Analysis of Current Status of China's Ink Enterprises

Since 2000, the world's major ink-producing countries such as the United States, Japan, and Germany have experienced sluggish economic development and a sluggish printing industry. The ink industry has continued to slump. According to the National Association of Printing Ink Manufacturers (NAPIM), U.S. ink sales fell 3.3% in the first three quarters of 2003, while sales fell 4.1%, including sales and sales in the area of ​​publishing and commercial paper. It decreased by 3.4% and 5.0%; while in the packaging area, it decreased by 2.8% and 3.0% respectively. These data indicate that not only sales are declining, prices have fallen even more. As SUN Chemical's North American President MIKE MURPHY (Mike Murphy) said: "For the US ink industry, 2003 is a challenging year. Recent government reports indicate that the economy is recovering, but in the ink industry, the recovery The signal is still weak. The weakness of the printing market and the excess production capacity have led to fierce competition among printing companies. As a result, more printing companies have shifted their pressure to suppliers and caused price turmoil in the ink market."

In response to this situation, European and American ink companies have adopted a variety of development methods. One of the most prominent ones is the following: There are large-scale mergers and acquisitions and frequent business reorganizations in the world, which are mainly manifested in three forms:

1. Mergers and acquisitions between ink companies

In 1988, DIC Ink Chemical Co., Ltd., Japan’s largest ink manufacturer, became the world’s largest ink company by acquiring SUN CHEMICAL Co., Ltd., and in June 1999 with COATES LORILLEUX. ) The company signed the acquisition intention. At the time, COATES ranked third in the world with annual sales of 890 million U.S. dollars, and the combined DIC company's annual sales reached 4.79 billion U.S. dollars, making it the world's largest ink company.

The world's second-largest ink manufacturer, Flint Ink Company, has a significant business reorganization: in 1999, it completed the merger of SACRAMENTO and IN KCOMPANY; in 2002 it acquired German Gebr. Schmidt’s operations in Europe and Canada; business exchange with SICPA Switzerland in 2003: transfer of global operations for security inks used for the printing of banknotes and tickets to Sikhbae, enabling Sikhbaya The security ink market holds 80% of the market share. In exchange, Flint has received Sikhby's global thermoset and coldset ink business.

In addition, in May 2003, AkzoNobel Ink (ANI) took over Belgium's Trenal SA, which has 70 years of history in the production of coldset and thermoset inks, but the product also used the Trend brand. The acquisition became the final chapter of the three major cold-ink manufacturers in Europe.

2. Acquisition of raw material companies

Ink companies’ acquisitions and mergers further developed into the raw material sector: Sun Chemicals, a subsidiary of DIC, acquired 50% of the French AIC company (which produces pigments, additives, and inks) in October 2002, making it safe and dedicated to production. The ink's raw materials increase its control capabilities. Sensient (which had sales of US$115 million in the North American ink market in 2002, ranked fourth after Sun Chemicals, Flint, and Inkes) also conducted a number of acquisitions: In 2001, it acquired Based on the industrial dye business of Kroppton Pigment Company, it has also acquired SynTec, a German special dyes and chemicals manufacturer, and a special ink and dye company for EGS, Switzerland, as well as a special ink manufacturer, Kimber-Clark Printing Technology (Formulabs, Currently a subsidiary of Sensient Corporation).

3. Strategic cooperation

In addition to acquisitions and mergers, there are many forms of cooperation in non-mergers and acquisitions abroad, such as cooperation between Sun Chemical and Flint in certain small inks, and Japan’s Toyo ink company. (No. 5 in the world) and Sakata (Sakata) Ink Corporation (No. 11 in the world) strategic alliance. They signed an agreement on 15 November 1999 to form a strategic alliance partner with their logistics and OEM production arrangements. Global cooperation on research projects is a model of cooperation among ink companies.

These mergers and cooperation have greatly strengthened the development capabilities of these multinational corporations: (1) further expanding the market, (2) consolidating the core competition in technology and achieving complementary advantages; (3) enabling joint procurement and reducing procurement costs. This will help these companies continue to develop in an economically depressed environment.

Second, the development status and analysis of ink companies in China

Since 1995, China's ink production has developed relatively rapidly. The average annual growth rate has reached about 10%, and the growth rate in 2002-2003 has reached 19.31% (14.5% in terms of data). It is expected that the growth rate in 2004 will increase. The rate will remain at 10% or more. There are two reasons why the production of ink companies in China can continue to grow at a rapid rate: (1) The rapid economic growth, and the growth rate of gross domestic product (GDP) in 2003 was 9.1%, which led to the rapid development of the packaging and printing industry. Ink demand growth; (2) domestic and foreign companies and funds continue to intervene, so that China's ink industry's production capacity continues to grow.

According to statistics, there are more than 300 existing ink production enterprises in China (actually more than 400). According to statistics from the National Bureau of Statistics, there are 11 production enterprises with output of 5,000 tons in 2003, and 3 companies with output of more than 10,000 tons: Tianjin Toyo Ink Co., Ltd. has an output of 16,600 tons, accounting for 8.16% of the country's total output. The output of Hanghua Ink Chemical Co., Ltd. was 14,300 tons, accounting for 7.04%; Taiyuan Gao's Lowry Ink Chemical Co., Ltd. was 13,900 tons, accounting for 6.81%.

