Main Board listed tile manufacturer Kim Hin Industry Bhd (Kim Hin) has etched itself a place as a favoured brand in the market both domestically and globally offering a variety of tiles incorporating the use of the latest in technology.
Founded by the late Chua Chui Tham, Kim Hin commenced with its roots as a brick maker back in 1973 in a small wooden shed. From making clay bricks, the founder decided in 1979 to try to expand the range of products by manufacturing mosaic tiles with technology he acquired from Taiwan. That initiated the journey of transformation from a clay brick maker to a preferred global tile manufacturer.
Listed on July 22, 1992 Kim Hin progressed from a small wooden shed making mosaic tiles, the company now boasts a huge variety of floor tiles, wall tiles and all those in between, marketed under the brands Kimgres, DuroGress, Kimware, VitoGres and Habitat Gallery.
While Kim Hin’s main manufacturing plant is located in Kuching, it has another two manufacturing plants located in Seremban and Shanghai to cater for both the domestic and international markets.
Johnnie Chua, the executive chairman of Kim Hin in an interview with BizHive Weekly said that, “Kim Hin is among the largest tile manufacturers in the region and a noteworthy competitor in the global market. We command an estimated 18 per cent of the domestic tile market and this will increase when we commence manufacturing our new line of larger tiles.
Concurring to the ‘Made in Sarawak’ theme, this Sarawakian based company is touted as the only state-based company that manufactures tiles from scratch – beginning from the locally sourced clay to the finished final product.
“I am proud to say that Kim Hin is very supportive of the local economy and people as we hire only local labour. I feel that this is one way for us to try to boost our Sarawakian economy and stay true to our people by producing truly ‘homegrown’ products”, he added.
In terms of production capacity, the tile maker boasts a sizeable figure of 10 million square metres (sq m) in its Kuching plant, three million sq m at the Seremban plant and another two million sq m at its facilities located in Shanghai, a massive total of 15 million sq m of tile per annum.
For the financial year ended 2011 Kim Hin registered a pre-tax profit of RM21 million on the back of RM267 million turnover. Forecasts for the current year are estimated to follow along these same lines.
According to Chua the second half of 2012 would witness the commencement of the next phase of Kim Hin’s expansion in its product line. Earlier in the year it had acquired new technology that would enable it to commence digital printing on its tiles.
“Basically it means that we can now manufacture tiles that not only look like wood but feel the same as well. The tiles will have the grain and grooves like wood and if you place it next to the real thing it will be difficult to differentiate the two. But wood isn’t the only texture we can recreate, we can also replicate the feel of other materials including metal, leather, or even concrete,” he enthused.
Elaborating on Sarawak’s market vibrancy, Chua favourably noted that he felt that the Sarawak market was still growing and that there was still a lot to be done in Sarawak. Chua was also quite enthusiastic about the Sarawak Corridor of Renewable Energy (SCORE) project and felt that this would be a positive factor for businesses in the state.
Chua clarified that the property development industry was without doubt the company’s largest target market with prominent property developers heading the top of Kim Hin’s clientele list, including the likes of SP Setia Bhd, UEM Land Holdings Bhd in the peninsular as well as prominent state-based players such as Ibraco Bhd and Naim Holdings Bhd.
In terms of overseas markets, Chua revealed that the Kuching operations also catered for the Australian market as geographically it was closer and that there was more trade between Kuching and Australia hence making logistics more feasible.
“Venturing from Sarawak to overseas markets is a logistics nightmare and very costly. Exporting our tiles from Kuching is almost not feasible as we do not have the volume in trade between countries such as the US and Europe. Take for example a shipment to US, we need to pay for the container be shipped to US and be brought back also due to the smaller volume of imported goods returning,” he revealed.
Chua rationalised that Kim Hin’s Shanghai operations was the gateway for the company’s overseas escapades. “China has greater trade volume and is logistically very much more vibrant thus we are able to take advantage of economies of scale and the cost factor.”
He also expressed interest in the Indonesian market as the market there was growing at a rapid pace, however he was aware that to enter a new market and set up a plant was costly and that the company might be considering a potential joint venture somewhere in the future should the opportunity arise.
Chua remarked that being a local player had more disadvantages than the advantages enjoyed by other counterpart players in West Malaysia that had government backing in terms of subsidies and other incentives.
“Another growing problem and the main reason why we opened up a plant in Seremban was because of the cost of manufacturing in Sarawak. Although for the moment the Seremban plant only has about 30 per cent of the capacity of the one in Sarawak, which we plan to increase to 50/50 soon, cost of manufacturing there is so much cheaper.”
Chua further explained that, “The two highest costs for us are the cost for LPG (Liquefied Petroleum Gas) and electricity with LPG constituting the bulk of the expenditure at roughly 38 per cent of our production cost which is definitely alarming.
“To compare the cost of manufacturing, in Sarawak gas comprises 38 per cent of cost but in Seremban it only amounts to between 20 per cent and 25 per cent of our total production cost. It’s becoming harder to justify our operations and maintain our margins. West Malaysia even as off peak tariffs and manufacturers end up paying half the cost,” he lamented.
“We have repeatedly beseeched the authorities to look into the issue. LPG that most people use at home is subsidised by the government but for the industry sector it is not, being in an industry that relies heavily on LPG and having to bear the full cost of the manufacturing process isn’t a conducive environment for manufacturers anymore.
“We are currently facing a multitude of problems. We plan to expand our plants but if we expand in Sarawak, cost would be a major burden factor, if we expand the plant in Seremban aquiring land in the vicinity of our current plant is the issue. So right now the company is sitting on a cash pile of RM150 million in the bank and we have limited options. We are also toying with the idea of scaling down our operations in Kuching.”
He opined that the state government’s focus on multinational companies that got special concessions on electricity and even land should also be given to local players that had been contributing to the local industry for many decades. Such consideration would only make the playing field even for all and determine those up for the competition.
“I am a born and bred Sarawakian and I feel that it would be a great shame if we have to move our main manufacturing plant away from my own home. We also have our responsibility to our workforce and to spur on the local economy too.”
“We have shown that not only can we compete in terms of quality regionally but that Sarawak has the potential to venture into the global market but I feel that this lack of incentives should be addressed promptly as they are stunting Sarawak players now.”
Source credit to: Borneo Post Online