Volume 258
Issue 32
08/08/2011
In 1985, Nintendo released Super Mario Brothers, Commodore launched the Amiga personal computer, Steve Jobs founded NeXT, and Bill Gates issued the first version of Windows. It was also the year PW launched the first report covering the Asian printing industry, of which you are now holding the 25th annual issue. (In case you wonder about the calculation, we skipped one year at the beginning.)
Since then, we have narrowed our scope to cover mostly the industry in Hong Kong/China as it expands to become the world's print manufacturing hub. Its evolution from mom-and-pop (or, to be precise, dad-and-son) shops into sleek multistory one-stop facilities makes for a fascinating story. The best commentary on this change comes from industry experts and professionals who have been working with Hong Kong/China suppliers and print brokers all this while. They, more than others, have seen the ups and downs, challenges and opportunities, past and present. So PW calls on a few of these professionals to sum up the past two and a half decades or so of the Hong Kong/China print manufacturing industry.
Looking Better than Ever
"The fact that most printers we use are now located in large purpose-built plants with climate control instead of cramped high-rise factory buildings has changed the workflow, working environment, and logistics involved in printing a book. It has definitely improved the chance of getting a high-quality final result," says production director Neil Palfreyman at Thames & Hudson, noting that "the massive leaps forward in prepress and press technology have also ensured much greater consistency in the printed result and higher chances of reproducing the original work, whether it is a painting, sculpture, photograph, or some other art form."
| 25 Years Ago Today... Back in 1985, Hung Hing, then located in a multistory industrial building in Tin Wan, Aberdeen, was just recovering from a severe fire that originated in a neighboring factory. "Production was halted for over a month, posing the first major challenge in my career," recalls executive chairman Matthew Yum, who eventually built his own factory—now housing around 300 employees and 10 presses—in Tai Po industrial estate. "We were into packaging printing and corrugated carton manufacturing then, and we did not start children's book manufacturing until after our first Shenzhen factory was established in 1990." |
Despite being approached by suppliers from Southeast Asia and beyond, Palfreyman has yet to find a better balance of cost, service, and quality than those that he currently receives from his Chinese suppliers: "However, the reality is that in this Amazon era, where so many books are discounted, consumers are looking for bargains as the norm, regardless of the costs that have gone into the making of the book. We will continue to look to our suppliers for better prices due to productivity improvement and new, more efficient plant investment."
Asked about the rise of tablets and e-book readers, he says, "Either the software available is too limited for us to reproduce the more complex page layouts, or the screen size and tactile element are too limiting or lacking. Thames & Hudson wholly believes in the unique qualities of the book and the connection people make with it on a basic level. What you get on an e-book reader is exactly that: an e-book, which is an approximation of the physical object. The physical and the digital are two distinctly different products. However, the e-book technology is developing so quickly that we certainly do not want to stick our heads, ostrichlike, in the sand. We do not want to be a dinosaur looking over our shoulder asking, ‘What meteor?' At the same time, we do not want to be stuck with the publishing equivalent of the Betamax video player. We are devoting a lot of resources and money into developing a workable model."
Digital printing, says Palfreyman, is still a long way off in making inroads into the kind of full-color illustrated book that he does. "Sheet size limitation and high production cost make it commercially unfeasible. We printed a couple of monochrome text-only titles digitally, but they were more of an experiment. The size of print runs for such titles still makes offset litho affordable for us. But as the pressure on inventory control increases, who knows what the future may hold."
Not Exactly Light Stuff
In the past 20 years, says Derek Hill, director of the British and Foreign Bible Society, innovations in prepress technology have transformed the printing industry. "Shifting from mechanical artwork to digital files, especially PDFs, has resulted in lower production costs and faster turnaround," he says. "It also provides publishers with greater mobility, enabling work to be transferred easily from one printer in one country to another printer in another country. The latter has benefited Asian print suppliers enormously." Another major transformation, he adds, is "the rise of China as a viable source for printing Bibles on 28 gsm and higher for both short and long runs, from 3,000 to 300,000 copies."
