Hung Hing's 3 Billion Vietnam Investment: Giants in a Total Panic, Printers Should Cherish Their Jobs

Recently, the news that Hung Hing Printing Group was increasing its investment in Vietnam unexpectedly failed to stir up any waves in the mainland. Perhaps it was numbness after a long period of the "boiling frog" effect, or perhaps people thought this export printing giant with an output value of HK$3 billion no longer cared? For a moment, one was overawed without knowing why.

Hung Hing's decision to increase its investment in Vietnam at this time, braving the virus, is in fact a subject with very strong topicality. This editor was itching to find out, and could not resist trying to speculate about the grand chess game of the giants and the small daily lives of printing people.

Hung Hing Printing Throws Its Pearl into the Dark

In recent times, descriptions of Vietnam in the mainland went like this:

"70,000 companies have gone bankrupt! The largest port has suspended import and export containers! Toyota, Nike, Samsung and Foxconn are facing production difficulties due to lockdowns..."

Under this immersive brainwashing, people in the mainland assumed that Vietnam and India would have basically nothing to do with export manufacturing this year, and that all orders would obediently land on China's plate, so much so that people selectively ignored the extremely impressive foreign trade data of Vietnam and India in the first half of this year.

However, people whose recognition and understanding are split never imagined that Hung Hing Printing, which had been testing the waters in Vietnam for only a little over a year, would actually brave the spread of the virus to increase capital and expand production in Vietnam.

Let us look at Hung Hing's official news:

Hung Hing Printing Group (00450) announced on August 5, 2021 that the company had increased its capital in its Vietnamese subsidiary by US$15 million to expand its production scale, and the capital increase took effect after being approved by the People's Committee of Ha Nam Province, Vietnam. The announcement said that as market demand for high-quality printed materials is growing and diversifying, in order to strengthen synergies, enhance competitiveness and promote sustainable development, the company decided to increase capital to accelerate its expansion plan, develop more types of products, and advance the diversification strategy of the company's Vietnam business.

The Prosperity of Export Printing Fades, Chasing the Fragrant Dust

From Hung Hing's announcement, this editor can roughly filter out three pieces of information:

1. Demand in the Vietnamese market is expanding; 2. Vietnam already has the capacity to produce high-end printed materials; 3. The future of Hung Hing Vietnam will be sustainable and diversified development.

Financial reports show that the turnover of Hung Hing Printing Group in 2018, 2019 and 2020 was HK$3.277 billion, HK$2.993 billion and HK$2.554 billion respectively, a clear decline.

Hung Hing's annual report pointed out that the group's increased provision for employee welfare expenses and the sharp rise in paper prices caused gross profit in 2018 to fall by about HK$100 million. In addition, sharp exchange rate fluctuations produced a fair value loss of about HK$46 million.

It can be said that Hung Hing Printing's operating situation in the mainland in recent years has somewhat carried the feeling of a hero down on his luck and a warrior with no face to show. Only by selling two land and plant assets in Shenzhen and Wuxi for a profit of 1.3 billion yuan did it barely save face.

The other two companies that joined hands with Hung Hing to sweep up global print orders, Leo Paper and Star, are in more or less the same situation.

Leo Paper has the world's largest single printing plant in Heshan and currently employs about 10,000 people. Its turnover in 2018, 2019 and 2020 was HK$3.19 billion, HK$3.59 billion and HK$3.06 billion respectively.

Star Printing, once looked up to with admiration, seems to have lost all its luster, and its straitened circumstances make one sigh with regret while being able to do nothing about it.

The Momentum of Printing Flying Southeast Has Not Diminished

In fact, the older generation of entrepreneurs really miss the days before 2008, when export manufacturing was as glorious as flowers on brocade and as blazing as fire fed with oil.

It is precisely this old sentiment that makes them willing to endure the pain of labor costs rising several times over, industrial workers being in short supply from one generation to the next, and raw materials swinging wildly like a roller coaster, while still insisting on investing regardless of cost in the technical research and development of non-standard equipment and in intelligent upgrading.

Over the past decade, Leo Paper, Hung Hing and Star have all invested heavily in building smart equipment factories, and from time to time exciting news emerged, but all to no avail. A decade of intelligentization achievements has yet to translate into a steady stream of overseas orders and hard cash, while a worsening labor shortage, the China-US trade war and the uncertain pandemic have come one after another.

Weighing their options, the three export printing giants can only have a foot in both camps.

Various sources prove that the three giants have always hoped to take their mainland factories as the cornerstone while stretching the other foot into Southeast Asia, so as to cushion the impact of China-US trade frictions.

Taking Leo Paper, which derives 70 to 80 percent of its orders from the United States, as an example, in order to avoid the impact of additional tariffs from the China-US trade war, on July 19, 2019, Leo Paper Products (Vietnam) Co., Ltd. grandly held the founding ceremony of its paper products factory at Site 02 of the Amber High-Tech Industrial Park.

Labor shortages, geopolitical risks and the continuous shocks of the COVID-19 pandemic have left the three giants trembling and anxious inside, while the crazy rise in raw materials has thrown the entire manufacturing industry into chaos.

Making money is getting harder and harder, uncertainty is growing greater and greater, and even those as strong as Hung Hing and Leo Paper are panicking badly.

Merchants value profit and think little of parting - so it has been since ancient times! Thus, we have seen Hung Hing's adventurous advance, Leo Paper's order transfer, and the half-heartedness of Star, Chun See and GFT. Amid the faint silhouettes of chaos, this editor also foresees that the rice bowls of the mainland printing industry may be shattered all over the ground.

——This article is reprinted from China Packaging Network (pack.cn). Original link: http://news.pack.cn/show-378009.html