CHINESE DEMAND FOR INK STRENGTHENED

China is no longer just a country where things are manufactured for the rest of the world. As their economy moves forward and import policies open up, it is a more and more important market for US and European countries to move into. The sales of commercial and consumer ink, toner and cartridge products are no different. 2011 and 2012 did not see quite the same rates of growth as in previous years, but that is hardly a surprise as world economies have affected China’s economy as well. Their own government has pulled back on monetary policy as well, but stable sales growth still exists in this increasingly important market.

THE IMPORTANCE OF EMERGING MARKETS

Both Chinese domestic and international manufacturers reported good growth through the last two years, and that is expected to continue. Because of the large population and the large batches necessary to serve that market, gravure printing has seen a large increase. Most of the growth which has slowed slightly are on colored inks, mostly in the offset printing market and packaging inks according to a company called DIC, which mostly serves higher to middle end markets.

However, colored inks in gravure (or roto) printing and in the commercial market continued to expand nicely. As the Chinese middle class grows, and wage increases are seen across China’s manufacturing and industrial sectors, small printers used for business and the consumer market are expected to increase in importance. This will be a huge opportunity for ink manufacturers, especially companies which specialize in lower cost, efficient high quality products in the remanufactured and compatible cartridges.

Rotogravure printing machine

Companies which already have manufacturing facilities in China will almost certainly have a step up on that market, but the market will not be limited solely to companies which use China as a manufacturing base. As the Chinese consumer market grows there will be ample opportunity for all the printer companies to expand in that market and this will increase the need for ink by large margins.

SHIFTING WORLD RETAIL TRENDS AND RISING RAW MATERIAL COSTS GIVE CHALLENGES, OPPORTUNITIES

Because of the way the overseas markets are expanding in new manufacturing countries, though, the growth potential will not be limited solely to China. Some manufacturing jobs are already starting to move to other countries as the Chinese wages see an increase and that will continue to happen. This will open more and more markets, which are almost custom made for the discount ink cartridge industry.

In any expanding market, the first inks to see increased demand will always be commercial printing of labels, manuals and packaging materials. As workers are employed and begin expanding into middle class, the desire to use consumer products will also increase, opening up new markets to the industry. This is going to be essential for the growth of many companies, of course, not just ink cartridges and toner cartridges.

This will also serve to keep prices on these products stable in the more developed markets as well. The only caveat to this is the continuing rise in the costs of raw materials, which has been affecting profit margins throughout the industry, especially in the last five to seven years.

photo source: cartridge 101

Expect big things to continue to happen overseas; all in all, the remanufactured and compatible cartridge industry is poised to vastly increase sales throughout the world, and domestically. OEM products continue to remain at high price levels, and there has been no indication that that will change.