I-Bhd positive on China alliance


BY HONG BOON HOW

I-Bhd chairman Datuk Lim Kim Hong

WITH numerous companies talking about tapping the enormous China market, only a handful are actually converting their ideas and visions into action. 

I-Bhd is already looking at positive results from its new alliance with Chinese partners to supply components for its range of household appliances. 

According to its chairman Datuk Lim Kim Hong, China is in a transitional period now of privatising its state-owned enterprises and this represents good opportunities for foreign companies to set up joint ventures. 

“Chinese entrepreneurs and manufacturers are choosy in selecting their joint venture partners and will only select those who are able to provide value to their business,” Lim said during an interview with StarBiz. 

Lim was among the first few Malaysian businessmen who realised the potential from China's open trade policy in the mid-1980s. 

In the 1980s, Lim ventured into China and set up mattress manufacturing plants producing the Dreamland brand. From there, he established a strong and reliable network of contacts which facilitated the formation of the new alliance. 

Lim said the company saw opportunities by leveraging on China's cost advantage and optimising I-Bhd's strength in product innovations to come out with new designs. 

He said the strategic alliance with Chinese companies would help I-Bhd reduce its production cost significantly and enable the products to be sold at a much more competitive and lower price. 

“We are anticipating the reduced product prices to create new demand which we are planning to take advantage of,” he said. 

Lim said the strategic alliance would enable I-Bhd to have an ally with the economies of scale as well as product variety that would allow the company to compete on a different platform. 

He said Malaysian consumers would be able to benefit from the expected decline in the product prices and enjoy greater selection of innovative product features and designs to choose from. 

“We always believe that premium products should not come with premium prices,” he said. 

As China offers enormous scale and demand for consumer products, I-Bhd is targeting to set up an office in China in the first half of this year to tap the growing opportunities, according to Lim. 

He said consumers should dispel the misconception that all Chinese products were of low quality. 

“China's manufacturing industry has improved tremendously over the years but we must admit that there are still certain products whose quality could be improved upon,” Lim said, adding that Chinese-made components had been accepted internationally in many instances. 

He said even South Korean and Japanese manufacturers were using Chinese-made components in their products. 

“This is especially true for the home appliance industry as the Chinese manufacturers have been global players for some time now,” Lim said. 

He stressed that I-Bhd was not selling China-manufactured products through the new alliance but using only components manufactured in China. 

“We will still maintain our manufacturing facilities in Malaysia as they contribute much to providing employment to our local workforce,” he said. 

Lim said the use of Chinese components also meant that I-Bhd did not need to invest in expanding its current component production lines. 

“Not only do we save on capital expenditure, we can also obtain our components immediately,” he said. 

Lim said I-Bhd's current monthly production rate of 5,000 air conditioners was expected to surge to 15,000 units monthly by the end of the year. 

“We will also be launching our new range of intelligent air conditioners with human presence sensor next month,” he said. 

Lim said I-Bhd would also continue making products on an original equipment manufacturer (OEM) basis. 

According to Lim, for such strategic alliance to succeed the Malaysian company must have full manufacturing facilities as well as the distribution infrastructure.  

“We believe there are not many such manufacturers in the country as most of them are mere assemblers without the distribution channels,” he said. 

Lim said the alliance was formed because I-Bhd and the Chinese parties shared the same vision about offering innovative products to consumers. 

“In addition I-Bhd's long standing and tested track record have instilled confidence in our Chinese partners that this alliance would achieve its set goals,” he said. 

Lim said I-Bhd's senior management team had a good track record in working with the Chinese and this had helped to swing the alliance in the company's favour. 

He said the target market for the “alliance” products was countries under the Asean Free Trade Area (Afta) and the Middle East, where Malaysian-made goods had a good reputation. 

“We have to give credit to the Japanese multinational companies which have helped build up Malaysia's manufacturing capabilities since the 1970s, thus enabling the Made-in-Malaysia label to become synonymous with quality products,” he said. 

Lim said that products carrying the Made-in-Malaysia labels had become sought-after goods in the Middle East and that I-Bhd would work with local agents or representatives in certain regions to distribute its products. 

He said that Prime Minister Datuk Seri Dr Mahathir Mohamad had done much to promote Malaysia and Malaysian products during his trips abroad.  

“In addition, Dr Mahathir is a respected figure in China because he is a person who is frank in his opinions and firm in his decisions.  

The Chinese have always respected a firm leader and we feel that this will provide more opportunities for Malaysian companies to do businesses in China,” he added.  

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