News

May 17th, 2022

THE SITUATION OF THE PRINTING INDUSTRY IN THE 2nd quarter of 2021

OVERVIEW

Vietnam's economy in the first quarter of 2021 recorded a good recovery and growth in many important economic sectors. Specifically, the industry increased by 6.5% over the same period, higher than the increase of 5.1% in the first quarter of 2020. Surveys show that 85.1% of businesses think that the situation in the second quarter of 2021 will be better and more stable than in the first quarter. The outbreak of the disease in Ho Chi Minh City in recent weeks has decreased the optimism of businesses.

The printing industry is also under the general influence in the context that Vietnam's economy is affected by the outbreak of the Covid-19 epidemic in the last months of the second quarter of 2021. Experts say the printing industry is less affected than other industries. However, the continuous increase in the price of paper along with other materials and even failure to buy paper forced the factories to be in short supply and waiting. The key impacts on the Printing industry are mainly in the segment of cultural products for traditional activities, scarce supplies and rising prices.

PRODUCTION SECTORS

  • In Publications, Textbooks are less affected compared to other industries. Because of the policy of socialization to innovate textbooks, production still has increased. Due to the impact of the Covid epidemic, the price of printing materials increased much, even sometimes there was a situation where there was no printing paper. Currently, the manufacturers divide the products equally, such as: Education Publishing House, Phuong Nam Publishing House, Education Development Investment... The situation of the printing industry this year will have frustrations and opportunities share for businesses, not as focused as before.
  • In the second quarter of 2021, some cultural printing establishments have more printing jobs for the Election, so they have more sales.
  • Packaging printing is developing stably, and at the same time, some companies have switched to packaging printing. Companies still hesitate to sign big contracts because the price of paper keeps going up, even if they do it just to keep customers because of little or no profit. Especially, there is a time when the price of materials is different each week, making it more difficult for small packaging companies than last year.
  • This year, the epidemic broke out and seriously affected to life activities, so the revenue of the packaging printing industry during the festive seasons will certainly decrease. Concerns about purchasing power will cause manufacturers to reduce capacity and as a result, printers specializing in making mooncake boxes, packaging and bags for the Mid-Autumn Festival will lose a lot of revenue. The situation will affect the printing of calendars and spring newspapers in the third and fourth quarters.
  • Due to the adjustment in the general policy of the State, businesses have begun to switch to using Electronic Invoices and Electronic Receipts, adding tolls and roads are also used in card form, leading to orders as well as sales. Tickets – invoices – receipts are almost reduced and even greatly reduced. Up to now, sales of this segment have decreased by over 50%.
  • Lottery ticket printing is not affected during the epidemic season but will be affected when businesses participate in re-bidding and have to reserve paper.
  • Due to the high cost of raw materials (about 30% on average for all kinds of materials) while the customers only approved for an increase of 5 -15%, the printing companies specialized in reducing orders or receiving only at moderate level to maintain production.
  • Printing and export packaging production businesses have been comprehensively and strongly affected by the disruption of the global supply chain, the sharp increase in shipping prices, and even no containers for shipping. During the prolonged Covid epidemic, the problem of storing raw materials is very difficult, before we knew the price would increase, it was acquired and stocked by major forces of other countries. When quoting competitive prices, Chinese enterprises take the initiative because their domestic raw materials are very cheap, but they are 30% more expensive to sell abroad. Even the price of shipping Containers from China is always cheaper than other countries.
  • Packaging factories in the Northern provinces such as: Hai Phong, Hai Duong, Hung Yen, Bac Ninh, Bac Giang, Ha Giang, are purchased by China, Japan, and Korea. Currently there is a factory 100 times bigger than Vietnam's printing factory, they dominate most of the market, hold large export orders, so they push Vietnamese printers into one difficult situation after another.
  • There are still packaging printing companies that can maintain production and restructure, waiting for opportunities to develop when the epidemic is over. During this difficult period, companies will focus on training human resources, orienting to boost production and develop markets. However, due to the increase in costs, the profits of the companies are also greatly reduced

LABOR

High-quality labor is scarce and shortages of skilled workers still occur everywhere. Many businesses have actively invested large costs to invite leading experts in the industry and have a lot of experience in training for their own units.

