Printed Pens

Europe and North America have unrivalled pedigrees as far as pen
manufacturing goes but in recent years their high manufacturing costs
has meant that the majority of unbranded pens have now switched to
India, Korea or China. This is particularly true of promotional pens
and printed pens because they tend to be price-sensitive commodities.
This article looks at how this change has taken place.

We are all familiar with the top-brand pens such as Parker,
Waterman, Cross, Sheaffer and Mont Blanc. These are pens that are
traditionally made in western countries and that is still largely true
today because their premium prices and consequent high margins has less
reliance on low manufacturing costs. However, in recent years we are
beginning to see Asian plants appearing to either manufacture
components for some of these brands and in some cases the entire pen
itself. In the latter case this is primarily to service the emerging
Asian market itself. Many believe this is the thin end of the wedge and
is a precursor to the wholesale abandonment of pen manufacturing in the
west completely. This would follow in the footsteps of what has
happened in the promotional pens and promotional items market in
general where the vast majority of manufacturing is now carried out in
either India or China.

So what was so attractive to western importers that allowed Chinese
manufacturers of promotional pens to flourish? Here we look at the main
reasons:

1. Labour Costs: There was a time when Chinese
labour costs were as low as 5% of western costs and this made the unit
costs of promotional pens very low, as much of the assembly was by hand
and labour intensive. In the west any hand assembly was prohibitively
expensive and as a consequence much of the assembly was done using very
expensive dedicated fully automatic lines. The cost of designing,
building and maintaining these lines is extremely high and must be
reflected in the unit-selling price. This is not a consideration where
Chinese promotional pens are concerned because all pens are
hand-assembled and consequently prices are much lower.

2. Tooling Charges: It would typically cost between
?50,000 to ?120,000 for a quality toolset to manufacture promotional
pens when moulded in Europe or America. This cost is high because of
the length of time that is needed to make a tool capable of producing
up to 36 pen barrels in one mould. This requires high levels of
precision so that the tool operates efficiently, with little downtime
and minimal maintenance so that unit costs can be controlled. Labour
costs are not a major consideration for Chinese manufacturers so they
could afford to make several small tools capable of moulding, say, 4
pens at a time. These tools wear out relatively quickly but their
replacement costs are negligible and consequently there is no need for
them to amortise this cost into the unit cost of the promotional pen.
The tooling cost for a Chinese pen can be as low as ?2,000 so the
initial costs of launching a new pen is no longer prohibitive and
consequently western pen manufacturers, importers and designers are
looking to China increasingly as their source.

3. Subsidies: Although manufacturing costs in China
are a fraction of western costs, the Chinese government embarked on a
policy in the early days of heavily subsidising its industry. This had
the effect of driving their prices down to almost material costs for a
greater part of the last decade. Although these subsidies have now
disappeared on promotional pens because of international
anti-competitive legislation the policy served its purpose by making
Chinese manufacturers very attractive to western buyers.

4. Historical: Because Hong Kong was a British
dominion and a prolific trader of non manufactured goods with Britain
for many decades prior to the expansion of China's promotional pen
industry the Chinese exploited this relationship when manufactured
goods began to emerge. There were numerous importers and shippers that
were very familiar with existing trading channels and this made the
importation of promotional pens extremely easy into Britain and
subsequently the rest of Europe. America followed some time after.

Today, it is estimated that where plastic promotional pens
are concerned over 90% have their origins in the Far East and there is
no sign of any significant shift back towards western manufacturers.
Prices are increasing from China but they are still significantly
cheaper than western manufactured pens. The effect on western pen
manufacturers has been devastating and many familiar names have
disappeared in Europe and America over the last few years, never to
return as the skill base for moulding promotional pens has also
disappeared.

Article Tags:
Promotional Pens, Printed Pens