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8/4/2019 Philippine Report

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STATE OF THE PHILIPPINE PRINTING INDUSTRY

Overview

The Philippine printing industry aims high to achieve global competitiveness thatit hopes to achieve through liberalization while at the same time seeks to find solutions tovarious problems which stifles growth and opportunities. As it is, the industry remains apotential major export industry and unexpectedly continues to grow in number by anaverage of 7% annually.

Lack of capital investment in more sophisticated machines, lack of skilledmanpower to run the industry, proliferation of many printing firms, stiff competition, lackof government incentives, lack of government control, are just some of the majorproblems plaguing the industry. Even with the advent of automated printing and digitalprinting, majority of local printers still stick to traditional printing limiting themselves tothe domestic market. The more profitable overseas printing market thus, remains thedomain of a handful privileged big industry players and sophisticated printers who canafford to invest in state-of-the-art printing equipment, and to train their people to properlyoperate the machines.

With the local economy experiencing another slump, and with recovery nowherein sight, the local printing industry remains at a standstill, perhaps fighting to survive in a

very fierce and competitive environment. Price cutting is a notorious practice for mostprinters often times at the expense of sacrificing quality.

While majority of local printers cling to the traditional printing methods, marketdemands dictate venturing into high-level printing. The onset of digital printingtechnology resulting in print-on-demand market is fast gaining popularity. Acquisitionsof digital, four-color and multi-color presses likewise is no longer news.

This report seeks to present an overview of the overall state of the printingindustry in the Philippines. Unless specifically noted, the printing industry constantlybeing referred to in this report includes the entirety of the three sub-sectors of the

industry, namely the printing-publishing sector, the job and commercial printers, and theindustrial/packaging/label printers.

The Philippine graphic and media industry has an estimated base of 4,000 to5,000 establishments. According to the 2001 data of the National Statistics Office, thereare 4,307 publishing and printing establishments in the Philippines of which 70% arestrategically located in Metro Manila and in key cities of the 13 regions.



Distribution of Publishing and Printing Establishments, 2001

Number

PHILIPPINES 4307ILOCOS REGION 169CAGAYAN VALLEY 67CENTRAL LUZON 306SOUTHERN TAGALOG 514BICOL REGION 119WESTERN VISAYAS 173CENTRAL VISAYAS 278EASTERN VISAYAS 41ZAMBOANGA PENINSULA 65NORTHERN MINDANAO 178

DAVAO REGION 173SOCCSKSARGEN 105NATIONAL CAPITAL REGION 2018CORDILLERA ADMINISTRATIVE REGION (CAR) 46AUTONOMOUS REGION OF MUSLIM MINDANAO (ARMM) 8CARAGA 47

Distribution of Publishing and Printing Establishments in NCR, 2001 Number

NATIONAL CAPITAL REGION 2,018

NCR-I MANILA 340

TONDO 33BINONDO 15QUIAPO 44SAN NICOLOAS 9SANTA CRUZ 65SAMPALOC 89ERMITA 12INTRAMUROS 5MALATE 15PACO 16PANDACAN 6PORT AREA 18SANTA ANA 13

NCR-II 491QUEZON CITY 491

NCR-III 303CITY OF MANDALUYONG 106MARIKINA 51CITY OF PASIG 101SAN JUAN 45

NCR-IV 345



KALOOKAN CITY 150CITY OF MALABON 82NAVOTAS 6

VALENZUELA 107NCR-V 297CITY OF MAKATI 271PATEROS 3TAGUIG 23

NCR-VI 242LAS PIÑAS 45CITY OF MUNTINLUPA 23PARAÑAQUE 105PASAY CITY 69

About 60% of the printing firms are small with an average capital of PHP500,000.00, 35% between PHP 500,000.00 and PHP 5 million and only 5% have overPHP 5 million capital. The total size of the Philippine printing industry is over US$ 100million. Many of the smaller presses operate one or two presses.