Bible translation used to take 30 years from start to finish, and typesetting the pages would require months to accomplish. "Now, with modern technology, the goal is to complete the translation within 10 years, and typesetting in a few days, of which more time is spent on getting the typography right," Hill says. "On the not-so-good side, technology also allows us to make mistakes that much quicker—like sending an e-mail message in a matter of seconds that we regret immediately." For sure, Bible production has come a long way. Now various formats are available, from the basic ink on paper to fashionable versions in denim material, camouflage colors, metal cases, or plush polyurethane. "Within the industry, we joke that one day we might produce the ideal Bible: pocket size but in large print."
| 25 Years Ago Today... Regent Publishing Services began in the summer of 1985. An unemployed George Tai (having lost his job at a color-separation house) had coffee with a business friend at the Regent Hotel in Tsimshatsui, and both decided to set up a business together even though they did not have a single client. "I used a friend's office—another color-separation house—to communicate with one U.K. publisher and obtained my first order: a repro job worth about $2,500 that provided a gross margin of 50%. That was in October. Two months later, I moved into a 300-sq.-ft. office in Aberdeen and was joined by a junior secretary and a young production controller. And we went on from there." |
For Hill, China's continuing cost hikes and renminbi appreciation against the greenback will be the main factors challenging publishers and Hong Kong/China print suppliers alike over the next three to five years. "Increasing demand for ever-higher efficiencies will usher in more modern machinery that requires even less manpower," says Hill. "At the same time, competitiveness among European and U.S. printers will improve due to more favorable currency exchange rates and proximity to the target markets. For short-run printing, I foresee a substantial increase in print on demand for Bibles, possibly using inkjet technology instead of lithography."
Eye-popping Progress
For pop-up creator and designer David Carter, there have been three major changes in the pop-up segment: "The most important was the acceptance of the pop-up genre by major publishing houses. Then came the shift of manufacturing from South America, specifically Colombia, to Asia, and, thirdly, the recent rise and decline of super-complex pop-ups." Carter was with Intervisual—and liaising with top pop-up manufacturer Carjaval in Colombia—before establishing his own paper engineering company 22 years ago.
"The main reason pop-up manufacturing moved from Colombia to Asia was because the latter provides much more competitive pricing," Carter says. "Then again, manufacturing prices are always on the way up. In the future, it is possible that the manufacturing base will shift again. But for now, creativity in pop-ups means the ability to use less expensive manufacturing methods to rein in production costs. It also has to do with how the pop-up is used with the concept of the book and not necessarily with the complexity of the pop-up structure itself."
Advances in technology in the past 25 years have definitely made it much faster and less expensive to create pop-ups. Says Carter, "Such progress is most evident in the prepress portion of a project, where the latest software is much more accurate in terms of color. But the greatest impact on pop-ups is still good old hand labor. The ability to manufacture super-complex pop-ups at a good price in Asia is the catalyst that has allowed pop-up artists everywhere to expand the art form. I have seen very complex titles created in the late 1970s and early 1980s that simply could not be manufactured at a reasonable price at that time."
The current weak economy, he adds, has had a great impact, particularly on expensive and complex pop-ups. "Nowadays, both consumer and publisher are very sensitive to the retail price of a pop-up book. I believe we will continue to see expensive, complex pop-ups, but in much smaller numbers. As a designer, I am currently focused on simpler and less expensive designs with a few complex works thrown into the mix. And given the many creative paper engineers and artists working today, I am sure we will continue to see many wonderful pop-up books in the future."
Pulp and Paper Chase
For paper, the types demanded by the market have remained largely unchanged in the past two decades, says Simon Fung, general manager of Che San, one of Hong Kong's oldest and biggest paper merchants. "But instead of using or stocking four to five brands of, say, coated paper, most printers and merchants now stock only two or three. Paper manufacturers are facing just as hard a time as the rest of the print supply chain, and they are improving efficiencies by narrowing product grades."
The pulp-and-paper industry has seen a lot of changes: mergers and acquisitions in Europe, scrap-and-build projects in Japan, and closures in Korea. In China, mills continue to expand rapidly, but the government has been shutting down those that are not environmentally friendly. "Every mill claims to be eco-friendly and sustainable," says Fung, "but to what extent do customers demand proof of such claims—FSC, PEFC, PREPS [Publishers Database for Responsible Environmental Paper Sourcing] or PCW [post-consumer waste]? At Che San, some customers only want to know if a mill is FSC-certified, but they end up buying non-FSC grade due to cost constraints. Others are interested to know where a specific mill sources its pulp, especially since Indonesia remains a sensitive area in terms of forest stewardship." Volume-wise, FSC-certified papers account for less than 15% of total fine paper sales invoiced by Che San.
