This remarkable increase in population has its drawbacks, specifically in terms of the environment. But in terms of economic potential, the sky is the limit. Many industry suppliers have had a presence in Asia for years (some, for decades) in an effort to tap into this astonishingly fast-growing market.
What sets this region apart
The Asian label market is unique because its size and its diversity. Because of the number of countries in the region, it can be very difficult to pinpoint industry standards that are consistent throughout the region. According to Yael Barak, packaging segment manager of strategic marketing at HP, there are significant differences in print quality, labeling and packaging standards, labor costs and run lengths between countries.
“The common thread in almost all Asian countries, though, is that the market is highly sensitive to production cost,” Barak says. “That is probably the primary obstacle in the overall adoption of digital technology. That being said, it is a fast-evolving region with a quickly developing middle class. What we are facing right now is the struggle to change the mindset of printers and brand owners toward creating higher value applications, enhancing product image and/or creating differentiation to better engage and retain consumer interest.”
HP has been involved in the Asian label and packaging market for more than a decade. Barak says that HP has seen a lot of success with its Indigo printers in two of the main areas of the market: glue-applied labels and specialty labels. He attributes this success to the need for variable content and unique designs, as well as the need to address price-sensitive and volume-based print runs.
“In the past two to three years,” he says, “we’ve experienced significant growth and more installations in the mainstream labels and packaging market.”
He adds, “There is still a lot of variance in the region, so printing methods vary from market to market. However, there is a growing acceptance of digital technology across the board, specifically with HP Indigo printers as the quality meets and exceeds brand standards. We have also seen an increase in combination, or hybrid, processing and security labeling and technology in the last few years.”
Press manufacturer Gallus is headquartered in the Swiss city of St. Gallen and has a heavy presence throughout Asia. Gallus South East Asia Pte. Ltd. opened in September 2011 and currently employs more than 20 engineers, sales reps and administrative staff in Singapore. The company provides sales and service for customers in Cambodia, Indonesia, Laos, Malaysia, Singapore, Thailand, Vietnam and the Philippines; it also offers services in Korea and Taiwan.
Dario Urbinati, managing director of Gallus South East Asia Pte. Ltd., says that his company has enjoyed “substantial development” since opening two years ago.
The primary difference between the Asian market and other markets, Urbinati says, is that it is less specialized. “This leads to the need for highly flexible equipment, but also a flexible and broad skillset of local engineers,” he says. “Since the SEA market is heterogeneous, local circumstances in terms of legislation, language and logistics need to be considered and solutions implemented on a local level.”
While letterpress still plays an important role in the region, Urbinati says that flexo has enjoyed growth in recent years, while offset and gravure are used by a certain number of printers serving related markets.
“Digital is common in the meantime while differentiation in the digital market – including embellishments – is asked for more and more,” he adds.
Where to focus
In a region as large and as populated as Asia, forecasted trends and predicted areas of growth are worth keeping an eye on. As Nuttika Sutanthavibul, customer service manager at Harper Asia Pacific Co. Ltd. points out, the high population in Asia is very advantageous for label industry suppliers and converters. “The consumption rate of consumer products is extremely high when compared to the rates of other regions,” she says.
Of course, China accounts for the largest percentage of people in this region. According to AWA Alexander Watson Associates 2012 Asian Market Study, China is the largest consumer of labels in Asia with a 42% share of the regional market. Sutanthavibul says that other countries, specifically India (which is the second highest at 19%), should not be overlooked.
“If we talk about the biggest population in this region, we cannot overlook China with the largest population of [approximately] 1.4 billion people. It not only has the biggest share in this region, but China was also ranked number one in business growth in the world,” she says. “During the last five years, India has become another country with a high population where the label market has also grown continuously.”
Smaller countries in Asia – though no individual matches for China or India in terms of buying power – are not to be discounted. By forming business-specific alliances, they have become major players in a competitive region. (There really is strength in numbers). The Association of Southeast Asian Nations (ASEAN) Economic Community – otherwise known as AEC – is comprised of ten member countries: Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam. According to Sutanthavibul, this is the market to watch in the coming years.
