Supply chain disruptions” is currently the most dreaded phrase in the print manufacturing industry—in all industries, for that matter. The troubles, which started soon after the pandemic began, roiled print manufacturing in 2020, intensified in 2021, and persist today. And there are no quick fixes. Alas, there is no big red Emergency Stop button, like the one on the printing machine, to press and get a do-over.
So here we are: the major challenges affecting print manufacturers in Hong Kong and China—logistics logjams and higher paper prices, for instance—have not gone away, and nor has the pesky mutating virus. But while some supply chain issues have shown signs of returning to a sort of normal, geopolitical chaos is undermining much of the progress.
The conflict between Russia and Ukraine, for instance, has impacted the supply chain, disrupted global trade, and brought about rising inflation, says Matthew Yum, executive chairman of Hung Hing Printing Group. “At the same time, geopolitical tensions between China and the West, particularly with the U.S., where many of our clients are based, have also seen some print-manufacturing projects being moved out of China and diverted to other neighboring countries.”
Looking at logistics, lockdowns, and labor
The main issue for the industry lies in freight, says Howard Musk, president and CEO of print management company Imago. “The cost of shipping has skyrocketed, and finding capacity is a problem as well. Some of our clients manage their own shipping, and most of them are used to shipping from Hong Kong and China. But they are not familiar with shipping from Southeast Asia, and our experienced shipping partner has been able to help.” Musk is seeing higher print quantities, which means that restocking is less frequent and longer shipping lead times are often tolerated and accepted. “The JIT model of print-manufacturing only as needed in order to reduce inventory holding costs is on a hiatus, at least temporarily.”
And while the recent lockdowns in Shanghai and Beijing had no impact on Imago’s production—since its print-manufacturing partners operate in the southern part of the country—the backlog at Shanghai Port poses a problem. “Shipments were diverted to other ports, such as Shekou and Yantian in the south, which caused capacity issues and new backlogs there,” Musk says. “The clearance of all these backlogs is going to clash with the usual peak manufacturing season, from August to September. Over in the U.S., there is still port congestion on both coasts, but it is down from the worst levels with less ships anchoring and waiting to dock.”
Lockdowns owing to China’s zero-Covid policy have caused uncertainties and disruptions to the economy and business operations. “This stringent measure, which is good for curbing the rapid spread of infections to save lives, has resulted in higher transportation costs and logistical issues,” says Yum, of Hung Hing. “While our facilities were not affected, some of our suppliers had to temporarily cease operations. There were no drivers to deliver the supplies, such as raw materials and machinery components, which are needed in our own production. But the recent situation has been much less disruptive than that of last year.”
For now, logistics and shipping remain unpredictable. “Scheduling for freight is tough while pricing remains unstable,” says Francis Ho, deputy general manager of C&C Offset. “Energy prices have been fluctuating globally, and this issue is exacerbated by increases in raw materials, production, and labor costs, especially in China and many Asian countries. The Chinese yuan has been fluctuating, and we see stock markets and currencies around the world experiencing the same situation. The pandemic has caused uncertainties, which are made worse by geopolitical tensions in different parts of the world. The global economy and trade have been affected, and so are people’s livelihoods.”
Labor availability remains an issue in China’s manufacturing sector. “It is harder to get young people, especially college graduates, to take on manufacturing-related jobs,” Yum says. “This short supply has pushed up labor costs in some ways. For Hung Hing, we continue to automate our manufacturing processes as much as possible while giving preference to less labor-intensive projects.”
Pulp and paper problems
Imago’s publishing clients are well aware of the rising costs due to the massive paper shortage in the U.S. market. “But paper prices in Asia have not been rising as quickly, and they also started from a lower level,” Musk says. “Presently, they are up around 10% from the start of 2022. The cost of imported pulp to China mills has increased due to the global inflation in energy and freight costs, while the periodic lockdowns in China have slowed its economy and helped to hold prices down. We are monitoring the situation closely so that we can buy paper well in advance of any indication of price hikes.”
Russia is a major exporter of pulp and paper products, says Yum, of Hung Hing, “but its military conflict with Ukraine and the ensuing trade sanctions have seen these exports being decimated. Consequently, some European paper mills have shut down, which in turn tightened paper supply and raised the prices. The conflict has also caused an energy crisis that resulted in higher operating costs for many companies. Consumables and components used in the day-to-day print-manufacturing operations, of which many are produced in Europe, have become more expensive. All these have contributed to spiking operational costs across the board.”
