Excerpt from WeChat public account: Printing Entrepreneurs (Original by Wang Sanhao)

The SML Group and Sanhao Students were reminded of a recent exchange with two bosses in the industry.

At that time, the three good students quoted a set of data.

Since the establishment of independent statistics, the peak of profit margin of printing industry value was in 2009, when the total output value of enterprises in the circle reached 636.77 billion yuan, the total profit reached 60.39 billion yuan, and the profit margin was 9.5%.

By 2022, enterprises in the circle will achieve a total output value of 1.43 trillion yuan, a total profit of 68.95 billion yuan and a profit margin of 4.8%.

In 2023, the total output value of enterprises in the circle reached 1.44 trillion yuan. The exact data of the total profit has not been released yet, but it is generally more than 71 billion yuan, and the profit margin is still less than 5%.

In fact, since the total profit reached a high of 77.22 billion yuan in 2013, until 2023, the total output value of enterprises in the circle increased by about 40%, but the total profit hovered between 67.53 billion yuan and 72.70 billion yuan, failing to achieve synchronous growth.

So here's the question: How much more work is being done, but profits are not growing. Where are the profits going in the printing industry?

This is exactly what the two bosses want to talk about with the three good students.

Yeah, where did all the profits go in the printing business?

It is naturally difficult to explain and demonstrate this question completely, but it is much easier to say something about it.For example, no matter revenue or output value, it is always difficult to grow in proportion to profit. Instead, it is affected by various factors such as cost and price.

When it comes to cost issues, the principle is straightforward. For the same 100 yuan worth of work, the original cost was 80 yuan, but now it's 90 yuan. The boss is more diligent and productive, earning 200 yuan a day instead of 100 yuan. Although the income has increased by 100 yuan, the profit hasn't actually increased by a single cent.

But at this point, one of the bosses put forward a different opinion: if you say that costs and expenses have gone up, the price of printing materials such as paper has actually been low in the past two years. If you say that labor costs have gone up, we now have all kinds of automation equipment, so people use less.

It is hard to argue against the price of raw materials. It is easier to argue about labor costs.

For example, whether the rate of decline in employment is matched by the rate of increase in unit labor costs.

For another example, the reduction of labor force is basically based on the use of automation equipment, but automation equipment does not come for free, it needs to spend money, and the money will have depreciation; if the own capital is insufficient, there will be financing costs.

Moreover, if the boss is too aggressive and buys too many devices, the idle equipment is not really idle. It will also consume costs and erode profits invisibly.

From the perspective of cost, it doesn't make sense. We can also look at the problem from the perspective of price. For the same 100 jobs, we used to earn 20 yuan for each job at 1 yuan; now we still do the same 100 jobs, but it becomes 90 cents for each job. The cost remains the same, so we can only earn 10 yuan.

This is the decline in profit margins. More work does not necessarily mean more money, but less work will certainly mean less money.

From this perspective, from 2013 to 2023, the total output value of enterprises in the circle increased by 40%. In fact, the output may grow more, but it cannot withstand the decline in prices, so it is difficult for profits to grow.