19 June, 2020

On May 22, 2020, Reed had an in-depth interview with Ms. Qiu Yezhi, CEO of Guangdong Dongfang Precision Science & Technology Co., Ltd., （Dongfang Precision） about its Intelligent Corrugated Box Manufacturing Strategy revealed in DONGFANG PRECISION’s 2019 annual report.

Guangdong Dongfang Precision Science & Technology Co., Ltd. is a world leader in the corrugated board printing industry. Ms. Qiu also briefed DONGFANG PRECISION’s third five-year strategic plan, and the Dongfang Precision‘s future strategic deployments in of its products, technology, service and overseas market.

According to the 2019 annual report, Dongfang Precision‘s high-end intelligent equipment business achieved an operating income of approximately 2.868 billion yuan, registering a robust growth rate of 20.64% compared to 2018 and generating 1.838-billion-yuan net profits for its shareholders. Among all the company’s offerings, the corrugated production line achieved an operating income of approximately 2.064 billion yuan, while the complete corrugated board printing line achieved about 622 million yuan.

Dongfang Precision has a complete industrial chain and a strong presence in the global market. It has considerable influence in Europe, the United States, South America, Africa and Latin America as well as in emerging markets of Asia. A young company as it is, Dongfang Precision quickly responds to the ever changing market and has great potential for growth in R&D, market expansion and industrial layout thanks to its abundant financial resources.

Reed: We know that DONGFANG PRECISION covers all the businesses of the corrugated packaging industrial chain, from upstream to downstream. Can you share with us the reason for this business strategy?

Ms. Qiu: DONGFANG PRECISION started its business in printers. Since then, it has been committed to the manufacturing of high-end printers. Throughout the development, we have also experienced the process of learning, exploration, innovation and upgrading.

In 2010, we shifted our minds and drew a new blueprint for future development.

As a local private enterprise, capital always remains an important but hard-to-get resource. In line with our first five-year strategic plan starting from 2008, we completed the IPO which solved our capital shortage. After strenuous efforts of integrating resources and expanding market, DONGFANG PRECISION was successfully listed on Shenzhen Stock Exchange in 2011.

After going public, we spent two years pondering on the second five-year strategic plan. DONGFANG PRECISION is a typical strategy-driven company. Each step we take is guided by a clear development strategy. We invited professional consultancies to study the whole packaging industry, including color printing, carton packaging, inner box packaging, etc. Finally, we entered the complete industrial chain to fulfill our goal of "becoming a manufacturer that offers turnkey solutions for corrugated packaging clients".

In 2014, DONGFANG PRECISION acquired 60% shares of Fosber Group. We made a quick and accurate adjustment on Fosber's portfolio and market strategies to develop and upgrade products. At the same time, we reorganized its core management team to fully mobilize and unleash managing potential. We also increased investment in Fosber’s VIP customer service while upgrading its customer service system. In 2019, the operating income of Fosber reached 230 million euros, and the net profit reached over 23 million euros.

In terms of the industrial layout, DONGFANG PRECISION focuses on medium- and long-term returns rather than short-term benefits. As a high-end equipment enterprise, we must make continuous investment from an early phase. Based on insightful understanding of the market and a rapid response, we use strong power of execution to optimize our product portfolio and continuously expand the market to achieve synergistic development with our partners.

Reed: We notice that though COVID-19 hits the market hard, the development of digital intelligence seems to have accelerated. What do you think of this trend? And how does DONGFANG PRECISION provide better quality solutions to different customers by means of its advantages in the complete production line?

Ms. Qiu: Now we should refer to the third-stage development strategy. At present, DONGFANG PRECISION is in the golden era which has been unprecedented in the past 25 years. From a small startup to a global group, our company has gone through many M&As to finally understand the most suitable path for our development.

The third five-year strategic plan of DONGFANG PRECISION lasts from 2018 to 2022. It centers on intelligent corrugated packaging equipment and the complete production line, which will be two priorities in the next three years.

