The competition on brand in stationery market

President of GuangBo Group   Mr. WangLipin

Though many entrepreneurs look down on the stationery trade, the stationery trade has been the most perfect trade with the most rapid development in Chinese light industry. According to incomplete statistics, Chinese stationery market has the capacity of more than 100 billion RMB, and it increases by more than 10% annually in recent years. The economic development and increase of purchase power of corporations far accelerate the development of stationery trade. Many large foreign-funded companies and distributors pour into China because of splendid future of consumer market of stationery.

It took the stationery trade more than 20 years to change from the seller’s market of traditional planned economy to purchaser’s market of market economy. There were great changes in production and operation ideals. There were few of companies for stationery in the early days of the development, many products depending on import and the demand continually increasing. With the development of national economy, the stationery trade changed from simple consumption over the past years to all-round consumption now, and the demand to stationery of companies and individuals got rape more and more. From focusing on price and quality to brand, the stationery trade is lying in the stage of great change.

A few days ago, a large purchaser came to China to purchase notebooks used for Iraqi students that worth more than 16 million yuan. In a few large-scale companies of the country, GuangBo Group finally won the bid by comprehensive assessment conducted by the delegation of the purchaser. “The reason is”, the representative of delegation said with fluent Chinese: “the brand of “GuangBo”is the representative of Chinese stationery trade in US, and Americans very appreciate the albums and notebooks produced by the group. Moreover, it seems that only GuangBo Group has ability to produce high-quality products in such short time.” Besides, such large international purchasers as Disney, wal-mart and Carrefour incline to purchasing the products with well-known brands.

The direction of development of the stationery trade

A trade is born because of great profits and it must undergo beginning stage, competitive stage and rape stage. It marks the trade rape when the market competition is rape and the profits of the trade are as stable and much as other trades. This is the law of the development of a trade and the way of development of stationery trade.

What controls the development of stationery trade? The answer is consumers. Whether manufacturer, distributors or retailers must adjust their production and marketing strategies according to different demand of consumers in different period. If not, it is impossible of them to succeed. The demand of consumers changes continually the way of sales.

At the professional point, the stationery trade formed in the late 1980s and the early 1990s. GuangBo Group was born in 1992 for meeting the change and development of the age. Formerly, the production and sales of stationery were planned by the central government. That is the distributive department of general store distributed the stationery to the first-, second- and third- class culture station of county. The trade hardly develops under the system.

With the opening up and reform to the outside world deepening, many foreign-funded companies poured into middle and large cities in costal area and brought about many their practices of consumption on culture, which affected the demand and consumption of home companies and stimulating the changes of consumer structure. Some developed areas came the special shops for stationery such as in HaiDian district of BeiJing and ShenZhen in GuangDong province. This time, the trade starts new development again.

There were few of companies for stationery in the early days of the development, many products depending on import and the demand continually increasing. With the development of national economy, the stationery trade changed from simple consumption in the past years to all-round consumption now, and the demand to stationery of companies and individuals got rape more and more.

If the development of the trade is divided into the beginning stage, the competitive stage and the rape stage, now the stationery trade is lying in the late of competitive stage- that is in brand age. And the competition ways change from single price competition to brand competition in service, management and shopping environment. Facing the stationery with various brands, the consumers can take more and more choices, and the foreign competitors pouring into home market will make the competition increasing and cruel.

Now, the five characteristics of the development of the stationery trade

The first, large potential market and increasing purchase power. There are now elementary and middle school students of 190 million, high school students and college students of 40 million adult students of 5 million and leaders of companies and institutes of 34 million. Because the social development requires further strength of cultural and educational qualities of citizens, and massive increase of education investment, there is broad consumer market in stationery trade.

The second, multi-line and multi-level consumer structure for stationery has been formed and develops to high quality.

The third, with the development of computer net technology, the traditional ways of work and study take new changes.

