Vladimir Vorotnikov, Russia Correspondent05.11.18
The Ukrainian ink market is experiencing a rather complicated competitive fight between a single legal manufacturer, several importers and numerous underground companies.
With a population of approximately 45 million people, Ukraine once was considered one of the most promising ink markets in the post-Soviet space. In the 2000s, marketing studies conducted by local analytical agencies were anticipating the rise of per capita consumption in Ukraine to the European average level within the coming 10 to 15 years.
Although there are no official estimates of how much ink the country’s citizens use on average today, in general it is believed that those forecasts have not come true yet.
Since 2014, the internal crisis associated with the annexation of Crimea and armed conflict in several regions has been hampering consumption of inks, while the collapsing purchasing power of the population forces customers to opt primarily for the least expensive products.
A Lone Warrior
Worldwide Manufacturing, E.D. (WWM) is a single legal manufacturer of inks in the country, according to Vladimir Bartash, the company’s general director. The word “legal” has an important meaning here, he explained, because the rest of the manufacturers operate underground, not showing its production capacities, warehouses and offices to anyone at all.
WWM was founded in 1993 as an importer of inks under several popular brands. However, in 1998, when the domestic market was nearly at its peak, the idea to move away from reselling imported inks and to start manufacturing some unique products under the company’s own brands crossed the minds of WWM’s top managers.
“So several chemical and technical experts were invited to perform research, design and develop the original products and capacities to manufacture it. In 1999, WWM released its first inks for cartridges number 26 of Hewlett-Packard printers. Shortly after, the production range was expanded with the inks for Canon BC-01/02 cartridges,” Bartash recalled.
“After that, new products were introduced one by one, from the simplest inks to the most complicated ones, from black water-soluble to color inks and then pigment inks,” he added.
The company enjoyed quick success selling its own inks, so it was able to change the old production building, which it was renting, to new houses located 2 km away from Kiev.
The company operates a production line and warehouses with the total space of around 4,000 meters, employing 100 people. WWM roughly accounts for 30% to 35% of Ukraine’s domestic ink market, according to its own estimations. The market itself has settled down in 2017 after the protracted fall in sales recorded in the period from 2014 to 2016, Bartash noted.
“There are several reasons why the demand for consumables of inkjet printing was reduced. First off, it was because of the rising popularity of various devices for data storage and corresponding fall of the demand for printing of documents and photos. Additionally, OEMs were widely introducing factory-equipped CISS printers to the market,” Bartash said.
Nevertheless, there were some factors unique to Ukraine’s ink market, including a sharp decrease in the purchasing power of the population due to the economic downturn and a fall of the exchange rate of the country’s currency. In these harsh circumstances, the competitive fight has additionally escalated with the invasion of less expensive inks originating from China.
WWM has its own testing facility, where it conducts analysis of the products of the main competitors on a regular basis. As explained by Bartash, in this way WWM not only manages to stay updated about the quality of inks of the company’s rivals in the domestic market, but also uses the obtained knowledge to perform optimization and improve quality of its own products.
No-Name Products
At the same time, aside from the falling demand, the real problem now for WWM are the so-called “garage” businesses. Most of these manufacturers are small-scale private businesspeople, who don’t have production facilities and simply mix up some components to produce the cheapest possible inks in their own garages.
Similar “garage” businesses exist in most countries of the post-Soviet space, and it is in fact a common problem not only for ink producers, but numerous industries in the region.
Eugene Sirota, the manager of the Sint Company, an official distributor of OCP inks in Ukraine, doesn’t exclude the possibility that the falling demand for inks at the country’s market are at least to some extent associated with these “garage inks.”
“An inexperienced user can buy some cheap ink and eventually not only get poor-quality print, but also even the problems with the printhead. As a result, at least some of these customers refuse further use of the compatible inks, and switch to original cartridges, because, in their opinion, all compatible inks have similar bad quality,” Sirota observed.
“In some particular cases, customers simply stop using inkjet printers. Nevertheless, some customers understand where the problem came from and start searching for more compatible inks, as a rule eventually choosing OCP,” he added.
In general, the price of OCP inks in Ukraine is 20% to 30% higher compared to the “garage inks,” which Sirota describes as “no-name inks,” simply because as the rule they are distributed without any particular brand and without any label on a can.
