From one-stop shop to non-paper suppliers to brokerage firms, you'd be hard-pressed to find a group of businesspeople blessed with more resilience and product knowledge than those operating along every front of the Asian print-manufacturing industry. To the buyer, though, it's a double-edged sword: with so many supplier choices, it's hard to keep each company's strengths and offerings straight in your head. You can't afford to overlook any of them and yet, you don't have the time to look over each one. Here PW tries to provide the pertinent details and shorten your research process.
While expert and quality manufacturers abound in Asia—Tien Wah Press (Singapore), Times Printers (Malaysia), SNP Sirivatana (Thailand), Shen Art (Taiwan), Daehan Printing (Korea) to name a few—the hub of the industry is indisputably in Hong Kong/China, and so it follows that these suppliers form the focus of this report. Bear in mind that this is not a popularity contest result and that PW always runs the risk of missing firms that aren't on our immediate radar or that have just ventured into book/book-plus manufacturing. This report is also not intended to endorse, recommend or promote any particular supplier; the sequence of companies reviewed herein is of no consequence.
Meet the Newbies
To call the following suppliers newcomers is a bit of a stretch. Many of them are established companies—for example, Midas and Leefung-Asco—that have appeared in our previous reports but, like old friends, we lost touch with one another after a while. A few more are big-name domestic packagers—Cheong Ming and QPP, for instance—which have expanded their operations by fine-tuning and leveraging their core expertise. One thing is for sure, as more and more suppliers enter the ring, so to speak, publishers worldwide stand to reap the dividends of intense competition.
After more than 40 years in packaging, Cheong Ming Press decided to extend its operation to include boardbooks, casebounds, novelty/book-plus and hand-assembly in 2000. Hang Seng—listed since 1997, it is still family-owned but with no evidence of the traditional pop-and-son management. Its group of companies include Capital Financial Press (a professional service offering production and publication of annual results, notices of AGMs, financial reports, etc.), Chun Ming Printing (offering commercial printing services) and 32Print.com (delivering print-on-demand workflow). Their two facilities, in Dongguan and Shenzhen, occupying some one million square feet— houses 3,000 workers mostly for novelty and book-plus. Time-sensitive projects are still being manufactured in their New Territories facility, where the company owns half of the building block.
Helping the company to move into print-manufacturing is Lorna Yu, a 20-year veteran who spent many years at Paramount in the 1990s. "Book-printing division contributes about 10% to our bottom line—which is relatively small compared to our $39-million packaging business—but we aim to change that very soon. Our present focus is on novelty books because of the synergies between this segment and our packaging expertise," says Yu, v-p for sales and marketing. With new accounts coming in from the U.S., the company is also busy planning for an East Coast sales office.
On the production floor, Cheong Ming's equipment line-up favors KBA. There are one 5-color KBA, six 6-color offset presses with coating unit, one 7-color KBA with coating, besides the usual 2-color and 1-color presses. The newly installed CtP system at its Dongguan factory is undergoing intense monitoring because, as Yu says: "We're a rather conservative company, with caution our middle name. We do things gradually but surely, and testing the CtP system thoroughly is just one of our ways to ensure top-notch quality and service to customers."
Any new trends observed? Yu says, "Well, nowadays publishers send in their order only after their sales have been confirmed. And they usually print 'sales copies' first—which is about 1,000 copies—before going for the 'real run.' On the average, most orders are for 20,000 copies, but we have also handled orders up to 300,000." Such big orders don't faze Yu, because "Cheong Ming is well-stocked in terms of paper—we buy in bulk and therefore are unaffected by any increase in paper pricing—and we have sufficient capacity."
A well-entrenched box-packager for the past 20 years but a relatively new entrant to the book-manufacturing industry, QP Printing, with its 2,600-strong workforce, is a privately owned company with two major shareholders—managing director Ricky Cheng and general manager Bobby Yeung—who are also its founders. In 1992, QPP relocated its manufacturing department to Dongguan, leaving behind some 40-odd administrative and sales/finance staff to work in its chrome-and-glass New Territories office. The company also has offices in Beijing, Shanghai, Chengdu and Guangzhou, which are mainly for its domestic packaging business. QP, by the way, stands for the company motto: Quality Production.
So how did QPP get into book-printing in the first place? "Well, when we started with box packaging, our clients also asked us to handle printing of instruction manuals that went with the box. There was no conscious decision on our part to venture into book printing. We just developed our printing expertise and machine line-up as we went along. Last year, we did some Hallmark projects requiring envelope die-cutting—so we learned that—and three years before, Mattel started doing games packaging with us. Ten years ago, we started doing boardbooks. It's a learning process for us. Now we have machines for stamping, die-cutting and wood-cutting (for wood puzzles), etc., courtesy of our customer demands," says marketing director Keith Lam.
"Overall, our business is still 35% packaging for domestic/mainland market and 65% paper products for export. The U.S. contributes the most to our export business—nearly 70%—from both categories. That percentage is the main reason behind the establishment of our Venice, Calif., sales office in November 2002, which is now managed by Kevin Sharkey," Lam says.
With a recent addition of a CreoScitex CtP system—the first was installed three years ago—and CIP3 workflow implementation at its Dongguan factory, QPP now offers the full spectrum of prepress-to-postpress services to all customers. To-date, about 70% of its projects is on digital workflow. "We make all efforts to match customer needs and demands, to expedite communications between our production personnel and customers and to overcome barriers such as the time-zone difference. Our Web site, for example, has a JobTrack feature that allows customer to get instant update on the progress of their project anywhere in our factories," notes Lam.
"At QPP, we say we're in the paper product business, because our expertise runs the gamut of packaging, printing and the combination of the two. Also, we're realistic enough to know that paper products have higher value than just packaging or book-printing, and we don't want to limit ourselves to just one specific category."
Another big name in the packaging and printing industry is Leefung-Asco, which has been listed on the Hang Seng since 1992. The founding Yang family still retains about 35% of Leefung-Asco while Jefferson Smurfit—the world's leading manufacturer of board, corrugated containers and other paper products—which bought over 25% in February 2001 is now its biggest holding company.
