The Pearl River Delta Printing Enterprises are on the Verge of Closure Tide in October

(NPES International E-commerce Website, August 28, 2008) Because of the U.S. sub-crisis which affected export demand, a large number of SMEs collapsed in Guangdong, as well as the appreciation of the RMB and cost rising of paper and labor, an anonymous source of Shenzhen Printing Association said that 15,000 printing enterprises are facing dilemma. At present, only in Shenzhen there is Parkway and Blue Star printing and other large and medium-sized printing companies closed. Along with the peak season of printing industry finished in October, it is expected that a large number of printing enterprises, especially SMEs, will fall into the closure dilemma.

China Joint Business Printing (Guangdong) Co., Ltd executive deputy general manager Zhou Zhiqiang said:” Our 70% orders are export orders, due to 9.7 % appreciation of the RMB in one year, we lost tens of million of dollars, furthermore, the national measures against hot money also affect the company's turnover of funds and exchange rate losses. “Shenzhen increased the minimum wage standard twice from last year until now, staff wages of this company increased 15% last year and 20% in this year, as well as the implementation of the new labor law, increased paper price and higher environmental protection requirements, production cost of the company at least increased 25 %, it is common in other printing companies.

Production costs generally rose 25%
Shenzhen Printing Association chairman, Heidelberg Printing Equipment (Shenzhen) Co., Ltd. general manager Tan Haohui (Tan Haohui collection) also said that due to the sharp drop in U.S. demand, 5% of Shenzhen and the Pearl River Delta printing enterprises whose mainly business is export processing are facing difficulties, as well as the national macro-control policies also lead to the closure of many small and medium enterprises in groups. He also pointed out that many export processing printing enterprises usually signed contracts with overseas customers one year beforehand, but in past year, the exchange rate of RMB has dropped from one U.S. dollar can change to 7.60 RMB in August last year to 6.86 RMB in mid-August this year, the appreciation rate as high as 9.7% which caused many printing companies huge losses.

Signature of orders in advance lead to big loss
Chen Jun, former executive vice general manager of Chinese Joint Printing Business (Guangdong) Co., Ltd‘s and the incumbent general manager of Shenzhen China Business Security Printing Incorporated Corporation also said that copperplate paper, book paper and dull finished art paper which widespread used in printing industry have risen 20% since the fourth quarter of last year, so the cost of production increased substantially. And the appreciation of the RMB also caused the former company loss tens of million dollars.

Against hot money circulation and capital decreased sharply
In addition, he added that China's export tax rebate rate of processing trade dropped from 11% to 5% last year, and developed "Notice on Networking Verification Means of Export Foreign Exchange Settlement “on July 2 this year to against hot money, the extra foreign currency quota of printing enterprises contrast to Customs statistics need to deposit into designated account, printing companies only have to wait the foreign currency quota and apply for the use of it, while, many of the export processing contracts were signed previously , products were already exported ,now also be counted Into this kind of approach which caused many printing companies reduce circulating fund significantly and also lead to the loss of foreign exchange due to the appreciation of the RMB .

The linked chain of closure affected printing enterprises
Tan Haohui said that there are 67,000 SMEs collapsed in the first half of this year and enterprises in the PRD accounted for a large part of it which will inevitably affect the business of printing enterprises. He learned from relevant agencies from Hong Kong that there are 70,000 Hong Kong enterprises in the PRD which had or will face the closure have amounted to 20,000. And Zhou Zhiqiang said that Hong Kong enterprises have closed only in the Pearl River Delta have amounted to 4,000, including Shenzhen, Dongguan and other places in the first half of this year, which mostly are clothing, footwear, textiles and toys enterprises, those printing and packaging enterprises mainly for the business of shoebox and toy box can not keep sustained production, only have to face bankruptcy or closure.
According to the insider of industry, there are several major printing enterprises collapsed only in Shenzhen, such as the bankruptcy of large-scale printing enterprise Blue Star Arts in Shenzhen and large and medium-sized Hong Kong-owned printing enterprises Parkway printing. An anonymous source of Shenzhen Printing Association said that the current period is in business peak period from June to October when the PRD printing enterprises receive overseas Christmas gift packaging printing orders, he believed that there would be a lot of printing enterprises facing closure, streamlining staff or bankruptcy after this peak period.