Planning in advance and preparation lead to the road of success. This can be applied to when you are focusing on one specific task, or also when you are looking at a complex business operation. Recently, our magazine has the honor to interview Mr. Richard Yan, Managing Director of Guangdong Yizumi Precision Machinery Co. Ltd. The interview focuses on Yizumi’s upcoming 3-year plan (2013-2015). Mr. Richard Yan gives an in-depth elaboration of the Yizumi team, the Yizumi brand, marketing, products, and production. The following article is our interview with Mr. Richard Yan.
Ju Feng Plastics: As we entered 2013, Yizumi has not only reached a new milestone of going through a course of a whole decade, but also come up with a new three-year plan (2013-2015). Firstly, can you please give us an overview of the achievements of the first decade of Yizumi, and also share with us the targets of your company for the coming three years?
Mr. Richard Yan: Our company has made great achievements in the past ten years. For the past decade since the founding of Yizumi in July 2002, the company has made great progress everyday and is continuing to move forward. Despite the 2008 financial crisis, we still maintained a steady pace of rapid growth, and because of the comprehensive competitiveness of the enterprise, we have received appreciation and recognition from customers, suppliers, employees and all stakeholders. During the rough economic situations in 2012, even when there was a huge downturn to the equipment manufacturing industry as a whole, Yizumi still achieved double-digit earnings. Yizumi has already been recognized as China Well-known Trademark, one of the strongest among the top ten enterprises of the plastic injection molding industry in China, one of the strongest among the top twenty in the comprehensive plastic machinery industry in China, and has been awarded honors such as the “Outstanding Quality” award from the Shunde government, the “Most Rapid Growth of Small and Medium-Sized Enterprises” award, and also the “Star of Technological Innovation” award. Accomplishments belong to the past; to face the future, we have developed the coming three-year development plans and performance targets. Until 2015, Yizumi’s overall performance target is 2 billion RMB (1.2 Billion RMB from injection molding machines, 6 hundred million RMB from die-casting machines and 2 hundred million RMB from rubber injection machines); our target is to have a year-on-year growth rate of 150% over the 3-year-period.
Ju Feng Plastics: Yizumi team makes the next three-year goal of 150% business growth for the second boom of the company. However, the growth rate for 2010, 2011 and 2012 respectively is 72%, 49% and 12% and there is an obvious downtrend. It seems quite difficult to achieve a growth rate of 150% in the coming three years. Can you please tell us why your team makes such a goal and how you ensure the realization of this goal
Mr. Richard Yan: From the trend of the growth rate in the past three years alone, it seems that to achieve a 150% growth rate in the next three years is not realistic, but we know very well that the decrease of the growth rate is mainly due to production capacity constraints, the second factor is the weak market environment. In order to solve the problem of insufficient production resources, while we expand the Ronggui production base, we are also optimizing the production process, and improving production efficiency. The Ronggui base production capacity rose from the original 300 units to 400 units, and then further increased to 700 units. Even though the economic environment is not ideal, since 2009 our company continued to make great progress, and from 2009-2011, the operating income of the compound annual growth rate exceeded 60%. We are also accelerating the construction of other production bases; the first phase of the factory in Wusha, Shunde is scheduled to be put in operation on July 1st of this year and 70% of the production of injection molding machines will be transferred over to the new factory. This makes a 40% growth in production capacity possible, and at the same time, relieves our headquarters of the productive pressure. The second phase of the project is scheduled to start at the end of this year and to be completed by the end of 2014; it will be officially opened in 2015. The Wusha factory’s injection molding machine total output value is estimated to reach 12-13 billion. The 1st phase of Wujiang plant, covering an area of 15,000 square meters, is expected to be put into use at the end of this year, as a sales and technical service center with coverage of East and North China, as well as a machine assembly transit point. We will take the finished or semi-finished products of the Shunde factory and directly transport them to the Wujiang factory; if customers have special requirements of the machines, we will make changes to them in the Wujiang factory. This can help speed up the production and shorten the delivery time. After the completion of the 2nd phase, the Wujiang factory will start directly producing some large equipment. After the production headquarter base in Ronggui, and both factories in Wusha and Wujiang are fully completed, the production output value will meet the capacity requirements of Yizumi’s development plan for the coming three years. This will also fundamentally solve the production capacity constraints in Yizumi’s development.
Strong funding base also helps solve the problem of capacity shortage. Our company is young, but our investment strategies are the very positive compared to others in the industry. We invest in not only the plant and workshop constructions but also the production and testing equipment. So far we have invested billions of yuan in our facilities. After all, we believe excellent precision tools ensure high-quality products. Our Wusha Plant is under construction now and we will make a budget supplement of 30 to 35 million yuan for purchasing equipment.
After all we are very fortunate in the case of capacity expansion. Global economic was hit hard due to the financial crisis in 2008 and did not show any signs of recovery until now. During the economic downturn, we positively made investments and intensified reforms; and at the beginning of economic recovery, we’d made full preparation to seize the opportunities.
Business development is just like the launch of a rocket. Thrust required differs at each stage. For a company, the first boom relies on capability and experience of the entrepreneur. When it comes to the second stage, the second boom needs new power. As early as three years ago, we began finding new sources of business growth and advancement. We are now ready for working on the new three-year plan to confident in fulfilling our goal with new driving force.
In addition to higher productive capacity, the impetus for our success also comes from our completely upgraded team, brand and market access.
