Comline Print 09 Ivanenko Chicago

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Just a quick view on russian printing industry made at international days conference at Print 09 trade show in Chicago USA

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Comline Print 09 Ivanenko Chicago

  1. 1. Alexei Ivanenko Al iI k Comline Group RUSSIA & CIS Group, International Day Conference «Central and Eastern Europe» Central PRINT 09, Chicago September 13, 2009 COMLINE® Russia
  2. 2. Comline Group 17 years of successful experience in running international businesses in Russia and ex-USSR countries: Distributor to the Graphic Arts Industry p y Commercial offset printing shop in Moscow Digital p g printing shops in Moscow, Astana (Kazakhstan) and Minsk g p , ( ) (Belarus) Main focus on Business Development Services for our Clients 40+ commercial and digital print shops built from green field for our Clients staring from business model / strategy development and up to equipment/consumables/service supply 7000 companies involved into the printing business became our Clients COMLINE® Russia
  3. 3. Agenda 1. 1 Current state of the Russian economy 2. How economic issues influence the Russian printing industry 3. Russian printing industry overview 4. Opportunities? 4 O t iti ? 5. How can Comline help you to start and develop your business in Russia and CIS? 6. Q & A COMLINE® Russia
  4. 4. 2007-2008: Russia is becoming an economic powerhouse 1. Economic growth – one of the highest GDP CAGR forecast 9.8% 2. Growth of the consumer market Growing disposable income – i G i di bl i increasing prosperity i it Declining unemployment and increasing consumer spending (CAGR 21%) Retail potential – a market of 142m people 99%+ literacy rate 3. Energy giant – strong economy support for the next 7-10 years Russia is a key oil gas and coal exporter in the world oil, This is safeguarding the economy and makes Russia less susceptible to slowing global growth 4. Huge investment needs Largest emerging market recipient of FDI after China US$1 trillion planned Government infrastructure investment COMLINE® Russia
  5. 5. Factors for Market Growth 2008 Growing disposable income – Increasing prosperity – Increasing demand – g Increasing sales – It means more print! Only 44 kg of paper consumption per capita COMLINE® Russia
  6. 6. Factors for Market Growth Strong balance of payments Import of goods and services was $260B in 2007. About 50% of import is machinery, equipment, Hi-tech technologies – new production facilities! It means more print! COMLINE® Russia
  7. 7. Printing Industry in 2007-2008 1. THERE WAS A FAST GROWING PRINTING MARKET IN RUSSIA 2. DEMAND DIDN’T MEET SUPPLY IN PRINTING INDUSTRY Printers could not follow demand growth Printers didn’t meet customers expectations 3. RUSSIAN PRINTING INDUSTRY GROWTH WAS MUCH FASTER THAN RUSSIAN ECONOMY 4. 4 MOST OF THE PRINTERS SPENT A LOT OF MONEY FOR NEW CAPACITY AND FOLLOWED COMMODITY PRINTING STRATEGY COMLINE® Russia
  8. 8. Printing Industry in 2008 Gross Printed product – $ 5 B p 11,000 companies in the printing Industry About 10,000 Publishers COMLINE® Russia
  9. 9. Financial Crisis 2008 Printing Industry one of the first feels if the economy tends to growth or decline. Q1/Q2/Q3 – big difficulties in obtaining credit and investments, printing market still grow est e ts, p t g a et st g o Q4 2008 HARD LANDING Volume of printed products (capacity) reduced 2 times (!) in Oct-Dec 2008 Many printers laid off personnel and closed until Feb 2009 to cut costs COMLINE® Russia
  10. 10. Russia in Global Financial Crisis 1. GDP: Q1,2008 8 7% Q1, 1 GDP Q1 2008 +8,7% Q1 2009 -9,8% 9 8% 2. 2 GDP FORECAST 2009: -7 9% -8 4% 7,9% 8,4% In 2007 Printing Industry Growth rate was higher than economy growth rate up to 2 times Russian Printing Industry in 2009? COMLINE® Russia
