Teaching Experiences -- China ConnectionOctober 2008 By Regis Delmontagne
First of all, the weather: My first teaching assignment there was winter 2006-2007. Cold and damp outside, the same could be said for inside the classroom, the faculty dining room--everywhere. Teaching with a sweater over two shirts, and a leather coat over that, barely kept me warm. But I could walk around the classroom. The students, equally dressed for the weather, were, unfortunately, confined to their desks...but, we all survived.
Returning in the spring allowed all of us to walk around with a light jacket or sweater, and teaching became more comfortable for both me and the students.
The mood of the students this year was altered considerably, not so much by the weather, but by their frequent questioning about whether there is a printing industry ready to hire them after graduation. More than one asked if they were studying a subject that was in rapid free fall. Should they instead be studying packaging, which they believe had an almost guaranteed rocketing growth rate and promise of a good position after graduation?
Reading, Printing on Rise
Their questions had some personal experiences behind it--none of my students in the printing section read a daily newspaper; a few glanced at one infrequently. None of them read a magazine or book other than for required reading. They get their news from the Internet, of course. I realized they are laden down with class projects and homework, so they don't have much free time to read.
But when you see the number of bookstores and kiosks selling newspapers and magazines everywhere, they should take solace in the fact that print is very much alive in China. On average, residents of the major Chinese cities read two books a year, a figure not much different than here in the United States.
I did my best to convince the students that while print is leveling off or slightly declining in the United States and the Western world, not so in China. The potential in China is mind boggling, when one considers the sheer size of the population. Consider the fact that China now has a middle class of about 350 million people who are literate and do read. Also consider that there are another 1 billion Chinese people who potentially will become readers, and the numbers get scary if only 100 or 200 million actually become literate. The printing industry here has a long way to go before it starts a downward movement. So banish the concept that print is dying in China!
While I taught such familiar topics as the history of printing, size of the worldwide industry, terminology, etc., we also spent a considerable amount of time discussing standards for printing machinery and why they are important. Sustainability is a topic relatively new in this country, but one growing in importance due to all of their environmental problems. These are topics that have very recently been added to the curriculum.
We also spent a fair amount of time discussing the role of Chinese printers and their forays into the world of foreign business. For a long time, the Chinese felt comfortable knowing that their labor rates made them remarkably successful in taking business away from global competitors. They easily underbid other printers and, operating with state-of-the-art equipment and systems, carved out a profitable niche for themselves.
However, their successes also led many new Chinese entrepreneurs to enter the printing business, eager to get their share, plus more, by successfully undercutting the traditional suppliers. Competition is fierce among Chinese printers, with many of them complaining about their competitors doing the same thing they previously did--undersell the competition. Several Chinese printers relayed to me that print is becoming a commodity, quality is a given, and they can't make money if they just put ink on paper. Sound familiar?
We discussed what successful U.S. printers are doing to get out of the "commodity" business, such as setting up a fulfillment center, diversifying into package printing, maintaining databases, etc. An executive from a large U.S. printer I met at Drupa told me that he is talking to some Chinese printers that currently print some jobs for him, but now they want to take the final step and actually send the finished products to the ultimate customers, rather than to a middleman. While those new business models appear attractive to Chinese printers, their time is well off into the future.
Competition from India
For the near future, package printing appears to be their best opportunity to generate the kind of profits necessary to stave off competition from new entrants into the printing world, such as India, Vietnam and Indonesia. What advantages and disadvantages do printers in these countries have?
For starters, India has lower labor rates than China and, most importantly, they are used to communicating in English and have a rule of law concept firmly established. However, the tariff and non-tariff barriers in existence in India preclude--except for the very wealthy printers and newspapers--purchases of the latest machinery and systems. Therefore, a lot of used equipment still finds its way to India. Vietnam is a rising star in the printing industry, still relying mainly on used equipment, but with labor rates even lower than those found in India.
The message for Chinese printers is not to bask in possessing low labor rates, but how to compete with their neighbors for offshore customers.
Education is one of the keys China is using to make sure that people running the industry today, and those that will run it in the future, are aware of these challenges. That's why they have people like myself with printing knowledge and educators from universities such as Wuppertal teaching short courses. That's also why many of their graduates enroll in post-graduate programs at foreign universities. It's why many faculty members from Chinese printing schools go abroad for extended stays to improve their knowledge base. I also met several educators in Wuhan who worked in the United States for a number of years, then decided to return to China to teach the latest technologies to eager students.
Effect on U.S. Printers
What does this all mean for U.S. printers? First, offshore competition is not weakening, and I believe it is gathering strength. In the past, most U.S. printers faced competition from Hong Kong, Japan and Italy, among other countries, mainly for calendars, "coffee table" books, fine art, etc. But today, there are more than enough competitors in China, India and, moving up quickly, Vietnam. And they are looking to print anything without a restrictive deadline.
U.S. printers will continue to survive, though the number of printers closing up shop may indicate a different story. The survivors will be those that continually update their equipment and systems, train their employees on the newest technologies, and expand beyond their traditional offerings. The days of buying a used press and printing business cards and stationery died a long time ago.
Yet, in China and the other developing countries, there are plenty of entrepreneurs who start their printing business just like their American counterparts did several generations ago. These upstarts are throwing the marketplace in China into a free-wheeling "get the job, regardless of what it will cost us."
Western European printers are grappling with a similar set of equations as former Soviet bloc countries now offer printing at rock-bottom prices, thus changing the way print is bought in the EU. How will printers based in Germany, Italy and France, for example, not only survive but thrive? By diversifying beyond just putting ink on paper.
As the famous bank robber Willie Sutton used to say when asked why he robbed banks: "Because that's where the money is."
Smart printers know where the money is: mailing and fulfillment, wide-format printing, database management and the like.
Competition is what keeps all businesses on their toes. Chinese printers realize this and must adapt to changing market conditions. Some will and others won't. I will see for myself next spring, when I return to Wuhan University and experience what another year has brought. PI
About the Author
Regis Delmontagne retired as president of NPES in 2005 following an almost 30-year career heading the U.S. trade association of suppliers to the printing industry. He also served as president of GASC, the producer of the Graph Expo and PRINT exhibitions. Delmontagne expanded NPES into an internationally recognized organization with offices in five major markets in the world. He currently serves as a consultant to several foreign firms, as well as to U.S. manufacturers and printers. He can be reached by e-mail at email@example.com.