Eleven years ago, computer major Jim Ji set up Guangzhou Guangcai Label from scratch. Today his company is a touchstone of manufacturing efficiency and environmental awareness.
By chance, his first job after graduation was servicing barcode printers. ‘I was fortunate to witness the golden age of barcode label printing in China from 2002 to 2004. I started to have a preliminary understanding of the label industry and decided to start my own business.’ Jim Ji explains that he was born into a poor family, and as the eldest child was expected to finance his sister’s education. So how was he to find start-up capital?
In 2004, the ‘stubborn and unyielding’ 22-year-old resigned his well-paying job and invested his energy into the new business despite having no technological knowledge, customers or funding. He contacted an OEM factory directly to get his first printing machine. ‘Compared with the rural life, these difficulties are nothing,’ asserts Jim Ji. In 2007 he registered Guangzhou Guangcai Label in a small 500sqm workshop.
Between 2007 and 2012, Guangcai Label’s business grew rapidly, installing intermittent rotary, stack flexo and intermittent offset presses. ‘I am not technically educated, but I was more and more obsessed by label printing and spent lots of time learning the technologies. But I was so busy coping with day to day demands, I took very little time to think about the direction of the industry or my company’s future.’
Looking back, Jim Ji can see that this growth came – as well as from his own efforts – from the overall growth of the Chinese label industry. ‘At that time I was simply happy to be making good money.’
What sobered Jim Ji was one sentence from an industrial senior. ‘He said there was no guaranteed market, or customer, and every industry has its development life-cycle.’
In 2013, clothing labels from one fast fashion brand, Forever21, accounted for 60 percent of Guangcai Label’s work. ‘To be frank, we were almost totally dependent on the Forever21 brand, and we even felt proud of it. However, the senior figure’s observation made me realize that dependence on a handful of big customers was dangerous. If one customer’s business went wrong, Guangcai Label as a downstream supplier would suffer a deadly blow.’
Jim Ji made the decision to transition away from the single product mix. In 2014, Guangcai Label moved into a bigger, 6,800sqm factory, and installed a Label Source letterpress and Zonten intermittent offset press, allowing the company to go after the FMCG market. This transition proved timely when in 2015 sales of Forever21 plummeted and the brand cut its label orders in half.
Today Guangcai Label services a wide range of end use sectors – food and beverage, wine, household chemicals, healthcare products and anti-counterfeit labels. The company works for leading Chinese brands including Wong Lo Kat, Perfect, Haitian, Mengniu Dairy, Qomolangma Glacier, Luowa, Junlebao and Renhe Pharmacy.
Now understanding the saying ‘In peace, prepare for war’, Jim Ji took another hard look at the company. ‘Sales appeared to keep growing, but actually our profit was decreasing. The causes included vicious price competition from our peers, the growing cost of labor, materials and finance following the company’s growth, and the cost of implementing environment protection measures. At the same time, the annual growth rate of the Chinese label industry almost halved to less than 10 percent from its previous 15-20 percent. Under these circumstances we needed to think rationally about our future development.’
By 2016, Jim Ji was ready for Guangcai Label’s second transformation, this time into flexo and digital. ‘Technology transformation from letterpress and offset doesn’t mean simply purchasing new machines, but an overall revolution in professional training and in management thinking.’
Since 2016, Guangcai Label has purchased two Gallus ECS340 flexo presses, one HP Indigo 4500 digital press and an entire flexo platemaking system based on Esko color management and flexo CTP and a DuPont Fast thermal plate processor. In September this year, Guangcai Label installed the latest HP Indigo 6900 digital press and a third Gallus ECS340 press is on order.
‘As well as environmental protection, the productivity of the flexo press was a key reason for choosing it,’ says Jim Ji. ‘Currently, the output of these two Gallus flexo presses accounts for 40 percent of our total productivity. I believe the ratio will rise after the third press is put into operation. I am very interested in digital printing, and I believe I can unlock its various possibilities in the future with my computer background and years of traditional label manufacturing experience.’
With these two transitions, Guangcai Label is an epitome of the development of the entire China label industry to date: from abnormally rapid expansion to ‘regular’ growth. As the Chinese label industry has gradually matured, enterprises are re-building themselves into businesses which are more efficient, environmentally sustainable and quality-oriented.