CHICAGO — Chen Hsong Holdings Ltd. may not roll easily off your tongue, but Chen Hsong injection presses are a household word in China. And China — with 1.2 billion consumers — counts.
Hong Kong-based Chen Hsong runs 10 plastics-machinery facilities in China, six in Hong Kong and two in Taiwan. Chen Hsong claims to hold about one-third of the injection molding press market in China.
This week, the world's eyes are focused on Hong Kong as it reunites with China after 156 years of British rule. Hong Kong, market-driven and freedom-loving, could become a model for China.
Chen Chiang, chairman and managing director of Chen Hsong, likes that kind of talk. He fought against Mao Tse-tung's populist revolution, then fled to Hong Kong to set up a small repair shop.
Right now, most of the Chen Hsong presses sold to China are simple, low-cost machines. But that will change as China's manufacturing sophistication increases, he said.
``We want to bring technology into China,'' Chiang said, speaking through an interpreter in an interview at NPE in Chicago. ``After June 30, we believe Hong Kong will be able to assist China [to] open up their market even more. Hopefully, China and the world industry can become one.''
At NPE, held June 16-20, Chen Hsong exhibited at the booth of its North American representative, New Pacific Machinery Inc. of Trenton, Tenn.
As Hong Kong gains global attention, Chen Hsong has caught the attention of many in the global machinery sector.
One reason is sheer size. Chen Hsong claims to sell about 9,000 injection molding machines a year, most of them in China, Taiwan and Hong Kong. Chiang said 20-25 percent of that output goes to mainland China, where Chen Hsong has about 30 percent of the market.
Company literature maintains that Chen Hsong makes one of every 10 injection molding machines sold throughout the world.
Chen Hsong, publicly traded in Hong Kong, makes injection molding machines in clamping forces of 22-3,520 tons, metal die-casting machines and — through joint ventures — extruders, blow molding machines, robots and custom injection molded parts. Sales for 1996 were 1.1 billion Hong Kong dollars (US$142 million). The company employs 1,500.
Chiang founded Chen Hsong in 1958. As Hong Kong's plastics industry grew, the company in the mid-1960s began to specialize in injection molding machines. It set up manufacturing in Taiwan in 1980. Production in China followed in 1987.
Connections to mainland China have netted Chen Hsong two high-profile joint ventures with German companies in the past two years, to build extruders and blow molding machines. Both ventures are in the city of Shunde, in China's Guandong region. From NPE, here are some progress reports:
Chen Hsong and Battenfeld GmbH formed Battenfeld Chen Extrusion Systems Ltd. in 1996 to build extruders. The Shunde plant started making pipe extruders earlier this year, according to Wolfgang Studener, chairman of the managing board of Battenfeld Extrusionstechnik GmbH. Next, the company will make machines for profiles, and film and sheet. Lily Chiang, executive director of Chen Hsong and Chen Chiang's daughter, approached Battenfeld about the venture.
Fried.Krupp AG announced its China venture in 1995, with Chen Hsong and Shunde Sunny Group Corp., to make machines for blow molding 1-liter high density polyethylene bottles. The Shunde factory is starting to build machines with components from suppliers in China, according to Jurgen Maass, supervisor of sales at Krupp Kautex Maschinenbau GmbH, a unit of Fried.Krupp AG. That follows earlier phases of shipping in simple German-made machines, then building European-style machines in China, he said at NPE 1997.
What's it like to do business with Chen Hsong?
``This is a strong company,'' Studener said.
So far, Chen Hsong has established joint ventures only outside of its core business of injection molding machines. Besides the Battenfeld and Krupp agreements, Chen Hsong has long-term Hong Kong joint ventures with U.S. custom injection molder Nypro Inc. and Japanese robot maker Yushin Precision Equipment Co. Ltd.
Although more deals are possible, Chiang said that Chen Hsong has no immediate plans to form a joint venture in injection molding machinery.
But Battenfeld has found a way to tap into the company's core strength, by purchasing 5 percent of Chen Hsong Holdings. Chiang and Helmut Eschwey, a member of the managing board of Battenfeld's owner, SMS AG, confirmed the news at NPE. Eschwey called Chen Hsong a good partner with solid business sense.
Maass declined to comment specifically about Chen Hsong, but said an outside firm has no chance working alone in China.
``You need a local company whenever you go to China. You have to have it,'' he said.
Maass said China presents many challenges, especially with finding qualified employees.
``China is harder to get the work force formed than other countries, but it is a single, big market,'' Maass said.
Meanwhile, Chen Hsong continues to expand into China — where it already employs 1,000 and has more than 7 million square feet of manufacturing space. At NPE, Chiang announced plans to spend at least US$70 million to build a 500,000-square-foot factory in Shenzhen, China.
Construction of the plant should begin in about six months. It will be the first to make, in-house, all major components for the molding machines, including tie bars, manifolds, screws and barrels. Chen Hsong now outsources those parts.
Chiang wants to promote Hong Kong as a center of heavy machinery manufacturing.
He admits that, when U.S. plastics processors think of Asian injection press makers, they think of Japan, Taiwan and Korea — but Hong Kong has a different image.
``In the past, people would think of Hong Kong as a haven for shopping and also a financial center,'' he said.
Chiang wants the world to know that Hong Kong makes injection presses, too — thousands of them every year.