Aside from OEM Offerings, MPS is Not Yet Readily Available in China
I go to China several times a year, and from what I've seen, the Chinese market for managed print services is really embryonic. OEMs are growing more active in their support of MPS programs for larger corporate clients, but not many independent dealers offer print management programs for small- to medium-sized Chinese businesses. While OEMs may be successful in implementing print management solutions in larger companies, I'm skeptical that independent dealers will witness much demand for MPS in the Chinese SMB market.
I recently attended ReMacau, a new event for digital consumables vendors, hosted in the southern city of Macau. I had the opportunity to discuss MPS with some of the leading Chinese third-party supplies vendors. Because most digital imaging consumables produced in China are destined for overseas markets, vendors at ReMacau were aware of the growing popularity of MPS in North America and Western Europe. While the larger firms said they have foreign customers providing some sort of managed print solution, this was not the case with domestic Chinese markets. The Chinese supplies vendors told me they do not currently offer MPS programs domestically. They said they've experienced no demand for MPS to date from their Chinese customers, and none had plans to roll out an MPS program in the near future.
In large cities like Beijing, Guangzhou, Hong Kong, and Shanghai, OEMs operate direct sales organizations that support MPS. Many hardware vendors have been peddling their programs for years in these larger cities. Canon, for example, says its direct sale organization has been selling what it calls "managed document services" in the Pac-Rim region, including China, for the past six years. It recently indicated that the company plans to market MPS more aggressively in China.
OEMs have various assets in place in China to support MPS and other programs and continue to invest more. The hardware vendors operate call centers that can accommodate local languages, including Cantonese and Mandarin. They also have technology show rooms in many of the major cities. Hardware vendors are demonstrating an ongoing commitment to providing MPS for their corporate clients in China. HP announced in April that it's now writing volume-based supplies contracts for Chinese clients, and it maintains various MPS initiatives in China, including HP MPS Smart Decision and the HP Eco Solutions Printing Program.
While large corporations in China may be in the process of embracing MPS, there are several reasons why I don't think China will become a big SMB market for managed print, at least in the near future. First, the channel is very fragmented. Scores of tiny distributors operate small shops strung along one street or in one city block. These dealers compete fiercely on price and lack the space and equipment to manage fleets of printers. They also don't have the types of sales organizations required to sell MPS. Simarily, distributors cram into so-called computer malls: large retail establishments with floors stuffed with both consumer and business electronic goods. Like their competitors out on the street, dealers in malls lack the infrastructure to implement any sort of MPS program.
Beyond the channel, it's the culture of Chinese businesses that really makes me skeptical that MPS will be a big hit in China. Most firms are quite accomplished in limiting their printing costs without any type of outside assistance. The Chinese, as a rule, do not spend elaborately on hardware. They purchase the minimum number of low-end machines required to support an office and run them well beyond a device's rated monthly capacity. They run these machines until they breakdown and replace or repair them. It's unlikely dealers could keep a fleet of overstressed machines working and still make money.
In terms of supplies, Chinese companies have a long tradition looking for ways to save money. Firms in China were duplexing long before Western MPS gurus began telling clients how much money they could save if they employed two-sided printing. Chinese companies are also well aware of the saving non-OEM consumables offer and typically purchase remanufactured cartridges. Some firms even refill their own cartridges in house. It's unlikely a dealer could offer these companies a program that would significantly lowers a customer's per-page costs.
Of course, as the OEMs educate large clients about MPS, more Chinese businesses may learn of the benefits managed print can offer. I'm skeptical, however, that will happen any time soon.
Posted by Charlie Brewer on 05/20/2010