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Pursuit Of Perfection Never Stops(HKTDC Hong Kong Trade Services, Vol 02,2002)

Vol 2, 2002

CEO Profile

Pursuit Of Perfection Never Stops

Pursuit Of Perfection Never Stops

Stressing quality at all times is the single most important strategy behind the decades-long success of Kin Hip Metal & Plastic Fty Ltd, says executive director Cliff Sun, shown here in the company's Hong Kong showroom.

FOR Kin Hip Metal & Plastic Fty Ltd executive director Cliff Sun, passion for perfection is hereditary. Sun enjoys recalling how his father, who founded the company in 1949, always demanded the production of quality.

"My father was a perfectionist," he says. "Even in the early days, we were known in the industry for our quality."

Kin Hip began by making plastic products, like drinking cups and coffee servers, before expanding to stainless steel hollowware and cookware. Its Kinox cookware brand appears throughout the world.

After studying in Canada, Sun joined the company in 1978. Kin Hip's boss since his father retired, this voluble, outgoing businessman and two younger brothers continue the family-owned firm's quality tradition.

With Sun at the helm, the company grew and prospered by observing two basic rules: keep one step ahead of the competition; and carefully cultivate long-term customer relationships.

"Our customers are happy with the products we sell them. Many of our customer relationships date to the 1960s, 1970s and 1980s," says Sun.

Kin Hip's evolution had four stages, each triggered by competitive pressures to find new revenue sources. Until 1966, the focus stayed on plasticware. One of the biggest successes attributed to this period is the company's black-and-gold series of Hot'n Cold Insulated Beverage Servers, a familiar sight in restaurants and hotels worldwide.

"Each year, we still produce 250,000 of these, our best-selling product," Sun proclaims. Insulated with PU, the beverage servers are subtly fine-tuned and upgraded to enhance demand.

"We never leave products to sit and die. In 1975, we changed the lining from ABS to (odourless and stainproof) polycarbonate. We changed the resin and moulding method. Then we changed the resin again, this time to the new generation of PP because it is more heat resistant. You do not always see the difference, but we did a lot in the past 30 years," Sun says.

When competitors began biting at Kin Hip profit margins, the company sought out new products. "We needed something different. We had to be a pioneer, so we became the first in Hong Kong to fabricate stainless steel hollowware (serving dishes, trays, salad bowls and soup bowls). Before that, stainless steel was used only in hospitals," says Sun.

Sun's father, a mould-making technician, chose stainless steel because he had learned about stamping and metal forming as an apprentice at a flashlight factory in Shanghai. By 1978, when competition again dictated change, the logical choice was stainless steel cookware.

Cliff Sun visited Europe to source necessary equipment. "The metal shaping was not difficult, but we needed to laminate the base so heat would distribute more quickly and evenly. Otherwise, our products would be less competitive," he says.

The company soon created a stylish line of high-grade cookware with innovations and modifications like stackable lids, a cool-touch handle grip, flame and finger guards, a drip-free rim and steam-ventilation holes. The pot-bellied design was modern and decorative, enhancing the appeal.

In 1997, Sun steered to higher value-added products via a range of electrical household items. First came a kettle with a 360-degree cordless connector.

"We made the handle hollow to be lightweight. We put the heating element underneath, not in the water. Later we added water gauges," says Sun. Now Kin Hip sells 200,000 such kettles per year.

"Next, we will put a colourful light ring around the product so people know when the water is ready."

Kin Hip's product lines are a balanced mix of plastics (40%), stainless steel (40%) and electrical products (20%). Annual sales total HK$400m (US$51m). Production is at the company's 1,000-worker factory in Shenzhen on the Chinese mainland.

Consistently opting for innovation and quality over strict price competition has made the difference between success and failure - although admittedly not every product is profitable. One of the worst flops was a coffee-mug warmer in the mid-1980s. "It was very innovative and everyone liked it, but the retail price of US$12 was too high," Sun says.

To avoid miscues, the company turned to extensive market research and testing. "Our testing and debate on product design are quite lengthy. We do all this before tooling. Then 90% of the products devised by us or our customers do sell," Sun says.

In Kin Hip's largest market, the US, it has a 49% share. Sales are also strong to the UK, New Zealand, Australia and Southeast Asia. Still at early stages in the Chinese mainland market, Sun plans to focus on developing sales there.

His strategy is to avoid concentrating only on major cities like Guangzhou, Shanghai, Beijing and Shenzhen, which are "flooded with too many of the same things". Instead, he stresses second-tier sites like Wuhan, Fuzhou, Nanjing and Xiamen.

Based on decades of business experience, Sun cautions SMEs not to rely totally on a single product: "You should diversify - but in areas where you have expertise. In other words, an electronics factory should stick to electronics products."

His final word of advice is to avoid the trap of arrogance when things go well. "Be humble. Then people will be willing to teach you and share ideas that you can incorporate into your business," he advises.



Tips To Better Marketing

AFTER decades of success in overseas markets, Kin Hip Metal & Plastic Fty Ltd executive director Cliff Sun commands a wealth of knowledge on the secrets and strategies of successful product marketing.
He offers the following advice to SMEs:

  • Focus on quality, quality, quality! Nothing is more important. Quality creates loyal customers, who supply word-of-mouth publicity to lure new customers.
  • Select an easy-to-pronounce and simple-to-remember brand name (preferably two syllables).
  • Proper advertising is necessary. Use "nice spots" in popular magazines to show your brand.
  • Use local professional product designers, but ensure they understand the appropriate user habits and culture.
  • Offer a problem-free guarantee to help forge strong relationships with clients. Apply strong quality control to gain customers' trust.
  • The Chinese mainland is a unique market demanding slightly different approaches. Sun suggests the following:
  • Hong Kong's government is negotiating with the mainland on duty charges. If a zero-import-duty policy emerges for goods entering the mainland from Hong Kong, then high-value-added production may be feasible in Hong Kong.
  • Word of mouth is important. Foreign clients actually market your products by using them in conjunction with their mainland investments. Local people enjoy following the quality choices of overseas counterparts, especially at discount prices.
  • Be cautious with credit sales. Suppliers of popular products too unique to easily replace are in a strong position to reject credit sales. When a comprehensive credit-rating system emerges, some credit can be offered to high-rated clients.
  • Clearing account-receivables can take up to six months. This is like allocating two sets of capital, one for production costs and another to cover the time difference until revenue is actually received.
  • Not every manufacturer is fully aware of distribution channels. Build a network of agents to help bear the burden of "shelf fees".
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