To meet increasing demand for packaging and publications, China’s printing industry is growing. Estimates have placed Cia’s printing industry at $160 billion; that requires a lot of ink. Ink World estimates annual ink sales in China of more than $1.5 billion, supplied by a mix of domestic and international ink manufacturers. The most common printing processes remain offset and gravure, with flexo and digital printing making gains.
Bauhinia Variegata Ink & Chemicals, a subsidiary of Yip’s Chemical, is China’s largest domestic ink producer. The company is the 14th largest global ink manufacturer in the world, with sales of approximately $180 million in 2018, according to Ink World’s 2019 Top International Ink Companies report (July/August 2019).
Hangzhou TOKA Ink, a JV with T&K Toka, and Tianjin Toyo Ink Co., Ltd., a JV with Toyo Ink, are the leading multi-national ink suppliers in China. DIC, Sakata INX, Siegwerk, Flint Group, hubergroup and other major ink companies also have manufacturing plants in China.
Even though the GDP had solid growth in 2018, it was slower by China’s standards. The current tariff battle with the US is impacting exports; reports place China’s exports to the US at 18% of the country’s $2.2 trillion in total exports, and higher tariffs will likely cut into that.
The Chinese ink industry enjoyed growth during the past year, with the increasing emphasis on environmentally friendly inks for packaging a key driver in this expansion. The spokesperson for Yip’s Chemical Holdings Limited said that the robust domestic market and the pursuit of higher living standard are the key drivers for the growing packaging demand, hence driving the continuous development of the printing industry.
“In the Chinese market, which consists of 1.38 billion people throughout a vast amount of land, the living standard is improving due to the rise of GDP,” Shingo Watano, GM, International Operations Department of Sakata INX, said. “With the Chinese government placing extremely strict environmental regulations, we are seeing growth in packaging ink and environmentally conscious ink. We believe that we will see further growth in these fields.”
“A huge market of 1.4 billion people is supporting the growth of the Chinese printing industry,” said Akihiro Takamizawa, GM of Hangzhou TOKA. “The ink industry’s growth has slowed down, but we have increased slightly.”
“Consumers in China are now putting a greater stress on the quality of printed materials, so packages that look better and feel better are gaining popularity,” said Masamichi Sota, executive officer, GM in Printing Material Products Div. and GM in Packaging & Graphic Business Planning Dept. “Concerns about safety have also grown, especially with food and healthcare products. The printing market has a great opportunity to lead the charge in meeting the growing demand of ‘safe’ packaging.”
Takashi Yamauchi, division director, global business division, Toyo Ink Co., Ltd., reported that for Toyo Ink, the key drivers of growth have been lower VOC offset inks in addition to eco-friendly packaging systems such as toluene- and MEK-free gravure inks. “Demand for inkjet inks for on-demand printing has also remained robust,” Yamauchi added.
Overall Growth in China’s Ink Industry
With more than $1.5 billion in sales, China’s ink industry is on the rise, and it will continue to grow in the future.
“It is a huge market worldwide, and it is also important in terms of raw material procurement,” said Kazuhiko Shigesu, manager, global business management for T&K Toka.
Yamauchi reported that Toyo Ink Group continues to grow its presence in China as a strategic hub for manufacturing and development.
“In 2018, the group saw growth in China although the pace of growth slowed,” Yamauchi added. “The strongest area of growth came from sales of eco-friendly inks for flexible packaging, in particular for middle grades. Market conditions for offset inks remained stagnant, reflecting the downturn in the local economy and impact from tightening environmental regulations. In the coating materials segment, sales of conducting adhesive sheets for smartphones directed at China and South Korea and adhesive films for displays were strong.”
“We regard China as an important market because of its large population and market potential,” said Watano. “Due to the tightening of environmental regulations last year, our sales increased mainly from environmentally conscious packaging ink and sheetfed ink, which are our strongest points.”
“There was an increase in our product unit prices in 2018,” Yip’s Chemical Holdings Limited’s spokesperson noted. “As raw material prices dropped in the 1H2019 and expenses were under tight control, we managed to better manage our margins.”
“Because China is the world’s largest market for printing inks, we always consider it one of the most important markets for us,” Sota said. “We have been steadily expanding business in China over the past few years, especially in the packaging area.”
To meet increasing demand, leading ink companies are expanding their operations in China.
“At Jiangmen Toyo Ink, construction plans of a new manufacturing facility are underway to boost our capacity of eco-friendly products for the packaging sector,” Yamauchi said. “In addition to this, the group will be expanding adhesives production in Shanghai and Zhuhai to meet the rising demand for kinesio athletic tapes and surgical tapes. We will also develop and launch new adhesives products with the aim of expanding this business into new markets.”
“We have plans to build a second offset ink plant in China (Maoming, Guangdong Province),” said Watano.
“Currently, we don’t have any plans on adding new business and production plants in China,” Yip’s Chemical Holdings Limited spokesperson noted. “We will strengthen our existing businesses by focusing on quality sales and operational excellence to drive growth and profitability. However, we will look at businesses that are in line with our strategic focus of being environmentally friendly, services oriented and end-user driven, with a particular focus on home and car segments.”
“We are now working on a few projects to expand our businesses and capacities in China, and also looking for opportunities to acquire local companies,” Sota noted.
China has faced a lot of environmental issues in recent years, and the government has placed a major emphasis on cleaning up pollution and improving plant safety. On March 21, 2019, a deadly explosion occurred at Jiangsu Tianjiayi Chemical, a pesticide plant in the Xiangshui Chemical Industrial Park in Chenjiagang. Nearly 80 people were reportedly killed in that explosion. As a result, Chinese officials increased their inspections and closed numerous plants.