The forth, the foreign-funded companies has gone into retailing in the stage of the circulation of commodities and develop rapidly in electronic business. Last year, the flagship stores of an international chain store for stationery opened in ShangHai, which aggravates further the brand competition.

The fifth, the purchase of government expands from on trial to general. Such expensive stationery as printer and fax will be contained the purchase scale of government as well as common stationery.

With the special store for stationery and special market rape, the influence of distribution market is declining. This requires further improvement of management and services. The middle and high-grade products with well-known brand will be the mainstream of consumption. Besides, with the strength of the sense of environmental-protection, the stationery made of nonpoisonous and regenerated materials will be the mainstream of consumption.

 

 

The fence against the development of the stationery trade

As a rapid developing light industry, the stationery trade plays a more and more important role in international market. Every year, the home companies that join the stationery fairs and products of light industry exhibitions at home and abroad are no less than 1000, and the stationery made in China shows up to the world with colorful varieties. According to statistics, there are nearly 5000 special companies for writing materials in the country and about 3000 companies for stationery, among them 10% is the companies with the sales volume of 10 million yuan. The traditional and related stationery are still the main products of the home companies because of low domestic economy, cheap labor force and weak competition. The traditional stationery has still massive consuming market in which the traditional stationery exists.

However, home stationery trade walks inevitably in the road of vicious competition in development. The lack of order norm, single production line, competition with low price and severe waste of resource have become the fence of the development of stationery trade that seriously limits and prevents the healthy development of domestic new brand of stationery.

Several disadvantaged factors

The first, single product structure and small scale

Such characteristics as the trade covering massive scale, lack of technology, low cost, little investment and much return and massive market result in many middle-scale and small companies investing in stationery trade, including not only companies for notebook, pen, album and cabinet for file but also companies for glue, paper clip and plastic ruler. Above 40% of home companies have no capital of 5 million yuan and many companies only have single product and have difficulty to develop two or more kinds, which severely prevents the development of profession and brand of the stationery trade. The group develops its products to professional notebook, album, notebook and article for travel while does its best at notebook, and now has formed 6 series of 1300 kinds of products.

The second, the cooperation with OEM in the lack of leading industry with well-known brand

Now most of home companies for stationery produce by the way of OEM that is the group get orders to produce stationery and then label on its products the well-known brand belonging a well-known company for stationery. Though it is necessary for those companies to accumulate effectively the capital and experiences by the production style in the beginning stage of the stationery trade, and GuangBo Group also went through the road “that makes wedding garment for others” in the beginning stage of the stationery trade, now is the age that a host of heroes in stationery trade rise and “big fishes eat small fishes”. The companies that only process products are probably gone and be merged. The birth and emerge of the brand of “GuangBo”go through for a long time. When the president of the group went to participate a stationery exhibition in Germany, he found in surprise that the albums produced by GuangBo Group were fixed on another well-known brand and their prices increased by 300% than original price. This shocked us and we at once registered the trademark of “GuangBo” back the country. Last year, a large company for stationery based in Europe was willing to purchase the trademark of “GuangBo” with millions of RMB. The president refused the request because he knew that the brand not only means millions of RMB but also the existence of the group in future and the “permit” of its development.

The third, the vicious competition in lack of the norm of the stationery trade.

There is no any real official stationery trade association now in the country, to some extent, which results in the aggravation of disorder competition. Now, many private enterprises register companies with tens of thousands to produce stationery and compete with large companies at sharply low prices, even they produce substandard and fake products serving as excellent and real products. Some small-scale companies sold their products such as notebooks and books for keeping accounts at lower prices than the price of waste paper in commodities fair, which seriously affects and restrains the development of home brands in international market. It is reported that NingBo city is planning to establish stationery trade association, which to some extent plays a vital role for NingBo to be the base of stationery trade.

