August 18 Hangzhou Steel Market Price Quotes
In the face of slowing macroeconomic growth and rising operational costs, the printing industry has experienced significant pressure that has quickly spread to its upstream sectors. On August 12, 2008, Beiren Printing released its semi-annual report, revealing that by June, the company had generated revenue of approximately RMB 390 million. According to both Chinese and Hong Kong accounting standards, it recorded a net loss of RMB 22.8 million or RMB 20.98 million for the period.
Shanghai Electric, another major player in China’s printing industry, acknowledged the widespread challenges facing the sector. Yang Changcai, General Manager of the Supply and Marketing Branch at Shanghai Electric Group Printing and Packaging Machinery Co., Ltd., stated, “Based on past experiences, the downturn in the printing industry is expected to last two to three years. Therefore, I believe the situation for the printing industry over the next couple of years is not promising.â€
The pressure has been felt across the entire supply chain. Earlier, Beiren Printing had issued a performance warning on July 3, indicating that increased costs and imbalances in supply and demand had led to losses in the first half of the year. The semi-annual report revealed that the company's operating profit, total profit, and net profit all declined sharply—by 442%, 335%, and 303% respectively—resulting in a loss of RMB 0.05 per share.
Beiren further explained that global economic turmoil, triggered by the U.S. subprime mortgage crisis and soaring commodity prices such as oil and grain, led to inflation worldwide. Combined with domestic macroeconomic controls, slowing economic growth, the renminbi’s appreciation, reduced export tax rebates, and rising raw material and labor costs, downstream printing companies faced severe profit declines, leading some to shut down, divest, or even go bankrupt.
This trend is reflected in the semi-annual reports of other listed printing companies. For instance, Jilong Industrial reported a net profit of 3.07 million yuan for the period, down 24.98% year-on-year. Meanwhile, Hongbo’s ROE dropped from 6.52% in the first quarter to 4.66% in the half-year, a sharp decline from its 2007 and 2006 figures of 31% and 41% respectively.
Yang Changcai confirmed that the phenomenon of factory closures and divestments is particularly noticeable in South China. Many foreign and joint-venture companies have chosen to close their operations there and relocate to lower-cost regions like Southeast Asia.
According to Guo Zhenju, an analyst at Essence Securities, private and foreign-invested companies make up 76% of Guangdong’s printing industry, while only 20% are state-owned or collectively owned. Changes in foreign investment directly impact the Pearl River Delta, which accounts for more than a third of the country’s printing output.
The appreciation of the renminbi has also hit the export sector hard. Yang noted that Shanghai Electric’s export profits have significantly declined, as over 60% of its printing equipment exports go overseas. Similarly, Beiren Printing saw a steeper drop in its foreign business (-33%) compared to domestic sales (-28%).
Despite these challenges, Yang observed that North China has shown better performance this year. Sales in the region have slightly increased, with the Northeast showing even greater potential due to substantial investments made since the beginning of the year. This has prompted the company to adjust its strategy and focus on the North China market in the second half of the year.
Data from Guo Zhenju indicates that loss-making companies account for 10–20% in the more mature East and South China markets, but as much as 25–30% in North and Northeast China. Additionally, the number of large-scale printing companies in North and Northeast China is significantly lower than in East and South China. If industry consolidation continues, it may drive demand for high-end printing equipment, suggesting a gradual upgrade in these regions.
Meanwhile, major printing companies are pinning hopes on textbook reforms, which have already stimulated the book and periodical printing market. Yang expects this segment to grow in the coming year.
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