“The most interesting region at this moment, I would have to say is the AEC market,” she says. “The AEC is the collaboration between 10 Asian countries that have a combined population of more than 600 million people. There will be a free flow of goods, services, and investment capital within this region.”
In addition to the geographic areas of growth in Asia, there are some specific market areas for suppliers and others to consider. According to AWA’s report, the key end-use segments in 2012 were in food, beverage, personal care products and pharmaceuticals.
SATO Holdings Corporation is an international provider of automatic identification and data collection products, including bar codes and RFID tags. The company is headquartered in Tokyo, and has a dozen locations in its Asia Pacific division. According to Daphne Tay, chief communications officer for SATO, the company expects growth in several high-volume markets.
“Our primary growth area is expected to be factory automation and retail,” she says. “We will also be focusing on automotive, healthcare and RFID in this region.”
It is likely because of the growth expected in high-volume markets that digital printing is predicted to make significant strides in the region.
Carmen Chua – vice president of marketing for Avery Dennison’s Asia Pacific Materials Group – says that digital printing will grow in markets across the board.
“Digital printing across all fast-moving consumer goods segments is expected to increase, as are competitive, locally-produced quality product offerings to address local demand,” she says. “We also plan to continue to invest resources in segments with great growth potential, specifically, segments where pressure sensitive is currently low in adoption. Geographically, we remain committed to our investments in China, India and ASEAN.”
In addition to an increased need for digital printing, Chua says that Avery Dennison’s Asia Pacific Materials Group will continue to develop more “sustainable solutions” for customers and brand owners throughout Asia, as they are becoming more concerned with their environmental footprint.
An awakened Asia
Economic growth in Asia has come at a cost. The rapid industrialization throughout the region, specifically in China, has resulted in never-before-seen levels of pollution and related health issues. According to The Blacksmith Institute, an international non-profit organization dedicated to “solving pollution problems in low- and middle-income countries,” China has the unfortunate distinction of being home to 16 of the 20 most polluted cities on Earth. In Linfen, which sits in the heart of the country’s coal belt, air pollution is so bad that hanging laundry is known to turn black before it dries.
Other environmental issues of concern in Asia include deforestation, a lack of clean water, and decreased food production as a result of climate change. These are serious issues with frightening consequences that are only amplified by the fact that this region is home to more than half of the global population.
The European Environment Agency – a branch of the European Union – has arguably lead the globe in terms of environmental policy. Other Western countries, including Canada and the United States, have made significant political and social strides towards sustainability. Historically, China has focused on economic advancement and largely ignored environmental policies (and pleas) from other countries, though it appears that the aforementioned issues have caused this global powerhouse to reevaluate its methods.
Chua says that changes in Asia are being driven by increased consumer awareness as well as an overall global shift towards more sustainable practices.
“As local infrastructure is developed to support sustainable recycling practices, demand for sustainable label and packaging solutions will significantly increase,” she says. “The topic of sustainability has shifted from a niche ‘nice to have’ feature to a regulated and/or legislated ‘must adopt’ scenario.”
For suppliers in the region, this translates to an urgent need for products that meet regional demands. Tay of SATO says that this need has given rise to products such as linerless labels, recyclable liners, biodegradable facestocks and liners, and the like. “In addition to linerless labels,” she says, “SATO has produced the world’s first CO2-reducing Econano series of labels.”
The Econano series are labels that use nano vesicle capsule (NVC) technology to add a CO2 absorbent to the label’s adhesive. The company says that this enables users to reduce CO2 emissions at the point of incineration by approximately 20%.
As with other trends or methods in Asia, there are discrepancies from country to country. According to Barak of HP, Singapore, Japan, Korea and Taiwan are leading sustainability practices in the area. “Several corporations and brand owners are becoming increasingly concerned with social responsibility and ‘green’ packaging,” he says. “Print providers and converters are frequently being asked to demonstrate that they are using environmentally-friendly materials and processes like creating smaller packaging and minimizing waste.”
The good news for international suppliers who are required to meet the environmental standards of Western countries is that they are in the unique position of being able to readily offer environmentally-conscious products and practices that are new to the area.
As Urbinati of Gallus points out, “Since Gallus follows the developments in the West, our products are still ahead of the local developments and are [likely to meet] any future requirements.”