Chu: China
Urbanization Paves Prosperity for Machine Tools Industry
Jimmy Chu: In China, the
marketing strategy is to consider one province as a country, and to focus on
the domestic needs. Exports and RD are operated from Taiwan strongholds. Due to the Japanese earthquake, a gap of
supply chain may emerge in May and June.
Economic Daily
News May 3rd, 2011
Chu
indicated that shortage of critical components and parts may occur in May and
June. It’s estimated that 3 months at least it will take to have healthy supply
chains back.
In
this report Jimmy Chu talked about the cross-strait marketing strategy and the
impact from Japan’s tremendous earthquake. He expressed that machine tools
industry is welcoming its thriving age in China. Automotive, high speed rail, 5-Year Plan
and urbanization policy are all favorable factors. He estimated this year FFG
will reach RMB$ 5 billion (NTD$22 billion) revenue this year in China.
As
for the recent earthquake in Japan, Chu said that FFG wasn’t benefited from
transferred orders. However, shortage of critical components is likely to
happen in May and June. Even the component suppliers manage to sustain
production from other sites, it takes at least 3 months to come back to normal
and stable supply flow. FFG now owns 3 subsidiaries in Japan. Chu indicated,
“earthquake, radiation emissions and electricity shortage triggered crisis
alert among Japanese enterprises. More Japanese companies consider investment
or development in Taiwan.”
Moreover,
Taiwanese machine tools builders benefit from ECFA due to low tariff rate. Some
Japanese corporations have contacted FFG for cooperation of setting factory
sites in Taiwan. “Japanese enterprises tend to work with us and it’s a small
chance for them to enter China market on their own,” Chu delivered. For some
history reasons Japan is not always welcomed in China. Complicated business
ecology also keeps middle-small Japanese companies from China market. Therefore, they mostly incline to put
their investment chips on Taiwan.
This is a good opportunity for Taiwan.
It’s
a clear strategy FFG’s plants in China particularly serves the local market
requirements while international exports and RD are operated from Taiwan. So
far FEELER has 66 branch offices in China and handles marketing
channels/network directly.
Chu
emphasized, “The marketing tip in China is working on a province as you working
on a single country.” Taking Shandong Province for instance, in 2010 FEELER
received NTD$ 2.5 billion from Shandong and an increase is estimated up to NTD$
3.5 billion for this year. In Taiwan, only 3 machine tools builders earn annual
turnover as much. “You work so hard in Taiwan but in China just one province
covers business worth your entire grind,” Chu added
Chu
has great confidence in China market. China’s 12th 5-Year Plan
covers communication, electronics, solar energy, ship making, aerospace and so
on. Chu expressed, “market requirements for automotive has reached its peak
though, in a long term a stable growth still can be expected.” China has such a
great population and still many people out there desire to have their own cars.
Urbanization is another strong support for machine tool industry’s growth. In
the forming process from agriculture village to modern town, many economic
activities and industries will get involve, such as clothing, shoe-making, nursing
for seniors, education and so on, which are less or more related to machine
tools.
FFG
pours in NTD$ 10 billion to build up new production facilities. Considering man
power, existing plants and overall planning, all the 6 current plants are
located in Hangzhou and 6 more new plants to be built this year are also in
this province. Lately Sangyun Wang, Governor of
Anhui, visited Taiwan and keenly invited Chu to invest in Anhui. Chu expressed
that this caused his interest and “I shall pay a visit to Anhui in recent
time.”
