Shenzhen, China — In three decades, TK Group (Holdings) Ltd. has grown from modest beginnings to a powerhouse mold maker and injection molder that's on the speed-dial of top brands from Silicon Valley to Sweden.
In 1980, strong-limbed immigrants could swim the 3 kilometers from Shenzhen — at that time still a sleepy fishing village — to Hong Kong's New Territories.
“There was a policy that as long as you could reach downtown [Hong Kong], then you would be accepted as a resident. At that time, HK was still an industrial city and they needed workers,” said CEO Michael Yung, who has been with TK since 1989. “That's how [company founder Alan Li] immigrated to Hong Kong, and started the company in 1983. With only seven workers.” The company was initially called Tung Kong Machinery Moulding FTY and operated out of a tiny 70-square-meter space.
Recently, Plastics News was given an exclusive tour of the company's sprawling complex in Shenzhen that includes factory space, futuristic headquarters, a lushly landscaped pond and garden, worker dormitories and sports fields. No photos were allowed of the fully automated production lines, but the fruits of Industry 4.0 were in full swing, as robot arms fed and unloaded ranks of injection molding machines churning out electronics parts.
When it came to quality control, though, the human factor loomed large, as workers meticulously examined parts for any blemishes. The capital outlay has earned TK the ISO13485 certificate for quality control in the production of medical devices.
The company also has other factories in Shenzhen, near Suzhou, and in Germany — this last from the acquisition of Braunschweig-based Selig & Böttcher GmbH & Co. KG in 2014 that gave TK a bigger foothold on the continent.
“We see Germany as one of the very important potential markets. Customers are becoming more demanding in requesting local support, especially automotive parts makers,” Yung said.
Following on the successful Selig & Böttcher acquisition, TK is focusing on opportunities in the North American automotive mold market, according to its annual report.
Sales growth is robust: in the fiscal year ending Dec. 31, 2015, total sales were HK$1.6 billion ($201 million), a 20 percent jump from the previous year. Injection molding sales were HK$1.02 billion ($131 million), or about 63 percent of TK's business. Sales from mold making were HK$589 million ($75.9 million). Gross profits were HK$419 million, up 14.6 percent from the previous year, according to the annual report.
Mobile phones and wearables such as smart watches and sports video cameras constituted 20.7 percent of sales, with many of these parts going into top brands. Another 19.7 percent of sales went to makers of smart-home and other digital devices, such as thermostats and flash drives. Sales to commercial telecommunications equipment makers such as teleconferencing vendor Polycomm Inc. jumped 53 percent; this sector now constitutes 19.4 percent of total sales.
The Selig & Böttcher acquisition enabled TK to enter the German market for automotive molds; not surprisingly, sales in the automotive sector for the year leaped 32.3 percent to HK$302.4 million ($38.9 million), or 18.8 percent of total sales. Personal care and medical products represent 12.7 percent of sales, with the remainder, 8.8 percent, going to household appliance makers such as Whirlpool Corp. and AB Electrolux.
Gross profit margins for the mold making business slipped from 34.3 percent in 2014 to 25.4 percent in 2015, as TK invested HK$89 million ($11.5 million) in this business, including launching a unit for producing large molds. TK said the automation upgrade has cut materials and management expenses by 12 percent while boosting operating efficiency by up to 90 percent.