This Month's Spectrum Summary:

(The following is an excerpt from the June 2004 issue of Spectrum, a proprietary monthly briefing published exclusively for the clients of I.T. Strategies, Inc. © 2004)

WIDE FORMAT IN CHINA- Today, Cost-Effective Outsourcing; Tomorrow, a Growing Market? Tough Competition?

This month we look at China through the lens of wide format printing with Liz Ziepniewski and Marco Boer, informed by Liz's recent visit to the Shanghai International Advertising Show. The China boom is changing the world's economic landscape, and creating opportunities and problems for digital printer vendors. Chinese branded products, including printers, are already replacing imported products in the domestic market. China is changing the world economic landscape. But strategies to deal with these changes need to take into account how far and how fast China will be advancing. Will China's development follow the Japanese model or go its own way? Chinese wide format companies are multiplying, getting their start as distributors of established wide format printers and with very cost effective engineering, learning to make much less expensive copies. To be competitive, outsourcing to China may be essential, but partners are likely to become competitors.

In order of perceived importance, the challenges facing the Chinese wide format printer companies include lack of business plan/experience; distribution; reliability; service; print quality; product range; and RIP/software. Much progress has been made in the past year. Solvent flatbed printers are now offered by many vendors. Print quality is improved. Last year most vendors were working to market overseas under their own brand. Now most realize they need to look for OEM partnerships. Teckwin stands out as the most aggressive and successful in developing brand visibility and OEM ties with established overseas vendors. Companies are also beginning to realize, as hardware competition squeezes margins, that they need a revenue stream from inks.

Among the government and cultural realities of significance are government subsidies that encourage Chinese companies to participate in trade shows around the world, the need to work with local bureaucracies, the RMB/$ exchange rate mandated by China, alleged rebates of the value added tax only to domestic companies, and the regional pattern of industrial development with given provinces specializing in given industries.

A number of forces are conspiring to temper the "China miracle." Change is inevitable. As always, we need to be informed and realistic in dealing with the present, and planning for the future, play the odds with creativity and courage.