85 % of the printing companies are into offset, while 15% are into letterpress,gravure and flexographic printing. Of the 85% belonging to the offset printing group,53% are small-scale (assets: PHP 5 million and with less than 30 employees), 35% aremedium scale (assets: more than PHP 10 million and more than 30 employees), and 12%are large scale (assets: PHP 100 million or more than 100 employees).

The commodities and services of the industry include the following: (1)publication printing: books, pamphlets, newspaper, periodicals, magazines, journals; (2)commercial printing: business and office forms, brochures, posters, envelopes, schoolannuals, promotions/advertising materials, calendars, calling cards, greeting cards; (3)security printing: documentary stamps, postal stamps, bank forms and passbooks, legaltender, examination booklets, forms and answer sheets of state-sponsored tests; (4) officesupply printing: continuous forms for computer printers, invoices, receipts, and otherbusiness forms; (5) special printing, e.g. packaging: folding cartons, boxes, containers;(6) software-related services: pre-printing services, such as typesetting, color separations,electronic stripping, image manipulations, graphic illustrations, internet services such asweb design.

The industry is composed of four sectors according to specific lines of business:printers-publishers, job and commercial printers, industrial/package/label printers andfirms with printing presses. These sectors, which likewise engage in pre-press andgraphic design enterprises, have gradually constituted themselves as one, distinct,competitive segment.

The printing-publishing sector accounts for 70% of the total industry sales.Firms in this business group engage in the publication of various products forcommunication such as books, newspapers, magazines, journals, periodical and



pamphlets. Except for the segment involved in newspaper publications, this sub-sectorusually sub-contracts printing requirements out to commercial printers of foreign firms.Only 6% of the total industry players are into publications of newspapers and periodicals.

Entry barriers are high because of the huge capital investment requirements and theestablished dominance of such publications like Manila Bulletin, Philippine Daily

Inquirer and the Philippine Star. The segment servicing the book market (i.e. about 3%of the industry) has lately found more channels for increased production sales. Theuntapped potentials of this segment have made it a very promising engagement. Thelarge capital outlay required may be high but the degree of rivalry will be low among thelimited number of competitors.

The Job and Commercial printers account for 10% of the market share. Firmsin this group are primarily engaged in small to medium run commercial jobs likegovernment forms, advertising brochures, office and school papers/forms, posters,

calendars, calling cards, greeting cards. They employ the smallest printing equipment interms of runs and number of printers. This small to medium scale sub-sector, however,comprises majority of the firms in the industry. A little less than 90% of the industryplayers are in this sub-sector. The wide range of commodities and services has made itthe most fragmented.

Job and commercial printers largely service the domestic market. But they alsocompete with printers based in the other neighboring countries. These entrepreneurscompete in a market size of around $50 million and are expected to expand the sub-sector and reach the $165 million mark by 2005 if it aggressively upgrades its technology.

The Industrial/Packaging/Label printers account for 20% of the market. It issimilar and at times interchanged with job and commercial printers. It is alsocharacterized by small to medium run printing jobs. Its distinguishing character is itsengagement with the manufacturing industry. The latter requires wrappers and labelingmaterials for carton packaging products, boxes and containers of manufactured goods.Depending on the type of packaging and labeling requirements, the firms in this sectorshift focus from packaging to commercial with some degree of constraints, depending onthe printing equipment used to produce various outputs. These products include labels forcanned goods, label insets in packaged products, labels in carton boxes and other productlabeling materials.

Companies with printing technologies. This sub-sector is made up of bigconglomerate multinational and local enterprises with printing plants establishedprimarily to service their own printing requirements.



Industry Structure

Firms in the Industry:

The industry experienced an average of 7% annual increase during the years1994-1999. However, with the onset of digital technology and the reduction of prices of computers and computer-related printing equipment, there was a surge of new printingcompanies specializing in pre-press. There was a 7% increase in the number of printingfirms – from 2,563 in 1994 to 2,755 in 1995. The small firms (those employing less than10 workers) account for 77% of the total number.

