Infrastructure & Cities

World Precision Machinery: Moving up the technology ladder

March 29, 2012

Asia

March 29, 2012

Asia
Our Editors

The Economist Intelligence Unit

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World Precision Machinery (WPM), an integrated manufacturer of precision metal stamping machines based in Jiangsu, China, has seen its revenues multiply five-fold between 2005 and 2010. In the first nine months of 2011, the firm had revenues of RMB 947.9m (US$150.1m), amounting to year-on-year growth of 30%.

Shao Jian Jun, the company’s executive director and CEO, says WPM derives more than 95% of its sales from China currently and that Asia’s standing as the world’s manufacturing hub will continue to present business opportunities for the company as “the stamping industry forms the backbone of many manufacturing industries”. WPM is currently one of the three largest manufacturers of metal stamping machines in China. It mostly supplies manufacturers in home appliances (34% of revenues), automobiles (32%) and electronics (15%), while it earns the rest of its revenue from several other sectors.

Mr Shao attributes the profitability in the industry to “a boom in market demand, [the rising value of] brand names, price competitiveness and technology innovation”. However, he adds that the intensity of competition in the sector in Asia has increased considerably. “More and more manufacturing plants have moved into Asia,” he says. Many non-Asian firms have set up plants in the region either independently or through joint ventures. For instance, global players such as KLA-Tencor and Applied Materials have invested in manufacturing plants and research and support centres in destinations such as China, India, Malaysia, Singapore and Taiwan.   

Mr Shao expects stiff competition in the PE sector over the next few years. He says that Asian firms have started to move up the technology ladder, while non-Asian firms that have an Asian presence have started lowering production costs.

In the face of this rising competition, a key part of WPM’s strategy is vertical integration: the company has the capability to design 90% of the equipment it produces. According to Mr Shao, over the next five years, profitability in the PE industry will be driven by market demand on the one hand, and cost control, production efficiency and price competitiveness on the other. Technology innovation will also be important, he says. This is reflected in WPM’s decision to employ more than 200 R&D and technical staff in two Chinese cities, Danyang and Shanghai.

 1 Company presentation. World Precision Machinery. 5-6 January 2012.

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