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Inscrutable. Merriam-Webster defines the word as: "Not readily investigated, interpreted, or understood; mysterious." Derived from the same Latin root as scrutiny, it is the word most often used to describe China, and to characterize the frustration suffered by the Western world in trying to understand what goes on there. Angst regarding China is rampant in nearly every corner of the printing industry around the world. The Chinese are feared by both printers and their suppliers, from Australia to Sweden, just as in North America. How are North American printers likely to be affected by recent events in China?

The Chinese Economy

As the third-largest country on the planet geographically—behind Russia and Canada—and the largest in terms of population—just ahead of India— China has long concerned North American printers. Labor in China costs a mere fraction of that in the United States or Canada, and jobs with extensive hand work have long been candidates for outsourcing to the Far East. North American print buyers have become accustomed to weighing the lower cost of printing against longer shipping times and the difficulty of coordinating work over a great distance. Brokers have come on the scene to make sourcing in China easier.

Change is in the wind. The Chinese economy is currently undergoing an industrialization process much like that which occurred in North America in the early 20th century. A country that has historically been primarily agrarian is now seeing a vast migration from the countryside to the cities. The jobs these former farm workers find often are in construction and factories—including printing plants.

Workers who move from the farm to the factory constitute a huge labor pool, with wages a fraction of what North American workers are paid. As a result, products with high labor content—such as clothing—moved quickly to China, and a walk through stores ranging from Wal-Mart to Saks Fifth Avenue will find shelves and racks full of items made in China.

Predictably, as various products began to be manufactured in China, packaging and corollary printed products, such as instruction books, were made there, as well. This spawned a Chinese printing industry, in a country not noted for a market-driven economy.

The Chinese live, of course, in a managed economy—one that follows a long-term course, laid out by a government that knows no opposition and thus can plan with impunity. Because the economy is rigorously planned, the government sought to establish printing centers, not only to support factories exporting products, but to provide the printing that will be required as China shifts from an agrarian economy to a market-driven one.

While the countryside and small towns remain rural and backward by North American standards, cities such as Shanghai, Beijing, and Chongqing are bustling metropolises which look much like New York City or Chicago. As the Chinese economy continues the transition from agriculture to manufacturing, and as personal incomes increase, the amount of printing required internally can be expected to grow exponentially.

With these changes come some that have disruptive influence around the world. Public opinion—some resulting from extensive newspaper coverage about toys with lead paint, for example—is prompting the Chinese to reduce chemical pollution and change manufacturing practices. This, in turn, is resulting in higher ink prices in the United States. Just a few weeks ago, Sun Chemical and Flint Group both announced ink price increases attributed in part to increased costs for Chinese ink components due to taxes being imposed by the Chinese government to fund chemical cleanup efforts.