A Glimpse of the World Through the Industry’s Eyes
- By Raegen Pietrucha
- Jul 01, 2012
As we all gear up for World Expo, what could be more appropriate than giving some attention to that first half of our show’s name — “world” — and finding out what’s going on around it? We hear a lot about the Chinese market, but what about the rest of the world? Remanufacturers are popping up all across the globe — some of whom will be proudly representing their countries at our show. Here are some of the global experiences in the industry thus far, which you’ll be able to learn more about firsthand from our international attendees this month.
It all begins with the print device ...
Although many in the U.S. currently fear the decline in print, thinking one day our country may be a paperless one, the fact of the matter is that printers and copiers live happily on every continent of the globe, allowing people to disseminate information and communicate with each other easily. “If there is one industry which is truly global, it is the printer and copier technology (one),” said Jeevanjot Kumedan, former managing editor of Recharge India. The only differences to be observed in it at this point seem to be with respect to which devices get distributed where and when. OEMs generally sell specific devices to a single country or an entire geographical region based on the segmentation character of the region, noted Nikolai Yakimchuk, editor of RechargEast. And OEMs at times distribute the same devices we in the U.S. have elsewhere ... but years after they were originally released in our market. For instance, many printers no longer on the market here or in other developed countries are still in use in Brazil, indicated Flavio Oliveira, international public relations consultant and industry journalist.
Naturally, if print devices differ depending on where a person finds him or herself in the world, so will the consumables required by those devices, presenting a variety of opportunities specific to the myriad aftermarkets. All “entry-level monochrome and color cartridges” are popular to remanufacture in India, Kumedan indicated. Remans for 20-45-ppm laser printers/MFPs by HP, Samsung and Brother as well as low-cost (under $100) inkjet printers by HP, Canon and Epson are most popular in Central and Eastern Europe as well as Russia, Yakimchuk said. Since HP, Canon, Xerox, Epson, Minolta and Lenovo print devices are most popular in Brazil, so are the remanufactured cartridges associated with these machines, Oliveira said.
Challenges industry siblings face
Knowing these “big names” are dominating global markets as well as our domestic one isn’t terribly surprising, but Oliveira mentioned an interesting problem he’s witnessed in Brazil that’s occurring not because of the manufacturers who are most popular there, but the models they’re releasing to that market. It is the outdated models that familiar OEMs are sending to Brazil, which presents unique challenges to remanufacturers there trying to complement the devices with their consumables. “Most of the things I know that we need in the aftermarket come from China,” Oliveira said, “(but) I’ve noticed ... (that) there are many Asian manufacturers that have been struggling to manufacture the toners we need in Brazil because we have many, many, many old printers ... still in use all around the country, ... (and) many Chinese producers that produce aftermarket products make their products by European and USA standards.”
This has contributed (at least in part) to the success of clone cartridges in Brazil — one of the biggest challenges remanufacturers here and beyond face. “I think the most popular product (in the industry) — the one that’s really selling everywhere — is the generic cartridge,” Oliveira said, which is raising red flags for aftermarkets around the globe. “Local companies, especially remanufacturers, are concerned with the invasion of compatible products from Asia,” Yakimchuk said — and rightfully so. “Locally remanufactured products cost more and can hardly compete with new compatible products. The dilemma is whether to dump the expensive refilling machinery and start reselling products from Asia or keep the local production running.” Along with financial conundrums, global markets also have to contend with legal battles similar to the ones the States face. “Patent infringement litigation along with infrastructure expansion ... are the two major concerns of the industry globally,” Kumedan said. But while the aftermarket spends time working hard to find legitimate solutions to these dilemmas, the clone producers are throwing all caution to the wind and taking market share away from remanufacturers with their products.
However, the global aftermarket knows it’s wise in the long run to not only invest R&D time and resources to avoid infringing OEM patents, but invent products of its own to generate additional income as well. It is well-known that aftermarket inks are often better than the OEMs’, Oliveira said, and several companies have patented products in Brazil and the U.S. to improve remanufacturing processes themselves. One such example of the latter is Parai Innovative Solutions’ vacuum technology, which prevents inkjet cartridge leaking. Oliveira also pointed to Parai’s Toner Station and Master Ink’s Cyclone Machine, which, by keeping toxic toner confined inside during the remanufacturing process, make recycling laser cartridges much more environmentally and employee-friendly.