The leaders of Yizumi have a full understanding of the technology, production and sales, and are well aware of what is going on in the industry. This allows them to use their abilities and knowledge to guide and help Yizumi develop rapidly at the first phase. At the second phase of development, we have to depend on scientific and strategic management more than our empiricism. Three years ago, we introduced a series of trainings to senior executives. They had to take courses of HP Business School and learn management of strategy and process. At the end of each year, three divisions of Yizumi will conduct a careful and scientific analysis on their core competitiveness and have meetings on future plan for the whole division. In this way, the senior executives have a clear and comprehensive understanding of the strategies for the whole company and each division. Their leadership will be enhanced in this process. Moreover, the second tier of talents is the major force in the development of Yizumi. They play an important role in implementing every policy and measure. We have already set up a complete system of training, appraisal and promotion for our employees and pay great attention to their career development, daily life and work environment. Over the past three years, the number of second tier of talents well increased, which laid a solid foundation for our second boom.
For better personnel training as well as to meet the needs of the sub-market, we set up different project groups focusing on developing machines for specific applications. They are in charge of product positioning, design, cost, pricing, advertising, and planning. Our goal is to take a lead in some areas of the sub-markets and then reach an international level by establishing two relatively independent operation systems.
When tangible resources such as talent and capital are gradually enriched, an intangible resource—brand reputation—is also increasing. Today, many excellent customers from home and abroad will take the initiative to contact Yizumi to know the company’s products and technologies, and they come back to us when they are in need of equipment. A few years ago, we could not have imagined this happening. Yizumi's brand reputation is rising as time goes by, and in August 2012 Premier Wen Jiabao paid a visit to the factory and encouraged Yizumi to develop advanced technology to take a lead in the world. We believe our brand will attract more attention from more industry insiders and customers worldwide.
The driving force of Yizumi's second big leap to success also comes from the layout of the market. Over the past three years, we established more than 50 representative offices throughout China. With the completion of Yizumi East China Headquarters which is located in Yizumi’s Wujiang Plant, we can provide better technical services and products for customers particularly in East and North China. In addition, since Yizumi purchased the intellectual property of U.S. Company HPM in March 2011, Yizumi officially started "globalization journey". We currently have a number of overseas offices and service centers worldwide, covering dozens of countries and regions. Also we will set up an overseas plant in one of these three countries: India, Brazil and Russia to provide better products and services for overseas customers. To expand on overseas marketing, we particularly establish an overseas strategic market planning and operation department that conducts comprehensive researches and analysis of overseas strategic markets, determines the target country for investment, plans the investment project and then executes the project. We must take the initiative to develop new overseas markets. Although it is a huge investment, it will help us go in-depth and have an accurate understanding of the preferences and needs of the international market, and quickly respond to it. The establishment of overseas technical service center and production base has been included in the agenda; preparation of establishment is to be completed by the end of 2014, and the new plant will be put into operation in 2015. As it stands, India is more likely to become our target country for investment. But we should have scientific analysis before making the final decision.
While getting new driving force for development, we also analyze the future market capacity. According to the research, it is estimated that in 2015 global sales of injection molding machines will be 40 to 50 billion RMB and die-casting machines will be 5 billion RMB; and the rubber injection machine market is relatively small. Therefore, our 2015 target of two billion RMB is practical as the capacity of global market is large enough. We think that overseas market has higher potential of growth compared with domestic market, so we will strive to develop the overseas market. If we take the initiative to grow up into a truly global and multinational corporation, we will enjoy a great advantage regarding global comprehensive competitiveness.
Ju Feng Plastics: From reports, it shows that Yizumi’s IPO is going through the feedback stage. Can you tell us the current situation as well as your company's plans to raise funds?
Mr. Richard Yan: Because of the suspension of public listing, our application for IPO is pending. In March we have already completed and submitted the self-examination material. We are the company in the first batch waiting for official approval, but we don’t know when the result will come out.
We are raising funds for two main purposes. The first reason is for the Wusha production base construction. The second reason is for the construction of the Corporate Technical Center. In the case of performance and reliability, China’s machinery still lags behind the European and Japanese counterparts due to lack of investment of technical R&D, testing and detecting device. When it comes to product design, manufacture and processing techniques, you have to rely on not only the technicians and production equipment, but also advanced testing and detecting equipment. So we will set up the technology center at our Ronggui headquarters and invest heavily to enrich the testing equipment and technology. The technology center is for comprehensive basic technology research and technical development, including material, surface treatment studies, heat treatment technology, control technology, and hydraulic and pneumatic servo. To make Chinese manufacturing technology meet global standards, even take a lead in the world, we have to work hard to improve our comprehensive basic technology and be bold in technological trial. In foreign countries, many new applicable solutions come from joint research and development. First, the customer put forward prospective requirements, and then the mold supplier, raw material supplier and original equipment manufacturer collaborate in this project, developing new solutions and techniques in response to customer’s demands. The research and development may take one or two years before a brand new solution comes out, and the result will boost the development of the whole industry. It is our responsibility to step forward and promote China's equipment manufacturing technology so that it takes a lead throughout the world!
Editor’s notes:
As a Chinese saying goes, “Watch where you're going while pulling the cart painstakingly”. This is applicable to running a business for long. On one hand, members of the company have to work hard together. On the other hand, they, especially the senior executives, have to watch where they are going. In other words, they have to plan and actively prepare for the next phase of development of the company. As The Art of War indicates that in war precautions averts perils. Full preparation is a precondition for the victory in war, as well as in today’s business war. The enemies are no long limited to competitors but include the whole market.
In the interview, Mr. Yan said that achievements and glory were a thing of the past. His team will create stronger driving force so that Yizumi would go further and preserve with its mission.