Balancing hope and pragmatism seems to be the overriding philosophy within the Hong Kong and China print-manufacturing industry. In the face of economic complexities and geopolitical uncertainties, these print players are focused on improving internal processes and end products, fostering deeper client partnerships, and embracing industry challenges and changes.
The world, as executive chairman Matthew Yum of Hung Hing puts it, is much more complex than it was two or three years ago. “Globalization seems to be under constant threat, with one issue resolved while a new one rises. Companies like us operate in a very volatile environment, and while we can forecast or scenario plan to the best of our abilities, we must also be agile and willing to adjust our execution at any point in time.”
There is simply no running away from challenges, says Francis Ho, deputy general manager at C&C Offset. “Challenges will always be there. The more important thing is to look for opportunities. And there are always new opportunities in emerging markets or fulfilling unique product demands, which our team is constantly identifying and monitoring.” The team, Ho adds, “has been raising our competitiveness and flexibility using better solutions and greener methodologies while meeting challenges and the needs of our current global customers. We aim to reduce waste, shorten the turnaround time, make better products, and fulfill client needs.”
After the issues with excess inventory in recent years, publishers are being cautious with initial print-run quantities. “However, we are seeing more frequent reprints, which hopefully speaks to improving sales,” says Howard Musk, president and CEO of print management company Imago. “There have been several occasions where an initial print run was ordered at the low end of the anticipated range and then a reprint order came in during the production of the first printing.”
The numbers tell the story: In the U.S., unit sales of print books were 1.1% higher in the second quarter of 2024 over the same period in 2023 at outlets that report to Circana BookScan, spurred mostly by huge gains in the adult fantasy genre. The second-quarter increase was nearly enough to offset the 1.7% decline in the first quarter, putting unit sales down only 0.4% in the first half of the year. That fuels optimism among American publishing houses that the two-year slide in sales might be coming to an end.
Overall, overseas publishers continue to have jitters about supply-chain disruptions and logistics logjams, which roiled the print-manufacturing sector soon after the pandemic began. They have been pushing to move some projects outside of China to reduce the reliance on a single manufacturing location or when sensitive content is involved. This strategy brings new opportunities as well as some unique challenges for print manufacturers and print management companies.
Going beyond the Chinese shores
Leo Paper, for instance, has been busy upgrading its Heshan facility while commencing operations at a brand-new 77,000-sq. -m. factory in Vietnam’s Hai Duong province. “We are harnessing the potential of the Chinese market while simultaneously diversifying our manufacturing capabilities geographically,” says general manager of sales Andy Lau.
“The expansion of our Vietnam factory has increased our product categories and services to global customers as well as enhancing our operational flexibility,” Lau says, adding that “it also opens up opportunities for us to tap into new markets and strengthen our global presence. So we are now better positioned to mitigate supply-chain risks and adapt to shifting market dynamics and demands. Resilience and responsiveness are our watchwords.”
For Yum, of Hung Hing, who also has a manufacturing facility in Vietnam, operating across a wide range of businesses and product lines as well as in different markets often allows for quick pivoting. “Our export customers have been taking a more proactive planning and order placement stance, and many have allowed advanced production to counter any delays in shipping and port congestion issues.”
Over at print management company Chang Jiang Printing Media, company founder and marketing director Samuel Chung has embarked on a mission to forge partnerships with more printing firms in Southeast Asia and even in Eastern Europe. “This sourcing expansion stems from requests that we received from many clients, especially from those who are worried about potential tariff increases that may come after the U.S. election in November, logistical hiccups in the Panama and Suez canals, and unstable freight charges during peak manufacturing season,” Chung says.
But sourcing or printing in Southeast Asia comes with its own challenges, despite the region’s proximity to China. “Materials supply, language, shipping arrangements, production lead time, and social compliance, for instance, differ from country to country,” says Chung. “Fortunately, I have a team of experts that I regularly send to these factories to train them on areas such as day-to-day communications, service requirements, and technical jargon. This enables all of us to speak the same language and deliver the tip-top quality and standards that our clients have come to expect from Chang Jiang Printing Media.”