"We are basically made up of three business units: the magazine division, which is 100% for China; the export division (mainly in casebounds and children's products); and the packaging division," explains executive director and CEO Alain Baudant, who joined the company 15 months ago. "In 2003, the magazine and export divisions are expected to bring in about $45 million each, while the packaging division is expected to achieve sales of over $20 million." In terms of business make-up, the U.S. represents 75% of Leefung-Asco's export division sales and, indirectly, 50% of its packaging business. "We foresee growth in 2003 to come in mainly from the packaging side, from the U.S. and from domestic markets," says Baudant. So it's hardly surprising to note that the company has set up a sales office in Connecticut.
In total, Leefung-Asco has three factories, of which the one in Dongguan is 100% for export business. "Our total workforce is about 2,900-strong right now, and we have recently added two new sheetfed machines to increase our capacity. This year, we plan to have one CtP system each in our Dongguan, Shenzhen and Beijing factories and to increase the percentage of digital workflow in Dongguan from its current level of 30%—40%," he says. Its present equipment line-up includes some 23 sheetfed presses (up to 6-color), four web-presses (Heidelberg and Polyman), three flexo-printing presses (up to 6-color), four automatic die-cutters and one wide-corrugator. "Our average print run is somewhere between 10,000 to 15,000 copies, and we export finished goods directly through China ports," he adds.
For L.Rex, one press and nine employees marked its humble beginning in 1969. One of the first suppliers to set up shop across the border—its Dongguan factory was established in 1992—it now offers full artwork production, filming/proofing and CtP services as well. PW can't resist asking: what's in the name? Business development manager Brenda Lee—who's also elder daughter of L.Rex's founder, Denny Lee—says: "My dad thought his firstborn would be a boy. and so he picked the name 'Rex' way ahead of time and then used it to name the company." PW isn't sure if it's a joke—hers or her father's.
Back to serious matter: with 65% of its total sales originating from Europe and less than 25% from the U.S., L.Rex is working hard on its North American connection. And it's doing very well, considering that it relies 95% of the time on word-of-mouth and direct liaison. "Anthony manages our entire sales team and he has been instrumental in establishing contacts with overseas publishers and maintaining client relations," says Lee, referring to deputy managing director Anthony Fan, a 30-year veteran in the book-manufacturing industry who apprenticed at Dai Nippon in its early days.
The CreoScitex system added in the last quarter of 2002 has strengthened L.Rex's pre-press services. "We hired a pre-press expert with 20 years of industry experience to help us with our CtP system. He shaved off lots of trial-and-error and research time. Our objective prior to installing the system was to study the technology, look at our product portfolio, choose the most suitable system—not the latest or the most expensive—and implement it properly," explains Lee. "Now, with the workflow in place and running smoothly, we're encouraging customers to let us do the proofing. Once the color requirements are sent to us, we will do the necessary pre-press adjustments and save the color data/profile in our system. This way, when the project goes through the various processes, the same color data/profile will be used. Basically, what we want out of this workflow is this: no surprises anywhere along the way that may lead to delays in meeting our delivery."
L.Rex has only about 20 people in sales, shipping and finance in its Hong Kong office. The bulk of its workforce—some 1,000—is at its Dongguan factory, which consists of three buildings with a total work area exceeding 300,000 square feet and supported by a line-up of 4- and 5-color Koebaus and Komoris, as well as the prerequisite folding and binding machines. So what is the average print run like? Any ultra short runs? "Well, we have customers printing more than 50,000 and also those ordering 1,500. Print run varies, but ultra short runs are pretty rare. Those with 1,500-copy orders normally print several titles at one go or do several co-editions together." Presently, L.Rex produces more than 15 million books a year, mostly casebound coffee-table books, flexibound, hand-assembly/book-plus and an increasing amount of children's boardbooks. Asked if there's any product focus for 2003, Lee says, "None. We aim to strike a balanced growth rate across our product lines to achieve a healthy and efficient portfolio."
Established in 1990 and listed on the Hang Seng Stock Exchange since 1996, Midas is a diversified printing group with three major divisions: book printing, commercial printing and packaging. In 2000, the company was sold to property developer Chuang's China Investments but in spite of the change in holding company, it had a stable year. Sales from its printing division reached $73 million in 2002, brought about by enhanced internal efficiency, proper cost control and implementation of pricing standards across its product lines. Group managing director T.L. Kwong is now in charge of the printing businesses.
Combined, its two factories—in Yuanzhou and Dongguan—have a total production floor exceeding one million square feet, 20 presses, three CtP systems and peak-season staff strength of more than 3,000. Presently, book production is mainly done at its Yuanzhou plant, where a CreoScitex CtP and two Afga CtP system, as well as some nine sheet-fed presses focusing on 4- and 5-color printing, are located. More than 80% of Midas's new projects are in digital format.
"Our book-printing/book-plus business is about 42% U.S., 22% U.K., 28% Australia/New Zealand and the rest from domestic markets. For 2003, our capital expenditure is expected to reach $7.5 million. We also plan to expand production space by 20% and to bring in two new machines—one 6-color and one 8-color. The focus is on increasing our hand-assembly and children's product capacity and on delivering our motto of quality printing at competitive prices," says Kwong. With that expansion, Midas hopes to reduce outsourcing of its color-separation and smaller-scale printing projects. The company has recently appointed Embassy Graphics (Canada) as its agent and is working on setting up a U.K. sales office.
Recent projects include Anne Geddes's Photofolio and the M.I.L.K. series of Family, Friendship and Love. This is one company that consistently collects printing and graphic awards in Hong Kong. One title—Alba Nero, a duotone large-format photographic essay from Nazraeli Press—won the grand award from Hong Kong Graphic Arts Association. Accolades aside, Midas is also leveraging on its reputation and extensive contacts in China to help publishers push their books in the mainland. Kwong noted that its first translated project for Anne Geddes was successfully completed last year.
With more than 30 years in the printing business, Sun Fung is no stranger to the industry. When its export business accelerated in 2000, Fortune Star Printing was set up as its printing arm dedicated solely to overseas accounts. At present, its business is 40% U.S. and 50% U.K./Western Europe, mostly from the Netherlands, Belgium and Germany. In terms of segment, 60% of its projects are full-color hardcovers, with another 20%—25% softbound books. For the last two years, Sun Fung has been going directly to its customers and, to date, more than half of its business still comes through local brokers. Recently, though, the company has contracted freelance agents in the U.S., U.K. and Australia.
