Xinyi Glass: always take the initiative for development

To explore the foreign market first from North America

Interviewee: Chen Shaoyi, vice president of XinYi Glass Holding Limited

Gasgoo.com: How has Xinyi Glass stood out among its numerous rivals in the auto glass sector? What important stages has the company undergone in its development over the past two decades?

Chen Shaoyi: Back in the mid-1980s, all the glass parts needed for China’s auto-making were imported. But glass is fragile and heavy, and this led to the high costs of logistics. In addition, China had no auto-glass manufacturers at that time and foreign suppliers could ask a sky-high price. Mr. Dong Shiqing, now president of Xinyi Glass (Hong Kong) Co.,Ltd, realized the huge market potential of auto glass and built the Xinyi Auto Glass (Shenzhen) Co., Ltd. in 1988.

Later, in the early 1990s, Xinyi decided to do the OES business as its market orientation after some consideration between OEM and OES choices.

After six to seven years of OES business in the domestic market, Xinyi began to explore the U.S. market.

Gasgoo.com: How did Xinyi develop its sales network in the global market, boost its brand recognition, and gain so large a share in the OES market?

Chen Shaoyi: We started by forging a strategic partnership with the dealer: at first we created confidence of dealers in our brand, making them believe that our cooperation will be a win-win deal, and then the dealers would join us in developing and supporting this brand. The joint efforts would improve the quality of Xinyi’s products and expand the variety of the products. The quality and price of Xinyi products are similar to those of many other products, but the price of Xinyi glass could is much more competitive to help dealers expand their market. 

Gasgoo.com: With the growth of China’s own brands, the auto market competition will become increasingly fierce. Will Xinyi’s auto glass be better than the Japan-related products for the Chinese automakers to cut their costs?

Chen Shaoyi: Exactly. Only five years ago, we saw Volvo, Isuzu, and Benz running everywhere; but now the Yaxing-Benz has gone under, and the Silver bus has also disappeared. Why? just because the prices of Yutong and Kinglong buses of similar quality have been sharply reduced. In the passenger vehicle segment, Chery Eastar also delivers excellent driving delight and now the price of Toyota Camry would fall to that of Eastar.

Gasgoo.com: Since it’s acquired by Xinyi Glass, Shenzhen Nanbo Glass has also been proceeding in a steady and sound manner and has entered the OEM market. Will Xinyi Glass expand its growth in the OEM market?

Chen Shaoyi: Our acquisition of Nanbo Glass was based on two considerations:

1. As a brand, Nanbo has its huge customer base, human resources, and sales channels. Its network and tangible facility are both of great value to Xinyi. We have not changed Nano’s name to Xinyi; by keeping this brand name we can diversify our product lineup and showcase the distinctive features of our different products. Now as a well-known brand of Xinyi, the Nano glass will become a highlight of our profit-making in future.

2. The second aim is to trump the rival and set right the order of market competition. Nanbo Glass had some conflicts with Xinyi Glass before, which led to vicious competition. If it has so many useful features, why not turn them to our benefits?

Gasgoo.com: In the passenger vehicle market, it is hard to enter the supporting system of foreign brands. But in the commercial vehicle market, own-brand products play a leading role.

Chen Shaoyi: Yes, we are advanced in producing glass in the commercial vehicle sector. We provide over 60% for Yutong. We can share many common profits with our domestic customers so that we have such concepts as “focus supplier” and “strategic partner”. However, it’s different from doing business with foreign brands as they have their own “focus suppliers” and “strategic partners” in their native countries.

Gasgoo.com: Xinyi does well in products variety and quality as well as in controlling the material costs. Is Xinyi buying a placer deposit now?

Chen Shaoyi: We have been prepared to buy a placer deposit before establishing Fufa glass, but not now.

Gasgoo.com: How is Xinyi’s strategy in controlling costs as buying a placer deposit needs investment?

Chen Shaoyi: We have learned lessons from others. In the past, we barely processed the auto glass and bought the raw material glass from enterprises like Nanpo, so we were usually controlled by others. But since we established our own Fufa glass, quality problems caused by materials are thus reduced.

Gasgoo.com: So you have held a dominant position.

Chen Shaoyi: First, we always maintain the stable price; second, we can save 10% of transportation and packaging costs by direct processing. The importance of mergers can be seen in cutting costs.

But the risk also exists. For example, how should we do if we can not sell out the products when we produce that many? There is a hidden cost rising. Anyone without enough money couldn’t afford that. we have invested in five production lines, with every line valued at several hundred million yuan. As part of a capital-intensive industry, the production line couldn’t be interrupted.
 
Gasgoo.com: Is Fufa glass’s daily production over two thousand tons?

Chen Shaoyi: It’s been for a long time.

Gasgoo.com: It seems the production capacity has expanded a lot more than three years ago. And how do you deal with the market?

Chen Shaoyi: Three years ago, it’s still a blank. But from last year, after eliminating the waster and damaged products, the entire five producing lines, with a designed capacity of 2,900 tons, can actually reach an output of 2,500 to 2,600 tons. We use a majority of the products in the late phase processes such as engineering glass and auto glass selling. For the other part, we sell the Fufa glass directly to the well-developed Guangdong glass processing industry under the condition that we can satisfy ourselves. Apart from reasonable storage, there is no overstock.

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