The forth, extensive international culture of stationery trade

Now, because most of the companies for stationery connect with international market, there are a lot of slogans of “walk out of the country”. But what is the fact? As we all know, because stationery trade is the light industry of low cost of production and low technology and only by high attached-value brand can the company get the maximum profits, many home companies has been the first cooperative partners with well-known brand of OEM in the world. So the internationalization of home stationery trade is a kind of extensive international culture.

Before the entry to WTO, almost home middle- and large-scale companies shouted shockingly that “wolfs came in”, but the practices indicated in a year that the “wolfs” were not as frightened as we imagined. On the other hand, when the gate of customs opened, come in not the wolf but the flood, which the stationery trade can deeply feel in the practice in a year because only the flood can make home many companies for stationery improve. Tens of well-known companies for stationery all have gone through the test of international market. However, it needs a process to really head for internationalization.

 

The stationery trade breaking out of the encirclement

Economists think that the most essential change of Chinese economy in 2003 is that as the biggest developing market in the world, the change of the economy of Chinese society is increasing and the market power is being strengthening, which add much colorful to the mark of “made in China”.

Under the pattern of global economic integration, the capital always shifts to the countries and areas with low cost of production. China has surpassed U.S. to be the country attracting the most direct overseas investment. Many of transnational enterprises based in U.S. move their factories to China, which makes the middle- and small-scale companies feel in crisis. According to John. Boyli, the manufacturer for paper boxes in Baltimore, his biggest customer moves his company to China, and he lose not only him but also 30% of his annual sales volume of 10 million USD. It is certain that now China is not as same as before. Formerly, Europeans even Americans always emphasized that China should adjust itself to appropriate the globalization, however, now, U.S. also faces the challenge of globalization. Thus, for a great number of Chinese companies, this is not only the opportunity but also challenge, if they can’t take the opportunity, they will lose much; if they can’t face the challenge, they will be eliminated.

Taking opportunity, facing challenge. The home stationery trade should actively close to international market and break out the encirclement of by working hard.

The first, setting up industrial circle of stationery

It has formed two stationery industry bases that is ChangJiang River Delta with NingBo as leading city, another ZhuJiang River Delta with ShanTou as leading city after a long-term development in the country.  NingBo has such well-known stationery companies as guangbo, Deli, BinBin and Befa, while QiXin and Yafu in ShanTou. However, there are many small-scale companies in and out of the two bases that have no brand and pollution treatment, some even produce by hands. How to contain these companies in one, two or more large industrial bases to forming the bloc of stationery trade with common development and progress in order to compete with large transnational stationery flagships and to gain more profits.

Many of transnational companies look China as their “production base”. Now, ZheJiang tries its best to be in line with the status of “world factory”. Almost the half of the various stationery that are sold well in the world every year are made in China, among them most of products are produced in ZheJiang. NingBo is planning to set up the stationery trade association to actively develop large-scale stationery industrial base. ShanTou also creates professional stationery production base with nearly 10 billion yuan.

The stationery trade has many related industrial chains. For instance, paper products not only need much supply of the good-quality raw materials at low prices including the low cost of transportation but also need to set up entire printing and package industrial chains. Because before entered the stationery trade, GuangBo Group engaged in color printing and package, then it started to produce paper products. Now, the group has had nearly 30 sets of printing equipment and has been the biggest printing press in ZheJiang province. He can meet the demand of printing the books for accounting and notebooks that will be sold in home and overseas markets.

Setting up stationery industrial circle under the global economic integration is the key that Chinese stationery industry develops to mass-production and brand-production.

The second, setting up trade norm, establishing net-style association

Though a part of home companies only restrain the concept of “made in China” in the production style of OEM or ODM, some entrepreneurs who put his eyes on global economic development are doing their best to establish their brands in order to get rid of the restraint of the processing and semi-processing production style.

