Injection press maker Borch Machinery Co. Ltd. is taking strides to expand in South and East China, but the approaches are different in each region.

Yuan

In Guangzhou, the South China city where the company is headquartered and its factory is located, Borch is investing about 500 million yuan (US$67.7 million) to build a new campus on 122 mu of land. The company broke ground on phase one of the project in November, according to Faster Yuan, chief executive of overseas sales.

"We expect to finish the construction and start production in September 2008," he said at the Asian-Pacific International Plastics and Rubber Industry Exhibition, held in Shanghai from November 29 to December 2.

"Starting in August 2008, we will move our headquarters and all Guangzhou operations to the new campus, which will feature the entire chain of functions including research and development, production, sales, training and management."

The privately held company currently employs 400 in Guangzhou, but the figure will grow to about 500 next year, he said.

East China, especially Zhejiang province, already houses many injection machinery makers, including China's largest press maker, Ningbo Haitian Group Ltd. But Borch executives still feel that a local production facility will help secure market share in this region.

However, the company vetoed the conventional way of expansion in China: buying land and building a factory. Instead, Borch acquired Zhejiang Euro-Asia Plastic Machinery Co. Ltd. in Hangzhou, the capital of Zhejiang province.

After closing the deal in October, Borch gained 35,000 square meters of manufacturing space on a 130 mu parcel of land, and the capability to produce and assemble injection machines below 3,500 metric tons of clamping force.

"It will boost our East China sales with the good logistics," Yuan said. He expects the Hangzhou branch to produce about 150 million yuan ($20.3 million) worth of presses in its first fiscal year with Borch.

"Many [in China] don't realize merger and acquisition are efficient means of expansion," he said.

Thorough market investigation and due diligence are vital in the Chinese market. Yuan said Borch President Zhu Kangjian is from the Hangzhou area, "he understands the local market and competition."

The Hangzhou plant has a workforce of 200. "There's plenty of [land] for expansion in the future," Yuan said.

Borch projects 350 million yuan (US$47.4 million) of sales for 2007. About 30 percent of the company's sales are from overseas customers.

The company's multicolor machines, capable of molding parts with up to four colors, sell about 50 units annually.