22 Dec 2017
Stationery Industry in Hong Kong
- 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, demand for stationery featuring licensed characters of popular TV shows, cartoons, movies and mobile phone games sustains.
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
Hong Kong stationery exports showed a mild recovery after a 9% drop in 2015, increasing modestly by 1% in 2016 and 4% year-on-year in the first 10 months of 2017. The Chinese mainland was the largest market, accounting for 52.1% of the total in January-October 2017. Other major markets include the EU and the US, with a combined share of 22.3% during the period. Sales to ASEAN have seen strong growth in recent years, bringing its market share up from 7% in 2015 to 8.5% in January-October 2017.
Items under SITC 59229, prepared glues & other adhesives, are the major stationery exports of Hong Kong. This category made up 47.1% of total exports in January-October 2017. Other major stationery exports include pens, markers, sliding pencils and holders (SITC 89521; 8.8% of total exports), and paper box containing assortment of paper stationery (SITC 64223; 7.8%).
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 expanding into the retail distribution sector of the mainland and Southeast Asian countries.
Home and small 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.
Marketing and promotion efforts usually include advertising in related industrial publications and through participating in exhibitions. 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:
In developed markets, selling stationery has become more than the seasonal, back-to-school business. The widespread use of computers, smart phones and tablets has increased the sales of IT related products. There is a sustained demand for computer accessories such as USB flash drives, linking up traditional wholesalers with IT specialists.
Technology developments have also affected the traditional stationery business. For example, traditional writing instruments such as ballpoint pens are of lesser use today as people have switched to communicate with email or social media. People are also getting more used to type or record with their laptops and smartphones on hand when needed, rather than to write on papers. Responding to the trend, manufacturers have produced traditional stationery as gift and in terms of design, offering consumers more stylish alternatives, rather than the mainstream gold, silver or lacquer finishes. On the other hand, the popularity of scanners, high quality printers and specialty paper has also contributed to the rising trend of customised products.
In most developing countries, however, stationery is still a necessity as people are less equipped with electronic devices. The demand for all types of stationery will increase moderately with population growth and increased literacy in general. As these customers tend to be price sensitive, reducing price with mass production of similar products will continue to be the main strategy of most companies.
Apparently, 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.
Under the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA), the mainland has given 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 is 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 here.
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.
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, mouse pads, printer inks and USB devices. Traditional stationery items are also modified or presented as computer accessories.
Stationery sets remain popular. The contents of a set varies according to manufacturers but items are typically designed in a consistent look and style, and packed securely in place within the case, which may be for personal use or for giving as a gift.
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, especially in developed countries. Green office products, including recycled paper, pens, printer cartridges and office furniture, are gaining popularity, thanks to the advancement in technology and manufacturing process that lower the cost in producing recyclable stationeries. For example, there is an increased use of papers that are certified by the Forest Stewardship Council (FSC). FSC certification ensures that papers come from responsibly managed forests which indicate a high level of environmental and social responsibility from forest to manufacturer to merchant.
There is also a sustained demand for stationery featuring licensed characters of popular TV shows, cartoons, movies, and even mobile games. Global retails sales of licensed merchandise amounted to US$262.9 billion in 2016, up 4.4% last year, according to the International Licensing Industry Merchandisers’ Association (LIMA). Among the categories, entertainment/character licensing was the top licensing property type, accounting for 45% of the global licensing market.
 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.