Number of Firms and Total Employment (1995)

TYPE NO. OF FIRMS TOTAL EMPLOYMENT

% %

< 10 Employees 2,123 77.10 9,711 29.36> 10 Employees 632 22.90 23,364 70.64

TOTAL 2,755 100.00 33,075 100.00

In 2000, it is estimated that only 3% of the total number of printing firms (about5,000 including those specializing in pre-press) have a total net worth of $1.5M andemploy 300 workers per company. The rest are mostly small- and medium-sized firmswith less than four reconditioned printing units, and employing 30 people or less.

Top Performing Printing & Publishing Firms in the Philippines (1998) in PH Peso

RANK COMPANYGROSS REVENUE

269 Manila Bulletin Publishing Corp. 2,006,610,000

306 Philippine Daily Inquirer 1,621,376,000

349 Pablo L. Bustamante III Printing Press 1,394,831,000

384 Directories Philippine Corp. 1,273,062,000

434 Bookhaven, Inc. 1,145.595,000

750 Filco Stationeries Co., Inc. 641,586,000

842 Lapu-Lapu Packaging Corp. 558,047,000

1263 Papercon (Phils.), Inc. 352,1999,00

1469 Rowell Lithography & Metal Closure 278,905,000

1551 Alliance Media Printing, Inc. 352,199,00

1625 FEP Printing Corp. 241,097,000

1650 Pilipino Star Printing 237,490,000

1745 Jardine Salmat Corp. 221,740,000

1781 Monica Publishing Corp. 215,476,000

1980 Business World Pubilshing Corp. 186,912,000

2013 Vibal Publishing House, Inc. 183,880,000

2030 RL Graphics Arts, Inc. 182,629,000

2218 Lotte Aluminum 161,371,000

2354 Liwayway Publishing 149,791,000



Competitors:

Competitors of the printing firms include exporters from other countries which

satisfy the demand for printed matter that local printing and publishing companies cannotfulfill. In fact, the Philippines is a net importer of printed matter. It recorded negativetrade balance that peaked to $80.265M in 1997. In 1999, imports exceeded exports by$53.704M.

Balance of Trade in Printed Matter (1995-1999) in US$

DESCRIPTION 1995 1996 1997 1998 1999

Imports 77,373,737 82,528,693 87,913,811 80,316,129 63,630,525

Exports 5,210,968 5,438,673 7,652,787 9,568,038 9,925,662

TOTAL -72,162,769 -77,080,020 -80,265,024 -70,218,091 -53,704,863

Top Import Suppliers:

The United States is the country’s top supplier of imported printed matter,accounting for more than a third (36%) of the market in 1999 and 2000. Other top importsuppliers are Hong Kong, Singapore, Great Britain, Germany, and South Korea.

Top Import Suppliers of Printing Materials

RANK COUNTRY% Share

(2000)

% Share

(1999)1 USA 36.0 35.01

2 Hong Kong 19.49 15.13

3 Singapore 12.67 11.15

4 Great Britain & Northern Ireland 9.35 10.34

5 Germany 3.66 1.85

6 South Korea 3.03 12.34

7 Japan 2.85 3.00

8 Thailand 2.79 0.66

9 France 2.18 0.17

10 Malaysia 1.76 1.53

11 Australia 1.25 3.86

12 1.20 1.32

13 India 1.13 1.18

14 China 0.79 1.29

15 Canada 0.51 0.12

16 Others 1.34 1.05

TOTAL 100 100



Local publishers of books, brochures, musical books, and other publications donot only compete among themselves but also with foreign publishers for a share of thelocal market. Foreign book publishers compete through any of the following modes: (1)

selling directly to major bookstores; (2) appointing an agent in the Philippines who will,in turn, introduce their books to booksellers and take the latter’s orders; (3) working withbooksellers who receive orders from clients and import their clients’ requirements; or (4)granting reprint rights.

Foreign publishers may export directly to the Philippines. They may also dealwith local companies.

Local publishers of newspapers, journals and periodicals compete largely amongthemselves for a share of the domestic market, but also compete with publishers of foreign newspapers and magazines for certain segments of the market.