The writer thinks that because most of the private enterprises and joint ventures which comprise the stationery trade have inadequacies in scale and professional level, through making trade norm, they can not only protect intellectual property rights and avoid vicious competition but also establish flagship-style development through rational division of labor and profits collocation. The mode of “in America-style flagship, purchase all that we need” can be substituted with the home stationery net-style association. Of course, though this is just a dream, we can establish different-level cooperation of collocation at least. A few days ago, GuangBo Group produced 1200 notebooks for Iraqi students and cooperated with other companies for schoolbags and for ballpoint pens, thus the whole sets of stationery for students can be delivered to Iraq. To some extent, this cooperation strengthens the ability of competition of the home companies for stationery.

At this point, the economist, ZhongPengrong, puts forward an interesting theory that merits making use of: the economy of ZheJiang province is “dog economy”. He ever described a scene that in animal world, three dogs attacked a big zebra, the first dog bit the zebra’s nose, the second one bit zebra’s rear and the third one its leg, a long time passed when the zebra died, and then the three dogs eat the big zebra. The secret is that definite division of labor and close cooperation. However, the “dog economy” brings about a direct inadequacy that without themselves brands and only depending on the products of the light industry produced by the workers with low wages will causes indefinite restraint system and the lack of the path that step down from market. Thus, such behaviors as low cost of production, scamp work and stint material, lax quality supervision and management, more money with less labor, the products with the same structure, low-grade technology and earning more money in short term make the development of the private economy in ZheJiang province face severe test.

The private economy with WenZhou as leading city has opened a new mode for us which ever provides the “made in WenZhou” with tremendous business opportunity. Now, what we need is to do our best at the job of market operation and deepening brand on the basis of using the mode for reference.

The third, creating global brand culture

As for economic globalization, some people say that it is trade globalization or capital globalization. In fact, these are superficial and these result from the adjustment of global economic structure. If we can’t master it, we will lose the preceding opportunity. Only do we put the denotation of enterprise culture in the adjustment of global economic structure to continually adjust enterprise system and industrial structure, we can make our brand global. KFC runs not only snack store but also a kind of introduced and mainstreamed restaurant culture. The development of stationery trade, for it is restrained by itself character, is that “brand plus market plus quality”.

The home stationery companies face much pressure including the vicious competition at low price from the same trade in the country and continual influence from international capital in the two years. For instance, the OFFICEI, CEPUMA has firstly and successively opened their chain branches in ShangHai, GuangZhou and other cities. The development tendency of the economic globalization requires the Chinese companies for stationery to select their positions in new economic pattern at the point of world division of labor and relative cost advantage. Chinese relative advantages are the increasing mature processing ability and a great number of cheap labor and mature and advanced management ability suitable for productivity.

If we want to do our best at the job of global operation of the stationery trade, we must do our best at the job of the infiltration of the denotation of stationery brand culture into the world. The infiltration is the real culture amalgamation and infiltration but not “borrowing theory” and “book worship”. As transnational groups enter China, they have to go through a conflict period. GuangBo Group consistently introduces the ideal of “walking out of the country, employing foreign people, earn foreign currency”. Though this is a simple slogan, this is the key that GuangBo Group connects with international market at a distance of 0 meter and carries out the stationery globalization.

In 1997, GuangBo Group that had showed the brand advantage of “GuangBo” stationery took the good opportunity of the close trade connection between HongKong and mainland after HongKong returned to her homeland, opened the GuangBo Asian (HongKong) Co., Ltd, covering South-East Asia consumer market with Singapore, Malaysia and Thailand as the leading cities. Middle-East area is not only the biggest base for petrol output in the world but also one of major distribution center for all stationery in the world. Here is the Heaven of Arabs, and has different consuming tendency with that of other countries and areas. In 1999, the group opened subsidiary in Dubai of United Arab Emirates, which establishes good foundation for the group’s development in Middle-East area. In the first half year of 2003, GuangBo Group took the business opportunity of reconstruction of Iraq after the war and got more orders that increase by 320% over the same period of last year. U.S. is one of the biggest consuming countries for stationery in the world. The group opened the GuangBo (U.S.) Co., Ltd that paves the way of overall entering America market for the group.

