Evox Rifa follows customers to China
Evox Rifa follows customers to China
World markets for semiconductor products have shrunk amid the difficulties of the whole electronics industry and the IT sector in particular, but demand has remained firmer in Asia. Evox Rifa Group’s strategic decision to establish capacitor production facilities in China has proved to be a success.
“If the market is growing anywhere, it’s in China,” says Group President Harri Launonen. “The country has staggering potential. It improves our position that we arrived in China before our European and US competitors.”
Launonen points out that his company’s decision to set up in China was significantly influenced by the fact that many Evox Rifa customers have shifted their own production to that country. In addition to the potential market, western companies are attracted by China’s low production costs.
“For us, too, production is Europe was starting to become unprofitable and it was time to seek countries with lower cost levels,” he explains. “We looked at what each could offer and decided on China. An important element in our choice was finding a good partner.”
Capacity set to double
The partner that Evox Rifa chose, Jianghai Capacitor Factory in Nantong, originally acted as a subcontractor producing capacitors designed by the Finnish company. The idea gradually took shape of a joint venture, which began operations in spring 2002 in Nantong.
The production plant, located near Shanghai, produces electrolytic capacitors. At present most of them are sold in China but in future a large part of output will be exported to international markets via Evox’s worldwide sale network.
Evox Rifa owns 80 % of the joint venture and, together with its partner, will be investing about four million euros over a two-year period. Annual turnover of the joint venture is expected to rise to 20 million euros.
The plant in Nantong currently employs 40 workers and its productive capacity is in full use. “In spring capacity will double,” Launonen adds.
Strong sales of energy-saving products
Evox Rifa’s partner, Jianghai, is China’s largest producer of capacitors, making about two billion per year. The company has long been cooperating with renowned Japanese and Chinese electronics manufacturers. Some of its output is also sold to Europe and the United States.
One of the uses for the electrolytic capacitors produced in Nantong is in speed regulators for electric motors.
“Chinese power consumption is increasing rapidly and the country is now making serious efforts to improve its energy efficiency,” Launonen explains. “It’s why devices like these have good sales prospects. Room cooling devices are typical applications.”
Finnfund’s leading role
The main financier of Evox Rifa’s project in Nantong has been the Finnfund.
“Finnfund’s role in this investment has been absolutely important,” Launonen says. “They’ve been closely participating and advising us. We had worked successfully with Finnfund in the past so it was logical to turn to them at the very outset of this project.”
The history of cooperation between Evox and Finnfund goes back ten years. Finnfund participated in the financing of Evox Rifa’s capacitor factory in Batam, Indonesia in 1991. Seven years later it granted loan financing for enlargement of the plant.
“Evox’s factories in Batam and Nantong represent sensible investments as well as sustainable development,” says Finnfund’s managing director Jaakko Kangasniemi. “They bring employment and income to the area, at the same time as saving energy and safeguarding the environment. As a financier we want to play our part in promoting the success and spread of projects like these.”
Analyzing the market carefully and choosing the right partners are the keys to success in China, Launonen believes. He points out that a partner has an especially important role in a country with a corporate culture very different from Finland’s.
“To be successful, a company must adopt Chinese ways in everything, including management. And in raw materials, for example, it should shift to using local suppliers.”