Commercial printers largely service the domestic market. They also compete withprinters in neighboring countries like Hong Kong, Singapore, Thailand, & Malaysia.Some local publishers go to Hong Kong, Singapore, and China for certain printing jobs(especially full color printing) because of price, quality, and delivery time considerations.

Rivalry Among Local Existing Competitors:

There is keen competition among the firms in the printing industry characterizedby numerous and diverse competitors. Of the 4,307 (as of 2001) printing and graphicimaging companies, 70% operate in Metro Manila and the rest in major cities.

There has been a dramatic increase in the number of design and graphic imagingservices companies over the past years. This can be attributed to the rapid development of the pre-press technology and reduction in the cost of computer hardware. Opening of world market via the Internet has also resulted in more opportunities.

The large number of firms in the industry has resulted in stiff competition amongprinters and graphic service companies, many of which engage in a price war resulting inlowering company profits or simply sustaining operations. This practice results in limitedor even non-expansion of establishments.

Slow Industry Growth:

The printing industry has barely grown over the past decade. Its contribution tothe local economy has been declining through the years as a result. Its share in themanufacturing sector for instance, consistently declined from 1.618% in 1991 to only1.360% in 1999. Its GDP (gross domestic product) share decreased from 0.278% to0.218% in 1999, while its GNP (gross national product) fell from 0.276% in 1991 to only0.214% in 1999.



Entry in the Industry:

The large number of firms in the industry indicates that there are no major sources

of barriers to entry into the industry.

Capital Requirement. This is not a significant barrier for start-up firms.Prospective printers need not invest huge financial resources to be able to set up a smallprinting company. They can start their own printing press by merely purchasingreconditioned equipment that can cost as low as P 300,000.00 as compared to severalmillions for new equipment.

Government Policy. The industry is not regulated and no major controls isimposed such as on licensing requirements, limit to access to raw materials, or limits toprice offering levels, that may discourage prospective investors.

Customers (Industry Markets)

Primary Markets:

Market Segments

Examples of Printed/Published

MaterialsConsumers Institutional/Industrial

• Books/Journals

• Reference Materials• Newspapers

• Magazines

• Students & Teachers

• Researchers• Professionals

• Households

• Librarians

• Educational Institutions,Private Schools, Public

Schools

• Business Forms

• Advertising Space in

Publications: Newspapers,

Magazines

• Brochures/Pamphlets

• Packaging Materials

• Letterheads, Memo Pads,

Business Cards

• Political Campaign Materials

• Political Candidates • Manufacturers of

Consumer Products

• Banks, Insurance Firms

and other Financial

Institutions

• Hotel & Restaurants

• Advertising Agencies

• Other Business Firms• Sales Receipts

• Accounting Forms

• Public Documents

• Households • Business Firms

• Government Institutions

Primary Markets:

1) Educational Institutions. Schools are major buyers of printing products. Publicschools, through the secondary level, use local textbooks. Higher educational



institutions, especially those in traditional fields, use Asian or international editions of locally reprinted US textbooks

2) Libraries. There are more than 8,000 libraries nationwide.

3) Buyers of Advertising Space. Ad revenue is a major source of income for publishers.Print billings grew by 120% from P1.22B in 1992 to P 2.68B in 1997.

Suppliers

Major Suppliers:

1. Paper2. Ink

3. Fuel4. Printing Equipment

Minor Suppliers:

1. Transportation2. Electricity3. Postal4. Messengerial Services

Suppliers of paper account for almost half of inputs of publishers, commercial and job printers, etc.

Suppliers of Printing Equipment:

Almost all printing companies use traditional printing machinery. Others combinethese machinery with modern printing machines which are computerized and some fullyautomated.