The book print-manufacturing industry as a whole, adds Chung, “is facing more uncertainties and issues beyond its control. We do our utmost to minimize the impacts whenever such problems arise. Given our partnerships with print companies within China and elsewhere in the region, we have the ability to award an order based on a factory’s capability, capacity, cost, and schedule. At the same time, we advocate that publishers plan projects well ahead of time—preferably with our team at the earliest possible stage—and manufacturing earlier to avoid any unforeseen circumstances.”
Most China-based print manufacturers, adds Musk, are nervous about the second half of the year, with the knock-on effect resulting in some temporary caution in major equipment investments. “The current U.S. administration has not lifted the Trump era tariffs on books produced in China. So whatever happens in the November election, tariffs will continue for a while in our industry, but hopefully will not increase.”
Summer months remain the peak season at Imago. “But we have broadened our product categories to include calendars, planners, and educational materials that are produced earlier in the year, and this has really helped balance our production,” says Musk.
“We had some relief from shipping difficulties and high costs last year and early in 2024, but pressures are mounting now,” says Musk. “There have been record-breaking volumes being shipped a bit earlier than the traditional peak season, while capacity has been impacted by the diversions around Africa due to conflicts in the Red Sea and port congestion in Asia and Europe. It is not clear whether this early peak season will mean less pressure for the traditional peak season, but the consensus is that shipping rates will remain high through early October.”
The current print demand cycle has become more ad hoc, with less discernible ordering peaks, says Ho. “Although global reading habit is trending towards digital given the ubiquity of mobile devices, printed book will still be in demand for the long run. I am confident that Chinese print manufacturers and the print supply chain can deal with any geographical or logistical issues given their decades-long experience, efficiency, and maturity.”
Fortunately, paper prices in China have been very stable in the first half of 2024, and, while mills would like to see a price hike for the rest of the year, the market demand is not strong enough for them to enact one. “This means that we can look forward to continued price stability for the next few months. The one small caveat is that shipping costs do affect paper prices in Southeast Asia, as paper is generally imported from China or South Korea, and so this has pushed up prices by around 5%,” says Musk, adding that Korean paper prices is holding steady after an 8% increase late last year.
Gearing up for more automation
Automated guided vehicles (AGVs), autonomous mobile robots (AMRs), collaborative robots (or “cobots”), robotic arms, you name it—these are now deployed to more efficiently handle laborious and repetitive tasks that used to be done manually. So instead of hiring workers with ever-rising minimum wages and insurance, print suppliers are opting for more automation and populating their production floors with robots.
“Automation is prevalent in the present print-manufacturing industry but it comes with a price tag that increases the already high fixed costs,” says Chung. “However, many of our partners are still willing to invest in automation as well as new printing equipments such as eight-color or UV presses in order to stay competitive on pricing and efficiency. They see the advantages of having newer presses and technologies in terms of producing faster and better—and often, greener—and the impact on their bottom lines, as well as their standing with us and the clients.”
Operations-wise, Yum says that automation and AI will take the print-manufacturing industry to the next level. “Keeping abreast of the latest technologies and exploring ways to turn these into our competitive advantage is paramount. At the same time, digital printing will continue to expand its market share to accommodate ever-shorter print run orders and customization demands.”
Yum continues, “Having said that, we need to equip our workforce with the right skills so that they can adapt to the new environment. We have been actively exploring advanced digital postpress options and integrating AI into our daily operations to enhance our range of solutions for customers. Going forward, companies that continue on the traditional path will lose their competitive edge.”
For Lau, the globalized nature of supply chains and increasing global presence often translate into constantly changing shipping schedules and delays. “This has driven us to accelerate the implementation of lean manufacturing principles and automation. By streamlining our production processes and increasing efficiencies—while reducing waste at the same time—we shorten our turnaround times and can better adapt to changing shipping schedules.”
The successful adoption of lean manufacturing and smarter workflow processes have allowed Leo Paper to its labor force by nearly 70% since 2007 while enhancing both efficiency and product quality. “Take our Total Productive Maintenance program as an example: it advocates a total participation approach that involves all employees in the maintenance process,” Lau says. “The end result is an optimal operation that leads to improved efficiency and product quality, which makes us and our clients happy.”