“Intelligent" at this stage is not only limited to equipment, but also to digital and intelligent industrial applications. DONGFANG PRECISION will ramp up investment to achieve the integration of hardware, software and digitalization, so that we can truly solve the difficulties met by carton manufacturers. At present, China's corrugated carton industry is relatively fragmented, which is unfavorable to the development of the industry. Leading carton packaging companies in China only account for 10% of the global market, while those in Europe, the United States and Japan have occupied 80% market share. Under this severe situation, Chinese companies must stand up and complete the mission of industry integration. But such integration is impossible with a single machine. Thus, we will continue to invest in "intelligence" and "digitalization" of the corrugated packaging industry, and we firmly believe we will succeed.

To come closer to our goal in the complete production line, we integrated and upgraded products of the corrugated production line on the platform of Fosber; we completed the integration of printers at our headquarters in Foshan; we cooperated with Jaten Robot & Automation Company in AGV to realize concerted development of automated logistics equipment and traditional packaging equipment.

At the same time, we will keep up our consistent approach, that is acquiring 1 or 2 companies in the field of intelligent technologies. We will embark on transformation to intelligence and digitization based on our own advantages. With the aid of big data, we will help carton companies make well-informed decisions and also promote further integration of the entire carton packaging industry.

In terms of product control, we have managed to provide custom-made products and solutions that meet the needs of different customers under a unified high standard. At our printer division, the chief engineer ensures that all the printing equipment meets different needs of domestic and foreign clients under unified quality standards. At Fosber Asia, DONGFANG PRECISION’s corrugated production line division, we enlarge the original product portfolio to meet more diversified needs of domestic customers. In this way, we secure our positioning as a quality provider in the global market and strengthen our strategic layout in the Asia-Pacific region.

In the future, DONGFANG PRECISION will not only be a supplier of hardware equipment, but also a software supplier that delivers upstream and downstream equipment with an integrated management philosophy. This will be our core value.

Reed: In the face of COVID-19, DONGFANG PRECISION has done its utmost to combat the pandemic and give back to society while ensuring the safety of its employees and normal operation. Can you share with us your practices?

Ms. Qiu: Before the Spring Festival, we had purchased a large amount of medical supplies for future use.

After the outbreak, we urgently contacted overseas factories and purchased nearly 20,000 N95 masks and PPE within a week. We donated them to hospitals in Wuhan, Foshan and Hunan.

Then COVID-19 spread across the globe. We responded quickly and purchased a batch of critical supplies from the Netherlands and donated them to Italy where the pandemic raged. After the recovery of PPE production in China, we purchased nearly 100,000 N95 masks for Italian factories, hospitals and police stations, which gained wide acclaim in Italy.

Although those are minor kind gestures, they mirror the lovingness and team spirit permeating in DONGFANG PRECISION. We are a caring and cooperative family.

Though neither our suppliers nor customers resumed work, we took full advantage of our processing capabilities to manufacture core parts. We also proposed viable solutions and gave financial support for suppliers to regain their productivity. As a result, DONGFANG PRECISIONs supply chain has recovered better than expected.

The pandemic blocked people's travel, but it did not stop us from installing equipment. Despite lockdown and restrictions on international travel, Fosber Asia launched a "cloud installation project” to ensure smooth installation. The remote efforts joined by both Chinese and Italian teams created the high-speed corrugated production line, the first 370m/min one in China. To successfully carry out installation and debugging, Fosber Asia made full use of system advantages, applied Industry 4.0 technologies and collected and transmitted machine data, so that Italian engineers could get a clear picture of machine conditions and use their expertise to make “cloud installation” happen.

Reed: From 2018 to 2019, DONGFANG PRECISION was well recognized by the industry in terms of R&D. Recently, DONGFANG PRECISION sold all the shares of Pride Power. Does it show your determination to focus on intelligent corrugated packaging equipment?

