At a recent print trade fair the usual tales of falling demand, overcapacity and rising raw material costs. People talked about the need for lean manufacturing and environmental accreditations in order to cut costs and gain an advantage over rivals in a hugely competitive market.

    Yet this wasn't Northprint, or any other UK trade show, but the Hong Kong Print and Packaging Fair. Dispelling the widely held image in the West of China being the paragon of growth in the industry where cheap production has led to the outsourcing of large swathes of UK print, the region is not immune to the recession.

    This is particularly true in the export-driven economy of Hong Kong - China's most outward-facing province.

    Wages war

    Hong Kong is one of the world's leading printing hubs where 70% of print is exported. Total print exports from the country reached $2.6bn (£1.6bn) last year. This figure was up on last year, but only by 5% as the growth in the print market slowed and lagged behind the 9% growth rate of the rest of the Chinese economy.

    Rising wages are partly to blame for a slowdown in growth. Much of the print that is exported from Hong Kong is manufactured on mainland China, where wages have been rising by double digits on the east coast, in particular in the industrial heartland of Guangdong, just a few miles across the South China Sea from Hong Kong.

    As a result, overheads for Chinese printers are rising and radical steps are being taken to mitigate this. Starlite Holdings, one of China's biggest printers with a turnover of HK$789m (£62.7m), recently moved a large part of its operations further inland in order to capitalise on cheaper labour costs.

    Richard Lim, executive director of Starlite Holdings, says: "Wages in parts of China have doubled in the past four years. We moved some factories inland where wages are half that of those on the east coast and are now benefiting from doing so."

    Starlite has also adopted the principles of lean manufacturing - a relatively new concept in the South East Asia, but one that is winning fans.

    However, Lim adds that China is still a competitive market in comparison to other countries. "It has given a lot of value to overseas companies. Overheads costs are rising, but it is still competitive," he adds. 

    The expectation of Western customers is one of the great challenges facing print companies in Hong Kong. One printer, who asked not to be named but works on behalf of several UK publishers, said Western buyers wanted the best of both worlds.

    "We are expected to bring in the best environmental accreditations at the same time as reducing our costs," he said. "Our margins are being driven further down by buyers with an unrealistic impression of manufacturing here in the modern day."

    Going green

    Despite this, printers in China are increasingly adopting more environmentally friendly practices and many of the discussions at the Hong Kong show reflected this change in attitude, with seminars entitled ‘Going green - the new direction for business development' and ‘Latest trends in green printing'.

    Edward Yeung, chairman of China's equivalent to the BPIF, the Graphic Arts Association of Hong Kong, says: "Printers are increasingly responding to buyers' concerns about the environment; recycling materials and gaining FSC and PEFC accreditations."

    As in the UK, printers in the region see the environment as an opportunity. Philip Wong, council member of the Hong Kong Trade Development Council, which organised the fair, says Hong Kong must exploit developments to stay ahead. "We must respond to the green global trend and lead the way to stay competitive."

    The output from the region is also changing. A few years ago, long-run colour hardback books would have dominated the stands of printers at the fair. Today, the focus is on niche finishing and security printing with RFID, a key element of much of the printed products on display.

    Niche markets

    Companies such as Shanghai Security Printing are pioneering new methods in security print. The company has a range of ISO accreditions, including 9001 and 14001, and develops anti-forgery technology. It is just one of a host of companies moving into niche printing sectors in order to retain its competitive edge.

    Printing in Hong Kong is still heavily geared to the export market, despite the rise of the domestic economy in China. Lim says Starlite is targeting an even spread of exports - a third going to Europe, the US and China - although he admits it will take time to achieve that.

    Yeung believes the domestic market is beginning to take hold, albeit slowly. He says: "The domestic market is getting stronger and demand is increasing locally, but it's not enough to offset the current decline in Western demand."

    The growth of domestic demand will, in time, offset a decline in the West, but for now the Chinese print industry is rapidly adapting to the suppressed Western demand, rising overheads and the need to be more environmentally aware to win contracts.