Graham Galliford

The China (Re)Manufacturing The China (Re)Manufacturing Industry Overview and OutlookIndustry Overview and Outlook

Graham J. GallifordGraham J. Galliford

Galliford Consulting Galliford Consulting & Marketing& Marketing

Oxnard, California, USAOxnard, California, USA

Cartridge MarketCartridge Marketis one of Derived Demandis one of Derived Demand

• Industry Production followsIndustry Production follows– Market for print hardwareMarket for print hardware– Industrial/commercial/economic growthIndustrial/commercial/economic growth– Literacy and wealth of populationLiteracy and wealth of populationOther FactorsOther Factors

• Printer Hardware placements and printing in general are slowly Printer Hardware placements and printing in general are slowly declining in North America and Europe because of the popularity of declining in North America and Europe because of the popularity of tablet, mobile devices and electronic mediatablet, mobile devices and electronic media

• Printer Hardware placements and printing in general are increasing Printer Hardware placements and printing in general are increasing in Asia because of growth and that print is more affordable to the in Asia because of growth and that print is more affordable to the population that cannot afford tablets and mobiles (e.g. India, population that cannot afford tablets and mobiles (e.g. India, Vietnam, etc.)Vietnam, etc.)

• Additionally China has very high literacy rate plus rising incomes Additionally China has very high literacy rate plus rising incomes which creates growing demand for all types of printwhich creates growing demand for all types of print

© 2012 © 2012 Galliford Consulting & Galliford Consulting & MarketingMarketing

Worldwide Printer Hardware Worldwide Printer Hardware MarketMarket


• Worldwide New Printer Sales Volume 2010=125,094,250; 2011=125,981,530;Worldwide New Printer Sales Volume 2010=125,094,250; 2011=125,981,530; 2012 (projected) = 120,863,400 (-3.4% vs. 2011)2012 (projected) = 120,863,400 (-3.4% vs. 2011)• Printer Sales declining overall in the World MarketPrinter Sales declining overall in the World Market

USA Printer Hardware USA Printer Hardware MarketMarket


• USA New Printer Sales Volume 2010=27,858,986; USA New Printer Sales Volume 2010=27,858,986; 2011=26,068,248;2011=26,068,248;

2012 (projected) = 25,500,940 (-8.5%)2012 (projected) = 25,500,940 (-8.5%)• Printer sales declining faster in USA than rest of the WorldPrinter sales declining faster in USA than rest of the World

China Printer Hardware China Printer Hardware MarketMarket


• China New Printer Sales Volume 2011=8,700,000;China New Printer Sales Volume 2011=8,700,000; 2012 (projected) = 9,200,000 (+5.7%)2012 (projected) = 9,200,000 (+5.7%)• Printer sales increasing in China with Urbanization of Printer sales increasing in China with Urbanization of

Population and Growth of Chinese EconomyPopulation and Growth of Chinese Economy

The China Game of The China Game of NumbersNumbers• China population 3.5X the USChina population 3.5X the US

• In the US 1% of top students qualify to apply to In the US 1% of top students qualify to apply to Harvard about 30,000Harvard about 30,000

• In China top 1% is about 100,000 students - a lot In China top 1% is about 100,000 students - a lot more capable students in China than in the United more capable students in China than in the United States or any other regionStates or any other region

• By same logic Apple will sell almost 2X more iPhones By same logic Apple will sell almost 2X more iPhones in China than in the US next yearin China than in the US next year

• Apple projected to sell 35 million iPhones in China at Apple projected to sell 35 million iPhones in China at premium prices but only selling to the top 3% of premium prices but only selling to the top 3% of population with high incomespopulation with high incomes


The China Game of The China Game of NumbersNumbers

• Same logic might be applied to print industry but GDI Same logic might be applied to print industry but GDI per Capita lower in Chinaper Capita lower in China

• Print is a more democratized product affordable to the Print is a more democratized product affordable to the masses that cannot afford Tablets, PCs and masses that cannot afford Tablets, PCs and SmartphonesSmartphones

