Chinese Private Enterprise Management Cases

Author: Yu Huawen, Wang Xinqing
Publisher:
Publish Date: 2005-06-01
Features: Measures Taken Against Technical Barriers to Trade
1. Familiarize with the connotation of the "CR Regulations" and the new ISO 9994 technical standards, widely collect information, and grasp the development trends
Since the company's development entered a fast track in 1999, Xinhai Company has proactively stepped out of the country, extensively contacting foreign customers and manufacturers, and collecting information. The company's chairman, Huang Xinhua, spends one-third of his time abroad each year, leading trade and technical personnel to visit major customers, visit world-famous lighter companies, understand the development and use status of world advanced equipment, management concepts, and relevant technical standards. In response to the EU's "CR Regulations" and ISO 9994 technical new standards, Xinhai Company comprehensively integrated various information, grasped the development trends, did not wait and see, and did not rely on luck, but proactively adopted corresponding countermeasures. Therefore, before the "CR Regulations" and the new ISO 9994 standards were issued and approved, Xinhai Company had already taken production and R&D work in advance according to these standards.
2. Learn from the successful experiences of other countries, and graft advantageous technologies
Xinhai Company has hired experts from world-famous lighter companies at a high cost to help guide the design of the company's lighter CR devices, taking an important step toward meeting the ISO 9994 standard for product quality. At the same time, experts from Hong Kong and Europe were also invited to study lighter devices with new structures and anti-child-opening CR devices.
3. Cooperate with research institutions to accelerate the development of new technology products
The major lighter manufacturers in Europe have prepared for the CR Regulations for five years. In these five years, they have applied patents to all possible lighter safety devices, leaving very limited technical space for Chinese lighter manufacturers. If Xinhai Company's design concepts are slightly "similar," they may be accused of "partial similarity" and banned or sued for patent infringement. Xinhai Company learned that the EU is moving to raise the "technical" threshold and therefore sought help from Zhejiang University, establishing the "Zhejiang University – Xinhai Electrical Research and Development Center" to specifically tackle ISO 9994 compliance and the decoding of the CR Regulations. Based on in-depth research and understanding of the European lighter market and the CR Regulations, Zhejiang University and Xinhai's technical researchers leveraged Xinhai's existing strengths in a wide range of products, complete series, and detailed process design. They have now successfully developed 5 new products that meet the CR Regulations, with 3 of them obtaining U.S. lighter patents and 2 of them applying for patents in Europe.
4. Invest in new equipment, adopt new processes, and improve the technical level of products
In early 1999, Xinhai Company invested and built the first ISO 9994 quality testing center for the lighter industry in East China. In August 2000, it passed the ISO 9001 quality system certification, and currently, Xinhai has obtained the Japanese SG factory certification. During the process of responding to the CR Regulations, Xinhai not only improved the safety of its products but also raised the quality standards of lighters and lighters under the specific implementation of the EU's ISO 9994 in September 2001, while also proposing new requirements for product material quality. Facing the raised standards, Xinhai Company resolved to implement a technological upgrading plan and self-imposed pressure on product quality: in the first phase, it invested over 10 million yuan to import internationally first-class mold processing equipment from Switzerland, such as Mikron and Achy, and redesigned the new lighter production process and corporate standards. For example, the high-temperature test temperature for lighter gas boxes increased from 55℃ to 65℃ according to the EU's new standards, while Xinhai Company further raised it to over 70℃; sustained burning time was extended from 2 minutes to 3 minutes, etc., greatly exceeding the requirements of ISO 9994 (2002 edition). The implementation of the new standards increased product cost expenses but also improved the product level, competitive advantage, and selling price, while enhancing further development potential.
5. Strengthen internal management through self-improvement
In 2002, Xinhai Company achieved self-export of 240 million USD, with the EU market accounting for 130.5 million USD, representing 23% of China's total lighter exports to the EU, which amounted to 570 million USD. As one of China's main exporters to the EU market, Xinhai Company, to cope with the new ISO 9994 standard, has continuously strengthened its internal management while improving its capabilities. To meet the ISO 9994 standard, the company has invested over 2 million USD to purchase advanced equipment from abroad, such as Switzerland's MIKRO processing and manufacturing center and Germany's DEMAG injection molding machines. It plans to continue investing 5 million USD to improve its mold and product injection molding processes. It has hired experts from world-famous lighter companies to help guide its technical improvements and enhance product quality with the help of foreign customers. Some products use high-quality materials like PC and POM, and quality control is implemented for key components to ensure dimensional tolerances. Currently, all small-batch trial products before production have met or even exceeded the ISO 9994 new standard, such as increasing the high-temperature test temperature for lighter gas boxes from 55℃ to 65℃, extending sustained burning tests from 2 minutes to 3 minutes, and raising the requirement for high-altitude drop tests from 1.5 meters to 1.8 meters.
6. Step out of the country and take a detour to launch an attack
The target of the CR Regulations is China. To break away from the passive situation of being far from the terminal market, poor information flow, and slow response, Xinhai Company has implemented a plan to establish joint ventures in Europe and the United States to further increase Xinhai's market share. After nearly three years of hard work, Xinhai has successfully developed 5 new products that meet the CR Regulations. Although these new products have increased production costs, the export profit margin of the products has improved by 5 percentage points. Through the decoding of the CR Regulations, Xinhai has learned advanced foreign experiences and technologies and equipped itself with world-class production equipment, further enhancing the reform and innovation capabilities of its technical personnel and the overall technical strength of the company.
(Data provided by Ningbo Xinhai Electrical Co., Ltd., Ye Wei) P409-410