: $3.7 billion
• Flexible Packaging: $7.1 billion
• Folding Carton: $10.7 billion
• Corrugated: $26.5 billion
Overall, of the $48 billion that PRIMIR believes these segments to hold, it estimates 70.8% of its packaging sales are used domestically.
Where there are printers, there are also ink manufacturers. There is a mix of international and domestic printing ink manufacturers in the country. Among the global leaders in the Chinese printing ink industry are Hangzhou Toka Ink and Tianjin Toyo Ink Co., Ltd., both of which are joint ventures with leading international ink manufacturers (T&K Toka and Toyo Ink, respectively). DIC Corporation and Sakata INX also have major operations in China.
Domestic printing ink manufacturers also play a major role in the industry. Among the leading domestic ink manufacturers are Bauhinia Variegata Ink & Chemicals, Xinxiang Wende Xiangchuan Printing Ink Co., Ltd. and Letong Chemical Products Co., Ltd. A subsidiary of Yip’s Chemical, Bauhinia Variegata Ink & Chemicals reported that its 2013 sales were $215 million. The Hong Kong-based company has three production plants, located in Zhongshan, Guangdong; Tungxiang, Zhejiang and Cangzhou, Hebei.
Ink World estimated that sales for Xinxiang Wende Xiangchuan Printing Ink Co., Ltd. (primarily offset, UV and gravure inks) and Letong Chemical Products Co., Ltd. (mainly gravure, flexo and UV inks) were both at $100 million. Both Xinxiang Wende Xiangchuan Printing Ink Co., Ltd. and Letong Chemical Products Co., Ltd. have three subsidiaries within China.
The Market for Inks
As is the case globally, the key markets for ink manufacturers are offset printing for publications and sheetfed offset, gravure and flexo printing for packaging. In China as well as the rest of the Asia-Pacific region, gravure holds a larger share of overall packaging printing than it does in North America and Europe.
Dan Watson, managing director of Blairgowrie Associates LLC, an international business consulting specialist, said 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.
“This is especially true when it comes to the development of gravure ink,” Watson added. “Meanwhile, increasing environmental protection standards targeting the printing ink industry has increased the demand for environmental-friendly printing ink. Based on our analysis, publication ink sales in China were slow, but gravure enjoyed strong growth. The economic conditions in China have caused some ink producers to scale back their optimism for more growth in the next few years.”
Ink manufacturers are seeing similar trends in printing.
“The offset printing’s market share is gradually reducing, but gravure is on the rise,“ said a Bauhinia spokesperson. “Our company’s main product is flexible packaging inks for food and drinks, so we match this printing market situation. This is a good opportunity for us.”
“The biggest technology is the offset market, and the second is the gravure market,” said Hangzhou Toka president Akihiro Takamizawa.
For ink manufacturers, the good news is that China’s printing industry continues to enjoy growth.
“We believe the Chinese printing and ink industries did relatively well in 2013, and offset printing increased due to strong demand in the Chinese domestic market,” Toshihiko Fukunaga, International Operations Division general manager of Sakata INX, said. “We are unsure if the Chinese economy will continue to expand after 2014. This is due to factors such as a decrease in volume of export due to the effect of currency translation and the economic slowdown. An expansion of domestic demand can be expected. However, we project the market will not expand at the rate experienced in previous years.”
Fukunaga said that packaging ink is a strong area of growth in China.
“We believe that expanding sales in packaging ink is the key to growth in the Chinese market,” Fukunaga noted.
However, there were some downsides as well. Several major printers have closed their doors, which is leading to concerns within the printing industry. The economic growth in China also slowed relative to recent years.
“The Chinese economy looks to be slowing down now, but we expect that it will start expanding again in future,” said Takamizawa. “Now the personal and enterprise consumption are depressed because of a saving policy from the government, and it is impacting the printing market.”
Atsushi Egashira, general manager, corporate communications department at DIC Corporation, said that growth in China is steady.
“The overall printing ink market in China has shown steady growth except for news inks, and this trend is expected to continue for the time being,” Egashira said. “Despite the slowdown of the economy, the demand for packaging inks is brisk and continues growing at almost the same rate as GDP growth.”