It is believed that low price is the only competitive advantage of the “garage inks,” as the new customers in Ukraine usually start with buying the most inexpensive products. It is noteworthy that the very existence of the entire segment of such inks, according to Sirota, could be explained by the harsh economic situation in the country.
“With the projected growth of the economy, the demand for original inks, including under the OCP brand, will rise, because the main priority will be given to quality, reliability and trouble-free use, and not the combination of low quality and low price,” Sirota observed.
At the same time, OCP is believed to be a leader in the premium segment at the Ukraine’s market, and the demand for its products remain stable, according to Sirota.
A Way of Survival
Bartash offers a similar opinion, speaking about the small businesspeople in the market, suggesting that “they are selling products under the dumping prices, obtaining a temporary profit, but don’t care about the market situation in general.”
WWM also believes that importers of inks in Ukraine are not always being fair to their customers, as sometimes they are purchasing inks from various suppliers, including of Chinese origin, and then selling the different products with different quality under their single brand.
At the same time, the manufacturers of “garage inks” have their own vision of the situation at the country’s market. One of these business people, who wished to stay unnamed, claimed that it would be wrong to say that the quality of producers in the “shadow segment” is always poor.
“When producers are operating half-legally, not registering some part of turnover to the state agencies or not showing its production capacities, this is not the way of cheating with the customers, but this is a way of survival,” he claimed.
“The administrative pressure on small business in Ukraine is tough, while the taxes are rather high, so sometimes for small companies there is no alternative but to operate not fully legally.”
At the same time, the description of “garage inks” has nothing to do with the truth, because 90% of the companies in this segment actually were never operating in garages. In most cases, the definition is used to describe facilities that were registered fully legally once, but had to move away from legal operation due to various reasons, he noted.
The most important fact is that the quality of inks in the shadow segment is not as poor as the legal manufacturers and importers are trying to convince the customers it is.
“For instance, our facility is operating locally and we have numerous loyal customers who purchased our products for eight years. If we were manufacturing inks with such a bad quality, we would lose our clients in a minute,” he stated.
Nevertheless, operating outside of the legal field, an ink manufacturer in the Ukraine at least would be subjected to fines, while in some particular cases they could face the criminal liability if they were caught.
With a population of approximately 45 million people, Ukraine once was considered one of the most promising ink markets in the post-Soviet space. In the 2000s, marketing studies conducted by local analytical agencies were anticipating the rise of per capita consumption in Ukraine to the European average level within the coming 10 to 15 years.
Although there are no official estimates of how much ink the country’s citizens use on average today, in general it is believed that those forecasts have not come true yet.
Since 2014, the internal crisis associated with the annexation of Crimea and armed conflict in several regions has been hampering consumption of inks, while the collapsing purchasing power of the population forces customers to opt primarily for the least expensive products.
A Lone Warrior
Worldwide Manufacturing, E.D. (WWM) is a single legal manufacturer of inks in the country, according to Vladimir Bartash, the company’s general director. The word “legal” has an important meaning here, he explained, because the rest of the manufacturers operate underground, not showing its production capacities, warehouses and offices to anyone at all.
WWM was founded in 1993 as an importer of inks under several popular brands. However, in 1998, when the domestic market was nearly at its peak, the idea to move away from reselling imported inks and to start manufacturing some unique products under the company’s own brands crossed the minds of WWM’s top managers.
“So several chemical and technical experts were invited to perform research, design and develop the original products and capacities to manufacture it. In 1999, WWM released its first inks for cartridges number 26 of Hewlett-Packard printers. Shortly after, the production range was expanded with the inks for Canon BC-01/02 cartridges,” Bartash recalled.
“After that, new products were introduced one by one, from the simplest inks to the most complicated ones, from black water-soluble to color inks and then pigment inks,” he added.
The company enjoyed quick success selling its own inks, so it was able to change the old production building, which it was renting, to new houses located 2 km away from Kiev.
The company operates a production line and warehouses with the total space of around 4,000 meters, employing 100 people. WWM roughly accounts for 30% to 35% of Ukraine’s domestic ink market, according to its own estimations. The market itself has settled down in 2017 after the protracted fall in sales recorded in the period from 2014 to 2016, Bartash noted.