Ultimately, though, price — not the sustainable nature of remanufactured cartridges — is still the biggest motivating factor enticing consumers to buy these products in Brazil, India, Eastern Europe and Russia — and remanufacturers in those places know it, just as they know that “more developed countries ... are really (considering) the questions of sustainability, of really saving the environment, even if sometimes — at least in Europe — you may even pay a bit more to have a remanufactured cartridge than some generic cartridge,” Oliveira said. Therefore, educating consumers on the other benefits of recycled cartridges has become a goal for these aftermarkets. “(Consumers) really go for the price, and I think because of that, people are not getting that educated,” Oliveira said. “The main (purposes) of using remanufactured products (are) to save the environment, to generate less waste.” Kumedan agreed. And she believes educating consumers will pay off in a big way not only for the environment, but for aftermarket business as well. “The foremost concern is lack of awareness — or rather rampant misinformation — about ... remanufactured consumables,” she said. “OEMs blatantly run down remanufactured products in print and television advertisements without being challenged. To bring home to the consumers the advantages that remanufactured consumables have over the OEMs’ is a big challenge, ... (but) I am sure once the advantages of aftermarket consumables — such as green benefits as well as quality assurance — are made obvious to the government functionaries, it can throw open a huge opportunity for the remanufacturing industry.”
And as if all these obstacles remanufacturers around the world face aren’t enough, the global recession has had a huge impact on business too. Yakimchuk has made some disconcerting observations about changing consumer habits in relation to tough economic times: “With the economic crisis pretty fresh in their minds, local users are now more careful than ever about their business, operational expenses and hard costs – including printing. On one hand, it provides (the) grounds to believe more users (will be) converted to ... alternative supplies. On the other hand, even if converted to buy (aftermarket) supplies, both corporate and individual users tend to print less than before; typical yearly growth rates are just 1-2 percent, ... not 8-10 percent as (they were) six to seven years ago.” The good news is, Eastern Europe and Russia do business very much on a local level, he indicated, relying on reputation and word-of-mouth due to a variety of governments, languages and customs that create a high degree of fragmentation among the countries, which is to the regions’ advantage.
The bad news is, however, that consumer behavior isn’t the only behavior that’s changed with the recession. “With this decreased volume eating up ... their market share, OEM companies (are organizing) costly campaigns, which are not aiming at new customer base acquisition, but rather at retention of the existing customer,” he said. “Not (being) able to match up (to) the OEMs’ (standards) in advertising, local industry companies hope that the final service cost — which is much lower for the aftermarket — will remain the main (focus) in purchase decision-making for local users. For now this point is strong in (the) price-sensitive markets of Eastern Europe and Russia. Gradually, (however), with the disappearance of this advantage as the population’s wealth grows, this benefit may fade away.” Hopefully, these aftermarkets will continue to find ways to maintain their viability, though, and prevail.
Who’s on top of the world right now?
Thankfully, remanufacturers are still doing well for themselves, even in spite of the global and regional challenges they face. The U.S. and Chinese markets are still very popular, Kumedan said. Ink and component aftermarket businesses are particularly strong in India and Korea, Oliveira noted. In Europe, Polish, Czech and Hungarian remanufacturers seem to be prospering the most, Yakimchuk added. What are the ingredients contributing to these countries’ success? Government policies that support recycled products, growing public awareness about the industry, better-quality products, strong technical education bases, access to raw materials, and low labor prices were among the reasons the three stated.
Will these countries remain prominent, though? They’re certainly going to try. MPS, for example, is sprouting up in emerging markets as “aftermarket companies seek to differentiate their business models” there, Yakimchuk noted. “Coupled with inexpensive supplies, MPS is a very lucrative market. ... The first steps have (already) been made with companies venturing into this area.” One example of this is the recent induction of ARTI, which began offering MPS in Russia in 2008, as the first Russian company to join the Managed Print Services Association (MPSA). Kumedan believes “another avenue to (pursue) is ... infrastructure development, like any other industry,” to stay competitive. She is hopeful about the future of India’s remanufacturers as well as other up-and-coming aftermarkets, though she believes change is inevitable. “The current markets will definitely stay popular, as printing is high in these places,” she said, “but they will saturate, consolidate and remain stable, ... (and) the popular producers may change over a period of time.” Oliveira believes there will be a continuing dispersion of the aftermarket, and success will be divided among several markets instead of belonging to two or three major players. “The last reports from the World Bank from 2012 ... mention that in 10 years, 20 years, ... it’s going to be a lot of powers: USA, Canada, Europe, Brazil, Russia, South Africa, South Korea, China, India, Indonesia,” he said. “I think that this development is going to continue ... because at least in cases like South Africa, Brazil, Russia, India and China, we have a lot of land to grow, places to grow, to construct, to build, to plant, and there are many, many possibilities.”
If Oliveira is correct, whom should we be keeping an eye out for in the aftermarket’s crystal ball? “I would say South Africa, ... South Korea and Indonesia are (a few) countries that we’re going to hear a lot about ... in days to come,” Oliveira said. “I have realized in my latest research that they’re really blooming. Indonesia has 300 million people. I never imagined that there were so many people. And they have many, many forests; they have a lot of things to sell to the world; and they are really growing in silence.” Which other fresh faces will join the current ranks of the aftermarket around the globe, and what will they have to offer it? Only time will tell.
This article originally appeared in the July 2012 issue of Recharger.