  11. 11. Print in Downturn Official Statistics: Offi i l St ti ti Total Publishing & Printing market volume reduction in Q1/Q2 2009 – 16,4% COMLINE® Source: Prime Tass Russia
  12. 12. Printers in Downturn 1. Advertising b d t f 1 Ad ti i budgets for print media reduction i t di d ti Q1/Q2, 2009 – 22% 2. Printing Job volume reduction Q1/Q2, 2009: • Magazine & newspaper – up to 36% g p p p • Commercial printing – up to 56 % 3. Average price reduction for printed jobs – 30% 3 A i d ti f i t dj b 4. 4 Average Salary reduction – 30% COMLINE® Source: MPU Russia
  13. 13. Printers in Downturn 1. 1 80% of printers l id off up t 30% of th i f i t laid ff to f their employees and made salary reductions 2. Printers are seeking for alternative consumables sources to reduce costs 3. Printers are looking for any cost reduction opportunity t it 4. 4 Up to 35% printers work close to the breakeven point to survive COMLINE® Russia
  14. 14. Printers in Downturn 1. Up to 90% of printers follow commodity printing strategy 2. Focus on Sales Activities but follow commodity strategy (!) and do not understand customers’ expectations 3. Up to 7% of printers went out of business in Q1/Q2 2009 4. Capacity utilization: 25% of printers reported up to 50% reduction 40% of printers reported up to 30% reduction 35% of printers reported same level - no growth COMLINE® Russia
  15. 15. Printers in Downturn 1. 80% of jobs print-runs are less than 2,000 copies print runs (InfoTrends) 2. Offset Printers were not ready to meet that reality since invested into heavy equipment (only 1000 CTP installed, no workflow automation) installed 3. Short jobs migrated to digital printers which feel better these days, conventional offset printers suffer 4. Everybody is open to talk about efficiency of their business but difficult to invest in it now! COMLINE® Russia
  16. 16. Opportunities in Russia? AUGUST 2009 – FIRST SIGNS OF RECOVERY MARKET STRUCTURE WILL BE DIFERENT DURING RECOVERY A LOT OF INTERESTS IN STARTING NEW PRINTING BUSINESSES COMLINE® Russia
  17. 17. Opportunities for Suppliers? 1. There were no serious capital investments for almost 1 Th i it l i t t f l t 1,5 years (!) 2. Printers would like to know how to increase printing business efficiency to be competitive: y p - w2p - workflow management systems - ctp t - digital and DI printing - new consumables sources 3. Printers are open to listen about new business p models, sales systems … COMLINE® Russia
  18. 18. Opportunities for Printers? 1. Most of the Russian printers follow commodity p y strategy – undifferentiated market 2. There is a big inertia among Russian printers. They think in terms of price / capacity utilization and not differentiation 3. It will take time to recover and rebuild strategy for gy the most of printers 4. It is easy to start printing b business now which ready h h d for structural market changes and use opportunity of possible future growth COMLINE® Russia
  19. 19. Opportunities? This is a right time to invest and use opportunity of future growth! Comline i a Silver Sponsor C li is Sil S COMLINE® Russia
  20. 20. 1 Important thing left … Understanding & Doing Local Right COMLINE® Russia
  21. 21. How can Comline help you to develop your business in Russia and CIS? We provide the following services for the Graphic Arts Industry Go to the market services and support in Russia and CIS for: Manufacturers & Suppliers Printers Development of sustainable business model in Russia and CIS D l t f t i bl b i d li R i d Distribution of your products via existing Comline sales channels Market Research and Marketing Communication Services COMLINE® Russia
  22. 22. OUR PARTNERS COMLINE® Russia
  23. 23. Q&A Thank you! ai@comline.ru www.comline.ru COMLINE® Russia

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