Cultural Industry Revitalization Hoists the Sails for China's Printing Enterprises

China issues nine major policies for the printing industry:

1. Interest subsidies may be applied for on imported printing equipment

Printing enterprises that in 2007 imported three types of offset presses and one type of die-cutting machine within the specified technical parameter range could obtain, through application, interest subsidy funds of up to 6% to 7% of the import value.

1. Export tax rebate rates raised for some printing products

As of November 1, 2008, the export tax rebate rates for some publications and paper stationery will be raised to 13% and 11% respectively.

1. The enterprise income tax law hands a "bonus" to domestic-funded printing enterprises

The new tax law brings a number of benefits to printing enterprises, the biggest of which is that the income tax rate for both domestic and foreign-funded enterprises is unified at 25%.

1. Printing enterprises can deduct VAT on equipment purchases

As of January 1, 2009, all general VAT taxpayers nationwide (regardless of region or industry) are permitted to deduct the input tax contained in newly purchased equipment, and any undeducted input tax is carried forward to the following period for continued deduction; the printing industry will benefit as well.

1. The Labor Contract Law brings new issues for printing enterprises

The Labor Contract Law places somewhat greater emphasis on protecting the rights and interests of workers, while also giving full consideration to the interests of employers.

1. Lower threshold for Hong Kong and Macao investment in mainland packaging and printing enterprises

As of January 1, 2009, for packaging and decoration printing enterprises established in the mainland by Hong Kong and Macao, the minimum registered capital will be applied by reference to that for mainland enterprises.

1. Ten types of waste from the printing industry listed in the National Catalogue of Hazardous Wastes

Two ministries jointly issued the National Catalogue of Hazardous Wastes, in which 7 categories and 10 types of hazardous waste from the printing industry are included.

1. The printing industry brought within the scope of clean production audits by the Ministry of Environmental Protection

Environmental protection departments will carry out mandatory clean production audits on "double-exceed" enterprises and "double-hazardous" (toxic and harmful) enterprises; the photosensitive material waste generated by the printing industry is a "double-hazardous" substance.

1. Hong Kong funds clean production by printing enterprises in the Pearl River Delta

The Hong Kong government allocated HK$93.06 million to fund clean production by Hong Kong-invested enterprises in the Pearl River Delta across eight major industries, including printing and publishing.

Promote the policy of mortgage loans on tax-reduced and tax-exempt equipment;

Comprehensive credit lines ease enterprises' pressing needs;

Banks tailor financing plans for enterprises;

Introduce adjustment and revitalization plans for five industries including printing;

Preferential policies for restructured enterprises extended to 2013;

The "six major projects" advance the digitalization of the industry;

Service industry development guidance funds support transformation.

Current state of the printing industry:

World economics experts agree that the main impact of this financial crisis falls on Europe and the United States, and that China is a less affected country.

But even under such circumstances, driven by the state's macro-control and domestic demand stimulus policies, a very large proportion of China's printing enterprises went bankrupt. These were mainly small and medium-sized printing enterprises. Small and medium-sized enterprises have poor adaptability, find financing difficult and have weak technological innovation capacity; in the financial crisis, faced with increasingly fierce competition among printing enterprises, ever lower printing prices, constantly rising prices of printing raw materials and continuously rising production costs, small and medium-sized enterprises were overloaded and could only choose bankruptcy to put an end to their losses. Large printing enterprises, with relatively solid strength, staggered through the financial crisis; although they survived it successfully, with falling profits, a shrinking industry and rising costs, the gap in earnings was very large.

This fully illustrates the common problems existing in China's printing industry. First, outdated enterprise management models. When facing unexpected events (the financial crisis), enterprises have weak adaptability and no corresponding emergency systems. Poor corporate management capability leads to blind management, which makes corporate development strategies vague and reduces production efficiency. Second, weak technological innovation capability. It is a reality that China's printing industry lags behind in printing technology, and few enterprises have independent innovation capacity. Under the financial crisis, they could only cling to their existing technologies and put up a desperate resistance, taking a shot in the dark: if they bagged the rabbit they gained, and if not they could only choose bankruptcy. Third, weak financing capability: small and medium-sized printing enterprises have few financing channels and weak financing capability, and enterprises do not set aside risk reserves in advance, so under the financial crisis they face difficulties in capital turnover.

One set of figures shows that small and medium-sized enterprises account for 99% of the total number of enterprises, about 60% of total economic output, around half of taxes paid and more than 75% of the people employed. Without the recovery of small and medium-sized enterprises, there will be no recovery of the Chinese economy. Supporting the development of small and medium-sized enterprises is of great significance for maintaining growth, stability and people's livelihoods. Recently, in order to boost the economy and encourage employment, local governments have introduced a variety of policies and measures to ease the financing difficulties of small and medium-sized enterprises and actively support their development, and the printing and packaging industry is among them.