Some small enterprises don't have jobs since the beginning of the year, leading to the situation of unemployed workers looking for work.

MATERIALS

  • Since the beginning of 2021, the price of ink has increased 3 times due to increased materials, increased shipping costs, by the end of March 2021, the price of ink has increased by 7-8%, UV ink by 35%.
  • Currently, the price of Ivory Paper has increased by 110%, Duplex paper has increased from 65% to 70%, while the printer's partner units only approve the price increase of 5 to 10%. Therefore, printing companies specializing in packaging reduce orders or accept orders only in moderation to maintain production.
  • Because the cost of materials is too high, packaging printers for confectionery also hesitate to order and only order when there is demand. Compared to the fourth quarter of 2020 and the beginning of the first quarter of 2021, the amount of packaging paper sold has decreased, this is a sign of paper price reduction for 2 products: Ivory and Couche thick, especially for thin Couche paper specializing in calendar printing, the possibility very high increase.
  • Regarding to the situation of large production factories in the world, there is Stora Enso factory - a very large Paper corporation in Europe (specializing in the production of Publication paper products such as: LWC Paper, Newspaper, Paper, etc.) Couche, Pulp.) after a decade of business losses and the prolonged Covid pandemic, will permanently close 2 large factories in Finland and Sweden in the third quarter of 2021. Faced with that situation, we can also predict the future paper price situation for printed products, publications, etc.
  • Experts noted that the situation of paper materials this year is very dramatic and unusual. It does not follow a principle of supply and demand that is almost like a Trade War. The Chinese government advocates standing behind the capitalists, they gather raw materials and pulp. The price of pulp has risen from about 435 USD/ton to 1000 USD/ton, they have acquired and dominated all markets, they have bought shares of major shipping lines to control and regulate. Large European corporations such as Stora Enso have proactive and solvable sources of raw materials, sometimes the price difference of 100 to 200 USD is normal. Up to now, China's Paper prices and European Paper's prices are not much different, it can be said that they have risen to the top. That is also the reason why customers only buy when they really need it.
  • Currently, China is manipulating the entire paper market, even they have collected all the pulp from countries like Brazil and some countries in Europe, so they actively raise prices. This happens not only in Paper but other materials as well. It is expected that China will continue to hold this peak price until the end of the year.

SUMMARY

The current situation of the printing industry can be said to be very abstract. After the Covid wave in 2020, the printing industry was affected but only in the early stages. By 2021, the production situation will be more difficult than in 2020 because the price of raw materials increases. However, the total revenue of the printing industry did not decrease or even increase, especially in packaging and export. Sales may increase, but profits may decrease or deeply decrease. Some small printing companies had to stop production or transfer due to difficult reasons.

According to some documents from foreign economic experts: “The world economy this year is very abstract and precarious. Not only the printing industry due to the Covid epidemic but also the US-China trade war. The longer this war lasts, the more disadvantageous the economy becomes. At least until September 2021 can we make some comments on the economic picture of the World.” Therefore, printing businesses should be very careful when investing.

In the past time, our printing businesses have been severely affected, it is clear that the US-China trade war has a significant impact on us, and we are in a passive position to that influence. This war is not just speculation in the paper business, logistics chain or raw materials, but also political factors. For export enterprises, this impact is comprehensive and very powerful. Situational ingenuity and creativity will be decisive, printers need to maintain production and take advantage of time to restructure until the market stabilizes again.

Reference document:

  • Minutes of the Board of Directors meeting of Ho Chi Minh City Printing Association in April 2021
  • Prima.vn