As for automation, the Leo Paper team does not stop at just developing in-house solutions, says Lau. “We also collaborate with specific suppliers to customize automation processes that align with our operation and cater to our clients’ unique product requirements. This is applied across different product categories, including boardbooks, packaging, and games, to significantly improve production efficiency and reduce human errors.”
The value of data in driving informed decision-making is something that the Leo Paper team recognizes, says Lau. “We are investing in data analytics tools and capabilities to gain valuable insights into customer preferences, production processes, and market trends. By harnessing data, we can identify areas for improvement, optimize resource allocation, and make strategic market decisions. And this brings us to the need for comprehensive training programs for Leonians to equip them with the necessary skills and knowledge in areas such as data analytics, digital tools usage, and process automation.”
Getting greener by the minute
The EU Deforestation-free Regulation (EUDR), a policy framework to address and mitigate the environmental impacts of deforestation, is currently one of the hottest green topics in the industry.
“Given that we export printed materials globally, we recognize the importance of adhering to international regulations that seek to protect the environment and promote sustainable practices,” says Ho. “We are closely monitoring the developments and using our paper suppliers to prepare for EUDR requirements, especially in implementing sustainable sourcing practices and traceability measures.”
The C&C team is awaiting new information and guidance from the Forest Stewardship Council (FSC) on the full EUDR implications. “We are ready to participate in relevant FSC webinars on the topic to better prepare and collaborate with all our stakeholders to ensure a smooth transition to these new regulatory requirements,” says Ho.
“The EUDR, which will be take effect in December 2024, has raised many concerns regarding the stringent rules aimed at protecting our planet,” says Yum. Hung Hing’s environmental, social, and governance (ESG) team has addressed the topic in depth in its latest journal alongside ideas on green materials and packaging. Aside from regular briefings to its sales and marketing team to prepare them to handle customer inquiries and supporting customers in ensuring compliance with regulations, there is also a special team assigned to focus on researching and sourcing environmental-friendly materials for customers.
There is growing interest from publishers in benchmarking their carbon emissions and assessing ways to reduce them. “This aligns with Imago’s own goals,” says Musk. ‘’We both calculate and report on emissions, and we can provide clients with all the data they need. The biggest component of our scope 3 emissions is paper manufacturing. So using paper mills that use more renewable energy is a simple way to start lowering emissions. Some are further along in their use of renewable energy than others.”
The goal, Musk adds, is to engage and influence the supply chain to make the changes and improvements needed. “It is analogous to the adoption of certified sustainable papers. A while back it seemed difficult and sometimes more expensive to get FSC papers. Now, it is pretty much the norm.”
The greener aspect, however, is a challenge to Chung and his team at Chang Jiang Printing Media. “In the last couple of years, we are working hard to keep up with the greener applications required by clients. Whether it is about alternatives to plastic, recyclable materials, or renewable energy sources, it comes with additional pressures—not to mention costs—for our factories. But there is no getting away from these requirements, and we are doing our level best to meet the demands while staying within the price points.”
Sustainability continues to take center stage at C&C Offset with improved systems and new tools. For instance, the second phase of the C&C Energy Management Center, where 160 monitoring devices record and analyze daily energy usage, has included significant upgrades on its system analysis and usage. “Aside from additional energy measuring locations, we now have real-time analysis of the air-conditioning units and air compressors throughout our Shenzhen facility, and a carbon management system that provides insights into our emissions data to help us identify and quantify emissions sources within our operations,” says Ho, adding that any abnormal energy consumption will trigger a warning demanding quick action.
A smart in-house app has also been developed to cover areas such as energy consumption analysis on trend and peak usage as well as real-time electricity allocation and usage. “This is about energy savings, emissions reduction, and the judicious utilization of resources as well as spotting weak areas for further tweaks and improvements,” Ho says. “The road to achieving higher production efficiencies and companywide sustainability is always under construction.”
There is a growing expectation within the marketplace that companies will demonstrate their commitment to sustainable practices by providing visibility into their supply chains, says Lau. “This includes disclosing sourcing information and the environmental and social impact of their products. Increased transparency helps to build trust while allowing consumers to make informed choices that are aligned with their values. And so we are committed to complying with environmental regulations, continually improving our sustainability practices, and enhancing the transparency and traceability of our supply chains.”