The Philippines is largely import dependent on printing equipment, althoughimports during the last two years declined significantly because of high dollar to pesoexchange rate. The leading sources of printing equipment are: Germany, Japan, USA, United

Kingdom, Denmark, South Korea, China, Hong Kong, and Singapore. Other sources are:Australia, France, Italy, Switzerland, Canada, and Malaysia. Among the new printing machinery and equipment being imported are:

Phototypesetting and ComposingOffset PrintingLetterpressFlexographicGravureBookbindingDigital



Laws and Policies Affecting the Printing Industry

Philippine Laws:

1) R.A. 8293 or The Intellectual Property Code of the Philippines . This Code isparticularly relevant to the printing and publishing sub-sectors because it contains theLaw on Copyright. The law gives copyright protection on Original Works (i.e.Literary and Artistic Works and Derivative Works).

2) R.A. 8047 or the Book Publishing Industry Development Act declares as a Statepolicy "the promotion and the continuing development of book publishing industry,with active participation of the private sector, to ensure an adequate supply of

affordable, quality produced books not only for the domestic but also for the exportmarket. The law also created the National Book Development Board (NBDB) whichis tasked to formulate and implement the National Book Policy with a correspondingNational Book Development Plan. R.A. 8047 gives incentives for book developmentsuch as duty-free importation of books or raw materials and exemption of the valueadded tax, tax, and duty exempt importation of spare parts and supplies.

3) R.A. 8424 or the Tax Reform Act of 1997. The tax imposed on the royalties of bookauthors was cut from 20% to 10% as an incentive to authors and writers.

4) E.O. 226 (Article 39) on Employment of Foreign Nationals. It provides that aregistered enterprise may employ foreign nationals in supervisory, technical oradvisory positions for a period not exceeding five years from its registration.

International Laws:

Taxation – In the international market, laws concerning taxation, retail pricemaintenance systems, and copyright protection affect the industry. The rate of taxesimposed on books varies from each country - from a low of 2% in Switzerland to asmuch as 25% in some Scandinavian nations. In a few countries, such as in Australia and

in the United Kingdom, books are exempt from various forms of taxes. Retail Management System (RMS). The industry has lobbied successfully for

the retention of the Retail Management System although there are still some countrieswith no RMS.

Copyright Protection. There is an International Federation of ReproductiveRights Organization (IFRRO) to promote the proper acknowledgement and distributionof fees to authors and other copyright holders worldwide. Most of the major bookmarkets are represented in the IFRRO through their own Reproductive RightsOrganizations (RROs).



11 New Zealand 1.94 0.59

12 Netherlands 1.92 0.29

13 Malaysia 1.36 .84

14 Australia 1.29 2.3215 India 1.12 .04

16 Others 9.96 11.79

TOTAL 100 100

Book Exports:

Book Exports 1995-19991995 ------------------------ $ 847,1691996 ------------------------ $ 813,5711997 ------------------------ $ 989,9171998 ------------------------ $ 2,549,9771999 ------------------------ $ 2,728,645

In terms of value, religious books contributed a significant percentage of totalbook exports, followed by children’s books.

The top imports of printed matter for 1995-1999 and their percentage to totalimports are as follows:

1. Other Books, Brochures, Similar Printed Matter ----- 39%

2. Paper Labels ------------------------------------------------ 15%3. Other Printed Materials ----------------------------------- 12%4. Dictionaries and Encyclopedias -------------------------- 9%5. Bank Notes -------------------------------------------------- 8%6. Magazines, Reviews, Journals, Periodicals ------------- 8%7. Trade Advertising Materials ------------------------------ 4%8. Prayer Books, Bibles, etc. --------------------------------- 1.5%9. Stocks, Shares/Bonds Certificates ------------------------ 1.2%10. College & High School Textbooks ----------------------- .9%

Book Imports:

Book imports peaked at $48.295 M in 1996 but steadily declined since then,reaching only $27.643 M by 1999.

Book Imports1995-19991995 ------------------------ $ 42,597,0471996 ------------------------ $ 48,295,6341997 ------------------------ $ 43,639,8701998 ------------------------ $ 28,260,5311999 ------------------------ $ 27,642,153



Import of Printed Matter:

Imports of printed matter reached $ 87.9M in 1997 but dipped to $ 63.6M in 1999,

then went down further to $ 63.63 M in 1999. Overall, the Philippines is a net importer of books, but negative trade balance hasdecreased from $ 41.7 M in 1995 to only $ 24 M in 1999 largely because of the gradualdecline in the value of book imports during the past few years.

