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Shengyi Technology: success through transformation

 Photo: Shengyi Technology Co Ltd.
 Shengyi Technology Co Ltd.
Shengyi Technology Co Ltd of Guangdong was founded in 1985 as a Sino-foreign joint venture and subsequently a listed shareholding enterprise, invested and set up by Hong Kong’s AVA International Limited, Dongguan Electronic Industry General Company, and Guangdong Foreign Trade Import and Export Corporation as its major shareholders. Its principal products include copper clad laminates (CCLs) made with flame-retardant glass epoxy, CCLs made with composite epoxy material, and prepregs for multilayer boards. These products are mainly used for making single-sided, double-sided and multilayer printed circuit boards (PCBs), which are widely applied in mobile phones, automobiles, telecommunications equipment, computers and various kinds of advanced electronic products.

In 2004, the company acquired a site of more than 400 mu in Songshan Lake High-tech Industrial Park of Dongguan for the construction of its Songshan Lake plant, involving an investment of Rmb3.2 billion in total. The first three phases of the Songshan Lake project came into operation in 2005, 2007 and 2009 respectively. In 2010, the company decided to invest more than Rmb1.2 billion for the construction of phases 4 and 5 of the Songshan Lake project. But due to strategic development needs, Shengyi Technology has also stepped out of Dongguan and set up three shareholding subsidiaries in the form of joint ventures in Suzhou, Shaanxi and Lianyungang. They are Shengyi Technology (Suzhou) Co Ltd, Shengyi Technology (Shaanxi) Co Ltd and Lianyungang Donghai Silica Powder Co Ltd.

As the largest CCL production enterprise in the Chinese mainland, Shengyi has developed a number of advanced high-tech products targeted at the international market. It is the only enterprise in Dongguan that runs a national research and development centre, and its products always maintain top quality by international standards. Many of its leading products have already been recognised by major enterprises such as Siemens, Motorola, Sony, Nokia, Samsung and Huawei. Having gained a competitive edge, it is selling to different countries and regions of the world including the US, EU, Malaysia and Singapore.

Transformation and upgrade: process and outcome

At the early stage of its establishment in 1985, the company was a typical enterprise engaged in processing operation with supplied materials and more than 90% of its products were for exporting overseas. Since 1991, its management realised that the sole operation of processing with supplied materials had no prospect and the company therefore began to transform and upgrade its operation with a change of trade mark from the original "M" to "SL". Having explored the market for two years, it gradually broke free from external controls and set up China’s first CCL technology centre in 1993. Introducing the ISO9002 management system in 1994, it became the first enterprise in the industry that obtained the certification. Since 1998, the company has adopted the environmental management system of ISO14001 in a bid to reduce costs and expand its market. As a result, its products successfully entered the European market. Also in 1998, it became a listed company at the Shanghai Stock Exchange. The company then spent three years in introducing an ERP software from Germany, adopting computerised standard management for the whole process of its operation. In 2008, the company invested another Rmb230 million to construct an advanced and fully-equipped engineering and technology R&D centre that measures up to the leading global standard.

Photo: Modernised factory plant.
Photo: Modernised factory plant.
 
 
Modernised factory plant. 
With years of hard work, the company has grown by leaps and bounds in terms of production volume, product quality, brand building, reputation and technical strengths. Starting from the purchase of one product technology from the US at the beginning, the company now possesses 54 product technologies featuring proprietary intellectual property, as well as more than 200 patents. It also took the lead in drawing up two IEC international standards, which is a pioneer in the industry and breaks up the long-standing monopoly of European countries, the US and Japan in setting the product standards of the industry. Its "SL" trademark is regarded as a well-known Chinese trademark, and it has become a major taxpayer and leading enterprise of Dongguan for 10 years in a row. The company ranks as the industry’s largest player in China and fourth largest in the world.

In spite of the Asian financial crisis of 2008 as well as other adverse factors such as the US subprime mortgage crisis and the European debt crisis that took place in recent years, the company still maintains a stable flow of orders with an ongoing expansion in its scale of operation, cultivating at the same time a growing sense of loyalty among its employees.