Yum adds, “In product offerings, we must provide customers with value-added solutions, such as by providing more information or trends on sustainability and related regulations to help them make informed decisions for their orders.”
“We must continue to develop new designs, particularly those utilizing eco-friendly materials such as mineral oil-free (MOF) inks or plant-based packaging materials, to comply with the regulations imposed by different governments to meet their climate change commitments,” adds Yum, pointing out that Hung Hing has committed to achieving carbon neutrality by 2050 and is striving to be among the best on sustainability practices within the print-manufacturing industry.
Improving the supply chain bit by bit
Given the interdependence of each component of the print supply chain, nothing happens in silos, especially when it comes to sustainability and being green(er). Going forward, the print supply chain is as much about sustainability as it is about automation and technology. It is also about shared decision-making between the client and the supplier at various points in the manufacturing process to increase efficiency and cost-effectiveness.
Take Hung Hing’s warehousing services: they are a key component in its quest for a greener supply chain. “We store finished goods and break bulk as well as pick-and-bundle and repack for re-export to markets in Asia Pacific based on clients’ needs,” Yum says, “so there is no need for our clients to ship the books back to Europe, the U.K., or the U.S. and then redistribute them. Our warehousing services have helped clients avoid extra shipping costs and made the process more environment-friendly by avoiding incurring unnecessary carbon emissions. Less of a carbon footprint is good for all of us and our planet.”
Sustainability may means something different to everyone. It can be about one tiny piece of a company’s process or a communitywide effort such as Hong Kong’s ban on single-use plastics. It may focus on compostability, greenhouse gases, recyclability, smarter energy consumption, waste reduction, or even reducing microplastic in our water system.
While pulp-and-paper mills are rethinking their source materials and meeting various forestry certifications, ink companies are busy making sure that they are using bio-based, biodegradable, or decompostable additives and recycling-friendly packaging solutions. Still, polycyclic hydrocarbons (PAHs), heavy metals, primary aromatic amines (PAAs), and dyes—all of which pose hazards to human health—continue to be present in printing inks, albeit in much lesser amounts than in the 1970s or 1980s. Benzene, that sweetly aromatic—and carcinogenic—hydrocarbon, for instance, remains in inks, ink solvents, and cleaning agents.
Meanwhile, the New York State Legislature is considering banning the use of carbon black-based packaging inks within the next two years. Since carbon black is the main pigment for black inks and is deemed non-hazardous by the U.S. Environmental Protection Agency and Occupational Safety and Health Administration, this is a major development (and headache) for the supply chain. Fortunately, the proposed ban does not cover the use of carbon black ink for newspapers and periodicals. But the potential state ban has prompted companies such as Nature Coatings to attempt to use wood waste to formulate carbon black.
Back on the print production floor, adoption of newer curing technologies—UV, UV LED, and electron beam (EB)—are gathering momentum because they are more eco-friendly and efficient. But UV curing is not suitable for thick coatings, which may put a damper on publishers wanting different types of embellishments on, say, book covers. EB curing, which utilizes high-energy electron beams, offers deep penetration to instantly cure or harden coatings, inks, and adhesives without the need for heat or solvents. This eco-friendly curing method is mostly used on food packaging for now, and it requires significant power and proper protective equipment and training. UV LED, on the other hand, consumes much less energy and is more than adequate for the needs of print manufacturers.
However, investments in R&D, new raw materials, and greener technologies do come with a price tag. And this represents a major conflict, as clients—of both print manufacturers and publishing houses—naturally do not want to see increased costs impacting their bottom lines.
For Hong Kong and China print manufacturers, adoption of new materials, processes, and technologies remains the way forward. By deploying automation, smart manufacturing practices, and the latest technology, they will be able to deliver the best products in the shortest time possible using the most cost effective methods.
These print players know all there is to know about embodied carbon, insetting, waste stream, zero-to-landfill, and other sustainability buzzwords, and pare working hard to manufacture better and greener products while protecting the environment. Their adaptability, agility, can-do spirit, and resilience have carried them through stormy weather and turbulent times before, and now they are at the top of their game.
