Hong Kong: Still King of the Heap
Sally Taylor -- 6/26/00
Hong Kong's dominance as the printing center for the world's book publishers was only enhanced when China took over the former British colony in 1997. Most export printers today can offer competitive world prices because they have at least one plant established over the border in China. There, labor prices are lower, even when the companies offer such amenities as room and board for their workers, which are usually among the many government regulations that protect the PRC labor force.
|Peter Lau of|
Asia One Printing.
Literally millions of Chinese flock to Guangdong Province to train and work in factories like those of Toppan or Wing King Tong, where their salaries will be well ahead of anything they can earn back in their home provinces. So popular is Guangdong, in fact, that special permits are required to travel there. With the humblest education, these workers learn lifelong skills, from printing to hand-assembly projects. With room and board provided, after a few years, they can return home with enough of their salary saved to buy a home and start a family and continue with better employment locally.
Hong Kong's finely tuned printing skills and infinite resources for nonbook items, coupled with the excellent packaging and assembly skills and labor on the neighboring China mainland, make for a combination that is just about unbeatable anywhere in the world today.
Last year, book imports to the U.S. from Hong Kong and its neighboring China operations were valued by the U.S. Department of Commerce at more than $275 million, up 15% from Hong Kong and 42% from China over 1998. Together, that makes them the number one book exporter into the U.S., exceeding even the U.K.; and none of this counts the millions in book-plus business, which enters the U.S. not as tax-free books, but as taxable toys and gift items.
Hong Kong's statistics for last year showed a total export of books worldwide worth more than $270 million from Hong Kong alone, and an additional $340 million re-exported from the PRC. A bit more of this is book plus than in the U.S. figures, but it is hard to tell how much.
The Hong Kong and PRC currencies are both pegged to the U.S. dollar, which makes things even better for working with the Americans--no currency fluctuations to bother with.
Nearly every major Hong Kong supplier PW spoke to this year boasted about recent equipment purchases, designed to add productivity and speed to current operations. LeoPaper has invested in $20 million worth of new equipment in China this year and reports double-digit growth the last two years. Toppan bought a total of $40 million in new equipment in China last year. Both Dai Nippon and Sun Fung bought new 8-color Heidelbergs for their high-end business.
Wing King Tong has bought another 5-color press and reports they couldn't have met all the increased demand in 1999 without that new 10-color baby, bought last year--the first 10-color sheet-fed press in Asia. Excelis buying six new 4-color presses this year, all for the China plant.
Dai Nippon just joined more than half a dozen Hong Kong pre-press operations offering computer-to-plate services. C&C installed the first Scitex CTP in Hong Kong last year. Elegance now has a complete CREO+Scitex+Canon+Heidelberg CTP system, with 11 Macs.
(While digital management of materials and digital proofing is on the rise in Hong Kong, you can still get the best prices for wet press proofs here, and publishers' blads to create sample books to preview at the shows.)
Added to all this, two well-known personalities in Hong Kong printing, Ronald Tse and Steiner Fung, have launched their own companies, serving their international customers directly. It indeed feels like a boom town in Hong Kong again, after two quiet years following the Asian recession of 1997, when everyone was begging for work. Even in Asia, where it is bad luck to talk too much about your successes, people admit business is good. With the Asian economy coming back strong, printing demand is expected to increase across the board, nowhere more than in exports to the U.S.
|Steiner Fung, who has|
launched his own company.
There is a dark side to the picture, however. Paper and materials prices are going up worldwide. China is not offering tax-free status to Hong Kong printers for capital investments they make in China, and for Hong Kong printers not already set up with a printing operation there, it is mighty difficult to do so now.
Now that China has permanent normal trading rights with the U.S., it is likely to join the World Trade Organization (WTO) by the end of the year. At that point, such practices protecting domestic printers could change. Printers like Paramount, with all their presses in Hong Kong, are finding it difficult to compete, except as a means of keeping their presses running when other more lucrative work isn't available.
