marketing and logistics. Its manufacturing is split between Xiamen and Quanzhou, two sites 100 kms apart. At Xiamen, 200 people are employed in the factory, 15 in research and development, and others in finance, admin, QA and logistics. At Quanzhou, the focus is on production only, and 120 people work there.
Made to order The company supplies speakers and components for Bluetooth headsets, office telephony and portable devices, while its hearing aid components go to hearing aid manufacturers and are used in audiometers, machines to evaluate hearing loss. Mr Ip estimates that 95 per cent of Woodtai’s products are custom-made. “Our customers give us their requirements, including thickness, diameter and electro-acoustic requirements, during the early development stage of a product and we will provide a prototype for them,” he says. “But sometimes we also initiate and develop our own products, building samples and sharing them with our customers. For example, we have just developed a new 6mm driver used in music headphones with linear frequency response and ultra low distortion – this is now in volume
production. And we have developed a 10mm loudspeaker used in a digital camera.” Woodtai also sometimes works with contract manufacturers on a second sourcing basis. This model is in demand where OEMs already have an existing supplier and are looking for ‘localisation’ – in other words, the contractor wants to establish an alternative supply in China. “What we don’t have is ‘commodity’ speakers,” says Mr Ip. No surprise, then that R&D is a really vital part of the mix. Woodtai has two R&D teams – one of acoustic engineers, the other of mechanical and electrical engineers. “Acoustic design is mainly based on experience,” he says. “We do have some simulation software, but experience is most important. Also, we provide advice; our speakers are mainly going to be installed inside the housing of our customers’ products, so we give them some application advice about any issues that will affect sound quality, balancing, etc.”
Increasing productivity Woodtai has made significant investments in its workshops and factories recently, including purchasing a reliability testing machine and a
range of injection moulding, gluing, winding and testing machines. That investment will continue, says Mr Ip, and that’s partly due to ‘simple mathematics’, as he puts it. Woodtai’s business growth has averaged 12 per cent for 2012, 2013 and 2014 (forecast), but labour and other costs are rising fast in China. “Our strategy is not really to increase the number of people, but to increase productivity and employ more machinery,” he says. “If we can buy machinery that will save us employing two extra people, it pays for itself in one year. Labour costs as a percentage of turnover need to be reduced. We have to achieve growth without passing any cost to the customer and without sacrificing our product margins – otherwise we can’t survive.” He says it isn’t really a case of automation – it can’t be, because this isn’t a business based on churning out millions of cheap identical parts. “But we are building tighter manufacturing processes and consolidating some manufacturing steps. This process is at a very early stage, but it will continue.” Meanwhile, a new development for the company is the planned roll-out of its own brand of earphones. Mr Ip is under no illusions here – he knows he’s looking to break
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