Ningbo, China-based injection press manufacturer Haitian International Holdings Ltd. reported record sales and profit for 2014.
Haitian “continued to maintain a mild growth momentum,” the company said in a news release.
While the results showed a big leap in export sales, and a smaller hike in domestic sales, Helmar Franz, Haitian's executive director and chief strategy officer, downplayed the difference.
“Some things we attribute to the export market are actually domestic. And some things we attribute to the domestic market are actually … in the export market,” Franz said.
“A large part of the Chinese market orders are from Japanese, Taiwanese, [South] Korean, German [and] American customers operating in China. On the other hand, we have a great number of Chinese customers who are moving to Thailand, Vietnam and other places where the wages are lower. Nominally, their purchases are exports, but the customers are Chinese people,” Franz said.
Haitian's sales in China edged up 1.9 percent to 5.1 billion yuan ($811 million), while exports leaped 13.1 percent, to 2.3 billion yuan ($373 million).
Overall, Haitian reported 2014 sales of 7.6 billion yuan ($1.21 billion), up 5 percent from 2013. Gross profit hit 2.5 billion yuan ($392 million), a 7.9 percent increase.
Haitian attributed the faster rise in profit to improved profitability of its current lineup of machines, economies of scale, increased operational efficiency and stable prices for raw materials.
Operating profit climbed 9.6 percent to 1.5 billion yuan ($233 million).
Unit sales declined slightly, down 1.2 percent to 26,839 machines in 2014. But the average selling price was up a sharp 6.6 percent to 276,000 yuan.
Sales of smaller machines — those with a clamping force less than 530 tons — rose 3.1 percent, compared to a robust 9 percent growth in the sales of bigger machines.
“When sales of small machines [100,000 to 150,000 yuan price range] go down, this is a good indication of softness in the market,” he said.
“The smaller machine delivery time is only four weeks. [Customers think] ‘If I'm uncertain about market conditions, I won't buy now, because if demand goes up I can always get a new machine quickly. But even in bad times I will continue to buy big machines, because once my sales pick up, I'll want it so I can meet my customer's demands.'”
Haitian's new 1.29-million-square-foot plant — “our largest” — in Chunxiao, near Ningbo, is undergoing final testing and has a grand opening slated for May, Franz said. The factory required a rethinking in Haitian's manufacturing processes and the company is encouraging workers to innovate new ways of working.
“The only way you can offset higher labor costs is with higher efficiency. You need to be inventive and improve your processes,” Franz said. Moving manufacturing to countries like Thailand and Vietnam where labor is cheaper is “short-term thinking,” he said.
Franz waxed enthusiastically about the company's subsidiary in Mumbai. Besides being a huge market itself, India “is a bridge to Africa,” he said.
“All across Africa, you will find Indian engineers [in plastics companies],” Franz said. “In Africa, they are the heroes.” When these engineers purchase machines, they will be more comfortable recommending machines they already know.
Franz was unfazed by piracy, a key issue of contention for many foreign companies doing business here. “We might be the most copied company in China,” he said, wryly citing Ningbo rivals with sound-alike names. But they have “no financial impact on us,” he said.
“These people are thinking short-term. Their customers will eventually find out,” Franz said.