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China's Yizumi looks at injection press assembly factory in India

By: Steve Toloken

April 15, 2013

FOSHAN, CHINA — Chinese injection press maker Guangdong Yizumi Precision Machinery Co. Ltd. said it plans to open a service center and likely an assembly factory in India, as part of what the company described as an ambitious plan to double sales by 2015.

Yizumi disclosed the stepped-up plans to invest in India during an April 12 media open house at its Foshan headquarters, where it offered a tour of the first phase of an 81,000 square meter injection molding machine factory that it plans to open later this year.

Yizumi CEO Richard Yan said the India technical service will open this year and the factory there could open towards the end of 2014.

India imposed steep tariffs on imported Chinese-made molding machines in 2009, and that has hurt sales of Chinese machines and prompted at least one Chinese competitor of Yizumi's to set up manufacturing in India.

Yan said Yizumi has a goal of boosting global sales of injection molding machines from 600 million Chinese yuan ($96.9 million) in 2012 to 1.2 billion yuan by 2015.

Even if the company doubles its sales, it would still take only a small part of China's injection press market, Yan said. The company is focusing on a global strategy, with plans to open a service center in Brazil after the India investments are complete.

Exports, mostly to Southeast Asia, were 20 percent of sales, while the company targets 30 percent of sales from exports in 2015, Yan said.

The company bought the intellectual property of bankrupt U.S. machinery maker HPM in 2011 and opened a technical service center in the United States. Yan said Yizumi does not want to repeat HPM's mistake of relying too much on its domestic market.

"The golden time for equipment in China is passing away," he said. "We need to be global otherwise we risk the same problem."

Yizumi is not alone as an injection press maker dealing with tough conditions in China's manufacturing economy. Some of the company's major competitors, including Haitian International Holdings Ltd. and Cosmos Machinery Enterprises Ltd., have been reporting declining sales as Chinese plastics companies slow down their capital investment plans.

China's largest press maker — Haitian — for example, told the Hong Kong Stock Exchange in March that sales last year dropped 10 percent to 6.33 billion yuan ($1.01 billion) and Cosmos Machinery Enterprises Ltd. said its machinery sales dropped 23 percent.

At the open house, Yizumi executives also provided some details on their R&D plans, saying that they were working in four categories in their injection press business: high-speed machines, two-platen models, all-electric machines and its line of machines with HPM's technology.

The company is working on seven models of equipment in the HPM line, which it calls its HST series, from 80-650 metric tons of clamping force.

Yizumi plans to launch commercial production of its two-platen and all-electric designs in 2014 or 2015, but acknowledged that the company is coming later to the market than some of its competitors with that technology.

"We are the last one to do two-platen and the last one to do all-electric," Yan said. "We started later but we have to prepare fully."

It faces some entrenched rivals in the all-electric market. Japanese companies, who are considered the strongest makers of all-electrics worldwide, have already relocated some of their production to China in a bid to lower costs.

Yan said the company would look for innovations suitable to the Chinese market that would lower costs, but as with their plans to double sales, the company did not offer a lot of details.

He compared the company's strategy in R&D to its purchase of HPM's assets from an American bankruptcy court auction.

Yizumi prepared for a long time for how to handle an opportunity, and he said many Chinese firms have gotten into trouble buying assets overseas before they were ready or launching new machine designs before they were fully-developed.

"To do the purchase is easy," he said. "To manage it is difficult. If you are not prepared, it is difficult."

Yan said the company is still waiting on approval of its planned initial public offering in the Shenzhen stock market. The company also has units making die-casting equipment and rubber processing machinery, although plastics is its largest unit.