Sundram Fasteners Tightens China Ops; to Pay First Dividend
Ten years after Sundram Fasteners pitched a tent on the Chinese soil, the TVS group company now looks at the prospect of crossing a milestone – the maiden dividend. “It took us seven years to make our first profit,” says Suresh Krishna, Chairman and Managing Director. “We have wiped out all our losses. Sales rose from 2.37 crore in 2004 to 117 crore in 2013, and the current year promises to be even better, with expected sales of 160 crore.”
In these 10 years, the 2,000-crore automotive fasteners maker used its manufacturing centre in Zhejiang — in which it has invested 56 crore — as a base to supply products to its customers in the West in the first phase, and then to its operations in China. Now, the company believes it is entering the crucial ‘third phase’— supplying to Chinese-owned companies in that country. This is a tough market to crack, says Krishna. Krishna shares the general perception that the local Chinese companies are “helped along” by the system. Then, there is also the hurdle of getting around the ‘sentiment’ as the Chinese prefer to buy from their own firms.
While fighting against the “enabled” locals is a fact of life, surmounting the sentiment is possible by winning their confidence. Sundram Fasteners may have done just that.
Of the 210 employees, 205 are Chinese — so it is slowly being seen as a Chinese company. Sundram Fastners took care to ensure that there was never a face-off with workers. For this, it had to first get used to the local work culture and its many surprises. Office etiquette and decorum are understood differently in China.
Krishna, who has an inveterate dislike for joint ventures, feels not having a partner is particularly a blessing in China. China observers say the Chinese partner will “kick you out” after learning your technology. Even if it is not that bad, perceptions often don’t match, they add. A good example is that of a Chennai-based company, whose joint venture with a Chinese company broke up within two years.
Conservative Indians wanted to expand cautiously, but the Chinese wanted to be on “investment mode”. Going it alone means a slow take-off, but is sure-footed, feels Krishna. Sundram Fasteners’ continued stay and the imminent maiden dividend seem to vindicate this.
