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Mid-to-large sized Copy Stores

 ■ Questions
1. Current Industrial Situation
◇ Market Analysis
The overall production value of digital printing in China in 2006 was only about RMB 3 billion Yuan, accounting for

1% of the total production value of the printing industry in the Country. However, in developed countries, such as

Europe, America and Japan, digital printing has accounted for more than 17% of the total production value of the

printing industry, and grows at over 10% annually. According to this tendency, it is estimated that the market value

of digital printing in China should be RMB 51 billion Yuan soon, with an annual growth of RMB 5 billion Yuan. In

conclusion, the digital printing industry, started late in China but great potential. It will be a sunrise industry

in China.
◇Decline in Benefit
       The price is declining, while the cost is up (equipment cost and use-cost keeps high, the promulgation of new

labor law leads to the increased labor costs, and the raw materials price is on the rise), the service area is

restricted, the single store business grows slowly, the profit becomes lower and lower, the cost recovery becomes

more and more difficult, to make money becomes more and more difficult, and the profit keeps declining.
2. Analysis of Causes
◇Market competition increases
Over a decade of development, the digital printing industry of China has experienced the early stage. At present,

there are more than 1000 sets of production digital printers in the market, and about 20 sets of productive digital

printers in each provincial capital city at average. With more and more stores opened, the competition naturally

becomes more and more fierce, and the prices naturally becomes lower and lower. A variety of tricks such as scramble

for customers, rampant poaching, price cut, bribery, spies are exerted among peers, thus causing cutthroat

◇Equipment Cost and Use-Cost Keeps High
Take Xerox DC8000 for instance, if.1.5 million Yuan is invested in equipment, and a monthly printing volume is

100,000 sheets, the monthly depreciation cost in three years will be 41,700 Yuan (excluding interest); 60,000 Yuan

is charged for 100,000 sheets on the basis of 0.6 Yuan/sheet; 18,000 Yuan is charged for 100,000 sheets of A3 157g

art paper on the basis of 0.18 Yuan/sheet (excluding wasted paper); the monthly salary for 4 employees (two-shift)

is 7200 Yuan on the basis of 1800 Yuan/person (social insurance, welfare, bonus, overtime pay, etc.); the monthly

electricity fee is 4000 Yuan; the storefront area is about 150m2, and the monthly rental charge is 30,000 Yuan at

least. The sum of the above is 160,900 Yuan, and each sheet of paper is worth 1.6 Yuan or more, exclusive of

taxation. And above is just cost.
 3.Way Out
◇To reduce the equipment cost and use cost: to purchase the ECOSTAR guaranteed remanufactured color/black and white

production equipment, could bring the cost down on the basis of only expending 1/5 of procurement cost of equivalent

equipment to make the cost of A3 color printing single sheet range from 0.8 Yuan to 1 Yuan;
◇To develop the chain stores and form the industrial chains to cut the management cost and raw materials

procurement cost;
◇To innovate the operation mode, widen the market space, develop the civilian market, to expand to personalized

■ Solutions
1. The suggested solutions to large-sized copy center.
◇Equipment Portfolio: 4 sets of DC2060 “Ecostar” remanufactured digital color printer (or a portfolio consists of

DC8000、DC6060、DC2060), and 2 sets of Canon IR8500  (or IR105)、2 sets of Ricoh AF1105.
◇Investment in Equipment: about RMB 1.50 million Yuan (new equivalent equipments cost about RMB 6.00 million Yuan)
◇Production Capacity: 40 thousand A3 color prints/month; 4 millionA4 black-and-white prints/month
◇ Return of Investment: one year (3-5 years for new equipment)
2. The chain stores of large-sized Copy Center and the suggested upgrading solutions for mid-sized print store
◇Equipment composition: 2 sets of DC2060 “ECOSTAR” remanufactured digital color printer (the composition of

DC8000, DC6060 and DC2060), 1 set of canonIR8500 (or IR105), 1 set of Ricoh AF 1105.
◇Equipment investment: about 750,000 Yuan (about 3 million for the new equivalent equipment)
◇Production capacity: 200,000 A3 color prints/month, 2 million A4 black and white prints/month.
◇Cast Recovery: One year (3-5 years for new equipment)
■Case Introduction
◇Wuhan Jinying Digital Copy Center (hereinafter referred to as the Company)
    In October 2007, the Company purchased two sets of ECOSTAR remanufactured color production printers, DC2060;

three sets of black and white production equipment CANON IR105, and two sets of OCE3165. in the year of 2008, the

Company recovered cost and also expanded the production scale, and continued to purchase one set of ECOSTAR

remanufactured color production equipment DC2060; one set of black and white productive equipment CANON IR105, and

one set of CANON IR8500.

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