• China has a very high literacy rate at about 95% and China has a very high literacy rate at about 95% and this together with rising incomes is creating growth in this together with rising incomes is creating growth in demand for newspapers, magazines, and books as demand for newspapers, magazines, and books as well as the increased of document printing for records well as the increased of document printing for records and communicationand communication

• Print will grow in China but decline in USA and EuropePrint will grow in China but decline in USA and Europe


Green IndustryGreen Industry• High rate growth in Chinese economy has had High rate growth in Chinese economy has had

side effects of creating pollution, an issue of side effects of creating pollution, an issue of national importancenational importance

• Lack of fresh drinking water, poor air quality, and Lack of fresh drinking water, poor air quality, and safe food supply have come to forefrontsafe food supply have come to forefront

• Remanufacturing and control of waste/used cores Remanufacturing and control of waste/used cores has become important issue has become important issue

• China has embryonic printer manufacturing China has embryonic printer manufacturing industry and new makers are approaching the industry and new makers are approaching the business in a “green” mannerbusiness in a “green” manner


How and What are Chinese How and What are Chinese Companies Printing?Companies Printing?

• Chinese business usage patternChinese business usage pattern– 50% of companies use OEM supplies50% of companies use OEM supplies– 20% use refill kits20% use refill kits– 30% use aftermarket cartridges30% use aftermarket cartridges– 84% of companies have inkjet printers84% of companies have inkjet printers– 81% of companies have monochrome laser 81% of companies have monochrome laser

printersprinters– 73% of companies have color laser printers in 73% of companies have color laser printers in

use as welluse as well© 2012 © 2012 Galliford Consulting & Galliford Consulting &

MarketingMarketing

How and What are Chinese How and What are Chinese Companies Printing?Companies Printing?

• What are Chinese businesses printing?What are Chinese businesses printing?– 85% of companies print spreadsheets and charts85% of companies print spreadsheets and charts– 80% of companies print text documents80% of companies print text documents– 43% of companies print brochures43% of companies print brochures– 40% of companies print e-mails40% of companies print e-mails– 35% of companies print slide presentations35% of companies print slide presentations– 27% of companies print Web pages27% of companies print Web pages– 25% of companies print high-resolution photos25% of companies print high-resolution photos


Chinese Cartridge Chinese Cartridge ManufacturingManufacturing


Chinese Cartridge Chinese Cartridge ManufacturersManufacturers

• Top 5 producers make 64% of aftermarket Top 5 producers make 64% of aftermarket toner cartridges (toner cartridges (Print-Rite, Ninestar, New Print-Rite, Ninestar, New Regent, Ink Lab, Retech)Regent, Ink Lab, Retech)

• Top 5 producers have only 11 percent of Top 5 producers have only 11 percent of the domestic market share in Chinathe domestic market share in China

• Approximately 90 percent of output of top Approximately 90 percent of output of top 5 producers exported5 producers exported

• Rest of the aftermarket industry exported Rest of the aftermarket industry exported only about 44 percent of its productiononly about 44 percent of its production


Chinese Cartridge Chinese Cartridge ManufacturingManufacturing


Partial List of ChinesePartial List of ChineseCartridge ManufacturersCartridge Manufacturers

• PrintRite, Tesen, G&G/Ninestar, ABColor, PrintRite, Tesen, G&G/Ninestar, ABColor, Prinko Image , Leehi Industries , HueWay , Prinko Image , Leehi Industries , HueWay , Orink , Anycolor, Tech A, Summit Orink , Anycolor, Tech A, Summit Enterprise , Zhuhai Gree , Kolion Enterprise , Zhuhai Gree , Kolion Technology , Mipo, Dingrui Technology , Mipo, Dingrui Electronics/Kalon, ABColor, Speed Infotec, Electronics/Kalon, ABColor, Speed Infotec, Anerya, Mito Color, Ningbo Sea-Hill, Anerya, Mito Color, Ningbo Sea-Hill, Retech, Shanghai GW ElectronicsRetech, Shanghai GW Electronics