“Our sales declined, despite brisk sales of gravure inks, as faltering economic growth and other factors caused sales of offset inks and news inks to tumble,” Egashira added.
Yu Adachi, corporate communication department, Toyo Ink SC Holdings Co., Ltd., agreed that China’s growth appeared to slow, but environmentally friendly packaging inks did well. “Sales of eco-friendly inks for packaging applications increased,” Adachi added.
Expansion in China
To meet the demand for ink, there has been expansion in capacity. For example, Bauhinia Variegata Ink anticipates adding capacity to its packaging ink business, and in March 2012, Letong Chemical opened its new subsidiary, Zhuhai Letong New Materials & Technology Co., Ltd., adding 10,000 tons of production capabilities, primarily lamination printing inks, plastic reverse printing inks, BOPP pearlescent-coated inks and PVC heat shrinkable printing inks.
Among international ink leaders, DIC Corporation and Toyo Ink opened facilities in the past few years.
“We expect printing ink demand in China to continue to grow,” Egashira said. “In particular, packaging inks are considered to be more promising. We built the mother plant for environment-friendly packaging inks in the city of Nantong, Jiangsu Province. Since the start of its operation at the beginning of 2013, we have successfully expanded our business for packaging inks, targeting to expand our market share from 10% to 20%.”
In addition to Tianjin, Toyo Ink has ink manufacturing facilities in Shanghai, Guangdong and Chengdu, as well as pigment, resin and polymer production facilities. Adachi reported that Toyo Ink is adding new ink facilities in China, most notably its new liquid ink plant in Chengdu.
“Although growth in demand has eased somewhat, China is second only to Japan in sales of printing inks by region, positioning the country as a priority region for the Toyo Ink Group,” Adachi said. ‘As part of our regional strategy, Toyo Ink has been building production bases in areas inland, where growth in demand is expected, and expanding our liquid and offset ink businesses. In June, we just began operations at a new liquid ink plant in Chengdu.”
One key for global ink manufacturers to increase their presence is working closely with colleagues in China.
“T&K Toka and Hangzhou Toka have been having a bidirectional relationship for a long time to understand each other,” said Takamizawa. “T&K Toka sends Technical and Production officers to Hangzhou Toka to transport our T&K (Technology and Kindness) spirit in China, and Hangzhou Toka sends many trainees to T&K Toka to absorb technical and production know-how.”
Takamizawa noted that detecting printing trends in advance is also important.
“The key to growth in the Chinese market is to catch a need in advance, and develop inks for it in advance,” Takamizawa said.
Outlook for the Chinese Ink Industry
The outlook for the ink industry in China remains positive. Egashira said that DIC has placed much emphasis on China – DIC has seven manufacturing facilities in China, as well as pigment and resin operations – and is emphasizing high-end markets.
“China has a huge population and its economy is still expected to grow even though the economy is slowing,” Egashira observed. “However, the whole market is too large to cover and the market situations varies depending on its range (from low-end to high-end). Under the circumstances, DIC has focused much on middle to high-end markets where our expertise can be utilized the most.
“Geographically, DIC has already covered most demanding areas such as Huanan, Huadong and Huabei,” Egashira added. “We have considered packaging inks the key products for our future growth.
The packaging market is promising in both mature and developing countries, since packaging consumption has steadily increased, due to living standard improvements in developing countries and increasing demand for food security and attractive appearance in matured countries.”
Sakata INX is well positioned in China, with three manufacturing facilities in the country: Sakata INX Shanghai Co., Ltd.; Nansha Sakata INX Corp.; and Maoming Sakata INX Co., Ltd. Fukunaga anticipates further growth in the Chinese ink marketplace.
“We expect the Chinese printing ink market to continue growing,” Fukunaga reported. “However, because of political issues and severe competition among local manufacturers, we will expand sales by carefully looking at the trend in demand. We will reinforce our existing facility but do not have plans to build a new plant.”
In addition to Hangzhou Toka Ink Chemical Co., Ltd, T&K Toka also has two other operations in China: Toka Ink International (Hong Kong) Ltd. and Toka Ink (Guangzhou) Ltd.
“We forecast that the printing market in China will keep growing in the future too, so we will never stop developing new inks in all fields as a top player in ink industry,” Takamizawa concluded.