The biggest change in the pulp-and-paper industry over the past 15 years, adds Fung, is the origin of paper. "Today, most paper comes from China," says Fung. "Back in 1994, it was primarily from Japan and Europe, and later from Korea, Thailand, and Indonesia. Previous dependence on Japanese paper was evident from the impact of the 1995 Kobe earthquake, when coated paper prices rose to a historic high of $1,500 per metric ton due to reduced supply. The recent Japan earthquake, in comparison, had little impact because imports of Japanese paper have been sliding since hitting the peak in the 1990s. In fact, in the aftermath of the disaster, Chinese paper exports to Japan have grown substantially, helping to ease oversupply caused by new capacity in China." The 2010 Chile earthquake, however, caused a different sort of upheaval. "Since Chile is a major pulp supplier to China, the disaster caused a sharp spike in pulp prices that was largely due to market speculation. Paper prices jumped 25% to 30% in a quarter before dropping to their original level six months later."
| 25 Years Ago Today... Eight staff and two printing machines were the sum of Leo Paper back in 1982. The brainchild of two friends, Samuel Leung and Hok Hung Fung, the business, then located at A Kung Ngam Village in Hong Kong, was primarily focused on producing paper bags for U.S. clients. Seven years later, its first factory was established in Nanhai City, Guangdong province, effectively laying out the foundation for its ambitious expansion plan. In 1994, its primary operations and production were moved from Hong Kong to the present gargantuan Astros complex in Heshan city. Today, the company has more than 20 subsidiaries, over 18,000 staff, and 93 printing presses. |
With more Chinese pulp-and-paper capacity coming online in the months ahead, mostly riding on the growth of domestic demand, Fung says, "Paper imports into China will continue to drop, while Chinese mills will face heightened pressure to increase exports. Those days of cheap paper—and dumping—from the West are over, and the paper industry will get more local. For major pulp-and-paper players, gaining any sizable share in a particular market will now involve local participation, be it via greenfield projects or through M&A deals. Consolidation will continue to occur and probably at a much faster rate than we have seen before."
The E-volution of Books
In the printing industry, Hong Kong/China suppliers are fortunate in that "most of the books they produce best are the ones not much affected by e-books and not very likely to be—at least not in the next few years," observes Thad McIlroy, San Francisco–based e-publishing consultant and president of the Web site The Future of Publishing. "While full-color illustrated titles are well-suited to be recreated digitally, the unique experience of holding and reading a beautifully printed art book still reigns supreme," he says. "Most of the talk about enhanced e-books is just that: talk. And while some appealing and innovative work in e-book format has been done for this segment, I do not get the impression that much money is being made."
On the other hand, children's books are really starting to find a home on e-readers. "Recent announcements from LeapFrog, the leader in educational entertainment, about its personalized learning tablet LeapPad will further accelerate this trend," says McIlroy. "However, while such sales are climbing, and once again some very innovative work is being done, physical book sales are not yet challenged in any important way. It is more an example of incremental revenue being generated by a new platform."
In his opinion, the sweet spot for Hong Kong and China suppliers—which also represents a huge opportunity for innovation for publishers everywhere—is in custom manufacturing. Referring to the segment that covers novelty titles and books with bells and whistles, McIlroy says, "E-books offer ephemeral, two-dimensional experiences. Printed books, in contrast, are tactile and truly three-dimensional, and some tremendously creative work has already been done. I think the ball is in Hong Kong/China printers' court to bring new capabilities and novel ideas to their clients. And it is far better for manufacturers to show off their capabilities than for a publisher to try to guess what might be done."
The market for smart and fun ideas, he concludes, "is always robust. Great printers who are efficient manufacturers will have opportunities for many years to come. After all, we are now in a new era in book publishing that has opportunities everywhere you look."
The Future Is Here
Certainly, the decade ahead will be a time of opportunity, creativity, and growth. It will also be a time of upheaval, evolution, and perhaps revolution in the print manufacturing industry. Looking back, no one could have imagined that an industry dominated by one single company—which did not even own a printing press or scanner, but was responsible for nearly half of the books exported from Hong Kong in 1987, aka Mandarin Offset—would expand into what it is today: a hub populated by modern production facilities with the best presses and technology money could buy.
And just as PW began chronicling a new era in the industry some 25 years ago for the publishing community at large, we look forward to the coming years for yet more stories of outstanding progress, new milestones, and awe-inspiring projects from Hong Kong/China suppliers.
