Taiwan Special Report

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Discovery Reports

Chin Fong bridges industries with leading customer-centric innovations

PUBLISHED : Friday, 25 October, 2013, 2:43pm
UPDATED : Friday, 25 October, 2013, 2:44pm

Taipei 101, Taiwan's iconic skyscraper, is undoubtedly significant to Jack Chao, president of Chin Fong Machine Industrial. The company has supplied 80 per cent of the machinery used in Taiwan's liquid crystal display (LCD) screen manufacturing industry. The sheer volume would reach twice the height of Taipei 101 if the press machines were horizontally stacked up together.

Becoming the dominant machinery supplier to the LCD industry within just a decade underlines the company's transformation into a total solutions provider. "This is the industrial trend nowadays - to create value-added products that satisfy customers' needs," Chao says.

While rapid growth in the LCD industry precipitated the transformation, Chin Fong has long been renowned for its product quality and innovation, especially in the automotive industry, where Toyota, Mazda, Isuzu, Mitsubishi Motors and Yamaha are among its clients. The company is the largest provider of mechanical power presses in Taiwan. It has been awarded for its press technology achievements since 1975, the outcome of the company's research and development (R&D) focus and deep ties with Japanese industrial players.

Its production process is likewise anchored on the lean manufacturing principles of the Toyota production system, which emphasises total quality and production management. Chin Fong managed to bridge these principles to the LCD industry when it started working with clients on their production facilities based on the size and volume of flat panels to be manufactured and budgets available for factories. This total solutions approach led to production leaps in the LCD industry and has proven invaluable to Chin Fong.

"We are proud to say that we help our customers configure their process," Chao says. "More production lines can be set up in a limited factory area by changing the layout of the press line, and this eventually increases the overall manufacturing capacity. As the flat-panel industry matures, we help our customers adapt very quickly with a complete configuration for the press machine line."

Technology elevation

With customer-centricity built into its core strategy, Chin Fong has tapped the opportunities arising from market challenges such as the decreasing economic expansion on the mainland due partly to the revival of manufacturing in the United States and the continuing devaluation of the Japanese yen. These external factors posed risks to the company's long-term health, especially with the mainland as its biggest market.

However, continuous investments in R&D have enabled Chin Fong to respond with product innovation. It diversified its line-up of metal forming, stamping and forging machines by steadily infusing functions that optimise the manufacturing process.

Highly committed to the maturity and growth of the automotive and electronics industries, Chin Fong has moved strategically to enable technological leaps in these strongholds.

The company began a partnership in 2008 with Sumitomo Heavy Industries Techno-Fort, a world leader in hot-forging equipment, to meet the high demand for moderate hot-forging presses in the automotive components market. The co-operation allowed Chin Fong to produce co-branded machines for global distribution, such as the FPX series, which brought component fabrication to cutting-edge precision levels.

To position itself strongly in the 3C industry - consumer electronics, communications and computers - Chin Fong established a joint venture in 2010 with Yamada Dobby, Japan's largest manufacturer of high-speed presses. The team-up helped raise industry productivity and lowered overall manufacturing costs, to the benefit of consumers worldwide.

Its latest high-performance servo systems can handle up to 1,200 tonnes, which has made its direct-drive servo presses popular among US and Southeast Asian manufacturers. Meanwhile, Chinese clients have increased the take-up of its WF series due to the addition of semi-warm hot-forging presses that can handle up to 5,000 tonnes - an innovation that streamlines processing and forging accuracy.

Chin Fong sums up these moves in two words: technology elevation, which it deems the only way forward amid rapidly changing market dynamics. It requires a nuanced approach to attaining precision and speed through metal forming solutions. It means rapidly rolling out new machinery for the 3C industry to meet very short product-to-market cycles. When it comes to the automotive industry, the solution has to ultimately satisfy reliability and quality requirements.

"The main industries we are serving are totally different customer bases, and their requirements vary in terms of specifications, machine size, the scale of investment and quantity of machines," Chao says. "We look at the main area that our customers care about and situate ourselves in their shoes to understand the actual requirements. Knowing their needs from the beginning helps us decide on the best and most suitable press machines for their process."

Steady growth

The results are tangible. Chin Fong's group revenue grew 20 per cent from 2011 to hit a record level of HK$1.7 billion last year. This has been sustained in the first half of this year, when group revenue increased by 28.7 per cent from the comparative year-ago level. This performance positions the company strongly for its target to generate HK$2.6 billion in sales by 2016.

Much of this growth is anchored on the mainland - already the largest vehicle market in the world, with some 19 million units manufactured each year. Chin Fong exports more than 50 per cent of its machinery made in Taiwan to the mainland. Production at its 9,900-square-metre plant at the Zhenhai Economic Development Zone in Ningbo is dedicated to the local market.

Chin Fong's 25,387-square-metre main manufacturing facility in Taiwan is supported by three other factories within Changhua county, which, combined, span almost 23,000 square metres. A dedicated facility for heavy industrial machinery is in Taichung Harbour.

The Taiwan factories also cater to the company's global sales network. Chin Fong established a wholly owned distribution subsidiary in the US in 1990. It also had an early start in Southeast Asia, where its subsidiaries are in Indonesia, Malaysia and Thailand. Distribution partners serve the rest of Asia, Europe and the Americas.

Strategic investment

With more than 20 service and sales shops in first-class industrial cities, Chin Fong's subsidiaries on the mainland have outpaced the Taiwan headquarters since 2011. This has prompted the company to revitalise the industrial corridor in Huai'an, Jiangsu province, where it started building a new production base last year.

The expansion, which entails a total investment of about HK$256 million, places Chin Fong as the only prominent machinery business near the Lianyungang harbour, used by many automotive parts manufacturers on the eastern coast.

"This location has long been the pivot point of waterways in China," says Jade Chen, director of sales and marketing at Chin Fong. "The logistics condition for Huai'an is superior because it is at the intersection of four major highways." Huai'an is at the centre of nine provinces and connected to five waterways.

Chin Fong's site in the city is only an hour away from Lianyungang harbour and a six-hour drive from the company's production base in Ningbo. It can be reached in two hours by road from Nanjing, four hours from Shanghai and within eight hours from Beijing. Seven universities and 26 vocational schools provide a rich talent pool for the upcoming facility.

Slated for completion by 2016, Chin Fong's Huai'an plant will occupy 13.67 hectares. It will have separate sections for assembly, painting, machining and welding.

The site has a carrying capacity of 18 tonnes per square metre, a superior level of field resistance that translates to lower construction cost.

It is envisioned to be the production base for the company's middle to large presses such as STD, S2, S4 and SL4 machines. Among the small- to middle-range presses to be produced there are the OCP, G2 and GTX series.

With Chin Fong emerging as the machinery heavyweight in the area, it can count on government support to help realise plans of developing higher value-added products, increasing scale and raising overall profitability through the strategic investment.

Timing is also ripe for burgeoning Southeast Asia, where Chin Fong's top five markets are Thailand, Indonesia, Malaysia, Vietnam and Singapore.

The company is eyeing increased sales in view of rising Japanese investments in the region. Chin Fong is a preferred supplier among Japanese investors due to the high cost-performance ratio of its machines, which meet affordable quality and price considerations for Japanese businesses' foreign installations.

"Running a business such as Chin Fong is like being in a race," Chao says. "Innovations lead us to turning points, so we are very careful in making changes to the products and the business model. This is how we have maintained our leadership."


Chin Fong Machine Industrial




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