Chinese Cartridge Chinese Cartridge Manufacturing IndustryManufacturing Industry

• In China empty collections becoming more In China empty collections becoming more difficult because of more competition for difficult because of more competition for empties and more brokers resulting in: empties and more brokers resulting in: – Many empties are recovered from other Asian Many empties are recovered from other Asian

countries to Chinacountries to China– Shortages of cartridges favor production of Shortages of cartridges favor production of

clone cartridgesclone cartridges– Chinese remanufacturers also use many non-Chinese remanufacturers also use many non-

virgin cartridges (50% LBP and IJ) unlike US virgin cartridges (50% LBP and IJ) unlike US (20% LBP, 10% IJ)(20% LBP, 10% IJ)


Chinese Cartridge Chinese Cartridge Manufacturing IndustryManufacturing Industry

• Chinese cartridge industry has major influence Chinese cartridge industry has major influence on other Asian markets shipping remans and on other Asian markets shipping remans and clonesclones

• China does not import finished remans or clonesChina does not import finished remans or clones• China imports large amounts of emptiesChina imports large amounts of empties• China has lowest remanufacturing industry China has lowest remanufacturing industry

landfill rates in the World because oflandfill rates in the World because of– Active demand for plastic and metal scrapActive demand for plastic and metal scrap– Larger use of non-virgin coresLarger use of non-virgin cores



China TrendsChina Trends• Expanding remanufacturing / manufacturing Expanding remanufacturing / manufacturing

production capacityproduction capacity• Cartridge remanufacturing / manufacturing still Cartridge remanufacturing / manufacturing still

moving to low production cost areas in Asia moving to low production cost areas in Asia particularly China but also Vietnamparticularly China but also Vietnam

• Toner production growing in ChinaToner production growing in China– New domestic producersNew domestic producers– Foreign producer expansionsForeign producer expansions– Most domestic production is for aftermarket useMost domestic production is for aftermarket use

• Increasing Domestic DemandIncreasing Domestic Demand• Continued Investment in Production and Research Continued Investment in Production and Research

and Development in China unlike North America and Development in China unlike North America and Europeand Europe

• Growing production and sale of compatible Growing production and sale of compatible cartridges particularly of colored toner typescartridges particularly of colored toner types

Growth of Color WorldwideGrowth of Color Worldwide


Growth of Color WorldwideGrowth of Color Worldwide


Color Office Printing in Color Office Printing in ChinaChina

• Color is a big opportunity areaColor is a big opportunity area– 43% of Chinese offices use an in-house office 43% of Chinese offices use an in-house office

color device to print color documentscolor device to print color documents– 28% of Chinese offices use both an office 28% of Chinese offices use both an office

printer or an outside print serviceprinter or an outside print service– 14% of Chinese offices use only an outside 14% of Chinese offices use only an outside

print service to print their color documentsprint service to print their color documents– 13% do not print color documents at all (10% 13% do not print color documents at all (10%

have no need for it and 3% do not have the have no need for it and 3% do not have the resources)resources)


Color Cartridges and ChinaColor Cartridges and China• HP color cartridges retail at high cost so 3HP color cartridges retail at high cost so 3rdrd Party vendors Party vendors

have brought alternative options to markethave brought alternative options to market• Cost structure enables good profit and cost savings for end-Cost structure enables good profit and cost savings for end-

usersusers• Big impact on aftermarket promised but has taken a long Big impact on aftermarket promised but has taken a long

time to master remanufacturingtime to master remanufacturing• Now there are many vendors selling color cartridgesNow there are many vendors selling color cartridges• Growing diversity of machines means vendors still require Growing diversity of machines means vendors still require

aftermarket products to sustain their profit and aftermarket products to sustain their profit and remanufactured HP cartridges are no longer enoughremanufactured HP cartridges are no longer enough

• Compatible supplies can fill gaps where remanufactured Compatible supplies can fill gaps where remanufactured product not availableproduct not available


