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China's Chen Hsong opening sales and parts facility in Brazil

By: Bob Moser
PLASTICS NEWS

May 23, 2013

SÃO PAULO, BRAZIL — Injection molding machine manufacturer Chen Hsong has targeted Brazil for its first branch outside of China, opening a sales office and parts facility within the next month, and offering clients in-house financing with rates lower than most Brazilian banks, the company's commercial manager for South America said at Feiplastic in São Paulo.

The 1,200-square-meter stock facility and a support and sales office will be based in São Paulo state with an initial staff of 10, and serve customers in Brazil and the rest of South America. It is a direct reaction to leading Chinese competitor Haitian's strength in export sales in recent years, said Luis Guerra, commercial manager.

Haitian is the No. 1 Chinese supplier of injection molding machines, with Chen Hsong ranking second at home, down from the market leader position it held roughly a decade ago. Chen Hsong recognized the success its competition has had overseas, and felt South America was a market ripe with long-term growth potential, Guerra said.

"We currently rank outside the top 10 in Brazil, but we want to be No. 2 in sales here within the next five years," he said. "For that we must be aggressive, needing to increase our sales 10 times. But we can do it."

Part of that strategy involves Chen Hsong supporting clients with 24 to 36 months of purchase financing by the company, "with very low interest rates, far better than Brazilian banks," Guerra said. The company will also work with small state banks in Brazil and certain state governments that are offering low-interest loan programs for industrial equipment, and don't discriminate against foreign-made machinery.

The company will continue to assemble its machinery in Hong Kong, limiting the Brazilian warehouse to storage of spare parts and 25 to 50 machines. Assembly within Brazil was considered, but even after import taxes are applied the cost of a machine from Asia is still 20 percent less than if Chen Hsong assembled in Brazil, due mainly to higher labor costs and a myriad of domestic taxes, Guerra said

Chen Hsong is established in the Brazilian market, with more than 1,000 machines installed, mostly in the automotive and household goods sectors. The company was nearing 20 new machines sold at Feiplastic as of Thursday.