Paper purchasing and stock planning activities at Hung Hing had accelerated at the start of the Russia/Ukraine conflict as the company anticipated supply shortages and higher prices due to increases in energy costs. “The majority of our orders have arrived and we have ample stock,” says Yum, whose team is well prepared for new orders during the upcoming peak season. “Currently, paper prices have not fallen but have stabilized somewhat. Paper shortages in Europe have pushed some Chinese and Asian mills to increase their supply, but these market demands have kept the prices high.”
As for C&C Offset, it mostly uses Chinese papers—art, wood-free, lightweight coated, and artboard, for instance—for its projects. “Pulp prices remain high, and while paper costs have been stable recently, most of them are not coming down,” Ho says. “We have built a healthy inventory level for our major clients so they can get urgent reprints on time. This is a part of our pre-manufacturing service. Post-manufacturing, we offer warehousing and storage for printed inventories to support our clients with their JIT fulfillment. We also offer digital archiving and file management services.”
Doing digital and going green
The move to introduce digital printing capabilities to its production floors has been gathering momentum at C&C Offset since 2012. “Two years ago, we found that inkjet printing technology, quality, speed, and automated workflow had finally met the expectations and requirements that we set out for our print projects,” says Ho, who finds the digital printing process to be faster, more cost efficient, and greener. “Our educational publishing clients have definitely benefitted from our digital production line, especially for on-demand titles.”
For shorter on-demand runs, Ho says that digital printing is less expensive than offset printing for quantities between 200 and 800 copies. “Digital printing also provides faster turnaround time—since it skips several processes such as platemaking, make-ready, and registration adjustments—for quantities between 1,000 and 2,000 copies, and this is solely based on the data from our digital presses.”
Adding digital printing capabilities to a traditionally offset-based production floor is now the norm. In fact, according to the latest Smithers industry report, the print market is becoming increasingly digital, with sheetfed offset printing growing modestly, from $183.7 billion in 2014 to $192.6 billion in 2024. In that same period, however, the digital print sector will grow robustly, from $103.1 billion to $180.9 billion, with inkjet printing expanding the most.
Over at Imago, digital edge printing has become more popular as an alternative to traditional stains and gilding, Musk says. “The ability to do this digitally means that we can more easily do lettering and imaging on book edges—on all three sides—and in small volumes.” UV-cured printing remains a niche area, Musk says, “and we have been using it mostly on synthetic papers. But in recent months, we are applying this method to uncoated papers, where a brighter and cleaner result can be achieved compared to using conventional inks.”
But UV-curable inks are definitely getting more attention and application. The latest study from Allied Market Research stated that the global UV-curable ink market size, which was around $1.1 billion in 2021, is estimated to hit $4.5 billion by 2031. The surging demand for such inks is due to its reduced drying time, high bonding quality, low viscosity, and low VOCs. The report also stated that the publications and printing segment accounted for the largest share of the market—at around 40%—in 2021. The Asia Pacific region is expected to be the fastest-growing market for UV-curable inks between 2022 and 2031, overtaking Europe, which currently has the biggest share.
Meanwhile, Hung Hing is experimenting with mineral oil–free (MOF) inks, which include vegetable oil–based inks, to comply with legislation in some markets, such as France. “We are in the testing stage and will be able to integrate this into our system very soon,” Yum says. “Though such inks are more expensive, we anticipate that this will be a trend going forward, especially in the EU markets, where printed matter and packaging will be required to use MOF inks.”
Moving beyond print manufacturing
For print players in Hong Kong and China, business diversification is essential to their bottom lines and survival. Just as their publishing clients have moved to add digital products to their print offerings, these manufacturers need to go beyond print as well. But thinking outside the box is not for the fainthearted.
Take Hung Hing as an example: in recent years, the company has leveraged its industry relations and experience to connect upstream and downstream business partners and venture into new areas with unique opportunities. Yum Me Play, an experiential learning platform for young children, is one such area. Here, the Hung Hing team focuses on developing high-quality books, toys, and interactive games that are packaged as gift sets focusing on STEAM topics. This September, Hung Hing is launching the Yum Me Play flagship store in New Town Plaza, a popular shopping mall in Shatin, Hong Kong. The 6,700-sq.-ft. edutainment space will combine experiential retail and interactive thematic learning to engage children and parents.
“Innovative expansion at the right time and in the right area has always been our mission,” Yum says. “We specialize in children’s books. With Yum Me Play, we offer both online and physical retail platforms for our publishing clients to sell their products to an even wider audience. When our clients sell more, we print more. This win-win situation is the model we adopt at Hung Hing.”
