Pressing times for companies with mainland facilities
Hong Kong's printing and packaging companies will find more commonality than differences when they meet at this year's Hong Kong International Printing and Packaging Fair, organised by the Hong Kong Trade Development Council and CIEC Exhibition Company (HK) from today until Thursday at the AsiaWorld-Expo, as the majority of businesses who have facilities in the mainland are feeling the pinch of operating in the Pearl River Delta.
Over the next 12 months, Hong Kong's printing and packaging firms in southern China are expected to face a gamut of pressure that are increasingly threatening to put smaller production houses out of business and force larger operations to relocate.
Overall expenditure for these companies has soared by 20 to 25 per cent in the past two years on the back of an appreciating renminbi, tighter environmental controls, costlier raw ingredients and soaring wages which have been further exacerbated by a labour shortfall.
Finding skilled workers has been particularly tough. With China's rapidly emerging middle class, fewer people are interested in taking up long factory hours at low wages.
'There is a shortage of labour as well as a high turnover of workers. We are still monitoring the situation. The concern is that even if we move away from the Pearl River Delta, the labour shortage issue could still persist,' said Rebecca Ma ka-wai, deputy general manager of Luk Ka International, which specialises in the manufacturing and printing of gift boxes and paper bags.
'Traditional printing relies mostly on automated machinery, but for packaging printing where we turn a blank piece of paper into a printed gift box for example, much more manual work is required so we need more workers,' said Ms Ma, whose factory in Shenzhen employs more than 3,000 people.
Yeung Kam Kai, chairman of the Hong Kong Printers Association, which is a co-organiser with the Graphic Arts Association of Hong Kong, anticipates at least 5 to 10 per cent of Hong Kong printers in Guangdong will probably relocate or close down over the next few years.
'I think we will be able to tell in a year's time what the real situation is,' said Mr Yeung.
'The printing business is driven by production costs, so owners will move their facilities if opportunities elsewhere are more favourable.'
Last year, seven to eight Hong Kong invested printing plants closed down in Shenzhen and Dongguan, according to the Printers Association, which also noted that owners of printing plants were estimating a 15 to 25 per cent product price increase to offset the rising production costs.
Vietnam is emerging as a popular relocation option given its low labour costs and foreign investor friendly tax incentives. But Chan che-keung, who owns C&K Trading, which has manufactured printing equipment in Hong Kong for 20 years, said: 'Vietnam is what China used to be like 10 to 15 years ago. With the difficult environment in China, I think a lot of smaller businesses could move back to Hong Kong. After all, Hong Kong has its advantages. For example, it is easier to monitor quality here and business can be more easily conducted with other countries.'
C&K Trading supplies printing equipment to Southeast Asia, Britain and Italy.
Rapidly evolving technology has increased investment costs at printing and packaging plants with companies vying to keep customers happy with the latest special effects printing equipment and flexible digital printing solutions.
Ms Ma said: 'Customers are looking for fresh ideas and more catchy presentations and designs. Printing is no longer straightforward. Increasingly, people are looking for special results by using laminated and pressed paper or implementing textured effects on their products. We have been adjusting our equipment and raw material supplies to meet these demands.'
Kelvin Hung, a sales manager at Techway Technology, which provides digital printing solutions, said traditional printers that had equipment geared towards bulk printing would have to adapt to newer printing trends such as printing on demand and short-run printing to satisfy customers' needs.
Janice Law, business development manager at Advance Label, which prints adhesive labels for toys and electronic products, said with the operating environment becoming more difficult it was more pertinent now to promote the company through a variety of channels including trade fairs, online advertisements and international trade magazines to gain greater exposure.