Last year several major customers, including U.S. Media Holdings and Ottenheimers in the U.S., and Color Library, Quadrillion and DK in the U.K., reneged on payments or asked to reschedule their debts. These surprise developments were damaging to a number of Asian suppliers and brokers, who often serve as bankers in printing contracts.
PW reported in the April 24 issue that Toppan was left with unpaid bills of more than $750,000 from U.S. Media. Palace Press is still owed $672,771.
Generally, though the future looks bright in Asia, the opportunities of the moment should be taken, and probably the biggest of these is in hand-assembly.
The Hand-Assembly Specialists
While keeping up with the latest printing technology is essential in Asia, the ability to supply hand labor is critical for most export printers in Hong Kong today. The ongoing demand for novelty and books plus products internationally has forced nearly everyone into the business of assembling a growing variety of printed and manufactured materials into unique one-off items that must be assembled by hand.
There is little or no competition in the West, and only a few other places in Asia where the combination of high-end printing, an enormous range of ancillary product and reliable, repeatable hand-assembly lines exists.
In these products, every glue point, every fold, every additional small item included with the product, every box formed and string-tied, requires exacting attention to detail at the fastest repeatable rate. It is a Westerner's idea of the most grueling kind of tedium. But for many Asians, hand-assembly plants in China, Malaysia, Thailand and Indonesia, offer relief from the far more grueling demands of subsistence farming. And the pay, though it may seem pitiful to a Westerner, gives such workers an enormous boost out of poverty. There is also a technology transfer that is valuable to the future of Asians.
A decade ago, when the book-plus trend was just taking off, publishers bought the final products of design studios for their particular markets, or they contracted for work based on their own book characters. All the creative and engineering aspects were developed by independent experts. Now many publishers have their own creative teams in-house, and work with Asian brokers or suppliers who have their own ideas and know how to get their designs engineered into cost-competitive finished products.
It is entertaining indeed to visit some of the Hong Kong offices of these book-plus providers. Their showrooms are packed with the wide range of creative product they have completed. Arthur Tang and Adrian Watt at Winner Printing & Packaging specialize in more complicated hand-assembly projects, including rigid box kits. About half their work is for the U.S., though the company has no U.S. office. They did the "Mummies and Mosaics" kits for Running Press, Readers Digest's calligraphy kit, a stained glass kit for Fisher-Price. "Safety factors become very important with these projects," says Tang. "You get to know what the requirements are."
New Island is among the top exporters of book-plus products from China and Hong Kong. Overseas business with the U.S. and U.K. includes more direct work with publishers now, according to director of business development John Currie, though the company has longstanding relationships with packagers as well. A strong background in packaging printing helps. New Island has often pioneered developments in book-plus, including acetate printing, hologram foils and now, scratch-and-sniff books. Its 1300 employees in Dongguan, China, continue to assemble product printed both there and at the Yuen Long operation in Hong Kong.
Among Hong Kong's giant hand-assembly operations, Hung Hing added "a little new capacity" this year, according to managing director Matthew C.M. Yum. "This is to make us more competitive, not bigger." The firm has been a major packaging printer for 49 years, and since 1992 has been listed on the Hong Kong Stock Exchange with a market capitalization equal to all the other publicly listed printers put together. The U.S. investment firm Goldman Sachs owns 15% of the company.
Hung Hing also has a paper mill in China and a paper trading company, which is handy. Quite diversified, book publishers are just 20% of its customer base, and Yum strives to create materials that are unique. He wowed PW with his Pokemon Action 3D cards this year, 375-line screen work known as lenticular printing, which can give up to 32 different images to a single card, depending on the angle of viewing. "We work through many channels: brokers, agents, packagers and directly with the client. It just depends on the situation," Yum says.
