Chinese manufacturers are keen to break into the European print market, but it's not a one-way street with western manufacturers zoning in on China.
A delegation from the Shanghai Press and Publication Administration was in London last month, but they weren't here to see the sights. They were here to listen and learn; to collect ideas on subjects ranging from the environment to data handling. It was a golden opportunity.

"This is the first time that Shanghai printers have had this kind of face-to-face opportunity," explains Li Xinli, vice-director of the Shanghai Press and Publication Administration. "We hope that this is the start of something and we hope to bring more Shanghai printers here in the future."

Organised in conjunction with the University of Stirling, the party gathered at the Bridewell Hall and the presentations given by UK experts on topics such as environmental accreditations, short-run print and data management suggest that China has ambitions that extend far beyond its current high-volume, low-cost production base.

But it's not just Chinese printers who are looking to extend their businesses around the world; the equipment manufacturers have also set their sights on the lucrative European market. Chinese equipment in the pre-media, press and post-press sectors is increasingly attractive for companies looking for a low-cost option. However, question marks still remain as to whether the Chinese can shake off their reputation as purveyors of cheap 're-engineered' imitations of German and Japanese kit.

Significant changes
But times are changing. Some of the bigger European equipment manufacturers have already set up production sites in China in recognition of the market's potential. And it's a market that is hungry to learn.

A report into the graphic arts consumables industry in China predicts that "significant changes" are on the horizon as Chinese manufacturers look to expand their presence in Europe (PrintWeek, 2 January). The Chinese are Coming, by pre-press expert Michael Mittelhaus, underlines the fact that Chinese plate manufacturers will soon have plate production capacities of more than 40m m2 per year - that level of production is roughly equivalent to the big three plate manufacturers: Agfa, Kodak and Fuji. In addition, Chinese manufacturer DingKaiLong is investing in a new factory that will ultimately bring its annual production capacity up to more than 60m m2. These products aren't expensive - according to Mittelhaus, Chinese plates cost approximately €1/m2 less than Western manufacturers.

It is feasible, that in four to eight years time, there will be a Chinese plate presence in the majority of European countries and that 'the big three' will no longer dominate the offset plate market.

However, not everyone agrees that there is a significant threat yet. A source at one plate manufacturer says: "Given a level playing field, we are not frightened of anybody. And for anyone thinking of buying Chinese plates because they are cheaper, then it's a case of 'buyer beware'. The major print companies are not putting their reputations on the line by buying cheap imports. With established manufacturers you are assured of the quality."

Those established manufacturers aren't ignoring the Chinese market though. Indeed, while Chinese manufacturers are attempting to break the western markets, the three big players are hoping to crack the Chinese market. All three have manufacturing plants in China, partly to capitalise on lower production costs, but also so they have a foothold in a region that could open up a new market.

"We are committed to the global printing industry," says a Kodak spokeswoman. "Kodak has long had a presence in China and the Asia Pacific region and it's a very important, and growing print market for us. We have pre-press manufacturing operations in China, but our digital presses are not manufactured there."

Overseas expansion
Heidelberg is also active in the region. Its manufacturing base in China is expanding, with the first 40in press set to be shipped from the facility this summer. As a result, it will have all three formats (B3, B2 and B1) assembled there by the end of the summer. The plan isn't simply to shift Heidelberg's manufacturing to the region, but to service the local market; Heidelberg board member for markets Jürgen Rautert, indicates that the size of production in China is small.

"What we plan to produce in China is 10% of our total volume of products," he explains. "I cannot see us moving even half our production there in the foreseeable future."

As for the threat from Chinese-made presses, Rautert is less convinced. "It's hard to judge. Let's just say, based on what we've seen so far, they still have to master some challenges in terms of high technology."

But there are signs that this situation is changing. UK printers are now more open to the idea of buying Chinese equipment and consumables and over the last few years, some have turned their attention away from the more established players. In the press sector, the first Sanxin YK522 was installed back in 2006 and others in the UK have followed. Last August, Stargold and Levenmouth Printers were two firms investing in the machine. While Levenmouth's decision didn't just come down to cost, it did offer the opportunity to buy a new, rather than secondhand, press.

In the post-press sector, embossing and foiling company Impact Foiling turned to Chinese finishing kit manufacturer Yuyin; it spend around £200,000 on a TYM1020 in a bid to crack new markets.

Masterwork Graphic Equipment is a Chinese company that manufactures die-cutters and hot foil stamping machines. For the last three years, the company has established a base in Europe through its office and demonstration site in Wakefield, West Yorkshire.

"It has taken time to establish our product," explains Ken Farnsworth, general manager for international sales at Masterwork Graphic Equipment UK. "In the past the company has tended to concentrate on its own marketplace. But now is a good time to get into the international market."

Innovation not imitation
The firm goes head-to-head with Bobst in the UK market, which makes its job even harder as Bobst is a well-established brand. Farnsworth argues that what will help Masterwork isn't the price of the machines on offer, but how they've been developed. These aren't, he stresses, cheap imitations of other equipment. "They are taking on the market through innovation rather than cheap machinery," he adds.

Masterwork's product range includes the MK1450ER, a large-format die-cutter with stripper and blanker. It's not designed for the smaller trade finisher - like other Masterwork kit, the machine is aimed at high-end, high-volume applications.
Farnsworth stresses that these machines are the result of hard work in the R&D department. But there are lingering accusations that others are not following Masterwork's example. Chinese kit manufacturing has failed to shake off its reputation for basing product designs on Western ideas. One patent infringement case currently underway involves two plate manufacturers: one from China and the other a member of the big three.

Both sides refuse to go on the record, but it concerns intellectual property rights. A patent issue surrounding the Chinese plates has stopped them being sold in Europe with dealers threatened with legal action if they fail to comply.
"We have a court case outstanding," confirms an insider from the Chinese side. "It's delaying our attempts at getting into the UK market. Customer choice is still limited."

The case underlines how sensitive the subject of Chinese manufacturers can be. It's an area that's fraught with difficulties for the established players in all sectors. Stay out of the region, and there's a risk of missing out on a very lucrative emerging market. But by going in and setting up a manufacturing base, there's the risk that the Chinese market will gain the knowledge to make similar, and potentially, more cost-competitive products.