Strong Showing for China’s Printer Market, But Supply Shortages Emerging

 

According to the latest research from International Data Corporation (IDC), the hardcopy-peripheral (printers, copier/MFPs) market showed recovery in the fourth-quarter 2020 in China, but there may be supply restraints down the road.

IDC’s latest Quarterly Tracking Report on China’s Hardcopy Peripheral Market (Q4 2020), indicates that in the fourth quarter of 2020, China’s hardcopy peripherals market shipped 5.463 million units, an increase of 13.2 percent year-over-year.

Shipments of inkjet printers were 2.023 million, a year-over-year increase of 26.7 percent; shipments of laser printers were 2.838 million, a year-over-year increase of 13.1 percent; and shipments of dot-matrix printers were 602,000, a year-over-year decrease of 16.4 percent.

Supply Constraints

However, IDC cautioned that this year, the overall printer market will enter a complex adjustment period, and supply shortages will affect the entire year. The main reasons for the shortage of supply are as follows:

  • Affected by a fire, the production activities of AKM (Asahi Kasei), a Japanese semiconductor manufacturer and also a major supplier of printer components, suffered heavy losses. There is still uncertainty about whether it can resume supply as soon as possible.
  • Due to the current global chip shortage, the supply of printer chips is also in short supply. In the short term, this situation will continue to affect manufacturers until mid-2021.
  • The COVID-19 pandemic has led to insufficient shipping capacity; a substantial increase in transportation costs; and a slowdown in customs clearance. This will all cause supply problems for manufacturers who need to supply goods through their overseas factories. Therefore, to ensure a stable supply of products is an important challenge facing the printer market in 2021.

Inkjet Printers

Shipments of inkjet printers in the fourth quarter of 2020 in China maintained year-over-year growth. There are three reasons for this difference, according to IDC:

  • In China, the main users of inkjet products are small and mid-size enterprises and some household users, and small and mid-size enterprise demand has been suppressed by the pandemic. The growth of the inkjet market is mainly due to the increase of household users in the consumer market.
  • The prices of some low-end laser products have dropped, so that they are close to or even lower than prices for inkjet products. Therefore, low-end laser products are more competitive in low-level cities.
  • For major manufacturers such as Canon and HP Inc., the focus of their business is mainly on ink-cartridge products. The prices of ink cartridge products are generally lower than pricing for ink-tank printers, and users who purchase printers for the first time tend to choose low-priced printers.

A3 Copier/MFPs

In the fourth quarter in China, the A3 laser copier/MFP continued its growth trend. On the one hand, due to the uncertainty of the pandemic and the impact of the Chinese Spring Festival holiday, manufacturers are advancing sales. On the other hand, some international manufacturers experienced supply shortages in November and December 2020.

Taking into account future price increases and market demand, dealers increased their stockpiles in the fourth quarter. This has promoted the growth of the A3 laser market to a certain extent.

In addition, due to the increase in user demand for color printing, color laser printers contribute more profit growth. Major manufacturers have increased the promotion of color A3 copier/MFPs, resulting in a rapid growth in sales of color A3 copier/MFPs. The IDC research shows that fourth-quarter shipments of A3 color copiers in China increased by 25.7 percent year-over-year, which was much higher than the 8.3 percent year-over-year growth rate for A3 black and white copier/MFPs.

A4 Laser Printers

In the fourth quarter in China, the shortage of A4 laser printers was the most prominent. However, with the gradual stabilization of the pandemic, commercial market demand has recovered. The pandemic in some areas meant the household consumption market has also grown. The strong market demand has highlighted the problem of a supply shortage.

International manufacturers are more affected. Taking into account the risk of product shortages and strong market demand, channels have begun to actively stock up, and manufacturers have to adopt a quantitative supply method to ensure product supply within a certain period of time, according to IDC.

Unlike with international manufacturers, the short-term supply shortage of domestic manufacturers is not obvious, and the supply shortage will appear in the second quarter of 2021. From the current point of view, the overall supply shortage will continue until mid-2021.

Dot-Matrix Printers and VAT Taxes

In December, the China State Administration of Taxation issued the “Announcement on Issues Concerning the Implementation of the Electronic Application of Special Value-Added Tax Invoices among New Taxpayers.” According to IDC, this is a heavy blow for the dot-matrix printer market, and the future dot-matrix printer market size will shrink at an accelerated rate.

IDC believes that although the policies and market environment are not improving, the full implementation of the electronic VAT invoices still faces many obstacles. The digitization of special value-added tax invoices has been promoted relatively quickly in small and mid-size enterprises in pilot cities, but will be slower in low-level cities and underdeveloped regions. In a short period of time, the market demand for dot-matrix printers is still facing downward pressure, and it’s expected that a greater decline will occur after the large-scale implementation of government tax e-commerce.

Ren Mengxue, a senior analyst for the IDC China Printing, Imaging and Document Solutions Research Department, believes that the market will still face greater uncertainty in 2021, and supply shortages will be the biggest challenge facing printer-market growth in the future. Mengxue recommends manufacturers and distributors should be more flexible in formulating production and sales plans for the first half of 2021 to deal with supply shortages.

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