Hong Kong-based injection press maker Chen Hsong Holdings Ltd. reported its 2005 sales increased by 14 percent - and nearly all the gains came from outside its core China market.
China is huge for Chen Hsong, accounting for 68 percent of sales. But sales to China were flat in 2005, growing 2 percent from 2004.
Chen Hsong's fiscal 2005, which ended March 31, was a tale of two halves when it comes to China.
``During the first half, China's rapid economic growth provided a robust market environment for our products,'' especially in appliances and automotive, the company said.
The first quarter, in early 2004, was ``red hot.'' But the austerity measures announced last year by the Chinese government tightened bank credit and dried up machinery investments by small and midsize plastics processors.
Chen Hsong said other factors also hurt - including high crude oil prices, which led to higher resin prices, and record-setting prices for steel used to make its machines.
Chen Hsong reported sales of HK1.87 billion (US$240 million), up from HK$1.63 billion in 2004. Profit from operating activities was HK$292 million (US$37.5 million), up only 1 percent from the 2004 level of HK$288 million. Profit attributable to shareholders increased 22 percent, to HK$260 million (US$33.4 million).
Taiwan also is an important market, accounting for 12 percent of sales.
Meanwhile, to offset what it called Chen Hsong's ``overdependence'' on the single market of China, Chen Hsong continues to diversify into other regions such as Europe, South America and the Middle East. In 2005, sales to those markets sales skyrocketed 84 percent.
To offset tight credit in China, Chen Hsong is working with several Chinese banks to create ``buyer's credit'' programs. To help with steel costs, the company opened what it calls the largest ductile iron casting plant in Asia, in Shenzhen.
Also, the group reported increased sales of large-tonnage machines to China, which fueled a 30 percent gain in sales to eastern China.
Looking ahead, Chen Hsong officials said the Chinese market could enjoy a strong rebound of capital investment if the government relaxes its austerity measures, and crude oil and steel prices stabilize.
