Neil Cleere

Why Promotional Pens and Printed Pens Are Rarely Made in the West Any More

A look at why unbranded pens are now more popularly sourced from India, Korea and China as opposed to having previously been bought from Europe or North America.

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

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