Since entering June, China's industrial production has grown faster, profitability has improved, and new progress has been made in energy conservation and emissions reduction. China's economy is growing rapidly, and under the policies issued by the state, the printing industry has also shown a growth trend.

On January 8 this year, the National Development and Reform Commission issued the Outline of the Plan for the Reform and Development of the Pearl River Delta Region (2008-2020). Subsequently, the State Council successively approved seven plans, namely the Several Opinions on Supporting Fujian Province in Accelerating the Development of the West Coast Economic Zone of the Taiwan Straits, the Development Plan for the Guanzhong-Tianshui Economic Zone, the Development Plan for the Coastal Areas of Jiangsu, the Overall Development Plan for Hengqin, the Development Plan for the Liaoning Coastal Economic Belt, the Plan for Promoting the Rise of the Central Region and the Outline of the Plan for Regional Cooperation and Development of the Tumen River in China. The number of regional economic plans approved this year equals the total of the past four years, and the speed of their introduction.

Under a number of national policies, China's printing industry faces numerous opportunities. Some experts predict that by 2011 the whole will shift eastward, with the market shares held by North America and Europe falling to 28% and 31% respectively and those held by Asia and other regions rising to 30% and 11% respectively, while the total value will also exceed US$720 billion.

According to the Eleventh Five-Year Plan, by the end of the Eleventh Five-Year Plan period the total gross industrial output value of China's printing industry is expected to reach about RMB 449 billion yuan, accounting for roughly 2.5% of gross national product; its printing production and processing capacity will move into the front ranks of the world. It is expected that by 2010 the overall market growth rate of printed products worldwide will be 3% to 4%, and the printing industry will face increasing competition and pressure. By 2010, digital printing will rise from its current 4% share of the whole to 14%, of which inkjet technology will account for half, and by 2015 the output value of digital printing will reach 124.8 billion euros; it is expected that by 2010 the overall growth rate of printed products will be between 3% and 4%.

With the development of China's economy and its integration with the global economy, capital is entering China's printing industry at a faster pace. By 2020, about half of all printed products will be produced on digital printing presses.

Variable data printing will become the main driving force of the industry. A series of figures indicates that the development prospects of China's printing industry are promising.

What should printing enterprises do?

In August this year the State Council issued the Plan for the Revitalization of the Cultural Industry. In the Revitalization Plan, printing and reproduction, together with cultural creativity, publishing and distribution and other eight major industries, are listed as key cultural industries for future development, which further clarifies the strategic position of the printing industry in the national economy and social development and provides a rare historic opportunity for the development of printing.

Faced with so many opportunities, what should printing enterprises do?

1. Understand the development situation of the printing industry and accelerate enterprise restructuring

With the rapid advances of multimedia networks, electronic paper has become a major force impacting paper media. If the printing and publishing industry wants to hold its place amid fierce competition, it must grasp the development trends of printing. The impact of the electronics industry and the shrinking of the printing market are inevitable trends; the printing industry should not evade this problem but should actively confront it, adapting to the current form of development by changing its own business model.

1. Improve enterprise management systems and strive to develop new types of industry

The General Administration of Press and Publication has arranged for the restructuring of the publishing industry to be completed by the end of 2010. The restructuring of the publishing industry places publishing and printing on the same starting line for fair competition, promotes the survival of the fittest among printing enterprises and drives the upgrading of technology and equipment. In this situation, the printing industry cannot cling to its existing resources and live off past gains; it must actively develop new customers and new products to achieve business diversification.

1. Enhance independent innovation capacity and develop green printing

China's Eleventh Five-Year Plan vigorously develops green, environmentally friendly printing and promotes the transformation of the printing industry from a traditional passive processing industry into a high-tech, proactive service industry. Printing technology is a weak point of China's printing industry, from printing press manufacturing to printing and reproduction, and on to publishing. Relatively backward technology means that a certain gap exists between China's printing and that of developed countries. As the printing market shifts eastward in the future, printing enterprises that want to capture more customers must have their own innovative technologies, building China's printing brand on a low reject rate and green printing.

1. Standardization of enterprise printing and product qualification certification

If printing enterprises want to develop rapidly, they must establish standardized printing methods, reduce the waste of printing consumables, improve printing efficiency, lower printing costs and strive for higher printing profits.

——This article is reprinted from China Packaging Network (pack.cn), original link: http://news.pack.cn/show-362255.html