"We grew more than 40% in the last two years," says sales and marketing director Gordon Kong. "Book printing remains our core product, even though we do have a small division for book-plus sourcing and hand-assembly that contributes less than 5% to our total sales. In line with our focus on book printing, we have added four 8-color presses since 2000. Last year, our capacity was also significantly enhanced by the addition of another CreoScitex CtP system, one 4-color and one 5-color press. We are monitoring our binding capacity right now and will be adding more case-binding and saddle-stitching lines this year." Its present monthly capacity stands at approximately a million full-color casebound books and three million full-color 208-page paperbacks.
In total, more than 30% of Sun Fung's finished goods are exported directly through Yantian, and this brings about some 25% savings in terms of trucking/terminal-handling fees. Further cost reduction is brought about by paper purchase/inventory management, which is done directly with mills. "We maximize our group purchasing power by buying in bulk; this reduces our administrative and material costs. Any increase in paper prices therefore won't affect our quotations. Last year for example, we ordered up to 5,000 metric tons of coated and uncoated woodfree/artpaper from APP on LC payment."
Sun Fung's 700-odd staff works in two shifts, with quality control inspectors administering stringent checks at every stage of the manufacturing process. "We put lots of emphasis on quality control. All our QC inspectors and production inspectors have at least secondary education, if not university degrees. This is a prerequisite, seeing that our workflow is more than 60% digital and an understanding of the new technology is critical to the service we provide to all customers. Our president, Y.Y. Mak, always stresses that discipline, production cost efficiency and effectiveness are key to expanding our export business."
Old Friends Revisited
While out visiting these Hong Kong/China suppliers, PW was totally convinced there's a hoax—very much in the vein of captures or visitations by aliens—going on about the sorry state of the economy. Almost all the suppliers we met are busy increasing production capacity by investing in new machinery or technology, expanding sales representation, working on new products and services, etc. No one says that their business is down. Everybody admits to having a tough time, but they are all smiles and optimism personified.
And one of the companies brimming with optimism and expanding like there's no tomorrow is Leo Paper. The company's history began 21 years ago with less than two dozen staff. Today, its two mainland factories—in Heshan and Nanhai—are, in all sense of the word, home to some 13,000 employees. Its Hesan facility compound stretches over one kilometer and Phase 5 of its construction—adding some 390,000 square feet of production space—will be completed by the end of 2004. But even the most intricate hand-assembly and the glossiest of all coffee-table books produced by Leo can't hold a candle to its latest project: the $14-million Astros Greenfield Garden on 680,000 square feet of land, fully equipped with a club house, an auditorium, coffee shops, restaurants, a shopping mall, a stadium, a swimming pool, laundromat, dormitories and all the comforts and entertainment the staff could ask for. As a community project, it has garnered lots of goodwill for Leo, especially from the city fathers of Guangdong.
Voted one of the top 500 export corporations for 2002 by China's Ministry of Foreign Trade & Economic Cooperation, Leo's philosophy deviates from the standard emphasis found in many other for-profit organizations. "As the largest employer in the region, we have a responsibility toward the community and at Leo, we work hard to improve the environment and the welfare of our workers. Our philosophy is this: a happy worker is a productive worker," says group marketing director Kelly Fok.
Business-wise, Leo is not letting up on its pursuit of technology, quality or service. "We ordered some 40 Macintosh G4s in 2002 and these items are now being installed. By June 2003, four 5-color presses (two with coating units) and one 4-color press will be added as well. Two more CreoScitex CtP systems have also been purchased: one already in operation, while the other will be installed by the end of this year," says Fok, listing some of the new items which will join the already long and impressive machinery line-up. "These additions are necessary to meet our customers' demand for new technology, better efficiency and increased capacity.
"But we still believe that price and fast delivery are equally as important as having the newest gadget or following the latest trend. Since everybody uses pretty much the same machines and printing presses in the industry, quality will not deviate much from one printer to the next. The differing factors—and often the deciding factors for many publishers—boil down to levels of personalized service and delivery speed."
Books, especially children's boardbooks and novelty and trade books, continue to be Leo's main products, contributing some 57% to its bottom line. According to Fok, the strength of Leo is in its ability to offer a diverse range of specialized services—from flocking, multilayer debossing/embossing, complicated die-cuts to intricate hand-assembly—and, in his words, "to deliver the finished goods with quality, speed and cost in mind".
Managing director Matthew Yum of Hung Hing continues to see significant growth in children's book/novelty and stationery/paper products in 2002. "The one new thing that we experienced since last year is an increased demand for plastics or treatments of plastic," he says. "Children's book manufacturing remains our specialty and focus for the foreseeable future. We've added two new flocking machines to expand our capacity in this category—and will add more if the demand calls for it. We've also installed a new 10-color Mitsubishi press at our Shenzhen facility last year as well. At the same time, we've started working on automating some of the simple processes previously done by hand, allowing us to move our workers to areas needing intricate handwork or assembly. In a way, automating these processes will lessen chances for human error."
Hung Hing has also started to leverage on its name—or brand name, if you will—to assist Chinese and Western publishers on translations and co-edition projects. "It's coming along fine, but achieving a significant sales volume will take some time," says Yum. And the search for new markets goes on outside the region. Recently, the company appointed Print Innovations—headed by Harald Peter and Brigit Gathen—as its new sales rep in Germany. Meanwhile, its U.S. office continues to have strong sales and is seeing a very good start to 2003. "Plain boardbooks, coloring books, etc., aren't enough anymore. For publishers to be successful nowadays, they have to add value to their products by including a set of crayons to a coloring book or a stuffed toy to a boardbook. Or, as some of our customers do, apply for a license that, in itself, is enough to generate more sales. These factors have effectively increased our hand-assembly/book-plus turnover," says v-p of Hung Hing (USA) Bill Tollin from his New York office. "For the book printing division, we're also seeing strong sales in religious/inspirational books, especially during these uncertain times of war and terrorism."