Newspaper and Periodicals:

Demand for newspapers and periodical could be gleaned from the circulationfigures of these publications. Those with the biggest circulation figures are:

Morning Broadsheets:

Philippine Daily Inquirer ---------------------- 257,000Philippine Star ---------------------------------- 251,000Manila Bulletin --------------------------------- 250,000Manila Times ----------------------------------- 209,000Today -------------------------------------------- 152,000Malaya ------------------------------------------- 150,000

The three leading weekly magazines enjoy circulations of from 250,000 to300,000. The top female-oriented weekly magazines have circulations from 150,000 to200,000. Other types of weekly magazines such as male-oriented, teen-oriented, specialty,and sports magazines have circulations of from 130,000 and below. Provincial

publications have circulations of 70,000 and below. These are mostly in the cities of Cebu, Iloilo, Davao, Baguio, Bacolod, and Zamboanga.

Demand for Printed Matter Abroad

Book Sales:

The largest three markets are the United States, Germany and Japan. South Korea,Brazil and China represent the largest share among the fast developing markets.

Book Sales in Major Markets 1991-1996

Rank Country1 USA

2 Germany

3 Japan

4 United Kingdom

5 France

6 Spain

7 South Korea

8 Brazil

9 Italy

10 China



Supply Capability of the Industry

Operations/Services Offered by Printing Sectors:

In book publishing, some companies particularly the bigger ones offer a variety of services to expand their markets. Large publishers, for example, can handle the concernsof authors from the handling of the manuscripts to post-press operations.

Publishers of newspapers, magazines, and other periodicals offer specializedcontents geared towards segments of readers.

For the job and commercial printing sub-sectors, the large firms have thecapabilities to offer a variety of services from pre-press to post-press services, giving

customers the option of having all their requirements handled by one printing press.

On the other hand, smaller firms suffer from weak bargaining power in relation tosuppliers of paper and distributors of printing equipment because of limited financialresources. Usually they have shorter payment periods or on cash purchase basis frompaper suppliers. For many small printing press companies, the lack of access to additionalcapital has limited their ability to upgrade their printing capabilities. However, theycompensate for this by establishing networks with other small printing companies so theycould specialize on one particular activity (e.g. color separation only, printing only oronly binding) of the printing stage, thus not needing to invest in multiple equipment.

Expertise of Personnel:

In all sub-sectors of the printing industry, there is a lack of formal training of technical and managerial personnel. Majority of press operators never attended a formaltechnical school and most of them are high school graduates. Firms are forced to traintheir people on-the-job or they pirate skilled individuals from other printing companies.

Technological Capability:

Although majority of printing companies still use the traditional method of printing, there are some (again the large companies) that have already integrated the useof information technology in various aspects of the printing process. For one, the Internethas opened the door for printers to deal closely with suppliers and customers. Desktoppublishing has also resulted in speedier and more flexible production of printed materials.

Starting in the mid 90s, the country saw the emergence of digital printingtechnology that was successfully introduced and accepted by the local printers. A newmarket emerged - Print-on-Demand or Just-in-Time printing market. A customer can



have his printing done when he needs it and where he needs it. However, the market fordigital printing is currently limited to short-run printing.

The industry has a grasp of future trends, which is for full integration andautomation. Computer-to-film (CtFilm) technology is widely gaining practice,particularly in packaging, publishing, and commercial printing. Large printing companieshave facilities for computer-to-plate (CtPlate) initially utilized mostly for quick printing.Users of the more modern computer-to-press (CtPress) number less than ten and arelimited to companies engaged in packaging and export printing.

