4 Dec 2006
Quality Counts(HKTDC Electronics, Vol 04,2006)
|Elegant designer-style hi-fi systems are a specialty of S.E.M. Industries|
Specialisation has been the key to success for S.E.M. Industries over the course of almost two decades in the audio business, according to director Manoj Sabnani.
S.E.M. has long been known for its stylish portable boomboxes and designer-style hi-fi systems, and supplies a number of well-known consumer electronics brands.
"We've been in business for 19 years," says Sabnani. "We are a Hong Kong-based company with three factories on the Chinese mainland in Shenzhen and Dongguan that employ around 2,000 people."
S.E.M. is happy with the size of its operation and has no immediate plans for substantial expansion, as it has no interest in higher volumes of lower quality.
"We focus on quality and reliability rather than volume and mass production," Sabnani insists. "We do produce entry-level items, but most of the time we're in the middle and higher range."
The company's manufacturing facilities, which occupy almost 250,000 square feet of space, have grown dramatically since S.E.M. was first established in the early 1980s.
"We used to manufacture personal-cassette players, including radio-cassette portables," Sabnani recalls, adding that CDs had not yet become mass-production items.
However, the company was prescient in realising that CDs were going to be a major music medium and got into the market early. "We entered the CD business in the early 1990s, and got into full swing by about 1994," he recalls.
"That business has continued to grow, although since 2000-2001 it's not growing as fast for CD-only products as the MP3 business has filled the gap and continued to push the market higher in volume."
Although other formats such as DVD have since emerged, S.E.M. has continued to focus on CD players, sometimes now with USB ports and MP3 compatibility, although Sabnani stresses that not all clients want those options.
"A lot of clients still don't want USB because of pricing issues, so we offer it as an option in about 30% of our line," he explains. "Most of our products are MP3-capable, but even that's an option, so basic CD audio is still a good proportion of our business."
Sabnani adds that S.E.M. doesn't produce DVD or video formats because of licensing issues. "There is a disparity between licensed and unlicensed pricing and we would only do it if we were fully licensed," he asserts.
S.E.M therefore confines itself to OEM and ODM business rather than building its own brand, and takes pride in long-standing relationships with loyal clients, based on strong service values.
"We are a design house as well as a manufacturing house and develop product designs from scratch, or evolve our product for clients who want specific differences," Sabnani notes.
Confidentiality is an important part of the company's OEM and ODM business, he adds. "Even the packaging of clients is strictly confidential," Sabnani claims. "We go to the extent of having non-disclosure agreements signed when clients make factory visits in order to protect all our customers."
S.E.M. generates a maximum of 10-12 new products per year, largely because of the time involved in applying for international certification and meeting RoHS and other standards for each item. "There's a lot of engineering follow-up, as well as the product development process," Sabnani remarks. "As long as we produce 10 good products per year we've done our job."
S.E.M.'s products are manufactured on 11 production lines that utilise components sourced on the mainland and in Korea and Taiwan. "We can produce on average 2,000-6,000 units per day, depending on the item," Sabnani says. "FOB unit costs for finished products range from slightly below US$2 to products that cost slightly more than US$100."
They can usually be delivered approximately 60 days after order confirmation to S.E.M.'s key markets in North and South America, East and West Europe, and Asia.
S.E.M.'s ongoing success and development has convinced Sabnani that there is room for a company where reliability and quality have a wealth of meaning.
"We've built a reputation for being a very reliable, very consistent, very responsible and quality-oriented company that gives value for money," Sabnani concludes.
"It's a broad mix within our narrow field, but our focus is on maintaining our reputation for reliability and responsibility, which gives us the room to continue to grow."
WRITTEN BY ROBERT PIERCE