"I think in the foreseeable future we'll see more demand for specialty books which require a significant amount of handwork and sourcing of additional components. In this respect, Hong Kong/China suppliers have the advantage over U.S. printers in terms of cost, labor and variety," adds Tollin. "In addition, many Hong Kong/ China printers have in-house capability for glittering, foil-stamping, fluorescent ink printing, selective coatings on press, etc., besides conventional printing, and this is one aspect where most U.S. printers won't be able to compete."
Asked what makes Hung Hing such a major player in the print manufacturing industry, Tollin offers this explanation: "We have complete control of our manufacturing process from the start to the finish. By having our own paper brokerage business, state-of-the-art pre-press department and corrugating facilities, we are self-sufficient. We are not dependent on outside suppliers and we have the flexibility to accommodate whatever our customers require—small test runs, super-fast large orders, specialty or intricate hand-assembly. Not many U.S. printers can offer the range of products and services that we have."
At Paramount, 2002 meant running 24-hour days and 7-day weeks. "We started printing paperbacks on our web presses last year and it gave us greater capacity in this segment. At the same time, our magazine business saw substantial increase in demand. Combined, these two have resulted in the hiring of additional staff in all departments throughout our company," says marketing director Peter Nustedt. "The unexpected increase in volume had also resulted in a bottleneck at our finishing department, requiring some minor and quick investments. So for 2003, we are planning well ahead and are already working on expanding our finishing capacity especially saddle-stitching. Right now, we're busy installing our fourth heat-set web press." Overall, Paramount saw a significant increase in its 2002 sales—about 50% and mainly from the U.S. in children's activity/educational book and also medical book categories. According to Nustedt, the company also saw an increase in printing of travel guides from local and European markets.
"We installed a Dainippon Screen CtP system last year, partly because one major export customer from our magazine division prefers direct-to-plate. So far, quite a number of our customers from the publishing industry have also moved into this filmless workflow. We produced several full-color coffee-table books last year using CtP, and we have been pleasantly surprised by the print quality." Speaking of coffee-table books, Paramount did a major project for Phaidon last year: 400,000 copies of Mini Century, with more than 1,200 pages, on a very tight schedule. On the other extreme, Nustedt had an ultra short run for a varnished duotone with stochastic screening from a first-time photographer/publisher.
So how does Nustedt deal with color management and proofing issues? "It depends very much on customer requirement and on the project involved. We have clients who load PDF files onto their Web site for us to retrieve and output. Sometimes they request digital proofs or wet-proofs. Generally these clients are happy to see that our digital proofs approximate the color they see on their desktop monitors. But for color-critical projects like heavily illustrated coffee-table books, we always produce proofs in one form or another. We send out press-sheets for approval before binding pretty frequently, too."
Though not in the hand-assembly/ book-plus market, Paramount has been providing fulfillment services for one of its major clients who wishes to consolidate goods manufactured in various parts of China into display packaging and needs help with final quality check prior to shipping. Looking at the printing/publishing industry, Nustedt remarks, "The past three years have obviously been difficult for many publishers. We have seen caution when ordering print runs, often with quick reprints. We have also seen publishers ordering a reprint even before they have paid for the first run. Decisions to go to press are usually delayed until the last moment. So, there's pressure on faster turnaround and there are instances where the job goes to the first printer who can get the paper to print!"
A few months earlier, C&C Offset acquired one printing company in Shenzhen for its security and domestic printing division. With this latest addition, the company now has two plants in Shenzhen—one each for security and export printing—one in Shanghai (strictly for security printing) and one in Beijing (for security, financial and domestic printing). In total, there are no less than 30 presses—five in New Territories and 25 in China with five of these for web-printing. The company has already installed two FujiXerox DocuTech 4040 systems in its digital printing center. According to director and deputy general manager Ken Lee, "There's no job too small or too big for these machines. On one extreme, we printed just one single copy of a Sweet & Maxwell title. On the other, we printed three million copies of a direct-mailing for Bank of China. It's just part of our service philosophy: We don't want to turn away any customers."
C&C's five CreoScitex CtP systems—two in New Territories, two in Shenzhen and one in Beijing—are doing brisk business. "We output about 12,000 plates per month and the number is increasing fast, especially since our workflow is now about 50% fully digital. There's the usual issues concerning font, color and link but I think the major problem is in 'versioning.' If a book has several versions—or co-editions—then there's lots of coordination to be done with the various publisher offices, which may be located in Europe, North America or Australasia, or even Japan. To help expedite such projects, we now have set up a technical support group to assist with the different languages used."
The company also successfully implemented remote-proofing for its domestic market, especially with periodical publishers. "It's amazing to see how remote-proofing—if properly implemented—can reduce the already short turnaround time by shaving off another two or three days. It definitely helps in expediting the approval cycle. But it's going to take some time before remote-proofing moves into other products. However, I believe with proper calibration, remote-proofing won't be such a 'remote' idea in the near future," says Lee.
For Kwong Fat, its biggest and fastest growing segment is pop-up cards. "We have a five-fold growth for this product over the last two years," says managing director Lawrence Wong. Combining expert die-cutting, embossing/debossing, meticulous folding, foil/glittering and full-color printing, the pop-up card is the sum of all techniques in the printing industry. "But this and other nonbook work is just one small part of our business—amounting to less than 20%—even with packaging, desk diaries, hand-assembly and calendars thrown in," adds U.S. director Bob Passantino.
"Full-color trade book and children's book are our bread-and-butter, contributing more than 25% each to our sales," says Passantino. "For children's books, we have extended our services further by forming an alliance with an American printing company to do their printing over here if project lead time allows for offshore manufacturing. In terms of business make-up, the U.S. forms our biggest market—more than 70%. The other 20% comes from the U.K." And the unaccounted 10%? "That's printing for friends," replies Wong.
The company's aggressive growth has prompted plans to relocate to a new facility within the next year-and-a-half. Right now, it is staying put at its 600-strong Dongguan factory. In 2003, Kwong Fat plans to add two more 4-color presses and another Agfa Galileo CtP system. "We are seeing an increased demand for digital workflow for our projects. Right now, it stands at 60% but we plan to reduce conventional workflow further," says Passantino. "There is less demand for films and press-proofs over the last five years as a result of more Asian suppliers offering full digital workflow with high-resolution digital proofing and direct-to-plate process. There is an overall improvement in the printing quality and time-to-market, but it's fair to say that there's still no complete confidence in color control the digital way."