Ms. Qiu: In terms of the separation of Pride business from DONGFANG PRECISION, I personally see more positive impact on DONGFANG PRECISION’s development despite short-term hiccups. Throughout the process, regulatory authorities gave us lots of support because they felt great determination of our senior management. We do this in order to better protect the interests of listed companies and small and medium investors. After the sale, we received high praise from the regulators, industry media and investors.

After selling 100% shares of Pride Power, we have shaped a development strategy with high-end intelligent equipment at the core. The strategy combines cutting-edge technology from overseas, advanced concepts of intelligent manufacturing and intrinsic efficient management model.

Reed: I learnt that DONGFANG PRECISION was the pioneer in the industry to transform into a service-oriented intelligent manufacturer. Why do you want to transform?

Ms. Qiu: Years of experience enables DONGFANG PRECISION to come out top in the industry. Our products are known for high performance, intelligence, stability and reliability. Customers are provided with quality technical support and after-sales services. This service-oriented intelligent manufacturing model brings multiple benefits such as brand awareness, premium services and cost-effectiveness.

At present, the proportion of DONGFANG PRECISION's service revenue is increasing year by year. In addition to basic services, we also launch service-based products that are not available in the entire industry. One example is the production management system of printers, which is not only applicable to DONGFANG PRECISIONs printers, but also to those of other brands. There is a professional team to give guidance to companies who install this system.

We also have task forces for customer service and machine parts that are completely independent of the supply chain team. They are responsible for taking orders, procuring parts, guaranteeing quality and shipping, which greatly improves customer satisfaction.

This year, we plan to introduce a new customer service management system to improve our response speed and professionalism. Thus we can deliver more efficient, sound and better quality services.

We break down our five-year strategic goals into smaller objectives for each year and achieve them step by step in different business activities. In its development, DONGFANG PRECISION has grown from a technology-driven company to a strategy-driven one. We forge ahead steadily on the basis of ensuring healthy and sustainable development, continuously increasing investment in technological innovation, talent management, global & industrial chain layout, intelligentization and digital transformation.

There is an old saying that one cannot stop its step of progress. With 25 years’ efforts, we have emerged a veritable champion in Chinas intelligent corrugated box packaging industry. We also enjoy a very high reputation in the global market with substantial influence. In the future, we will focus on the intelligent packaging equipment, promote digital transformation, prioritize industry 4.0 technologies and lead the industry to strengthen service and intelligent manufacturing, with the aim to reach the top of the industrial value chain.

DONGFANG PRECISION is one of the first domestic companies to engage in the production of multi-color printing equipment for corrugated boxes. After more than 20 years’ hard work, it has grown into a leader of the industry. Three years after our first exchange, I had another opportunity to interview Ms. Qiu Yezhi. In these two interviews, I could always see DONGFANG PRECISION’s clear picture of steady development in the paper packaging industry, as seen in the three five-year strategic plans which carve out a right path for the company.

As Ms. Qiu pointed out, now the company emphasizes more on flexible staff management with a unified development goal. While maintaining high standards for products and services, it embraces individual differences and by doing so, obtain innovative ideas which drive its further development. This is the very corporate culture advocated by DONGFANG PRECISION—respect for individuals, quality services, integrity, innovation and steady growth.

“Success is never easy to achieve; failure is not horrible. You fall down, get up, and move on.”

                                              Ms. Qiu

About Dongfang Precision

Dongfang Precision was founded in 1996 by Chairman Tang Zhuolin in Foshan, Guangdong，China. Its main business is corrugated board printing production machinery line. The company has been listed on the Shenzhen Stock Exchange (stock code 002611) since 2011. Since its initial public offering, the group has completed global industrial layout of high-end intelligent equipment under the guidance of the "endogenous + extension" development plan. In addition to corrugated board production lines, high-end corrugated board printing production lines and pre-press and post-press supporting equipment, the group's other business includes outboard motor machines and other high-end intelligent manufacturing products.