What is be worth mentioning is that though many enterprises also open subsidiaries in overseas, what is more important is that we employ the local people work for us who are more familiar to the attribution of products they need than us. For instance, Mr. Steve Temkin, the general manager of GuangBo (U.S.) Co., Ltd, was the professional in stationery marketing in America market. He realized that the market for stationery of U.S. is developing towards two polarities after GuangBo stationery products enter in America market. In the new century, on the hand, advanced technology injects new motivation for the manufacture and design of stationery, on the other hand, market is demanding more the products that can remind us of the past time and can arouse us beautiful feelings. The multi-element kind of stationery and paper products, new design and new marketing channel make the businessmen who engage in stationery trade has filled confidence for the splendid future.

We think that creating a global brand is the most for those enterprises for stationery that devote themselves to international development by all-round and successful infiltration of brand, the distinguished group and culture.

The forth, the global competition and cooperation of “walking towards the outside world” and “introduction from the outside world”

The professional and different-style design and manufacture is the major factors if we want to develop our company towards larger, more powerful and more professional. However, how to compete and cooperate with international manufacturers and purchasers for stationery still requires us to learn from and grope more perfect way of development.

Ideal decides thoughts, thoughts decide the way out for stationery trade. The way out for stationery trade lies in the close combination between “walking towards the outside world” and “introduction from the outside world”, and gathering various resources to pragmatic keep forging ahead, and doing its best to seek and expand itself relative advantages and development space, and expanding with low cost through introduction from the outside world and unifying the home companies and complementing each other in advantages, unifying between large company and another large one and from competition with competitors to competition and cooperation on the basis of strengthening traditional products.

Analyzing the problems at the point of globalization form a basic basis for our decision to industrial development. Selecting an industry or investing a project, we should think the feasibility of projects from the demand and supply of the markets at home and abroad and put our eyes on international division of labor. This kind of global thought is not a “plane” concept about “entering to international market” but a “solid” concept. That is not only to deliver home products to overseas and import products from overseas but also to select production base and cooperative partners at the global point.

The “walking towards the outside world” is to put forward the global output and infiltration of the products, culture and brand and let GuangBo stationery, as a code of “made in China”, shows on the counters of transnational purchasers and various big exhibitions in the world. In the beginning of 1997, GuangBo Group entered Europe market by a company based in England, and overall entered such major countries as Russia, Italy, England, Germany, France, Poland and Israel after got the export authority of independence in management in 1998. GuangBo established not only general agencies in Finland, Sweden, Norway and Iceland but also general distribution institutions of “Newell”, “Hawa” and “Carrefour” in France and Germany. The international purchasing giants gradually appreciate the products with the brand of “GuangBo” because of their high quality, new style and low price. In 1999, Carrefour connected with the group through global stationery net and selected the group as its major supplier in home market by the bid in Internet. Now, the stationery with the brand of “GuangBo” has overall entered such international and home large business net and supermarkets as Metro, Carrefour and Wal-mart.

GuangBo Group actively participated the bid in Internet under the cooperation with its American subsidiary for enter Wal-mart and finally win the bid with its new design, high quality and low price. What is worth mentioning was that the participators included Japanese products with the brand of “Kokuyo” and the products with “Wal-mart” produced by Wal-mart through OEM.

Besides, we have to speak of Disney. In fact, Disney creates a business tale. White-Disney industrial chain has four industries including its film industry, broadcast industry including American broadcast company and ESPN, four theme park and Internet business. We were successively assessed for three times and finally enter Disney.

Creating net-chain-style cooperation of home stationery and cooperation and exchange with international companies for stationery is the only road to the development of globalization and brand of Chinese stationery industry. Therefore, only do we completely and systematically predict the development of global economic integration, we can development and take things calmly in the market with continual change.