Moldmakers and molders in South China face consolidation, Part II
PLASTICS NEWS CHINA
GUANGZHOU, CHINA (Oct. 4, 2011) -- Although the tough economic conditions are hitting some manufacturers in South China hard, other are doing well, according to industry sources.
“All of my friends related to automotive and thin-wall packaging, they are doing very well,” said Alfred Au of the Hong Kong Mould and Die Council’s executive board. “But with electronics or housing appliances, it’s no good, no good.”
“All our members, the mold makers or molders, can be divided into two groups,” said Au, who has been on the council board for two decades. “One, the volume of sales goes way down. The other, sales are going up.”
Au pointed to fellow Hong Kong mold-making company Datamatic CNC Engineering Co. Ltd. as a company that has “more work than they can handle.”
Datamatic, which employs 230 people at a factory in Guangzhou that is a joint venture with a local government agency, is looking to raise funds for a new factory in that city.
The company makes precision molds for headlamps and lighting in cars, and said almost all of its key clients in the auto industry are telling it to prepare for substantial new projects in coming years.
“Our clients are asking us to increase our capacity,” said Leton Lee, general manager of Datamatic. “We feel quite optimistic.”
Almost all of Datamatic’s customers are global Tier-1 automotive suppliers, with about half of Datamatic molds being used in projects for the China market and half overseas, he said.
The company has a niche making specialized, highly precise molds, and has more pricing power than many competitors, he said: “It is difficult [for auto makers] to get a good supplier for certain kinds of parts.”
Developing a niche, rather than trying to be a general mold maker in diverse markets, is a key recommendation that came from a recent study the Hong Kong council commissioned to give its members a roadmap to improve, Lee said.
Mold makers in Guangdong province, where Datamatic is, also may face more challenges with government policy compared to Zhejiang province, another mold-making center, where government rules are “very encouraging,” Lee said.
Guangdong and its capital, Guangzhou, want to develop more of a service industry, and are imposing stricter requirements on manufacturers that want to expand, Lee said. Datamatic meets those requirements, which include investment levels and profit margins, and is looking to put its new factory in suburban Guangzhou, he said.
The government requirements are apparently strict — Datamatic’s JV partner told him that even though they are a quasi-government agency, the factory must meet the rules that are being set by other units of the local government, Lee said.
The Hong Kong council maintains that its members still have advantages in the world economy, including familiarity with technology like micromolding, in-mold assembly to automate production and closer access to China’s growing domestic market.
Au said being a bridge between China and the rest of the world is one advantage. Hong Kong’s mold council, for example, is working closely with Japanese mold makers looking for partners to set up in mainland China, he said.
It’s also important for Hong Kong’s plastics industry to more closely integrate with the Guangdong and other areas in China, Au said: “Nowadays we cannot work just on our own.”
Jack Yeung, chairman of the Hong Kong Mould & Die Council, said the Hong Kong council is also actively arranging business match-making services for its members with groups in Europe and Japan.
The Asiamold exhibition also seems to be mirroring the changes in South China’s plastics industry.
This year saw a drop in participation from Hong Kong mold making and molding firms that had previously taken large and prominent booths, replaced by more mainland Chinese mold makers, said Louis Leung, deputy general manager of the Guangzhou office of fair organizer Messe Frankfurt.
Overall, the fair increased the number of exhibitors by 12 percent to 330, and saw visitors in the first two days total 12,500, which exceeded 2010’s totals for all three days. Overseas visitors were up 25 percent, helped by delegations from Eastern Europe, Iran and Japan, Leung said.
Some of the mainland Chinese shops at the Asiamold fair said they were upgrading.
Shenzhen-based Hanking Plastic Manufactory (Shenzhen) Co. Ltd. invested 50 million Chinese yuan (US $7.82 million) on a 10,000 square meter108,000-square-foot mold-making factory it opened in August next to its headquarters molding factory. About one-third of that was spent on expensive Japanese and European mold making equipment, said Olive Kan, international trade manager.
“We need to improve the mold quality to attract more attention from overseas,” she said.
Dongguan, China-based mold maker Hitop Mold Industrial Co. Ltd. said its business has been helped by overseas customers seeking bargains in the slowing world economy, but profits are hurt by rising costs and the stronger Chinese currency.
“Our profit rate is smaller and smaller,” said Marketing Director James Liu.
