Asia-Pacific weathers the storms

‘APAC set for significant growth’, read the market focus article last year. It predicted the region to grow twice as fast as the rest of the world. So, was 2023 a massive success or a streak of unfulfilled hopes?

The Asian Development Bank (ADB) has raised its economic forecast for developing economies in the Asia-Pacific region after robust domestic demand drove higher-than-expected growth in the People’s Republic of China (PRC) and India.

‘Developing Asia continues to grow at a robust pace, despite a challenging global environment,’ comments ADB chief economist Albert Park. ‘Inflation in the region is also gradually coming under control. Still, risks remain, from elevated global interest rates to climate events like El Niño. Governments in Asia and the Pacific need to remain vigilant to ensure that their economies are resilient and that growth is sustainable.’

In the third quarter of 2023, the economies of most countries in Southeast Asia showed pockets of growth and resilience despite the cumulative effects of monetary tightening and slower global demand.

Labelexpo Southeast Asia revitalizes the region

The last edition of Labelexpo Southeast Asia 2023 in Thailand best confirmed the region’s economic climat. It brought together almost 7,500 converters and brand owners from across the ASEAN and broader Asia-Pacific region, mainly from Thailand, but also from Malaysia, China, Indonesia, India, Singapore, the Philippines, Vietnam and Australia.

Multinational brands are moving to the region, and advanced retail infrastructure is emerging, leading to growing requirements for higher quality packaging – including from local brands which need to compete with the global giants. Letterpress, offset and screen printing remain robust, but regional label converters are starting to look at flexo and digital.

Digital for those who can afford it

‘Globally, there’s a downward trend in the macro economy, leading to shrinking orders in the label printing industry,’ says Max Goh, sales executive at Malaysia-based Sen Labels Machinery. ‘This shift has pushed towards the rise of digital printing, mainly due to reduced order quantities and challenges in finding skilled operators for conventional methods like rotary flexo printing. CEOs are turning to digital printing as a viable solution, especially accelerated by the impact of the pandemic over the last three years.’

According to IDC Worldwide Industrial Printer Tracker, a total of 52 units of digital label and packaging presses were shipped just in the first quarter of 2023 for Asia-Pacific customers excluding Japan (APeJ), with a sequential growth of 15.6 percent and an annual growth of 23.8 percent.

The primary application, label printing, experienced significant growth, with a quarterly increase of 44.4 percent to 39 units.

“Developing Asia continues to grow at a robust pace despite a challenging global environment”

The digital label and packaging market witnessed steady growth in recent years, especially post-pandemic, defying the economic downturn during the first quarter of 2023.

‘Fueled by the surge in personalized printing and customization, the digital label and packaging market is witnessing robust growth,’ says Sharon Cheng, senior market analyst at IDC Asia-Pacific. ‘In an era where consumers demand tailored experiences, brands are turning to digital solutions to meet these expectations.’

Australia-headquartered QLM Group opened a new manufacturing facility under QLM Label Makers Vietnam - Hoang Ha Label (HHLC-QLM) in Ho Chi Minh City in December 2023 to meet the increasingly diverse Vietnamese and broader Asia-Pacific market demands and to house the country’s first HP 20000 press. The company, which also operates production facilities in Malaysia, Cambodia and Bangladesh, intends to expand its flexible packaging services, including a stand-up pouch, three-sided seal, center seal, sachets and box bottom bag.

‘We continue to build an international company, managed locally, respecting local customs and traditions while investing in the technology and people to ensure we deliver you innovative and effective label and packaging solutions that meet the needs of today’s ESG environment,’ says Simon Pugh, managing director of the QLM Group.

‘In Asia, letterpress printing dominated for years, largely due to strong Japanese machine manufacturers. However, this has changed in the last five years, with a shift towards flexo technology,’ responds Goh. ‘Despite this, flexo printing market share remains below 10 percent due to its suitability for large-scale orders. Digital printers have a minimal market share due to high initial costs and lesser concern about operator shortages in the Asian market.’

According to Goh, in contrast, Europe leads the label printing industry and prioritizes digitalization and user-friendly equipment. He says that digital printing machines are highly favored for their ability to tackle human resources shortages and short-run jobs.

Flexo humming along

Tim Klappe, managing director for Asia Pacific at MPS Systems, at the beginning of 2023, thought that business would increase rapidly after the pandemic.

‘Well, this did not happen,’ says Klappe. ‘Although the label print business in the Asia Pacific hummed along better than in other parts of the world, the growth was nowhere we thought it would go. As machine builders, we were plagued by weak exchange rates in Asia and high interest rates. Buying new equipment for many printers in Asia Pacific is not a very conducive environment—at least, less than what we expected at the beginning of the year.

‘Things changed around September during the Labelexpo Europe. Maybe we were all happy to see each other again and celebrated this with new machine orders. For MPS and Asia, the Labelexpo was a turn-around point, after which we received many orders.

It has to do with the lower interest rates, strengthening of some Asian currencies, and the still excellent forecasts for the label business in the Asia Pacific region. Service was good throughout the region.’

One of the latest reports by Mordor Intelligence estimates the Asia-Pacific self-adhesive labels market to reach USD 16,229.33 million by the end of this year, and it prognoses a steady growth at a CAGR greater than 6.3 percent between 2024 and 2029. It is slightly more conservative than last year’s 7.34 percent, but still presents excellent growth opportunities in the region.

Piotr Wnuk

Piotr Wnuk

  • Senior digital and Southeast Asia editor