Asia-based machinery makers balance value, performance to meet trends

SHANGHAI—Investments from Asia-based machinery manufacturers in research and development have paid off with energy savings and niche machine features "at a fraction of the price" of their competitors, regional industry leaders say.

At the same time, they are watching China's electric vehicle market and future recycling initiatives.

With many global markets in a "technical recession," Hong Kong-based Chen Hsong Machinery Co. Ltd. is expanding its services and machine features to meet customers' demands, Stephen Chung, executive director and group chief officer of strategy, sales and marketing at Chen Hsong, told Plastics News, a Rubber News sister publication, at Chinaplas in Shanghai.

"It's hard to do business these days. … Interest is high," Chung said. "Investment in capital equipment is very costly right now, so (customers are) beginning to look at a grand balance of price and functionality."

Most of Chen Hsong's customers in the U.S. used to "go for the top-end (machines,) the very best," he said. "But (over the last two years) they're beginning to look more for value. U.S. companies wanted to pay good prices for very high-end equipment. Now they want reasonable prices for just-about-as-good equipment.

"How to (provide that) efficiently, I think, is the problem in front of the R&D department of every single brand," Chung said, adding that customers are looking for a "total value package."

"That means going for new technologies that will solve unique problems, at affordable prices."

With the cost of utility bills climbing across the globe, "everyone is pouring R&D resources" into energy savings, material savings and weight reduction, he said. "Strangely, we have been talking less about (R&D) these days. But I think the industry, as a whole, is doing more. … They're doing more and talking less."

Chen Hsong is focusing on "fine-tuning" its existing machines and developing "high-end precision controls … that provides value to the client without jacking up the equipment price," Chung said. "A user who buys one of our standard machines can have a slightly better yield over the last generation. For the customer, that means dollars in their pocket.

"When you're up to a certain level of technical expertise, every step of improvement takes very dedicated R&D efforts," he said. "With today's interest rates and (market) weaknesses, our clients aren't asking for the coolest thing; they're asking for the most bang for their buck."

For injection molders using engineering resins, "1 percent less wastage is a huge thing," he added. Customers that are used to European and Japanese equipment will "get the same level of yield on production, but at a fraction of the price."

The company's clients are also "diversifying their supply chain," Chung said, "away from a China-predominant one" by investing in new locations in Mexico and South America.

Chen Hsong plans to build a subsidiary in Mexico, with warehouses, supply, service centers and technical teams at its new North American hub. It also hopes to build an office in the U.S. after it finishes its Mexico hub, Lim Yi Jun, corporate project officer at Chen Hsong, told PN.

New customers in Brazil recently chose Chen Hsong's machines over European competitors for their energy savings, Lim said.

"The quality of Chinese-made machines has been catching up to those made in the west or in Japan, so the price differential is no longer justified," he said. "You're talking about double or triple the price sometimes for certain machine models, and it's just not worth it."

Chen Hsong's generic machine lines are for customers looking to get a machine installed fast, Lim said. But it also works closely with its clients to build custom machines "optimized" for specific products, designs and materials.

"We are usually one generation ahead on reducing electricity to our machines compared to others in the industry," Chung said. "We are usually easily 10-12 percent more energy-efficient, at least, than our competition."

Despite a rocky global market, Chung said he sees "a few bright spots" with growing demand in India and in defiance of rising inflation in its economy, Turkey.

In China's automotive market, EV sales remain strong, Chung said. For the rest of the world to catch up, "it's going to take time."

Over the past two years, China's number of EVs sold annually grew from 1.3 million to 6.8 million, according to the China Association of Automobile Manufacturers.

"In China … the government points and everyone follows," Chung said, adding that charging infrastructure, which holds back EV adoption in other countries, isn't a problem for China.

"The government can mandate everyone put charging stations in their parking lots," he said. "That removes the main obstacle."

Taipei, Taiwan-based Shini Group is expecting customers to start demanding more machines that can work with recycled content, especially in the China market.

Although Asia is currently behind Europe and some of the U.S. in amounts of recycled content, Alan Chen, director of the corporate technology center at Shini, told PN the Chinese government has started to request urban regions recycle more.

Shini has also seen strong demand for its standard machines, Chen said, which often go "in volumes of thousands" to "the major" EV component suppliers in China. "They have very high capacity for high volumes of parts," he said.

"They don't always need the very sophisticated (machines)" for interior, exterior or battery components, Chen said, "because it's just repeating the process."

That also helps to save those customers money, he added.

"We want our customers to be aware of (trends), so when they need it in the future, they can think of Shini," Chen said. "Shini is not aiming to be in a niche market; we're aiming to be in a market where there's a demand for quality and economical prices. But we are able to provide (niche machines) and turn-key solutions."

Shini's customer base is about 70-80 percent domestic, Chen said, with some clients exporting their products and components overseas.

For customers that sell to the Chinese market, "it's a very different market. … You can't calculate your investment for five to 10 years here; it doesn't work," Chen said. "You have to calculate it maximum two years, sometimes one year or six months.

"Asians, we like new things, new gadgets," he said, "much more than the Europeans and Americans. … Sometimes I think there are too many options on the market. Sometimes simplified things are not a bad option."

Shini has invested to improve energy savings and connectivity in its machines by modifying its existing units, he said. Customers with older units can upgrade "so the equipment is not obsolete."

It also sources components from local suppliers in Asia for automation and auxiliary equipment to provide more competitive prices, Chen added.

By making improvements "little by little," Shini is able to keep prices "not much more expensive than the standard unit" for machines with higher energy savings, he said. "We hope in the future this replaces and becomes the standard."

At NPE in Orlando, Fla., Shini hopes to show customers in North and South America that "we don't always need expensive solutions; our philosophy is to keep things simple," Chen said.

The company's Dongguan, China, operations will move to a new $28 million facility at the end of this summer, he added.