February 2008
By Martin Koepenick
In the world of book publishing today, nothing is fixed concerning the physical location of the publisher, the pre-press vendor, the printer, the bindery or the origins of paper manufacture.
Perhaps the biggest area of uncertainly concerns printers, as many publishing houses from Western countries are now shopping their printing around in India, China, Malaysia, eastern Europe, and an ever-changing array of emerging locations.
As with the manufacture of designer clothing, where the printing happens is about price performance at reasonable quality, unless a long-term partnership between publisher and printer prevails. However, lower price options are putting considerable pressure on even the most enduring of relationships.
Killer trend
Competitive pressures from Asia and eastern Europe are causing tough times for western European printers, and in some cases, forcing them out of business. According to the president of DB Grafiska in Örebro, Sweden, Bosse Enmalm, "We would like to think that our quality level and relationships would continue to win us business, but the cost difference has created a magnetic force in the direction of Asia. As a result, we are in bankruptcy."
Enmalm notes that traditional customers are saving 50% on average for books and catalogs, simply by dropping Western suppliers in favor of printers with lower cost structures.
A sea of Asian printers was evident at the Frankfurt Book Fair in Germany last October, eager for the next project in French, English, German, or even Swedish. China, Korea, Singapore and India were all well represented by a wide range of printers.
Paper has a critical role to play in the shift, because Western publishing companies have a quality standard, which they see as important to maintain.
"We are a market leader for high end books in Europe, based upon good relationships with the top printers," says Arctic Paper's Per Ekander. "As Asian companies win contracts from Western publishers, they need to have quality paper, or the overall feeling of books won't be the same. We are getting an increasing number of enquiries from China and India."
Early pioneers of the new model
One vivid example of the new dynamics actually began almost 20 years ago. It's the partnership between Yale University Press and New World Publishing of Bejing. New World vice president, Zhao Yuanzhi, explains that the relationship began in the 1990s, when Yale and the publisher/printer agreed to jointly produce books in English and Chinese. The images would be the same for picture books about Chinese archaeology, for example, and only the text would change. For a recent publication on Chinese art, including sculpture in ancient caves, New World even took photos throughout China.
With the exception of Hong Kong, English language skills are generally more advanced in India than China. While publishers from Europe and North America show hesitancy in turning over first editions, because of the process of changes and edits, this factor will be less of an issue in the coming years.
Aegean, a major printer from India has been winning awards for its quality, and also compliments for its service relationships with customers. While printers such as Aegean have offered a "value" solution to Western publishers, they have also been prepared to make changes via the web, and over the phone, eliminating time zones by working around the clock.
Paper changing too
Only a few years ago most high quality books used paper from Japan, Europe, and North America. Today in China, the trend is for China-made paper to be used, unless otherwise specified. Considering the large number of printers in Hong Kong, Shanghai and Guangdong this is significant.
The move to Chinese-made paper is obvious, when you realize that 50 million tonnes of the stuff are now produced in China on some of the most advanced paper machines in the world, employing high performance chemistry and engineered pigments.
"We are seeing a great interest in multi-pigment formulations in China, as our customers seek to match top quality printing and writing grades from Europe and America," notes the vice president of Imerys Asia, Jonathan Wilson. "Imported kaolins combined with bright local carbonates, including GCCs from Malaysia and Vietnam, are contributing to new grades of paper, which work well on high speed, sophisticated printing equipment."
Wilson believes that the people factor is important too: "There is a strong will to innovate and reach high standards in Asia, which is evident in paper and printing. This region wants to be at the leading edge, and getting there includes participation from suppliers of minerals, additives and machinery."
"The whole world is evening out in terms of paper quality and print quality," says Asian marketing manager, Eka Chemicals, Dave Lovell. "Our most advanced chemistries, including nanoparticle systems for the wet end, are employed in China, and throughout Asia. Just look at the increase of specialty chemicals usage in the region, and you will quickly understand the long-term implications."