Then there is STEMplus, one of Hung Hing’s portfolio companies, which is all about inspiring a passion for science and technology from an early age. Last December, STEMplus sponsored the first Inter-School AI Formula Edge competition, which was held over three days at the AsiaWorld-Expo. Around 70 teams from 21 schools participated in a custom-built car-racing competition that required STEM and AI applications. It was aimed at enhancing students’ abilities to write AI programs while motivating them to find solutions without using expensive gadgets and software. At the same time, such events connect participants and the audience to the STEM products that Hung Hing manufactures for its publishing clients.
Getting back to normal and forging ahead
At C&C Offset, activities are back to pre-pandemic output levels. “Our senior management staff had maintained a certain level of in-house production capabilities during the pandemic, which went a long way toward stabilizing our workforce, manufacturing output, and logistical support,” Ho says. “We have been able to fulfill client demands despite the chaos caused by the pandemic due to the strength of our business continuity plan and our ability to execute it under such tough situations.”
For Musk, of Imago, the Section 301 tariff action on imports from China—with 7.5% on most types of books—is a burden to the print-manufacturing industry. “The larger impact is on stationery products, such as journals and planners, with a 25% tariff,” Musk says. “Imago has been in the fortunate position of being able to offer alternate sources for these types of products in Southeast Asia, Korea, and Europe, and we have consequently seen a significant growth in this segment of our business. Given the current level of inflation in the U.S., I am sure that there will be changes to the tariffs coming quite soon, probably with targeted reductions on those with higher tariff levels.”
These alternate print sources have also proven to be advantageous whenever a title is flagged for censorship in China and manufacturing must be shifted elsewhere. “China remains our main source for print, especially those requiring handwork and lots of accessories,” Musk says.
Owing to the U.S.-China tension and tariff issues, “some clients have been looking for alternate sources outside of China for their manufacturing needs,” says Yum, of Hung Hing. “They may have started searching before, but now they are getting serious. While it does not mean that they are going to abandon their China-based suppliers altogether, they may be more keen to channel their businesses to countries such as Vietnam, Thailand, and Indonesia.”
But for these three print manufacturers, there is no time to waste on bemoaning external factors beyond their control. Resilience is in their DNA, and their can-do spirit has seen them through the tough times, including the Asian economic crisis of 1997, the SARS outbreak in 2003, and the tariff war that began in 2018 and is ongoing. The Hung Hing team, for one, is definitely not slowing down. “Our work continues to build on our core expertise in innovative children’s products and paper engineering to further differentiate our services from others in the field,” Yum says.
The printing press manufacturers are not standing idle either. Last month, Kodak unveiled its Prosper 7000 Turbo Press, the fastest inkjet web press on the market and capable of running up to 410 mpm (or 1,345 fpm), which is about 35% faster than its nearest competitor. Earlier this year, Fujifilm introduced Revoria Press PC1120, its high-speed digital printing machine capable of CMYK printing with overlays and underlays of specialty colors in one pass.
As for Heidelberg, it has leveraged its robotics expertise to increase Stahlfolder P-Stacker’s folding production output by around 25%, thus reducing manual labor and increasing process efficiencies. It also introduced the highly automated Speedmaster CX 104, which is capable of printing on different materials, from lightweight to carton stock, and is a good choice for book cover printing and short runs. Manroland Sheetfed, on the other hand, demonstrated its confidence in the China market by opening a new Print Technology Center in Shenzhen in June to be nearer to its existing and potential clients.
Much is also going on in the pulp and paper industry. There is Nafici Environmental Research with EcoPulping, an innovative low-carbon process for transforming agricultural wastes—wheat straw, reed, maize stover, for instance—into unbleached pulp to produce paper and packaging products. In the biocatalytic technology segment, novel enzymes have been developed that replace harsh chemicals in the kraft pulping process as well as extract higher cellulose yields from wood in order to reduce the environmental footprint. Then there is the Ukrainian startup RE-leaf, which is now selling sustainable paper products made from fallen leaves; the production of its first two tons of paper used 15 times less water and emitted 78% less carbon dioxide than the normal pulping process.
As one Chinese proverb says, “Nothing in the world is difficult for one who is determined enough to achieve it.” Indeed, if there is a will, there is a way. And you can certainly bank on the print players in Hong Kong and China having the will—with a healthy dose of pragmatic optimism thrown into the mix—to find the solutions to counter any industry headwind, and innovative ideas to meet new market demands.
This feature is published with the support of the companies covered in these articles.