Hua Yang is another major player in hand assembly. A pioneer in Shenzhen, the plant was bought by Zindart, a toy company listed on the NASDAQ, two years ago. "We are the paper side of the business," explains Richard Burgess, international sales director. "The book-plus industry evolves every year--there are new trends, new challenges to production. So we are not buying equipment this year, but adding to and developing our engineering staff, to give the best service to our customers."
With materials prices going up and capacity increasing, competition continues to tighten among these players. "Your service and quality must be good to survive now," says Leo Paper marketing director Kelly Fok. "Especially with children's novelty products, you need to get to the market on time, and you need to know the safety issues that are involved. We carry out our own tests in our own lab, just to be sure."
"Our pledge is to become the one-stop printing destination for all our customers," says Ken Lee at C&C. "We have a range of services now: book printing, commercial printing, packaging printing, security printing, chip card production and digital printing." Last year C&C installed China's first Heidelberg Harris M600 A24 8-color web press for high-volume commercial printing. A second web, with even more advanced features, will be installed in July, giving the two production bases of C&C Group a total of two commercial webs, mostly for work in China, and 20 sheet-fed presses, mostly for export.
|Charlie Clark (l.) and Ken Lee at|
C&C: seeking to become a
one step source.
C&C is one of the few printers that can provide CTP (computer-to-plate) support, and already has produced thousands of pages that way. Its Scitex Lotem System was installed last year, with a full range of digital capabilities. "We also have close to 800 people in our hand-assembly plant now," Lee adds, "producing pop-up books, stationery packs, greeting cards, wire-o bound books and board books."
Many Hong Kong export printers, from the giants C&C, Toppan, Dai Nippon, Leefung Asco and Wing King Tong, to the smaller operations, do both conventional and hand-assembly work. They couldn't survive without both, and most couldn't survive without another important element: the brokers.
Meeting the Brokers and the Agents
The broker tradition was established in Hong Kong decades ago by the British, when most print shops were still fairly small, simple operations without good English-language skills. Readers of previous PW Asian Printing reports will recall that it was the Japanese printers Toppan and Dai Nippon that brought photo offset printing technology to Hong Kong after World War II. They trained the bulk of the first generation of Hong Kong printers up to export quality work.
Being entrepreneurial in spirit, many of these Hong Kong trainees then took off on their own. Working first with the British brokers and later directly, they launched the Hong Kong export printing trade in the 1970's.
Today most of the major export printers work at least in part with U.S. publisher customers through such brokers, or maintain their own offices in the U.S. to service their customers' needs during their own work hours.
A few major players, like Wing King Tong, have established the high level of communications skills within the company required to work directly with overseas customers, but they are the exception. We therefore list both domestic print brokerage services and the U.S. offices of Asian printers in the second half of our directory.
While many book print buyers work directly with their Asian suppliers, especially in the specialist area of novelty and book-plus work, it is usually advisable to work with a reputable print broker, especially if you are new to the business. Many publishers stay with reliable brokers for decades, and rightly so.
Bundy Walker, whose dad was one of those early British brokers, forming Colorcraft in 1970, continues the family tradition. While she has no office in the U.S., she has a staff of more than 30 in Hong Kong, with an average of 14 years with the company, and she personally travels to the U.S. regularly. Production director Helena Chow in Hong Kong has been with the company for 25 years. Walker and her team do a wide range of book-plus work in addition to conventional printing for publisher customers on five continents.
George Tai, managing director of Regent Publishing Service, Ltd. is another of this old school of brokers.
Many others are dispersed from the old giant broker, Mandarin Offset, disbanded by parent firm Reed Elsevier in 1997. Edmond Chan is managing director of Ph nix Offset, part of the Asian Pacific Group run by former Mandarin director Leo Chu.
Elegance Printing has Frank Deluca, former Mandarin U.S. rep, running its U.S. operations.
