4 May 2007
Displaying Initiative(HKTDC Enterprise, Vol 05,2007)
|Hong Kong Benmost Electronics Co Ltd has found a niche in digital gifts and premiums|
Hong Kong Benmost Electronics Co Ltd, established in 1996, has dealt with novel electronic devices since its inception. "We started out 10 years ago in Shenzhen on the Chinese mainland," says general manager Bevis Au. "Our first product was a desktop telephone that even on entry we found yielded only a small profit. As the margin became even tighter, so we decided to think again."
As a result of that learning experience, the firm went into contract manufacturing and took up an opportunity to produce an OEM electronic item using Surface Mount Technology (SMT) machines with auto-insertion features. "Leaning on what we had experienced, and given the machinery to hand, we started to produce printed circuit boards (PCBs)," recalls Au. "We had two lines - one SMT model and one manual insertion model for the production of power boards."
The PCBs were intended mainly for the telecommunications industry, particularly for service providers with mobile phone transmitter towers who were major clients of Benmost for some three years.
However, profits again came under pressure as more makers came into the PCB sector and caused the market and demand to flatten. "Fortunately, at that time MP3 players had just started making it big," Au continues. "We decided to get into that platform with new designs and the result was some highly profitable business."
The firm followed up with MP4 players, but these were short-lived ventures as bigger manufacturers were poised to take up the various niches in that market sector, he adds. "But, happily, we had found our niche as an OEM maker of MP3 players and survived quite well."
In 2006, however, the Benmost team could foresee a decline in the MP3 market. "Not in terms of the volume sold but in terms of price and profitability," Au says. "Indeed, business became seriously tough and soon there was no profit margin at all!"
With the price of flash memory cards also fluctuating wildly, the company clearly had to look for a viable alternative. That brought the firm into the premiums sector, producing small, cheap items that sell in large volumes.
"We now offer a series of small, key-chain digital photo holders that acts as virtual photo albums and come complete with slide show features. There is also a larger digital photo frame for the table or desktop that also has a slide show mode," says Au.
These items make excellent premiums and come in a variety of designs for different markets and outlets. "Our 'Cutie'-look versions are very popular," he adds. "Our cheapest digital key chain in this line sells for about US$9 FOB Hong Kong and measures about the size of a typical mobile phone screen."
To load images into the desktop version of the digital photo frame one must use the memory card from the device that fits directly into the universal side socket, whereas on the smaller key-chain version pictures are downloaded from a computer using a USB link.
"There are several different features depending on the model, while most buyers ask for the 50-90 pictures versions," Au says. "Some buyers also bundle the items we produce with the electronic device they are already offering, such as a digital camera, to give added value to their package."
The key chain albums and the desktop albums are available in different colours, patterns and shapes (a heart shape sells well) and prices for orders for more than 12,000 units are free of tooling costs.
Au adds that the firm offers "more unusual items" manufactured with great economy of scale. "They are still premiums, but with a little bit extra and at a slightly higher price," he explains.
"Another new product ready to go is an advertising machine for commercial use, built along the same lines as our desktop model but for small videos," says Au. "We might be a bit ahead of the market with this product, though, so we will have to see how buyers respond."
The company also has a voice recorder poised for launch in May 2007. This is a memory-stick type with an added function of a digital camera. "The quality is the same as that of a mobile phone," says Au. "The chip is purchased from the US, and we do the associated engineering and circuitry in-house."
Benmost operates a factory in Baoan, near Shenzhen airport on the Chinese mainland. The 8,000-square-metre facility employs 700 workers and runs eight production lines. Au adds the factory has won approvals from Wal-Mart and that its main markets are Europe and the US.
Clearly establishing a good image, Benmost has its eyes on a long and successful future.
TEXT BY TONY HENDERSON
Hong Kong Benmost Electronics Co Ltd
Unit 1007, China United Plaza,
1008 Tai Nan West St, Kowloon, Hong Kong