APPAREL maker PCCS Group Bhd wants to build up and strengthen its labelling and packaging division in China in the coming years.
Group general manager Gan Hoe Lian said the company would focus on three market segments namely consumer goods, electrical items and garments.
He said prospects for the labelling and packaging business in China was bright considering its position as the manufacturing hub of the world.
“The three segments provide us with quantity. In addition, volume is not a problem in China,’’ Gan told StarBiz in an interview recently.
He said with a large number of multinational corporations (MNCs) and international manufacturers having operations in China, the prospect was endless.
The presence of the MNCs and international manufacturers in China offered good business opportunities for many local and foreign companies and businessmen.
The company found that producers of consumer goods, electrical items and garments needed the services of support industries such as those in labelling and packaging.
Gan said demand for labelling and packaging materials in China would grow even higher in future due to the booming manufacturing sector there.
“Our labelling and packaging division in Malaysia is doing well, so we believe we can do the same in China.’’
Although there were many packaging companies in China, a majority of them could not cope with the high standards set up by the MNCs, he said.
Sensing a business opportunity, the company had in July 2003, acquired 100% equity in loss-making packaging company Blopak China Private Ltd for RM4.106mil.
Blopak was already supplying bottles to an international multi level marketing (MLM) company in China.
“Prior to our acquisition of Blopak, there was a lot of wastage where raw materials were not properly controlled during production,’’ Gan said.
The company had successfully reduced the high wastage from 25% to 30% previously to the current 1% and 2%.
Gan said with the improvement in quality, it was able to convince the MLM company to outsource bottle caps from Blopak as well.
In addition to bottles and bottle caps, the company has started supplying toothbrushes and T-shirts to the MLM company.
The supply of T-shirts came under its wholly owned subsidiary PCCS Garments (Shuzou) Ltd, set up in April last year.
Gan said the prospects for apparel manufacturing in China was even brighter with Beijing hosting the Summer Olympics in 2008.
“PCCS managed to turn Blopak around within a year. The company broke even in June 2004 and is now starting to contribute positively. It was a wise decision to acquire Blopak.”
Gan added that several MLM companies and manufacturers in China had expressed interest to outsource packaging materials from the company.
The company was currently providing product samples to five MNCs in China and Gan was confident of securing orders from them.
He added that at present the company would focus on making plastic-based packaging materials before introducing other types of packaging products.
“Demand for plastic-based packaging materials especially bottles in China is high particularly from beverages and consumer goods producers.”