China had already been emphasizing the environment. Put into place in July 2018, China’s Blue Sky initiative looks to improve energy efficiency while targeting polluters and charging for carbon emissions. Ink industry leaders say they are well prepared for these changes.
“Our operation is facing more stringent government policies and regulations on environmental protection, especially on the emission of volatile organic compound (VOC) and product safety,” Yip’s Chemical Holdings Limited spokesperson noted. “We have invested more than RMB 5.5 million to establish a large VOC treatment system in our plants in Zhongshan and Tongxiang which effectively reduces the emission of VOC to a level that is well below the government-set threshold. Moreover, we were granted a HK$250 million, four-year green loan to fund the environmental infrastructure at our plants. Our R&D department is also equipped and has made unfailing efforts in innovating more environmentally friendly and safe products.
“The T & K Toka facility has been considering the environment since it was established, and there is no problem even if environmental regulations such as the Blue Sky Initiative are enforced,” said Takamizawa.
“We are reinforcing equipment for environmental measures when necessary,” said Watano. “Our offset ink plant in Maoming, (Guangdong Province), was certified in March 2019 by the Chinese government agency as a ‘Clean Production Certified Company’ because of its improvement in energy utilization, protection of the environment, and advancement in sustainable development for the economy and society. Our gravure ink plant in Shanghai also installed a VOC recovery system and waste treatment equipment to clarify environmental regulations.”
“While no new manufacturing facilities have been built, we have installed the latest solvent recovery equipment at our existing locations,” Yamauchi said.
“We believe that it is our responsibility to be a good citizen in the local countries we operate,” Sota said. “We are always fully compliant with the local regulations. We also are aggressively introducing environmentally-friendly products in the Chinese market and developing the latest in groundbreaking technologies.”
Opportunities for Flexo, UV and Inkjet Printing Inks
Gravure and offset printing have long been the staples of China’s packaging industry, but flexo, UV and digital packaging printing are making inroads.
“We continue to see UV ink sales increase year-on-year due to strengthened collaboration with press manufacturers,” Yamauchi said. “Rising raw material prices, however, have hampered market growth.”
“With the effect from strict environmental regulations, water-based flexographic printing for packaging and UV offset are increasing,” said Watano. “We are actively promoting sales in water-based flexo ink and also began to sell LED-UV ink.”
“Flexo and UV inks have different applications which most of the growth comes from emerging markets,” Yip’s Chemical Holdings Limited spokesperson noted. “For example, flexo printing is adopted in beverage and personal care products packaging, etc., while UV is adopted in tobacco and alcohol packaging and partial special effects. Flexo and UV will stimulate more breakthroughs and demands in the packaging industry.”
“We are seeing inroads being made in China with flexo and UV printing for packaging,” Sota said. “Some of our customers are very actively introducing flexo printing machines, especially for global brands. UV printing has become more and more popular due to tighter environmental regulations, such as VOC emission.”
“Packaging flexo printing and UV printing are growing, but have not yet had a major impact,” Takamizawa noted.
Ink industry executives see a growing presence for inkjet printing in packaging.
“A lot of packaging printers, especially in corrugated area, are showing interest in digital printing,” Sota said. “We expect that digital printing will grow rapidly in the next decade.”
“We continue to see strong interest for digital solutions from the Chinese market,” Yamauchi said. “To meet with rising demand, we are moving forward with plans to expand inkjet production in Japan and China, with the aim of propelling this business into new markets. Key growth drivers are the advertising signage and label markets.”
“Digitalization in package printing is partially seen for proofing and small lot production of many products,” said Watano. “However, as there are issues with cost and productivity, we believe that it will take time to spread throughout China.”
“With its printing flexibility and high efficiency, digital printing will give the packaging more personalities and varieties, complementing the shortcomings of traditional printing, thus driving the development of the emerging packaging market,” Yip’s Chemical Holdings Limited spokesperson noted. “Following the maturity of the application and dropping production costs, it is a developing mainstream.”
Outlook in China
Overall, domestic and international ink companies alike are optimistic that China will continue to be a strong growth area for printing and ink.
“Yip’s Chemical is transforming from focusing on asset-based businesses to service-oriented and end-user oriented operations and the Group strives to offer environmentally friendly products and services to enable customers to live a green and sustainable life,” Yip’s Chemical Holdings Limited spokesperson noted. “We will continue to develop environmentally friendly ink products to cater to the market trend.”
“In 2019, China’s economic growth continues to be sluggish as risks and uncertainties over an escalating trade war with the US remain. This conflict is taking a toll on the Japanese business environment and the global economy,” Yamauchi said. “That said, the Chinese market offers strong opportunity for growth. Demand for eco-friendly type products continues to surge as the government tightens its crackdown on high VOC raw materials in key industries. In line with increased demand, the Toyo Ink Group is working to expand production in China for water-based inks for flexible packaging, while focusing our development efforts on higher speed, more eco-friendly and lower odor systems. Moreover, we plan to strengthen tie-ups with press manufacturers in the region to expand our presence in high growth markets.”
“Chinese environmental regulations, the reduction in CO2, food safety and alternatives to safer products should be seen more and more,” said Watano. “To respond to these needs, we would like to expand sales by launching environmentally friendly ink and LED-UV ink into the market.”
“Although there may be some ups and downs in the Chinese economy, we still believe that China market will grow at a healthy pace for the next few years,” Sota said. “As environmental regulations become tighter and tighter, mid-to-small sized local ink manufacturers will be in a very difficult situation to continue business because they are unable to meet the regulations. As the leader in the industry, this will give us further opportunities to expand our business operations in China.”