Market Share of Printing Technologies:

According to a worldwide statistical survey, the different processes have

approximately the following market share:

Heatset Web Offset -------------------------------- 23%Coldset Web Offset -------------------------------- 20%Sheet-fed Offset ------------------------------------ 9%Flexo Printing -------------------------------------- 19%Gravure Printing ----------------------------------- 19%Digital Printing ------------------------------------- 8%

Offset printing as a whole thus covers 52%. About half of the sheet-fed offsetcapacity is producing advertising print, the other half produces mainly wrapping paper

and folding boxes or packaging materials.

Quality and Quantity of Training:

As mentioned earlier, lack of formal courses in printing has severely affected thesupply of skilled technical personnel. There are at present four institutions that offerformal and short courses in printing: Don Bosco School of Printing, Philippine PrintingTechnical Foundation, Technological University of the Philippines, and the University of Santo Tomas.

Opportunities and Threats to the Printing Industry

The printing industry faces a multitude of opportunities and threats brought aboutby social, technological, economic, and politico-legal developments both here and abroad.



Opportunities:

1. Population Growth. Increases base of potential customers (such as increases

in school populations), and more buyers of consumer goods that utilize printedmatter in their packaging requirements.

2. Large School Population. This assures constant demand for textbooks.

3. High Literacy Rate. This is a factor that could contribute to increaseddemand for reading matter.

4. High Degree of Press Freedom. This could be an opportunity for thePhilippines to attract international publishers to establish their presence in thecountry (such as establishing their regional centers in the country).

5. Large Filipino Communities Abroad. This offers a potential market forprinted matter (e.g. religious books, pocket books, magazines) produced in thePhilippines.

6. Evolution of Equipment and New and Improving Printing Technologies isan opportunity for those who can afford high-level printing equipment Theycan offer better and more innovative products and services to print buyers.

7. Attendance in Printing Conventions Abroad gives local printers theopportunity to see for themselves the most modern printing equipment in the

world. In Drupa (considered the Olympics of printing) for example, Filipinoprinters spent over P400M in purchase of new printing equipment or supplies.

8. The Internet has become a tool for printers to communicate and link withcustomers and suppliers to market, sell and distribute or order supplies.

9. Economic Growth can expand the base of customers for the industry.

10. Increasing Advertising Expenditures results greater revenues for theindustry.

11. Demand of Western Publishers for Low-Cost but High Quality Printing

Services could be serviced by local printers. Cost of print production(including labor) is still relatively high in western countries.

12. Elections are an opportunity for the commercial printing sub-sector as itdramatically increases demand for printing, particularly for ballots andcampaign paraphernalia.



13. Law Incentives offer tax and duty-free importation of books and rawmaterials, reduced royalty tax for authors, employment of foreign nationals,opening of public textbook program to private firms, etc.

Threats:

Lack of Formal Courses on Printing has resulted in a limited supply of skilledlabor who are knowledgeable with the operations of the printing process.

Limited Supply of Skilled Labor which could limit capabilities of printing firmsto increase output or to expand. This also resulted in piracy of skilled laborers.

CD-ROMs and Electronic Publications which could become as substitute for

printing materials such as in business forms.

High Operational Costs result in stagnancy or losses for printers. High cost of raw materials (paper and ink), taxes on imported paper, high cost of postage, etc. canlimit the capabilities of printers.

Tight Competition mainly due to the proliferation of printing companies hasresulted to lower prices and marginal mark-ups.

Unreliable Supply of Paper in Domestic Market which made the industrydependent on imported paper specially for coated stock.

High Investment Cost made printing companies unable to upgrade printingequipment to keep pace with competition both local and abroad. Majority of localprinters could not keep pace with the rapid developments in the industry.

Lack of Reliable Statistics on the Industry hinders the industry to map outstrategies to compete in the global market.

Inadequate Government Support such as in availing of incentives, release of budget for printing assistance in promoting products, tax on imported paper, etc. whichput local printers in a disadvantageous position for global competition.



Action Plan to Enhance Growth and Competitiveness

The industry needs to increase production, cut costs, and deliver promptly to beable to adjust to a highly-competitive environment. One way f achieving this is to investin new technology (new equipment) and to train its workers. Other suggestions includeputting standards in each of the printing process, specialization services and products, andtraining of clients and end-users on the new technology.