"By and large, the publishers' perception of Hong Kong/China suppliers is that communication has improved, further reducing the reliance on brokers for their projects. As for pricing, it's relatively less competitive, compared to other Asian sources, due to devaluation of many other Asian currencies following the 1996/97 financial crisis. But most publishers would agree that in Hong Kong/China, the quality is more reliable, the pricing stable and the customer service very good," adds Passantino.
According to general manager Shinji Suekane at Dai Nippon, "Hand-assembly—which we started at our Dongguan factory in 2001—accounts a little more than 20% of our total sales. But we have been very successful so far and expect this segment to grow bigger over the next few years." One recent project handled by DNP entailed putting 10 pop-ups in a single cube, while another involved packing five to six items in one blister case.
The slump in the U.S. economy has not spared DNP. "Since 75% of our overseas business originates from the U.S., the slowdown is definitely not good for us. But we are holding steady by working hard to reduce internal costs, increase manufacturing efficiency and shorten turnaround time. Sales from other markets such as Japan and Europe has helped to give us a steady growth," adds sales department manager Tsuyoshi Naganuma.
Expansion plans are going on at all four of its factories: three in Dongguan—with about 600 workers each and administered from their Shenzhen office—and one in New Territories. "We added a few machines last year to increase our overall capacity and now we have three CtP systems to help expedite our workflow. We have also set up a design center staffed by some 10 people to deal mainly with stationery and packaging products. Over the last three years, we have been actively promoting our own design and marketing prototypes for this particular segment with considerable success," says Naganuma.
So what else is new at DNP in terms of products and services? "Well, we continue to recommend new and novel ways of printing a book to our customers. For example, we suggest printing color images on PVC materials for flexi-bound covers and for cloth-bounds. We are capitalizing on our vast resources and experience in handling different printable materials to help bring ideas to fruition." DNP now promotes a total solution-and-service system through its offices in Japan, the U.S., Australia and Europe. "We also offer assistance in areas such as co-publishing, obtaining copyrights, applying patent/ license and creating new designs."
How about web-printing for trade books, which DNP started last year? "We have good results in this process. We can now print up to 150-gsm matte paper and are capable of producing cookbooks and art books as well thicker books on 65-gsm paper on our web-presses." Any preferred print runs? "No, our extensive machine line-up means we are capable of handling a range of print volume as well as titles of 800-page or above. The average print run is usually above 10,000 but we're seeing a lot of 5,000-copy runs recently." Some of DNP's recent titles include 1,000 Play Things (Workman), which was printed on the web-press, and bestselling titles The Sibley Guide to Bird Life and Behavior (Knopf) and The Golf Club (Zephyr), produced on sheet-fed presses.
"Our 2002 business was very solid," says Andrew Clarke, president of brokerage firm Asia Pacific Offset. "We saw increased sales in nonbook and book-plus segments, primarily for gift journals, boxes and kits. There was also an increase in reprints. We anticipate continued expansion in the book-plus segment. Coffee-table and trade books—accounting for over 75% of our sales—are still our core business. Overall, the variety of projects we handle these days is much wider than it was two years ago. This is really good because diversification and the ability to adapt to market trends are more important in our industry than ever before."
Is he seeing shorter runs nowadays? "Well, print runs depend on the nature of the project, but they range from 2,000 to 200,000. We work with smaller publishers as well as with museums, artists and authors whom want to self-publish, or who require small-run of limited-edition books/catalogues. We also have larger publishers who are trying to reduce warehouse costs by printing a few thousand copies at a time but have reprints several times a year."
The company produced several interesting and challenging projects recently. One of them is The Birdhouse Kit, in which the full-color cardboard box contained wood and screws for making a birdhouse and an accompanying instructions/ideas book. "It required sourcing of high-quality wood and some other unusual materials. We also had to devise a container sturdy enough to hold the pieces together and yet elegant in its form," says Clarke. Then there's The Children's Pencil Kit, with a zippered pencil case, ruler, pencil sharpener, eraser and pencil, all printed or silk-screened with the image of a character from a popular children's book. "The items went into a fancy PVC bag with a printed board-tag at the top for hanging from toy store shelves. We sourced the items individually and then modified our client's artwork for silk-screening. We also handled the assembly of all items." Another title, Learn Chess Fast, involved sourcing for chess pieces, screen-printing on a tin box and creating a PVC mold to hold the pieces and book in place inside the box.
"Asia Pacific Offset is an ideal source for such complex projects. Our staff in Hong Kong and in the U.S. are able to assist with sourcing and creating of appropriate packaging solutions. For example, we make certain that there is color and quality consistency between the various items even if pulled from different countries. We offer a one-stop shopping for publishers: we can source materials, print, pack and ship directly to their warehouse door," Clarke adds.
Jorgen Kirsebom, managing director of Locomotive, is of the opinion that nonpaper products are enjoying healthy growth due to the present trend and belief in "edutainment" and not particularly related to the Harry Potter halo effect. "Parents have grasped the importance of books and play in education and development of their young children. It has more to do with enlightened parents and their efforts in influencing their children to grow fond of books at an early age. Also, parents know that when learning is fun, the process is easier and more productive," says Kirsebom. "The present demand is for books with toys, interactive features and other novelty products that have elements of both education and entertainment. Harry Potter can only do so much in getting a child interested in a book."
In 2002, Locomotive enjoyed a 20% growth in its business. Its core products and expertise are in combining different materials and effects—plastic components, electronics, plush, toys and gadgets of all sorts into traditional paper or boardbooks. "We are continuing our effort to develop new products and to use new production methods while maintaining and improving the highest quality without compromising safety issues. Above all, safety is our #1 priority in all product development and manufacturing."
Since Locomotive's showroom is filled with all sorts of products effectively combining cloth/noncloth and paper, PW is convinced that "nonpaper" doesn't adequately sum up the company's offering. "Well, for the lack of a better name, we call ourselves a producer of softbooks, novelty books and book-plus. Perhaps edutain-book supplier is a more appropriate categorization," he suggests.