All in all, the following characteristics in the successful experience of Shengyi Technology can be used as reference by other Hong Kong enterprises:

1. Attaching great importance to product R&D to enhance the core competitiveness of the enterprise – the company set up an R&D department as early as in 1994, and today, it has also set up a provincial engineering centre and a provincial enterprise technology centre. Its R&D set-up is underpinned by a technical management department, a metrological management department, an intellectual property department, a technical standards department, a central laboratory, a product R&D department, and a testing and development department, each tasked with specific functions. Having operated for more than 20 years, the new products developed by the company cover 54 categories under eight series. As at the end of 2010, it was awarded 192 domestic patents and 16 foreign patents, among which 64.7% are patents for new inventions. The technical standards of its products are taking the lead in the industry in China.

2. Advocating the "film director style" client management and sales strategy – In this regard, a specialised marketing team is formed as the core to implement the One-Window System in providing value-added pre-sale and after-sales services. Through a one-stop supply system that offers a full range of products and a unified central platform to fulfill the commitment of making urgent delivery within one day, the demands and expectations of clients are met as far as possible. The company has set up Shengyi Technology (Hong Kong) Co Ltd in Hong Kong and has appointed agents and distributors in North America, South America, Europe, Japan, Korea, Taiwan and Southeast Asia, making up a global sales network to serve clients.

3. Expanding the resources and technical strengths of the company through industry alliance and collaboration – The company actively pursues all-round collaboration with renowned higher education institutes in the upstream and downstream disciplines. It has also cooperated with a number of organisations such as Nanjing Fiberglass Research & Development Institute, Chongqing Polycomp International Corporation, Shennan Circuit Co Ltd and Huawei Technologies Co Ltd. Capitalising on its scale of operation and technical advantages, it has built up strategic partnerships with both clients and suppliers.

4. Enhancing energy efficiency through updating and transforming its equipment – By transforming its equipment such as constructing natural gas supply pipelines, replacing laminated hot oil boilers with natural gas boilers and optimising the combustion parameters through the addition of combustion accessories, not only is the energy efficiency of its operation greatly enhanced, but its fume emission is also drastically reduced.

5.  Winning the market and clients through stringent quality control and excellent after-sales service – The company attaches great importance to the quality control and technical stability of its products. The quality of its products has established a good reputation in the industry where many end-user enterprises require their suppliers to use the products of its brands. Although the global economy is currently in recession, yet the orders secured by the company are increasing against the tide, and its rate of operation maintains at more than 80% of its capacity when most factories in the industry are only keeping a rate of 50%. This is mainly attributed to its stringent requirements on quality control that have been put into practice all along. Apart from its outstanding quality control, the excellent after-sales service of the company as mainly manifested in two aspects is also an important factor of its success: (1) The provision of timely after-sales service helps the clients solve their problems in the first instance; and (2) Maintaining a good communication and interactive rapport with clients allows it to work out the best solution and the most up-to-date technology and products through joint efforts.

6. Paying attention to staff training and development, and cultivating excellent team spirit – The company injected more than Rmb1 million into staff training and development every year. A training management team has been formed with the general manager as the leader, the human resources department as the guiding support and individual department heads as the officers-in-charge of the respective departmental training programs. An external training team is also set up by employing the professors of a number of higher education institutes and the experts of many training consultancies to provide assistance. Following the economic take-off in the Chinese mainland in recent years, there is a trend that much of the labour force in Pearl River Delta (PRD) has returned to their home villages for employment or business venture. It has become more and more difficult for PRD factories to recruit suitable workers. Realising this problem at an early stage, the top management of the company made a commitment of "no layoffs and no pay cuts" to their staff members in 2008 when many multinationals began to lay off their employees due to the financial crisis. Ever since 2005, the company has increased the salary of all its employees every year at a rate of 15% to 20%. At present, more than 70% of its management staff have been working in the company for more than 5 years and many of its employees have been serving the company for more than 10 years. A kind of "family culture" is gradually taking hold among staff members.

Company:Shengyi Technology Co Ltd
Address:5 Gongye West Road, Songshan Lake, Dongguan City, Guangdong
Email:liujq@syst.com.cn
Date of interview: 17 January 2013
Interviewers:  Wing Chu (HKTDC Research) and Edison Lian (HKTDC Guangzhou Office)
Writer:Edison Lian (HKTDC Guangzhou Office)

Content provided by Picture: HKTDC Research
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