“There are several reasons why the demand for consumables of inkjet printing was reduced. First off, it was because of the rising popularity of various devices for data storage and corresponding fall of the demand for printing of documents and photos. Additionally, OEMs were widely introducing factory-equipped CISS printers to the market,” Bartash said.
Nevertheless, there were some factors unique to Ukraine’s ink market, including a sharp decrease in the purchasing power of the population due to the economic downturn and a fall of the exchange rate of the country’s currency. In these harsh circumstances, the competitive fight has additionally escalated with the invasion of less expensive inks originating from China.
WWM has its own testing facility, where it conducts analysis of the products of the main competitors on a regular basis. As explained by Bartash, in this way WWM not only manages to stay updated about the quality of inks of the company’s rivals in the domestic market, but also uses the obtained knowledge to perform optimization and improve quality of its own products.
No-Name Products
At the same time, aside from the falling demand, the real problem now for WWM are the so-called “garage” businesses. Most of these manufacturers are small-scale private businesspeople, who don’t have production facilities and simply mix up some components to produce the cheapest possible inks in their own garages.
Similar “garage” businesses exist in most countries of the post-Soviet space, and it is in fact a common problem not only for ink producers, but numerous industries in the region.
Eugene Sirota, the manager of the Sint Company, an official distributor of OCP inks in Ukraine, doesn’t exclude the possibility that the falling demand for inks at the country’s market are at least to some extent associated with these “garage inks.”
“An inexperienced user can buy some cheap ink and eventually not only get poor-quality print, but also even the problems with the printhead. As a result, at least some of these customers refuse further use of the compatible inks, and switch to original cartridges, because, in their opinion, all compatible inks have similar bad quality,” Sirota observed.
“In some particular cases, customers simply stop using inkjet printers. Nevertheless, some customers understand where the problem came from and start searching for more compatible inks, as a rule eventually choosing OCP,” he added.
In general, the price of OCP inks in Ukraine is 20% to 30% higher compared to the “garage inks,” which Sirota describes as “no-name inks,” simply because as the rule they are distributed without any particular brand and without any label on a can.
It is believed that low price is the only competitive advantage of the “garage inks,” as the new customers in Ukraine usually start with buying the most inexpensive products. It is noteworthy that the very existence of the entire segment of such inks, according to Sirota, could be explained by the harsh economic situation in the country.
“With the projected growth of the economy, the demand for original inks, including under the OCP brand, will rise, because the main priority will be given to quality, reliability and trouble-free use, and not the combination of low quality and low price,” Sirota observed.
At the same time, OCP is believed to be a leader in the premium segment at the Ukraine’s market, and the demand for its products remain stable, according to Sirota.
A Way of Survival
Bartash offers a similar opinion, speaking about the small businesspeople in the market, suggesting that “they are selling products under the dumping prices, obtaining a temporary profit, but don’t care about the market situation in general.”
WWM also believes that importers of inks in Ukraine are not always being fair to their customers, as sometimes they are purchasing inks from various suppliers, including of Chinese origin, and then selling the different products with different quality under their single brand.
At the same time, the manufacturers of “garage inks” have their own vision of the situation at the country’s market. One of these business people, who wished to stay unnamed, claimed that it would be wrong to say that the quality of producers in the “shadow segment” is always poor.
“When producers are operating half-legally, not registering some part of turnover to the state agencies or not showing its production capacities, this is not the way of cheating with the customers, but this is a way of survival,” he claimed.
“The administrative pressure on small business in Ukraine is tough, while the taxes are rather high, so sometimes for small companies there is no alternative but to operate not fully legally.”
At the same time, the description of “garage inks” has nothing to do with the truth, because 90% of the companies in this segment actually were never operating in garages. In most cases, the definition is used to describe facilities that were registered fully legally once, but had to move away from legal operation due to various reasons, he noted.
The most important fact is that the quality of inks in the shadow segment is not as poor as the legal manufacturers and importers are trying to convince the customers it is.
“For instance, our facility is operating locally and we have numerous loyal customers who purchased our products for eight years. If we were manufacturing inks with such a bad quality, we would lose our clients in a minute,” he stated.
Nevertheless, operating outside of the legal field, an ink manufacturer in the Ukraine at least would be subjected to fines, while in some particular cases they could face the criminal liability if they were caught.