In terms of work process, Kirsebom says his company is going digital and exploiting technical resources as much as possible and as fast as it can. "We're working more through the use of computers and technology. Artworks and drawings are now sometimes sent via e-mail to us and we take it from there. Increasingly, samples, prototypes and proofs are often commented on or approved online or digitally to improve speed and reduce costs." Locomotive's effort to improve speed-to-market has also seen the company shipping directly from its partner factories in China. "We ship directly for full-container shipments. But for LCL [loose cargo load] shipments, we truck the goods back to Hong Kong, as it's generally harder to do consolidated shipments out of China ports at the present time," he explains.
"Customer experience," says marketing director Jeremy Kuo of Wing King Tong, "is our focus. Our goal is to make printing and business partnering with WKT an enjoyable experience. This means providing a frustration-free, highly personalized service with certainty in quality and delivery." He echoes what has been said repeatedly by others in the industry: that it's increasingly difficult to achieve product or operational differentiation, especially with everybody using very much the same machines and touting similar levels of experience, quality control and service.
WKT still uses the conventional methods of transferring information, though it has been receiving more files via email and FTP servers recently. "The hardware and connection is getting cheaper by the second, but nothing beats having CD-ROMs, zips, hard disks or other storage media and hard copy delivered to the door. In that respect, we still want to wallow in our comfort zone. Business at FedEx, DHL, UPS and domestic courier companies is brisk," says Kuo. "The advent of PDF has eased e-file transfers, but it also opens up a Pandora's box of pre-flighting and color-management issues." Therefore, WKT prefers to receive proofs/hard copies to accompany transmitted files.
With the establishment of a new New York City sales office, WKT hopes to increase its U.S. sales to about 30% of the business. "Our core products remain the same: children's boardbooks and illustrated books in multiple-language co-editions." Right now, WKT is busy adding another 100,000 square feet of production floor to its mainland facility. "It's due for completion soon and more capacity will be moved to this new area once it's ready. Our CtP system will of course remain here in New Territories for the foreseeable future," Kuo says. The company has also added one new 5-color press with water-based coating unit last year. "It's much cleaner and more environmental-friendly, compared to UV-varnish, which is rather problematic to manage in a 'green' way. 'Green' advantages aside, this machine is also perfect for color jackets with special or metallic inks," continues Kuo.
Print-broker Regent Publishing Services will have moved into its new office by the time you read this. "We will have an additional 50% office space, which is needed for our growing operation as well as to achieve a comfortable working environment for our staff and in preparation for future expansion," says managing director George Tai. Last year saw a record 40% increase in its non-book and sourcing business—the second year Regent started offering this service to customers. In line with that growth, Tai says, "We'll have an in-house workshop in the new office dedicated to quality control and preparing mock-ups and dummies for our customers."
At the same time, Tai is eyeing the increased purchasing power of the euro. "Regent will focus its attention on developing our European markets in addition to expanding our U.S. customer base this year. We are very optimistic about growth in our business. and we're targeting a 20% to 30% increase in our overall sales." Recent projects handled by Regent include Feng Shui for the Home (Peter Pauper Press), Keep Out Door Alarm (Becker and Mayer Publishing) and Beaded Journal (Havoc Publishing).
Tai, a 27-year veteran in print manufacturing, is a keen observer of the industry. He says, "Since 9/11, almost every print buyer and a large number of publishers have been very careful in their purchasing. They normally won't place their order until several rounds of shopping and price-comparison have been carried out. This in turn shortens the already little manufacturing lead-time that suppliers have to produce the goods. I don't expect any change to such short-notice buying practices in the near future. In fact, I think the industry just has to gear itself for even shorter turnaround time, while ensuring that quality remains impeccable and nothing has been short-changed as a result."
How about opportunities in the mainland? Is Regent considering venturing there in the near future? "Well, we won't be setting up a new service center over there anytime soon. This doesn't mean that we're undermining the potential in China or have a lack of understanding of the Chinese market. It's just that we want to concentrate on overseas markets: on building stronger client-supplier relationships, on delivering quality services and products and on helping them in their business," Tai says.
"The printing business is always tough," says operations director Jason Ma of H&Y Printing. "Profit margin is shrinking fast even for the most lucrative segments of pop-up and book-plus/hand-assembly. The present state of economy isn't really helping much, but we are holding stable." So Ma isn't keen on expanding his 400-strong Dongguan facility just yet. There is also no immediate plan to launch a bigger-scale book-plus/hand-assembly operation. "Let's just say that we think the market conditions aren't quite right yet. At present, we are concentrating our efforts on maximizing existing capacity and minimizing internal costs to stay lean and healthy."
He continues: "Our marketing strategy remains the same: To provide discerning customers with high-quality products at a competitive cost. We want to be the best in high-end products. Our strength is still on premium-quality art books and trade books. Recently, we have developed a non-book sector using our existing expertise to extend our product line. We hope to see this segment grow to account for 10% of our bottom line in the next one or two years." H&Y's sales are presently 70% U.S. and 25% U.K.
PW asked Ma for some predictions about the Hong Kong/China print manufacturing industry: "Perhaps in the future, some areas of the hand-assembly operations will move from Guangdong province to other countries in Southeast Asia where labor comes just as cheap and plentiful. But as Guangdong province continues to mature in terms of technology and efficiency, it's tough for any country to fight or enter the print manufacturing industry." As for the competition going on right now, Ma says, "We're seeing some big companies dominating the industry because of their economies of scale and the prestige of their names. It's much tougher for smaller companies to compete. That said, publishers should be aware that smaller operations are often more capable of offering personalized service and are more committed to their projects."
In July 2002, Everbest went into a partnership with Singapore-based Times Printers, a division of the Fraser & Neave conglomerate. "It is our strategy to 'corporatize' Everbest with Times's industry/management experience. We're looking forward to benefiting from their technical support/expertise, to expanding into web-printing, especially in the magazine/periodical segment, and also to increasing our sales from corporate customers," says managing director Ken Chung. Injection of cash in the form of machinery has already reached Everbest's Nansha factory. Three new 4-color machines have been installed in the past six months, with two more new presses provisionally ordered for 2003. The factory's second-phase construction, to increase production space by 100,000 square feet for a new web-printing floor, will be completed by August 2003.
