Hong Kong Industry Profiles

• Stationery and office supplies encompass a diverse range of product categories. Glues and adhesives, pens and pencils, as well as paper stationery, constitute the major export categories.

• Apart from producing for OEM customers (including major stationery brand owners of France and Germany), some Hong Kong manufacturers also market their own branded items. Hong Kong companies also accept ODM orders that require substantial design input from suppliers.

• A huge growth area is in offering a comprehensive collection of computer consumables. Traditional stationery items are also modified or presented as computer accessories. On the other hand, luxury stationery has become a key growth market, where there is a rising demand for stationery featuring licensed characters of popular TV shows, cartoons and movies.

Industry Features

Hong Kong's stationery manufacturers offer a wide range of products, including paper stationery, plastics office/school supplies, writing ink, writing utensils, staples, crayons, letter openers, pencil cases, chalk boards, memo boxes, file rings, push pins and adhesives. They are available in a variety of finishes and surfaces, such as chrome (gold, silver or bronze in colour), plastic, imitation leather and genuine leather.

Prepared glues and other adhesives are now dominating the export mix. However, paper stationery remains an important export category of Hong Kong. It consists of exercise books, albums, diaries, sketchbooks, memo pads, registers, account books, receipt books, gift boxes, shopping bags, shipping bags and gift wrapping materials. Gift boxes and shopping bags, which are made for manufacturers or retailers of consumer goods, usually bear company names, logos or advertisements. Some are made for subsequent resale to people for wrapping gifts they have purchased.

In general, ball point pens manufactured in Hong Kong are targeted at the premium market. Most manufacturers rely heavily on imported ink, refills, brass ball points and barrels. Only a few companies make their own refills. Various parts are then assembled in-house. Some also make their own barrels if the design is intended to incorporate a particular function such as LCD time display.

Apart from producing solely for their OEM customers, some Hong Kong exporters also market their own branded items. Hong Kong companies also accept ODM orders that require substantial design input from suppliers.

Performance of Hong Kong's Stationery Exports^

After the 2009 recession, Hong Kong stationery exports increased by 23% in 2010, with exports to most major countries continuing to increase in January-April 2011. The Chinese mainland is the largest market, taking up an increasing market share of 38.6% in 2010 and 40.1% in January-April 2011. The US is now the second largest market, while the EU follows as the third.

Items under SITC 59229, prepared glues & other adhesives, are the major stationery exports of Hong Kong. This category made up 31.1% of total exports in January-Apirl 2011. Other major stationery exports include pens, markers, sliding pencils and holders (SITC 89521; 13.3% of total exports), and registers, account books, order books and receipt books (SITC 64231; 9.5%).

Note: ^ Since offshore trade has not been captured by ordinary trade figures, these numbers do not necessarily reflect the export business managed by Hong Kong companies.

Sales Channels

Products are mostly exported directly by manufacturers, while a portion of them are handled by general trading firms, which may also deal in other kinds of products. In Hong Kong's domestic market, Japanese products dominate the upper end, whereas the lower end is occupied by imports from the Chinese mainland. Hong Kong stationery manufacturers, such as Climax International, are also diversifying to the retail distribution sector of the mainland and Southeast Asian countries.

Home offices are expanding, especially in the US. Superstores and mail order companies are dominating the channels for selling to small offices in the US and increasingly in Europe. In the US, for example, the three largest office-supply chain stores are Staples, Office Depot and OfficeMax. The superstore-type stationery shops will continue to be popular as more suppliers add computer consumables, office equipment and furniture to their product range.

Another new area that stationers are joining is the online market. It is now very easy to purchase stationery suitable for home or office use online. This may mean that smaller stationery shops, without the online facility, may find it more difficult to compete, especially as they cannot carry the same range of products as the larger retailers. However, it is more of a case in developed countries, while in China, store based retail sales are still dominating.

Marketing and promotion efforts usually include advertising in related industrial publications and through participating in exhibitions. In order to expand their business networks, explore market opportunities, and promote product image and brand-names abroad, Hong Kong stationery makers may participate in some well-organised and influential international trade fairs. Since stationery items are very often expensed as souvenirs and gift items, stationery manufacturers and traders usually participate in gift and premium fairs too. Below is a list of some major trade fairs:

Industry Trends

Selling stationery has become more than the seasonal, back-to-school business. The widespread use of computers has increased the sales of IT related products. With more than 75% of US households having a computer in 2010, there is an increasing demand for computer accessories such as disks, mouse pads and disk organizers. Traditional wholesalers may not be able to handle these products as they require technical sales people. There is a trend for traditional wholesalers to link up with IT specialists.

Technology developments have also affected the traditional stationery business. For example, the advent of computer-assisted design has led to the decline of the traditional technical pen business. Manufacturers have responded by expanding into office pens and higher-end writing instruments not only for use, but also as gifts. They aim to offer consumers a style alternative, rather than the mainstream gold, silver or lacquer finishes. The popularity of scanners, high quality printers and specialty paper has also contributed to the rising trend of personal creativity products.

