Lu Lizhe on the Mobile Communication Era: How Printing Can Reshape Its Business Model Through Digitalization

Editor's note: The mobile communication era demands convenient, enjoyable services and makes 'benefits' easier to share than the internet era did. Technology is now acquired in ways beyond imagination; technology suppliers want anyone and everyone to use their technology, while cloud computing has driven network application costs astonishingly low.

Many printing plants see business as tough because of rock-bottom pricing; oversupply—printing press numbers outstrip market demand, and one extra press in a region can move prices; similar quality from any press; digitalization; disappearing product differentiation; and only 'price' remaining as a differentiator, turning the market into a buyer's-market 'red ocean.'

Buffett once said that 'the benefits of digitalization can never be reflected in financial statements.' Is digitalization really to blame for today's difficult printing business? Digitalization can improve production efficiency and eliminate inefficient production methods; it can also enhance service efficiency and create new business models. Even if everyone rejected digitalization, production efficiency would not change, and financial benefits would still belong to only a few 'early birds.' Once latecomers arrive, those early birds can only pass the advantage on to customers.

Successful printing business models all take orders online; all can take orders online; all use the network to serve print customers. They can handle short-run, high-variety work as well as large-volume orders. Most of their customers are end customers, and most business is brought in by salespeople. They provide a printing service that becomes a product once restrictions are added. Only with a business model can a company set its own 'low price.' The network extends reach, orders grow without adding headcount; management becomes efficient, scale expands, product lines increase, yet the process remains unchanged.

To launch a successful business model, first identify inefficiencies, then solve them with appropriate digital technology—in other words, design the business model. Do not offer services you cannot charge for; never do by hand what a computer can do; adopt digital technology suited to the time; limit specifications so production can be automated; lower prices to offset the inconvenience of restrictions; and create scale to reduce overall costs.

New demand does not mean persuading people who do not need printing to print, nor is it merely 'going online to find customers,' and it is certainly not as simple as buying the software systems of Jianhao or Baonuoshi. A new business model is not built in a day, and successful online printing cannot be copied. Any new model should take the 'overall environment' into account.

The internet era is over; we have entered the mobile communication era. This era calls for convenient, enjoyable services and makes 'benefits' easier to share than the internet era did.

Today technology is available beyond imagination. Every technology supplier wants whoever it is to use its technology, and cloud computing has made network applications incredibly cheap. The technologies printing now needs include cloud applications for printing portals, photo albums, and e-books; digitalized business management; and digitalized errors for automatic proofreading.

At present, the domestic printing industry is changing, with these development trends:

1. Total output value is still rising slightly;
2. Business is increasingly concentrated; in Zhejiang last year, 70% of output value was concentrated in 30% of printing plants;
3. Even large printing groups have come out to compete for printing jobs;
4. Many printing plants are still expanding capacity;
5. Within 5-10 years, the number of printing plants is expected to decrease by 30-40%.

According to data from the Printing Industries of America, the number of printing plants in the United States fell by 32% between 1999 and 2009, while printing industry employment fell by 41%.

What the printing industry now faces is this: whatever can be digitalized will certainly be digitalized, and transformation must use digital technologies that fit the overall environment. Therefore, whatever can be digitalized must be digitalized one step earlier than others; inefficient models must be identified, and digitalization must be used to change the printing business model.

——This article is reprinted from China Packaging Network (pack.cn). Original link: http://news.pack.cn/show-361790.html