 2016-02-01 |
|
|
Xinzhu Global (3171), a subsidiary of YC Group, has set ambitious goals for its growth, aiming to double its revenue within five years. Despite experiencing significant losses in mainland China, the company has made a remarkable turnaround after a year of adjustments. Last year, Xinzhu Global achieved a gross margin exceeding 20% in each quarter, becoming the most profitable company within the group. Chairman Jiang Wen-rong emphasized that although there are still many challenges in the macro environment, the company is on track for revenue growth this year and plans to double its revenue in the next five years.
Xinzhu Global reported a full-year revenue of NT$1.733 billion, a decrease of 2.5% from the previous year. For the first three quarters of last year, net income after tax was NT$75 million, a 54.4% increase year-on-year, with earnings per share at NT$1.27, the largest increase in profitability within the group. Below are highlights from an interview with Chairman Jiang:
Q: Achem also sells packaging materials. How does it differ from Xinzhu Global?
A: Achem produces and sells packaging materials, mainly serving distributors. In contrast, Xinzhu Global sells directly to end customers, focusing entirely on product sales and services. Although Xinzhu also sells Achem's products, they account for less than half of Xinzhu’s revenue.
Q: Xinzhu Global has maintained a gross margin above 20% each quarter since last year. What is the key to this competitive edge?
A: Xinzhu Global goes beyond simply acting as a product reseller. We offer comprehensive solutions, helping customers find the most suitable and cost-effective packaging materials tailored to their needs, effectively positioning ourselves as packaging consultants. Our sales team collaborates with customers' R&D departments to develop customized solutions, leveraging decades of experience and know-how.
To lower costs, Xinzhu employs bulk purchasing and multiple sourcing methods. By offering competitive prices and professional services, we build strong customer relationships.
Q: What is Xinzhu Global’s customer base?
A: Our primary customer base is in the information technology sector, with cross-straight communications customers accounting for over 40% of our consolidated revenue. This sector’s short product lifecycles and constant innovation result in high demand for customized packaging. Xinzhu excels in providing tailored solutions that meet the high quality standards required by these customers.
Q: How has Xinzhu Global adjusted its strategy for the mainland Chinese market?
A: Initially, we assumed that our Taiwanese experience would translate directly to the mainland market. However, we faced significant challenges, including issues with business integrity and excess production capacity. Since 2014, we’ve refined our approach by focusing on large enterprises, which have stringent quality requirements and are less affected by economic downturns. Gaining certification from these large clients took about a year, but we have now found a successful business model in the mainland market.
Q: Will Xinzhu Global be opening new locations in mainland China?
A: We currently have offices in Shanghai, Tianjin, and Wuhan, with plans to open a new office in Shenzhen in the first quarter of this year. We will continue to add locations based on customer demand but will focus on strategic placements rather than widespread expansion.
Q: As you begin your first year as chairman, do you have specific goals for Xinzhu Global?
A: Despite ongoing adjustments in the mainland market and cautious economic conditions in Taiwan, Xinzhu Global is poised for growth. We expect mainland revenue to increase by at least 20% this year, while revenue in Taiwan is projected to grow by double digits. Our goal is to achieve a balanced revenue distribution between Taiwan and mainland China within one to two years, with mainland revenue surpassing Taiwan’s contribution within two to three years. This growth trajectory aims to double our consolidated revenue within five years, establishing Xinzhu Global as the largest packaging materials distributor across both markets. |
|