Suggestions for Printing Companies:

1) Invest on New Technology to enhance supply capacity and enable printers torespond to the changing needs and requirements of customers.

2) Invest on Human Resources to properly operate the new machines andequipment brought about by the new technology.

3) Focus on Certain Segments of the Market by creating a niche in the marketto attract advertisers that want to reach a specific target market.

4) Offer Specialized Products and Services to allow printers to improve theirtechnical skills in one area (such as printing of business forms), or products(such as paper bags or greeting cards) and in the long run increase efficiencyin production. This will also minimize cutthroat competition.

5) Standardize Work Processes and Product Types to increaseprofessionalism in the industry and also to break non-productive habits andpractices.

6) Work Closely with Customers to teach them the basics (need-to-know)about printing process which would speed up work and eliminate reprints, andincrease satisfaction on the part of the customers.

7) Consolidate Business through mergers or acquisitions to increase size of

existing business. An alternative is to collaborate with others so they couldspecialize in one particular printing activity.

8) Develop Competencies in IT-Related Activities such as desktop publishing,electronic imaging, or online publishing to expand capabilities or speed upproduction processes. Also to prepare the firm to shift to IT-based business inthe future.

9) Participate in Initiatives of Industry Associations to expand firms’ networkof contacts, among others.



Suggestions for Industry Associations:

1) Sponsorship of Training Programs to strengthen capabilities of participants.

2) Providing Members’ Exposure to New Technology such as in organizingtrade fairs, exhibits, etc.

3) Maintaining Database of Information concerning revenues and profit levels,salaries, etc. as an aid for future strategies.

4) Establishing Linkage with Other Industries so that issues affecting theindustry could be discussed.

5) Standardize Work Processes to be used as benchmark practices for printingcompanies in an effort to increase overall quality of products and servicesoffered by the industry. This would make the industry more competitive withits foreign counterparts.

6) Support Government by disseminating information concerning incentivesthat can be availed of by members.

Suggestions for Government:

1) Promote Concept of Global Competitiveness by supporting the industry topenetrate the world market through incentives or financial assistance ininternational fairs and exhibits. By being competitive in the internationalarena, local printers are contributing to national development.

2) Facilitate Human Resource Development Efforts by pursuing the creationof a graphic arts institute in coordination with industry associations. Thisserves as a long-term solution to the dearth of skilled manpower in theindustry.

3) Access to Capital and Credit to provide support in terms of facilitatinggrants and credit schemes for local printers.

4) Establish Performance-Monitoring Scheme in cooperation with industryassociations through maintenance of relevant data about competitiveness of the industry.

The printing industry in the Philippines is at the crossroads of development. It isalso a paradox in the sense that the industry is both mature and very young. It ismature in the sense that prices have been driven down by the sheer number of printers competing for a share in the local market. And yet, it is young and very



promising for those who take the aggressive path of innovation and to those wholearn to quickly adapt to the rapidly changing technology in printing and in thebusiness of print reproduction.

In the last 20 years, the Philippine printing market has been predominantly pricesensitive. The preference for lower prices over quality and good service dictatedthe movement of the economics in printing but such a scenario is true only for thesmall-scale (10 employees or less) & new entrants into the industry. A largemajority of the market now demands higher quality, better service, shorterproduction times, longer credit terms but unreasonably low prices. It is indicativeof stiff and suffocating competition brought about not only by lower demand butalso companies adapting stringent cost cutting measures resulting from theeconomic crisis which started in late 1998. In order to ensure the viability andsurvival of a printing company, one has to possess a high level of technical

expertise and imagination to create a niche market.

Consequently, we welcome the development of more efficient, simplified, and yetless costly printing systems. It is also with much hope that we look forward to theevolution of the digital printing age.

We in the Philippines will work and cooperate with our fellow FAGAT membersand Asian neighbors to help ensure the continuing and progressive developmentof our industry for the mutual benefit of our country and of all our beautifulfriends on this side of the world.

Mabuhay tayong lahat!

Thank you very much and good morning.