Kazakh printing industry tries to rebound

November 25. Central Asia Newswire

By Hal Foster

Kazakh printing industry tries to reboundKazakhstan’s printing industry was a gold mine between 2004 and 2007, growing at 20 to 25 percent a year, industry insiders estimated.

The boom, fueled by advertising in newspapers, magazines and flyers, led to a surge in the number of printing houses. The commercial center of Almaty had about 200 in 2008, according to estimates.

Demand for printing was so great that even an expanded industry had trouble filling orders. In fact, clients had to fight for places on printing firms’ schedules.

But the economic crisis that struck in 2008 changed everything.

Printing orders dropped 30 percent in 2008 and 20 percent in 2009, industry insiders believe.

The reason was that many businesses cut their advertising budgets to the bone.

Some banks and construction companies stopped advertising altogether for awhile.

The drop in ads hit magazine printing particularly hard. Some magazines reduced their page numbers. Others cut their circulations. Some folded.

New magazines have begun popping up in Kazakhstan again but the market is far from its peak in 2006 and 2007 – so the printing business also continues to languish.

Alena Tarasova, marketing director of Almaty’s OPG printing house, believes ad orders will pick up again. Companies need to advertise to keep their brand names alive, she said.

The only bright spots in printing during the downturn were government orders and niche markets.

Governments kept their printing at pre-crisis levels, although the work represented only 8 percent of the market, industry insiders said.

The many conventions that Astana has landed this year have contributed to an upswing in government printing orders. The events require the printing of background publications, convention programs and other material.

A number of books and other publications are being prepared for release before and during the summit of the Organization for Security and Cooperation in Europe in Astana on December 1 and 2, according to Joe Urbanus, a media consultant in Almaty.

Some of the publications are in Russian, some in English. Some will be sold, others will be given to those in town for the summit. All are godsends to print shops.

During the downturn, print shops that focused on niches weathered the economic storm better than those that did a full range of work, insiders said.

Kazakhstan’s niche printers produce such items as lottery tickets, plastic cards, postcards, religious literature and maps and atlases for schools.

Print shops that did general publishing rather than niche work had to resort to fierce price-cutting during the downturn to try to land what business there was.

“Since the quality of services at most of the large printing houses is the same, the only leverage” printers had was cutting prices, said an industry insider who asked not to be identified.

Print shops cut their prices so hard on some orders that they actually lost money.

Reeling from the price reductions, printers tried to save money on supplies and equipment.

It was hard to do, however, because Kazakhstan has few domestic printing-supply manufacturers and no publishing-equipment manufacturers.

“We purchase everything from abroad – from equipment to paper,” including ink, cartridges and cleaning solutions, said another industry insider who requested anonymity.

Because Kazakhstan’s printing companies are so import-dependent, they were clobbered when the National Bank of Kazakhstan devalued the tenge by 20 percent in February 2008.

Print shops pay for imported materials in currencies besides tenge, so their bills immediately jumped 20 percent in tenge terms.

With too many print shops chasing too few orders, printers were unable to pass on the additional cost of materials to customers.

Aware of the bind that print shops were in, some clients actually dictated terms to printers.

“If they don’t like the price, they go to another printing house, so everyone tries to reduce prices to keep clients,” Larissa Vasilyeva, a manager at Signet Print, said at the height of the downturn last year.

With intense price competition and little chance of reducing the cost of supplies, many printers found themselves in the red as the downturn dragged on.

In desperation they cut employee salaries, which led to a consequence that could have been predicted: Many skilled workers left, making it more difficult for print shops to put out good work.

Toward the end, some failing shops actually tried to stave off bankruptcy by selling used equipment to bring in money.

Finally, many simply ran out of revenue-enhancing and cost-cutting options. Those that closed included some of the largest printing houses in Almaty.

The silver lining in the situation, printers said, is that once the ad market catches fire again, print shops that survived the downturn have a chance to do even better than in the boom years.

http://centralasianewswire.com/Kazakhstan/Kazakh-printing-industry-tries-to-rebound/viewstory.aspx?id=2441

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