Competition is keen in the stationery industry, which adds onto the price pressure in this sector. Apart from cost cutting measures, such as relocation to less expensive production bases, suppliers need to counter the pressure with innovations, striking designs and attractive colours, and by reaching out to new target groups. Manufacturers are no longer sellers of the products only, but also the design. Increasingly, products are sold together with concepts.

In China, stationery is considered as a necessity, which we can forecast an increase in demand of all types of stationeries in the future along with the growth in population. However, since Chinese customers are very price sensitive, reducing price with mass production of similar products will continue to be the main strategy of most companies. Also, unit price is expected to decrease further since new firms continue to enter the market.

CEPA Provisions

Under the third phase of the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA III), the mainland agreed to give all products of Hong Kong origin, including stationery, tariff-free treatment starting from 1 January 2006. According to the stipulated procedures, products which have no existing CEPA rules of origin can enjoy tariff-free treatment upon applications by local manufacturers and upon the CEPA rule of origins being agreed and met. Non-Hong Kong made stationery are subject to tariff rates up to 25% when entering the mainland.

The promulgated rules of origin for stationery to benefit from CEPA's tariff preference are basically similar to the existing rules governing Hong Kong's exports of these products. Generally speaking, for manufacturing of pens, incorporation of the different parts, identified as the principal processes for the purpose of delineating their origin, must be done in Hong Kong. For stationery manufactured from paper and the like, the principal processes are forming, drying, calendaring and coating, which must be done in Hong Kong. If dying is required after coating, such process must also be done in Hong Kong. Detailed information is available from the following hyperlink:

http://www.tid.gov.hk/english/cepa/tradegoods/files/mainland_2011.pdf.

Trade Measures Affecting Stationery Exports

Some stationery items originating from the Chinese mainland are facing anti-dumping charges from the US and the EU. For example, cased pencils, paint brushes, paper clips and certain paper products such as lined paper and folding gift boxes, etc. are subject to anti-dumping duties by the US, while certain ring binder mechanisms are charged against by the EU. Since most Hong Kong companies are producing on the Chinese mainland, such anti-dumping charges will inevitably affect their business.

There is also a rising concern about product safety. Certain stationery products, such as pens and pencils, are required to meet international safety standards before entering into overseas markets, particularly the US and the EU. Although compliance to the Japanese Industrial Standards (JIS) is not mandatory, Japanese consumers tend to require that stationery and office supplies meet such standards or more stringent ones.

Not only product safety is important, buyers have also started to be concerned about the production process. Ethical manufacturing characterised by fair labour treatment, a healthy work environment, and enforcement of environmental practices are preferred.

Product Trends

The proliferation of computers certainly has an impact on the development of stationery products. A huge growth area is in offering a comprehensive collection of computer consumables including papers, labels, disks, disk storage containers, PC covers, cleaners, mouse pads, printer inks and USB devices. Traditional stationery items are also modified or presented as computer accessories.

On the other hand, luxury stationery has become a key growth market. For example, demand for quality correspondence paper or card is on the rise, as a hand-written card or letter serves as a symbol of care and warmth. Quality materials, such as aluminium, wood and glass, or combination of these with plastic will continue to be popular in the higher-end market.

Stationery sets are gaining popularity. A typical set consists of a plastic ruler, tape measure, retractable paper cutter, tape dispenser, pencil and pencil sharpener, stapler and scissors. All these items are stored in moulded foam so they can stay securely in place within the case. There are also compartments for paper clips, elastic bands and rubbers, which are usually colourful and packed brilliantly, serving to capture the eye of consumers. A sideline product of stationery, which is also a collectable and gift item, is art-stamps. Art stamping has increasingly become a popular hobby in the US and the UK. The trend means a new sales avenue for retail outlets as well as stationers.

Meanwhile, stationery products are becoming more sophisticated, focusing on novelties and items with multiple functions. For example, message pads now come with light displays showing incoming messages and dual time LCD clocks. Manufacturers are also turning out ballpoint pens with multi-functions, incorporating magnifying glasses, needles and threads, torches, or sometimes even USB memory sticks. Many manufacturers have also gone upmarket using genuine leather (instead of plastics) to give their products a high quality look.

Going green has become an important trend for stationery in developed countries such as US. The recycling rate of paper used in US was 63.5% in 2010, with a 105% increase since the 1990. It is mostly due to the advancement in technology and manufacturing process that lower the cost in producing recyclable stationeries. For example, Office Depot now offer products made by 100% recycled material by establishing a new brand called New Leaf Paper.

Therefore, it is not surprising to see that the market of greet card and envelop in the US has been shrinking. One reason is the success of “do not mail” action all around the US. Another important reason would be the increasing convenience in using internet. On the contrary, the Chinese greet card market, increasing by 18% in 2009, grew fastest among all stationery markets. It was due to the massive promotion done by the State Postal Bureau of China, which has now obtained a dominant 50% share of the Chinese greet cards market.

There is also a rising demand for stationery featuring licensed characters of popular TV shows, cartoons and movies, such as Keroro Kunso. The sparkling success of licensed products is expected to continue.