Hanover, MA…November 2003 -- China, which emerged as a significant market for established wide format OEMs such as Vutek, Nur and Scitex Vision, has, within the last two years become a domestically-produced printer market, significantly reducing the opportunities for traditional wide format OEMs. I. T. Strategies estimates that in 2002, more than 5000 aggressive solvent printers were sold worldwide. Of this, more than 70% were sold in China, primarily by Chinese OEMs. By 2007, sales into China are expected to fall to 67% of total sales due to a saturated Chinese market with declining sales. However, this does not necessarily mean high revenue of high profits for Chinese OEMs. I. T. Strategies estimates that the 15+ wide format OEMs within China have total revenues of about $100 million. According to Mark Hanley, president of I. T. Strategies, “None of the Chinese OEMs have an ink strategy and the results of this are twofold: First, OEM revenues are low because there is no ink annuity and second, cheap non-OEM is used. Non-OEM specified probably inks reduce head life so the demand for replacement heads is probably inflated. As a result, the biggest opportunity in China today is for ink jet head suppliers. Well over 40,000 heads per year. These heads are mostly from Xaar and Spectra, but now we’re also seeing new head suppliers such as Hitachi Printing Systems USA. Because the printers are priced so low, customers can either replace heads or buy new printers if the inks they use cause problems. However, the Chinese OEMs now realize that ink is a revenue stream that they are not getting and they are beginning to put policies in place so that as they target geographic areas outside China, they may be selling a print system comprising printer and ink.” Definition of Aggressive Solvent: Aggressive Solvent Printers are defined by I. T. Strategies as those printers using inks which contain high levels of cyclohexanone, an aggressive solvent additive which causes the strong smell of solvent inks and the environmental dangers. Cyclohexanone is prohibited in the US and Europe to the extent that it must be used with ventilation and safety precautions must be undertaken. Because of non-existent regulations of this chemical within China, cyclohexanone is widely used within China in all wide format solvent inks and often in higher concentrations than in US and European inks.