Although the development of the domestic ink industry is relatively good, there is still a big gap compared with foreign countries in terms of companies:

(1) The scale of the company is small, and the market share of individual companies is not high.

In foreign countries, the ink industry is a highly concentrated industry. For example, in the European market in 1999, the market share of major ink companies is as follows: 34% for Sun Chemical, and 14% for BASF (BASF), Gebr.Schmidt (Schmidt Brothers) was 11%, with 4 to 6 positions of Michael Huber, Flint Ink, and Siegwerk both at 7%. The top 6 companies accounted for 80% of the market share, while the top 4 accounted for 66% of the market share. According to Bain's classification of industrial monopolies and competition, it belongs to the “highly concentrated and oligopolistic” industry.

In China, from the perspective of 2003 production, the top six companies accounted for only 34.4% of the total output, and the top 10 companies only accounted for 47.47%. At the same time, no one company exceeded 10%, even from the company. From the perspective of the group, DIC has the largest share. Its three companies: Shanghai DIC, Shenzhen Shenzhen, and Taiyuan Gao's total production in 2003 were 28,100 tons, which also accounted for only 13.82% of the country. According to Bain's index of absolute concentration index analysis, the domestic ink industry's market structure is a competitive market structure, which belongs to the “low-concentration and oligopolistic type”. Compared with foreign countries, it is a low-concentration industry with barriers to entry. It is also relatively low.

The "low-concentration and omission-occupied" market structure in China's ink industry directly affects the development capacity of ink companies in China, especially technological innovation capabilities. The higher the degree of market concentration, the more active the technological innovation in the industry. As China's ink technology lags behind the world level, the primary task of China's ink companies is to change the status quo by strengthening technological innovation, and gradually expand the scale and further increase market share.

In this regard, DIC Corporation of Japan showed its brilliant strategy: relying on the company's strong technical strength and financial advantages to successively establish two successful companies in Shenzhen and Shanghai; through mergers with COATES, it has Gaoyuan·Lao of Taiyuan. Rui's shares; in order to occupy the South China market, it recently established a printing ink factory in Shenzhen, and recently invested RMB 60 million with the Yunnan Hongta Group to establish Yunnan Diaisheng Ink Co., Ltd. (where DIC owns 60% of the shares, Hongta Group It accounts for 30%, and the remaining 10% is held by Yunnan Tongyin Co., Ltd., and plans to reach sales of 1.5 billion yen in 2008. On the whole, DIC is centering on Guangdong Zhongshan, and the trend of significant expansion to the country has basically taken shape. It occupies an important position in the round transfer ink, offset ink, gravure ink. In addition to occupying the ink market, DIC has continued to operate in the raw material market. After it achieved resin production in Guangdong, it also established a pigment production base in Nantong, Jiangsu Province. On the one hand, it achieved nationalization of raw material production, reduced costs, and on the other hand achieved Control of the upper reaches of the ink production market.

Japan's TOYO ink company is also expanding. In addition to operating the existing ink factories in Tianjin and Guangdong Jiangmen, it also established a factory in Songjiang, Shanghai.

Domestic private ink manufacturers are also actively expanding: Suzhou Dadongyang invests 200 million to establish the largest private ink factory in China; Zhaoqing Tianlong is building a factory to achieve an annual output of more than 8,000 tons of ink-and-wash; Zhejiang Yongchang Chemical Co., Ltd. adapts to rapid growth The production situation is also building a factory building.

(B) The ability of technological innovation is not strong.

In addition to the use of capital to achieve the expansion of scale, domestic companies must also make technological innovations. This point was also highlighted at the 47th NPIRI (American Printing Ink Research Association) technical seminar held last year. In view of the large gap between domestic enterprises and foreign companies in terms of technical level or production efficiency, it is necessary to strengthen portfolio innovation. "Ink combination innovation" can essentially be considered as follows: Under the guidance of the development strategy of ink manufacturing companies, systemic coordination of innovation behaviors is constrained by organizational and technological factors. “Ink combination innovation” generally includes various combinations of various innovative behaviors such as product innovation, process innovation, institutional innovation, management innovation, raw material innovation, and equipment innovation. This combination innovation is not limited to ink companies themselves, but also includes inks and inks. Equipment companies' cooperation and innovation.

Due to the technical characteristics of ink, it is determined that "raw material innovation" is an important part of "product innovation" and "equipment innovation" is the basis of "process innovation." Therefore, the most important of the ink companies are the following two combination innovation methods: (1) a combination of organizational culture innovation and technological innovation, and (2) a combination of product innovation and process innovation.

1. Combination of organizational culture innovation and technological innovation

Due to the introduction of foreign capital, several large ink companies in China are in a process adapting to foreign cultures and domestic cultures. At the same time, China's ink companies are also in the initial stage of industrial production to development production. Therefore, we must first emphasize this. A "soft" combination of innovations. For a specific ink company, the coordination of technological innovation and organization, cultural innovation is an important means to ensure technological innovation, and regardless of the size of the company, this combination of innovation can be carried out, so this combination of innovation is every ink The important guarantee for effective technological innovation by enterprises is to grasp three principles in carrying out this type of combined innovation:

(1) Flexible principle: Due to the rapid development of ink innovation, it is required that the organizational structure and culture of the enterprise must have enough flexibility for the technological change, and that it can support the ink technology innovation in a timely and low-cost manner.

(2) The principle of coordination: due to the innovative nature of the ink, it was decided