At present, North America is still Everbest's main market. Meanwhile, its Australasia business has increased significantly over the past three years, since the Sydney sales office was set up. It's currently managed by Lionel Marz, a veteran in the printing/ publishing industry with previous stints at Mandarin and South China Printing.
Business, according to Chung, is still 90% coffee-table books—which is not an easy category to major in, especially when color issues abound. So, how does Chung deal with it? "Color isn't a difficult area to control if one deals with professional bureaus who know their stuff. The problem is more about publishers doing in-house scanning using mid-range scanners and supplying the files. Most publishers do not have high-end contract output devices or proofers. Also, their machines are often not calibrated to their suppliers' color profile. If these issues can be minimized or solved, color management will cease to be a problem." That said, Chung still insists on 100% color hard copy for printing reference.
On the average, Everbest's print run is between 5,000 to 7,500 copies. "We would like to set the minimum run at 3,000, but that would not be a good business practice. For existing customers, we do runs as low as 1,000 on stand-alone orders," says Chung. How about ultra short runs? "Sure, most publishers would like to subscribe to just-in-time minimum-to-zero inventory management, but the fact is, they'd find the unit price too high for such low run. For us, as long as the cost is being met, we'll take the order."
Finished goods from Everbest's Nansha factory are sometimes shipped directly from China ports. "Direct shipping means less time spent on trucking and waiting at congested Hong Kong depots. But for those customers who want to consolidate orders from several other suppliers, we have to truck the goods back to Hong Kong."
Managing director Malcolm Lee at Sino Publishing can barely contain his enthusiasm when relating to PW the many new and exciting things happening at his company. "We now have Debbie Lindsay and Kevin Chow—for operational and financial operations, respectively—looking after the day-to-day running of this company. That leaves me free to concentrate on the business side of the equation: developing new markets, improving our customer relations and helping Sino's agents and sales reps to grow our business."
Growth at Sino over the last two years, not least in terms of staff, meant expansion of office space. "We have rented an additional office floor just for our team of quality-control and operations staff. You can say that quality control has taken over our whole company. We now have our own field QC inspectors looking after every project that we handle. They have to sign off on all products prior to shipping."
PW notes with interest that Sino uses Taiwan suppliers for its projects, as well as mainland China, and has been doing so for the last two years. "We haven't experienced any major problems with Taiwan suppliers, not in terms of communication, delivery or quality. They are equally as good as Hong Kong/China suppliers," says Lee. "And we let our customers know where their project is being manufactured and they are okay with it."
Overall, conventional bookwork brings in about 70% of Sino's bottom line. Nonbook projects—a fast-growing segment at the company—make up the rest. "We now have a freelance agent in Australia who works almost exclusively for us, growing our business there. But our emphasis is not so much on obtaining new business as on acquiring repeat business. We're happy if we get one or two new accounts per year. It's our existing customers whom come before anything else. That's the reason behind our emphasis on personalized communication, stringent quality control and total commitment to our customers."
Johnny Leung, sales director of Universal Colour Scanning, notes there is a big revolution going on in the industry. "I'd say that more than 30% of color-separation/ pre-press companies in Hong Kong have moved into CtP workflow and switched their operations to full-digital mode. But in general, this industry now has a bigger fish to catch on the mainland: the hundreds of multinational companies clamoring for quality printing. There's also the consumerism and capitalism going on across the border, where there's now more money for quality scanning and glossy color-separation process."
So, for Leung, it's hardly surprising to see half of the big names in the industry expanding their operations across the border. "Many major color-separation/pre-press companies have relocated or at least set up an operation of considerable size over there." PW asks if Universal Colour will be following suit, and Leung says, "It's definitely an astute and strategic move, but I want to wait until the economy is on a more even keel.
"Right now, we are working on retraining our staff and keeping them up-to-date with the latest technology and publishing/printing demands. We have also increased our capacity last year by adding two new output systems—one Fuji LuxSetter 5600v and a Heidelberg Primesetter 74—to meet increasing demand for high-end proofing. Our CtP system should be coming in by the end of 2003 or the first quarter of 2004," says Leung. Universal's business make-up hasn't changed much over the last year: its biggest market is still the U.S. (70%), with mainland business accounting for about 10% of its total sales.
At publicly listed New Island, 2002 saw the company's strategic relocation of all printing operations from Hong Kong to a new purpose-built plant in Dongguan. The plant houses the printing center, pre-press and finishing departments in four buildings. Sales director Karen Fung says, "Our strategic plan is to have 10 buildings on a total site area of 110,000 square meters after the final phase of construction in 2004, and with an emphasis on high-efficiency automated production".
A new 6-color Heidelberg press was also installed early in 2002, together with an upgrade of digital pre-press and computer-to-plate equipment. The new plant complements New Island's existing Dongguan factory, which specializes in hand-assembly work such as children's boardbooks, educational packs and book-plus products. The factory employs more than 2,000 skilled workers, and has supported many leading international publishers for almost a decade. New Island also maintains a strong presence in Hong Kong, with its headquarters located in the north New Territories, just a 10-minute drive from the border with China at Huang Gong.
Although New Island does not have a U.S. rep. office, the company exports over 50% of its production directly to North American and European markets in publishing and stationery-related formats. Fung says, "We have always had a close relationship with our overseas clients, and many of the international publishers already know of our reputation in this field. However, we are always on the lookout for the right person or organization that can add value to our products and services, particularly in the current price-driven market environment."
PW never ceases to be amazed by Palace Press's array of complicated packaged products and complex high-quality printing projects. Take, for example, Prince of Dharma (Mandala Publishing), a finalist for the 2003 Benjamin Franklin Award. CEO Raoul Goff says, "This is perhaps the most stunning coffee-table book we have ever produced. It's a large, 8-color, casebound book with its pages going through six different passes. Therefore, it required carefully sequenced printing processes to achieve the rich, three dimensional look and feel we needed." Another of its projects—The Pilates Body Kit (St. Martin's)—is an excellent example, a packaged kit containing an instructional book, a compact disc and a set of instructional cards for the healthy-minded audience. These items all come in an elegant box with Velcro enclosure.