One interesting player in Asia is R.R. Donnelley, committed to expanding its market leadership position globally. In addition to its US and Mexican plants, it now has major holdings in China. The firm recently acquired Asia Printing Holdings Ltd. of China for $95 million, reflecting the decision to include Asia-printed books as part of a quality controlled portfolio of offerings to publishers.
Asia Printing Holdings has produced high quality children's illustrated and case bound books for export for several decades. It also designs, composes, and prints financial documents and annual reports in Hong Kong and the Asia region. It is a business model to watch.
Toney clones
A parallel pattern with a different twist is evident with high-end photographic books from Schirmer-Mosel Verlag of Munich. With these products, the development and production of graphics takes place in Germany, pre-press and printing in Italy, and subsequent editions in China.
An edition of Playboy centerfolds, reproduced on European glossy paper, is as large as the original centerfolds themselves. The retail price of over Euro 380 ($561) is also large. By contrast, an edition about one-third the size sells for Euro 56, and was printed in China on paper made in China.
According to Schirmer-Mosel Verlag's photo editor, Regine Kaiser, first editions need to be done close to the editors to control quality. "We make a lot of small changes. We can't afford the difficulties that go with great distances. Chinese printers really want our business, however, and their quality continues to rise rapidly."
Manga needs fluffy paper
Ohzora Publishing, a specialist in Japanese "manga" comic books, insists on high quality printing, and paper that supports this. "We need a fluffy paper. We want a book of 100 pages to feel bigger, and that is possible with grades from Nippon Paper Industries. We don't want images or text to show through, and we want the reader to value the book more, based on its touch, and feeling of quality," says deputy section manager, Uiko Kitawaki.
Price ceiling and currency fluctuation
While many publishers insist upon a high quality sheet, whether its glossy, matte, or some special grade, no one wants to pay more for paper.
"Pulp prices have gone up considerably over the last two years, yet we can't increase our prices," complains Ekander. "This creates a serious challenge for paper producers. When your costs go up, and your markets allow nothing extra for you, what do you do?"
Some paper companies have turned to saving on fiber costs through an increase in filler content.
Another issue is the logistics of shipping paper to printers around the world, and then back to a home market. As paper producers continue to develop in China, Indonesia and India, for example, local paper will supply the local printer far more often.
New World and Leo Publishing of China note that while they use Chinese papers for most jobs, they do import brands such as Arctic and Garda, especially when Western customers demand them.
Time is an issue, as three months' shipping time is normal for paper to travel from Europe to Asia, or from North America to Europe or Asia.
In addition, small quantities shipped drives up costs. One way for Western paper producers to boost sales in Asia, for example, would be to maintain adequate stocks in strategically placed distribution centers. "You can't ship a pallet of paper from Sweden to Shanghai and expect to be successful if the price is high and the time delay is excessive," says Ekander.
US printers have benefited recently by the unofficial currency devaluation, which has made them 40% cheaper today than three years ago in relation to European competitors. Even so, many US publishers are looking to Asia. This leaves European printers in a difficult position, causing many companies to reorganize, or close.
One Swedish printer, specializing in schoolbooks, magazines, and annual reports has seen job after job go to Asia or eastern Europe.
"We can't compete with developing countries," says this company's president, who chooses to remain anonymous. "We offer our workers higher salaries, and social benefits, which make our printing jobs much higher. Even schoolbooks are being printed in China, while many of the parents [of the schoolkids] are losing their jobs because of the fundamental shift."
Current trends will not escalate into an end of printing in Western markets, because many jobs demand a fast turnaround. But, second editions, reprints and books that don't require the absolute top in printing, will continue to move to developing markets.
As those markets develop, printing costs will rise, because of greater demand. Will that open the door for a shift back to the West, as price differences are reduced?
That is the multi-billion dollar question. Or should I say, the multi-billion yuan or rupee question?
Martin Koepenick, Innova can be contacted via mkoepen@earthlink.com
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