Compatible Color CartridgesCompatible Color Cartridges• Vendors learning to build products and researching patents Vendors learning to build products and researching patents

to ensure no infringementto ensure no infringement• Vendors can provide more non-HP SKUsVendors can provide more non-HP SKUs• Compatibles allow dealers to address wide range in cost-Compatibles allow dealers to address wide range in cost-

effective manner and guarantee supply because no used effective manner and guarantee supply because no used cores requiredcores required

• Even if used cores for remanufacturing available Even if used cores for remanufacturing available compatibles ensure consistent availability of input materialscompatibles ensure consistent availability of input materials

• Normal that new and lower-yield cartridges have core cost Normal that new and lower-yield cartridges have core cost that makes remanufacturing less cost effectivethat makes remanufacturing less cost effective

• ““Patent free” compatible cartridges will be important Patent free” compatible cartridges will be important element of the futureelement of the future


Buying Compatible Color Buying Compatible Color CartridgesCartridges

• Dealers must carefully evaluate suppliers to Dealers must carefully evaluate suppliers to ensure that the vendor has done the necessary ensure that the vendor has done the necessary research and development on their products to research and development on their products to ensure non-infringementensure non-infringement


Chinese TonerChinese TonerManufacturing IndustryManufacturing Industry



World Toner ProductionWorld Toner ProductionCAGR%

Japan 3.05%US -2.81%Europe -2.08%Asia 7.06%Worldwide 1.28%


Greater Asian Toner ProductionGreater Asian Toner Production

• Large growth percentage of smaller base but non-Japanese production becoming significant


Chinese Toner IndustryChinese Toner Industry


Chinese Toner IndustryChinese Toner Industry• More than 35 Chinese Domestic Manufacturers in ChinaMore than 35 Chinese Domestic Manufacturers in China

• Growing number of makers of CPTGrowing number of makers of CPT• Largest capacity Largest capacity

• Mainland - Handan, Pointrole, TCOA, Jiateng, Huike, ICLMainland - Handan, Pointrole, TCOA, Jiateng, Huike, ICL• Taiwan - Trend Tone Imaging, Royal Precision TonerTaiwan - Trend Tone Imaging, Royal Precision Toner

• Lower manufacturing cost than N. America Europe and Lower manufacturing cost than N. America Europe and JapanJapan

• Foreign Manufacturers Present in ChinaForeign Manufacturers Present in China• Ricoh Asia Industry, S.Z. Ltd (Japan)Ricoh Asia Industry, S.Z. Ltd (Japan)• Fuji Xerox (Japan)Fuji Xerox (Japan)• Tomoegawa Imaging Technology (2 plants) (Japan)Tomoegawa Imaging Technology (2 plants) (Japan)• Jadi (Malaysia)Jadi (Malaysia)

Chinese Toner Industry Chinese Toner Industry • China has become important production base for toner becauseChina has become important production base for toner because

• Investment climateInvestment climate• Potentially lower cost labor and resourcesPotentially lower cost labor and resources• Chinese and regional market growth potentialChinese and regional market growth potential

• Continuing expansion at many manufacturers with new advanced production line Continuing expansion at many manufacturers with new advanced production line installationsinstallations

• Continued investment in production and Research and DevelopmentContinued investment in production and Research and Development • Has lead to growing number of makers of CPT (3 plus others in Has lead to growing number of makers of CPT (3 plus others in

pre-production/research) pre-production/research) But seen from outside China it is viewed thatBut seen from outside China it is viewed that• Quality/consistency is still problem of top importanceQuality/consistency is still problem of top importanceOther industry problems are thatOther industry problems are that• Spare capacitySpare capacity• Restricting factors: low availability of experienced workers; for some R&D ability Restricting factors: low availability of experienced workers; for some R&D ability

constrained by low profits; raw material industry not focused on toner businessconstrained by low profits; raw material industry not focused on toner business


The China (Re)Manufacturing The China (Re)Manufacturing Industry Overview and OutlookIndustry Overview and Outlook

Graham J. GallifordGraham J. Galliford

Galliford Consulting Galliford Consulting & Marketing& Marketing

Oxnard, California, USAOxnard, California, USA

Date post:	11-Mar-2016
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Graham Galliford

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