China Confronted by Surge of the Home Office
The impact of the COVID-19 epidemic on China seems to be gradually fading, but the impact and changes brought by it to the market and consumers will far exceed the effect of “SARS” in 2003 and the financial crisis in 2008. The epidemic has opened a gap in the traditional way people communicate and the way people work. Everyone is now required to keep his distance!
For health and loss reduction considerations, many companies recommend that employees work from home. So these new telecommuters have created a new work experience, as communication with their customers and colleagues has been transformed into contactless forms such as online video, teleconferences, and emails. Documents at work will not be printed and distributed to avoid the spread of the virus through document papers. As the home is far from the office, documents that must be printed can only be printed in the home office. More data and documents are obtained and distributed through the cloud. The impact of these new changes on the printing market can be imagined.
IDC‘s print peripheral product research report for the first quarter of 2020 shows that China’s business print peripheral product (inkjet + laser) shipments in the first quarter of 2020 decreased by 25.9 per cent year-over-year. Among them, small companies with less than 100 employees, shipments fell 44 per cent year-over-year, while shipments of consumer printing peripheral products increased 153.2 per cent year-over-year.
The growth of consumer market shipments is mainly driven by the demand for home office products for use by both homebound students and telecommuters. IDC believes that in the second half of 2020 and 2021, as the impact of the epidemic subsides, the growth rate of the consumer market will gradually slow down, but the absolute value of shipment growth will remain high, business procurement by large and medium-sized enterprises will gradually resume, and it is expected to return to normal levels in the second half of 2020. The procurement needs of small companies with a size of fewer than 100 people will not be able to return to normal levels in 2020 or even the first half of 2021.
In the consumer market, short-term growth is mainly driven by the demand caused by the pandemic. The medium- and long-term growth is mainly driven by changes in user habits. Individual users have cultivated the habit of printing at home during the epidemic, and home printing equipment will gradually become one of the essential durable consumer goods for families. Among them, inkjet printers are the first choice of consumer customers.
Traditional small ink cartridge printers have always been in the consumer market mainstream due to their lower prices. With the decline in the unit price of ink cartridge printers and lower color printing costs, the consumer market has grown faster.
In the small business market, demand growth looks bleak. In the short term, small companies have been severely impacted during the epidemic, and a large number of small companies have gone bankrupt and closed. The surviving small businesses have demonstrated suppressed procurement, as their replacement cycles have been significantly lengthened.
Moreover, the epidemic has not yet seen a clear inflection point of relaxation beyond China. It is expected that imports and exports will be negatively impacted in 2021, which is still an unfavorable factor for China’s domestic economic environment.
On the other hand, in the medium and long term, the digital transformation of small businesses is accelerating. Service industries such as catering and accommodation, tourism and entertainment, culture and sports are accelerating the development of online businesses.
The government also made it clear in the work report that e-commerce, online shopping, online services and other new formats have played an important role in the fight against the epidemic. The government will launch supportive policies to further promote Internet+, deeply integrate internet & digitization within traditional industries, advance the digitalization of the industry, and create new advantages in the digital economy.
Therefore, we believe that contactless business activities will rise rapidly, and the development of robotics, collaborative office, cloud services, AR/VR and other technical fields will accelerate, which will continue to reduce the amount of printing in business activities and reduce the demand for equipment.
For small businesses, the reduction in print volume means that daily office printing needs that were supported by a medium and high-speed laser printer or copier can be satisfied by a home inkjet device in the future. After all, inkjet printing cost per page is lower, and can also offer color printing. Even for some small digital-native companies, there is basically no need for printing or equipment procurement for online work.
IDC believes that printing equipment manufacturers and consumables manufacturers need to be prepared to deal with the decline in printing volume and changes in equipment demand in the medium- and long-term business market. In the future, the growth of printing equipment and consumables in the business market will be relatively weak. Cloud-based solutions and personalized services may be new business growth opportunities, and the consumer market may become a new blue ocean.
Chinese families have a rigid demand for printing learning materials. Because European and American countries use alphabetic languages, they do not have particularly high writing needs as students can learn through online programs. Therefore, family education does not drive printing significantly. In China and other countries with a large Chinese population, Chinese writing needs are relatively high. In particular, the government is promoting the revival of Chinese culture in China, therefore primary and secondary school students write more homework. Also, the proportion of language learning has increased, and there is a strong demand for printing. Equipment manufacturers and consumables manufacturers may need to focus on the growth of home printing to obtain new business growth opportunities.
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