"This is an exciting year of growth and expansion for Palace Press," says Goff. "Our West Coast office will relocate to San Rafael, Calif., where we have a two-story, 18,000-sq.-ft. facility to house our packaging, design, publishing and fulfillment services all under one roof. Our New York office is also expanding, with the addition of several key positions in our sales team. Meanwhile, new investment in our Hong Kong office continues to ensure Palace Press's lead in print production technology." At present, the company's business is approximately 70% coffee-table books and 30% book-plus.
"We're also forging ahead with Insight Editions, our dynamic new packaging division. From concept to fulfillment, these expanded services are reshaping and expanding the Palace Press brand," continues Goff. A recent title—Rolling Stones 40 x 20—compiles the work of 20 photographers documenting the past 40 years of the legendary group. This project moved through conceptualization, design, manufacturing and delivery in less than 10 weeks. Other titles on the horizon include More Than a Piece of Cloth, a book on the American flag by folk artist Howard Finster; Days of Hope and Dreams: An Intimate Portrait of Bruce Springsteen, with an introduction by the artist; and Between Midnight and Day: The Last Unpublished Blues Archive by Dick Waterman.
As a premium-quality coffee-table book producer, Palace Press exerts stringent control over color issues. "We establish color profiles by producing test files that match our plating and printing environment with our client's design and production environment. Since we have a wide and varied clientele, individual solutions are developed to address each client's specific workflow requirements. We have systems in place that educate our clients on how to achieve the results they require. We also anticipate their needs and color concerns through careful analysis of their systems and projects. We continue to promote state-of-the-art, ink-on-paper press proofs as the best medium to match on press."
Anything else that PW readers should know? "Perhaps one of the most important and least known facts about Palace Press is our stand on environmental issues. We are an Earth Aware company. We believe in sustainable, conscious living and a healthy planet, and we act on these beliefs through philanthropic work in the U.S. and Asia. Two of our main projects are the Plant a Tree program—to return back to the earth the resources we use in producing books—and the Hamakua Ecology Center, a center for environmental education," says Goff.
"Last year was an extremely encouraging and productive one for Hua Yang. Initially, we experienced a slowdown in the aftermath of 9/11, as our customers were being understandably cautious. However, our financial year demonstrated a healthy top-line growth in excess of 30% compared to 2001," says London-based v-p for international marketing Tony Brooks. This U.K. office was set up last year to provide marketing and product design/development support for the company's key markets.
Hua Yang's business is divided into three main sectors: books (including children's pop-ups, boardbooks and book-plus), packaging (toy and high-end specialty) and board games. "The growth in our board game sales came largely through the securing of several new U.S. customers. Significant growth is also seen in our high-end promotional packaging for the French perfume industry. Historically, our packaging business has been highly dependent upon the domestic Chinese toy market with our long-term customers. We're working on ensuring that our sales distribution is more balanced across our markets."
Richard Burgess—previously in the Hong Kong office—now heads up the New York office and has spent the last year establishing long-term partnerships with some of the major U.S. children's novelty book publishers. Recently, Hua Yang has been appointed one of Scholastic's preferred suppliers. "In 2003, we're looking for growth from the U.S. book market and specialty packaging in Europe. Internally, our focus is on achieving greater production and operational efficiencies. We acquired two additional Roland 5-color presses and card-cutting/collating/packing machinery last year. Right now, we're in the process of purchasing automated box-making machinery as well as installing a CtP system to further increase productivity and improve lead-times," adds Brooks. "We're also moving into larger premises in Shenzhen."
So, what does Brooks think of the Hong Kong/China print industry generally? "I agree with the general consensus that it's an industry of increasing volume but decreasing margins—but only to a certain extent. Western publishers are increasingly looking to improve their margins by moving their business from domestic suppliers to Asian suppliers, or by cutting out brokers. Unquestionably, if a company simply aims to sell production capacity, then the industry will definitely grow ever more competitive for that company. So, it's up to us—as a supplier—to continually strive to innovate and add value to our product and service in order to give us the competitive edge."
CEO Kevin Murphy, based in China adds, "Frankly, we don't see ourselves as a printer or manufacturer. We're a service provider. If the customer is content with the quality of the product, and the method and the manner in which it was produced and delivered, then the customer will probably return. We are continually looking to identify new printing processes and effects, new outsourced components, etc., but essentially, our strength is the level of creativity on the marketing front and in our paper engineering department. We have recently designed paper mechanics for some pop-up or pull-tab products that arguably have never been done before!"
Those who thought SNP's 60% stake in Excel United would mean a temporary halt to the company's expansion plan, while top executives rethink their strategies, were quite wrong. Over the last year, Excel has added another 100,000 square feet of floor space to its facility in southern China and brought in new machinery, mostly to improve production and warehousing efficiency. "With the expansion, we now have two new buildings for both printing and administrative activities. A new warehouse is being built and is due for completion before the end of this year," according to managing director Samuel Chung.
"We have heavily invested in both machinery and skilled workers to enable us to add new processes/ finishes to our current range of services, which vary from electronic inks, acetate printing, flocking and crystalline (both thermo and non-thermo). Last year, we did a lot more pop-ups, which resulted in a growth of our peak-season staff from 4,200 to 5,000. Most of the pop-ups we produced were for the U.S. market, whereas before they were usually for the U.K./Europe markets. Right now, our product mix stands at 30% pop-ups, 40% board/children's books, 20% book-plus and 10% trade books," says Chung.
Excel exports some 60% of its finished products to the U.S. and 30% to European countries. One of the most complex and high-profile projects handled by Excel last year was The Night Before Christmas, a pop-up book by Robert Sabuda (Little Simon).
"Over the past months, we've noticed a lot of 'downgrading' of products especially for the U.S. market. Publishers in the U.S. seem to be focused on substitution of materials in order to make them more affordable to the mass market. For the U.K./European publishers, the emphasis last year was also on material usage, but focused on safety and environmental concerns, rather than just making goods cheaper. Customers like Egmont, Penguin and Simon & Schuster took more interest in knowing and approving the origins and chemical make-up of raw materials used for manufacturing their titles. For example, they prefer us to use papers made from 'sustainable' or re-growth forests." And, comments Chung, "As always, every publisher is forever searching for that extra 'thing' that will make their product stand out. We've had to double the size of our sourcing department just to assist in the search for new materials, components and electrical modules."