Jade Productions is a new brokerage company formed by two old hands in Hong Kong printing, Dave Zable in the U.S. (formerly with Dutton), and James Binnie of Scotland, who for years steered South China Printing's export services. This company specializes in novelty and licensing work.
|Ken Kong (l.) and James Binnie|
at Jade Productions, a new
One reason brokerage houses are successful is that they know the myriad printing resources of Hong Kong. They can get a job done in the peak summer season, and they can source and warehouse paper. They can also store customers' film in Hong Kong, which enables them to supply reprints quickly.
Some brokers, among them Palace Press in the U.S., specialize in high-end and unusual projects. Palace Press began its operations in 1980 when company president Raoul Goff was working as a designer of art and photography books in Singapore. Back then, Goff was struck by the quality and savings that his Singaporean partners were able to achieve, and decided that U.S. publishers would benefit substantially if he were able to arrange the production of their projects in Asia.
The first U.S. sales and service office opened in 1985 in San Francisco, run by brother Gordon Goff. Now there are five offices, and, following Asian manufacturing trends, Palace Press eventually made Hong Kong its Asian headquarters, with Lesley Sun in charge. In two decades, Palace Press has become one of the world's leading printers of art, photography, and design books, winning many awards along the way for some of the most unique projects in the business.
But many conventional print brokers shy away from complicated book-plus work. "There is so much detail involved in some of these projects," says George Tai. "So much to be worked out, between the publisher's idea and the actual product, we prefer to let publishers work directly with the supplier in those cases. They are better able to service the client for that kind of project."
Steiner Fung just launched his own brokerage, Steiner Graphics, after many years of experience at Ocean Graphics. As a professional in both prepress and printing, he handles business now for many of Ocean's former clients, to the gratification of both his own clients and Ocean, to whom he still sends most of the business.
The Other Printing Centers in Asia
By comparison with Hong Kong, Singapore's printers go through a number of cycles in their degree of competitiveness, strictly on the value of their currency against those of export customers. In this regard, Hong Kong is fortunate that its dollar is fixed against the U.S. dollar.
Last year, Singapore's book exports to the U.S. were down to $67 million, the lowest level since 1992, but still leaving them our sixth largest import source, after the U.K., Hong Kong, Canada, China and Italy, in that order.
|David Chan of|
Hoi Kwong Printing.
Singapore d s much of the printing for Australia and the U.K., and because of the high level of English usage in Singapore, most of them work directly with these customers. This is a disadvantage for them in the U.S., however, where most Hong Kong printers have their own representative offices.
There is some hand-assembly work outside of HK/PRC, too, most significantly at Tien Wah Press in Singapore. A pioneer in pop-ups and hand-assembly work, Tien Wah offers an alternative with its massive hand-assembly operations in Malaysia and Indonesia, in addition to excellent conventional four-color work in Singapore and representative offices on both coasts of the U.S. Two hand-assembly operations in Thailand, SNP-Sirivitana and Starprint, are also thriving.
We reported interesting developments in Indonesia last year, where the 10% sales tax on books ended, reducing the costs of books locally and for export. In Surabaya, where Tien Wah has established a major hand-assembly operation, Indonesia's giant Asia Pulp & Paper, listed on the New York Stock Exchange since 1994, has a huge new conventional printing facility, with 30 new Heidelberg and Roland presses with a full binding line.
Paper is obviously supplied by the parent company, which has no less than 11 paper plants in Indonesia, China and India. Both companies have headquarters in Singapore and are two promising operations indeed for export work from Indonesia, befuddled only by the hazards of local politics.
Many more excellent suppliers of the full range of book-printing services are available in Asia, as you will see in the following extensive listings, our most complete yet. Keep them on hand throughout the year, but be forewarned: we have already entered the high summer season for export book printing in Asia. You can expect those presses to be running now around the clock until September.
While the face of printing services in Asia evolves alongside the technology and demands of American book publishers, the need for reliable service suppliers d s not. We hope the supplement and directory links below will provide a concise overview of the current printing scene, and offer useful advice about where to find the best services.
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