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December 2, 2007

Public Insight

Just watched Public Insight on CNA just now, about two Chinese compaines Midsouth Holdings and Anwell Technologies. Having a few personal thoughts after watching it.

Midsouth specializes in creating Fibreglass-reinforced plastic, aka FRP. It’s plastics mixed with fibreglass: strong, lightweight and durable, making it very suitable as parts for automotives and furniture. Midsouth’s main clients include truck makers, air-con ducts, window frames and chairs makers. The lightweightness gives it an advantage in terms of lowering fuel costs for the vehicle. The company’s prospect in producing for diverse market segments such as aerospace, military, furniture, land/sea transport, construction, etc give good resilience against slumps in any particular sector. Coupled with growing demands in superior plastics especially in transport and construction, the company is “doomed” for success.

Anwell produces equipment which produce optical discs. It is in a technology market, but its owner is entrepreneurial; he stays next to its factory and working long hours (16-18) per day when starting out. Similar to the strategy of my company they have sinced eaten into its client business – the production of the discs in order to maintain a more consistent and recurrent cash flow. The similarity here hints to me the importance of sustainability in producing consumable products. What also triggered me is the never-give-up attitude of Franky (as a typical entrepreneur). Paraphrasing him:

In the first year my client told me: “Franky your machine is worse than the local machines”. So we improved and in the second year, my client said, “Franky, you machine is not as good as a Taiwanese machine”. We made it better and in the third year, I was told “Franky, your machine is not as fast as European machines”.

We were still not good enough, but we can observe the improvement over the years. We tried even harder and now the client says “Now I cannot differentiate between your machine and a European machine.”

Lastly, a common feature between the two companies was a focus on R&D efforts; a keen interest in improvement. They both believe a strong R&D helps the company to quickly respond to client problems and possibly provide custom solutions and products to each client. At the same time, it widens the margin between competitors and allows them to get ahead.

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