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Where has all the printing gone?
Jun 28 2013 10:07:48 , 2865

Leo Paper's vast Hesham facility employs 18,000 people and produces around nine million books every month

On a recent trip to China we visited Leo Paper, one of the country's biggest printing companies. Since 2003 Leo Paper has grown phenomenally: it's a model for Chinese printing and its success may explain why European and American printing industries are suffering such declines.

Leo Paper's printing plant covers 2.5 million sq ft (232,257sq m) in Heshan in southern China, about an hour from Hong Kong. The factory produces huge volumes of work for European and US print buyers, mostly books and packaging. In 2003, Leo Paper was the first Chinese printer to visit the Frankfurt Book Fair in order to gain exposure to European publishers. The investment has paid off handsomely.

Trade books covering everything from children's interests to cooking are Leo Paper's staple fare. Leo prints nine million books per month; daily output averages 300,000 copies and at peak times monthly output reaches twelve million copies. Average run lengths for European publishers is 10,000 to 12,000 copies or 5,000 to 7,000 copies for multiple language versions. All of it is exported.

The 90 presses in Heshan are a blend of Heidelberg, Komori and KBA. A Kodak Nexpress is used for proofing. Plates are output to 17 very large-format (VLF) platesetters, mostly Kodak but with Agfa and Fujifilm devices thrown in for good measure. Esko Software Suite handles pre-press, processing 10,000 A4 pages per month and RIPing files for 6,000 VLF plates per day. The whole set up is ISO 12647-2 certified and Leo is also certified for ISO 9001 (quality management), 14001 (environmental management), 14064 (corporate emissions) and 26000 (social responsibility). 18,000 people at the Heshan factory work in two twelve-hour daily shifts. Around 14,000 live on site in purpose built dormitories.

Leo Paper's customers are household names. Sainsbury's uses Leo for book printing and other work. Leo Paper prints 99 percent of Hallmark's cards, plus quantities of packaging for Calvin Klein, Crabtree and Evelyn and numerous booze brands. Leo Paper has considered every angle for its customers, even the environmental one: a Green Harmony Committee is responsible for improving Leo Paper's environmental impact. Many projects have helped Leo's cost base.

Leo is not the only massive printing company in China but it is one of the most successful. It's a private family-owned company set up when Deng Xiaoping started leading China towards a market economy. Leo blossomed following the trip to Frankfurt Book Fair where it invited publishers to come on all-expenses-paid trips to visit the factory. Now 100 percent of Leo Paper's output is exported and its stated goal is 'to be the global leader in the printing communications industry'.

Leo's secret is to work closely with customers to deliver what they want. This means tight partnerships with clients such as Hallmark Cards to invest in technologies that get Leo the business and benefit other customers. The other secret is absolute quality control, hence the bevy of certifications. Leo Paper also has one of the most impressive testing labs we have ever seen, far beyond what one would expect at a printing plant. The lab is used to test substrates and inks, and the effects of light, humidity and temperature extremes on products. All this is to ensure absolute quality control and to guarantee that customer jobs arrive at destinations in perfect condition.

It is easy for printers to complain about losing work to China on the basis of price, however there is another consideration. Leo Paper has invested huge amounts in technology and especially in quality control procedures in order to out-perform Western service providers. Leo has a relatively low cost base, but that is changing as wages in China rise. Environmental regulations such as the Lacey Act in the US and the European Union Timber Regulation (EUTR) require publishers to rethink their printing options. Both regulations require companies to have full and complete information about wood-based raw materials for products placed on the European market.

Leo Paper sources coated wood-free papers from Stora Enso, UPM and Asia Pulp and Paper (APP), a notorious destroyer of Indonesian rainforests. The EUTR requires European companies placing wood-based products on the European market to provide chain of custody certificates and have a due diligence system. Leo's cost base may still be low enough to make the required EUTR effort worth it. However, the EUTR may equally create an opportunity for European printers to woo publishers back. Do European printers have the confidence to take on companies like Leo Paper? Maybe, but they also need to have equivalent quality controls and openness to new investment ideas. That might take rather more.