The World of Print is Flat Too!

For most of the past ten years, one of the major trends in U.S. business has been the rise of globalization. Tom Friedmann, in his best seller book, The World is Flat, made the case that if you’re not global, you won’t survive. NPES members have long been active exporters: today we estimate that over seventy percent of them are involved in exporting to some extent. Twenty percent of our members strictly import to the US market although their parent companies are global in nature. So, roughly one tenth of our membership concentrate on the US market and have yet to explore the global printing industry.

Much attention has focused on the so called “BRIC” countries (Brazil, Russia, India and China), the fastest-growing emerging markets. As we look at emerging markets, the question becomes which countries, if any, will become the next China or India? To provide members with accurate and detailed information on the worldwide market, NPES through PRIMIR (The Print Industries Market Information and Research Organization) has contracted with PIRA International of the United Kingdom to conduct a study of the “World-Wide Market for Print.” This research will identify the top global markets for print, printing equipment and supplies, as well as emerg-ing markets where members should set their sights going forward. It is an incredible reference document to aid any NPES member seeking information on a given export market.

Not surprisingly, the U.S. is the single largest print market worldwide, weighing in at $186 billion in 2006. However, the fastest growing markets are the emerging nations illustrated in Table 1 above. While the world market is expected to grow at a rather anemic 2.5% from 2005 to 2006, the emerging regions will grow between 11% and 17% – an impressive opportunity for NPES members.

In 2001, these emerging markets comprised 21% of the total world print market. By 2006 they will represent over 27%. That is huge growth when you consider that the world market was $450 billion in 2001! The absolute global print growth between 2001 and 2006 is forecast to be U.S. $149.7 billion for all print markets. Emerging regions will account for $71.1 billion of this growth, almost half of the total. We are all quite aware that the U.S. market has been declining or flat since 2000, so these emerging markets represent solid growth potential for NPES member companies.

For novice exporters, Canada and some European nations can provide an effective launch pad. As Table 2 (click thumbnail below) illustrates, 10 of the top 15 world markets are in the developed nations of the world; these are the larger and easier markets for novice exporters. Despite the fact that some of these markets are experiencing the tough climate that we find in the U.S., they still offer opportunities. For instance, a strategy targeting England, Canada and Australia in which to start export activities would yield a potential market of $57 billion on top of the U.S. market of $182 billion. Throw India into the mix, and your market potential climbs to $71 billion. Combined with no language barrier, this can be an attractive starting point for going global.

For the experienced exporter the message is clear, the growth is in the developing countries and regions of the world. These markets may be tougher to penetrate but the long-term potential in these markets is well worth the extra effort it will take to be successful.

Here are two more compelling findings from the PRIMIR study:

• The fastest growing markets in terms of dollar growth since 2001 include Russia (27% annual growth), Romania (25%), and certain other Eastern European markets, as well as Turkey (18%), China (16%) and Brazil (15%).

• Packaging represents the single largest print product sector, with projected worldwide sales of U.S.$173 billion for 2006 across printed corrugated/solid fiber board, cartons and flexible packaging. Combined with labels, the overall market amounts to almost U.S.$200 billion worldwide.

As we look forward through 2006, Brazil and Mexico follow the Chinese in absolute growth terms (see Table 3 at right), while Russia, Ukraine and Romania offer the highest annual growth for the print market of any country over the past five years as their economies open and recover from many years of communist rule. According to the study, “China offers the greatest absolute growth; this attractive potential is opening up but organizations unaccustomed to dealing with Chinese bureaucracy and business practices need to learn the intricacies. Competition is growing in China with local suppliers of equipment and consumables joining the larger multinational brands.”

India, meanwhile, is capitalizing on its large numbers of well-educated people skilled in the English language by becoming a major exporter of software services and software workers.

Phase One of this three-part study will be released to NPES and PRIMIR members in late October. The complete study will augment data from Phase One with market estimates for the printing equipment and supplies markets worldwide, along with an analysis of key trends in the emerging countries and what it all means for NPES and PRIMIR members.

The message is clear: Significant opportunities beyond the U.S. market offer NPES members long-term growth potential. NPES