European base for global leader

In 1998 the Japanese company Shinwa International Holdings Ltd built its first and only European production site, Shinwa Precision Hungary Ltd, in the industrial town of Miskolc, north-east Hungary. Edina Beale examines the unique position of the Hungarian subsidiary within Shinwa’s global network and reveals the company’s winning strategy to bounce back after the recession.

The Japanese Shinwa group is a leading manufacturer of audio/video subsystems including mechanisms and pickups for the home and automotive markets. Headquartered in Hong Kong, the group established several manufacturing plants in China as well as a number of sales offices across the globe. In Europe, Shinwa opted for Hungary to establish its first manufacturing unit which also operates as a European sales and logistics centre to distribute radio/ CD player subsystems produced by other Shinwa units in China. However, the core activity of the Hungarian subsidiary differs from the other Shinwa plants which are mainly engaged in manufacturing mechanisms. Shinwa in Hungary is the only manufacturing plant to produce high precision plastic components for car radio/CD player front panels.

The company is mainly a Tier 2 supplier for Mercedes cars but also manufactures parts for VW, Skoda, Audi, Renault, Toyota and Hyundai cars, and now provides

products for the new Opel/Vauxhall Zafira. The factory in Miskolc is totally independent of its parent company in relation to product development. The company’s skilful engineers design and develop the products with their direct partners — well-known electronics manufacturers including Panasonic, Delphi, Continental and Flextronics — whilst constantly liaising with the end users. This process enables Shinwa Hungary to meet the specific needs of its clients and provide the highest quality.

Recovery from the recession

The recession in 2009 hit all players in the automotive industry hard. Shinwa Hungary was forced to reduce its staff numbers by nearly 120 people and its management had to concentrate on surviving. “There were two possible strategies to follow,” recalls Zsolt Bottyán, deputy factory director (DFM) of Shinwa Hungary. “It was either to focus on careful cost management or make dynamic steps forward - i.e. finding the gaps where we could be better than our competitors or perhaps acquire new markets. We chose the latter option.

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“I believe that the old saying of ‘Big fish eat little fish’ should be replaced with ‘Fast fish eat slow fish’, as having the necessary speed to move to possible markets and the flexibility to adjust to market needs are the crucial elements to staying competitive nowadays. As a result of this strategy we were able to strengthen our market position despite the unfavourable conditions, and it will also allow us to continue our progress in the coming years.”

Leading the field

Today Shinwa Precision Hungary is among the best in its field. In the domestic market the company is leading the way, whilst in Europe it has acquired a strong position in its segment. While the company’s mechanics division is slowly being eliminated, the main focus instead is on the component manufacturing. Mr Bottyán confirms: “This segment is continuously increasing. In the beginning of 2010 we had two projects on the table. By the end of the year we were working on 20 different projects, some of which are already being produced, and others of which will start in 2011. We expect that in 2011 our turnover will be more than double what we achieved in 2009.”

In order to execute the new projects, Shinwa Hungary made significant investments in human resources and new assets last year. At the beginning of 2010 the company employed 359 people, and this number rose to 460 by the end of the year. It also invested USD 5 million into improving productivity and meeting current market needs. “We purchased six new injection moulding machines and bought a state-of-the-art €2.5 million dying machine that has unique technology not only in Europe but worldwide. In 2011 we will continue our investments: amongst other things we plan to purchase a new laser engraving machine for USD 4.5-5 million.”

Positive outlook

Shinwa Precision Hungary is a unique and significant member of the Shinwa group that has not only survived the recent recession but has progressed dynamically in the past year. The company’s current USD 13 million turnover generated by manufacturing plastic components is set to rise to USD 20—21 million next year. The firm aims to reduce its costs by using more domestic suppliers, as they offer competitive prices and more flexibility because of their proximity.

Shinwa Hungary also continues to offer excellent working conditions for its staff as it follows the Japanese corporate values of creating a friendly and productive atmosphere for workers. The company’s strategy of adjusting quickly and efficiently to current market conditions has proven to be a successful formula which will enable it to thrive in the coming years. n