Photo taken in 2009 shows the TrueColor stand at the China Stationery Fair in Shanghai. [File photo/IC]

But Chen Du, chief analyst at Beijing Integration Capital Investment Co, said that despite the huge number of companies making school and office supplies, market concentration is low.

"Given the situation, stationery companies need to expand quickly to occupy a market niche so that they can grab more market share," he said.

TrueColor, with eight flagship stores, plans to build another 38 stores on its own and expects to double its net profit after the expansion.

"M&G is anticipating a tough encounter," Chen said. "And as more players are expanding their presence, competition is intensifying."

China is expected to overtake the United States as the largest writing supply market in 2018, with a market value of $4.2 billion, according to a report by Euromonitor International, a London-based consulting firm.

China has posted the strongest average growth rate of 14 percent in writing instruments over the past five years and will remain the fastest stationery market over the next five, the report said.

Gek Tan, who covers personal accessories and eyewear at the firm, said that China's stationery market has an upbeat outlook for the coming years, in spite of mounting challenges posed by the use of electronic devices such as smartphones and tablets.

Gek noted that the industry has a large customer base of university, secondary school and primary school students, as well as administrative officers. She also said that stationery makers should strengthen their distribution channels at hypermarkets, independent stores and bookshops.

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