10 April 2008
A Flexible Approach(HKTDC Enterprise, Vol 04,2008)
Gifts & Premiums
Any firm that has been in business for 36 years must be doing something right. Panashiba Ltd describes itself as an OEM design house with the capability to also supply electronic gift, premium and promotional items in addition to home decor and lighting products.
"Over the years, we have seen our business reach new heights," says Managing Director Jacky J. L. "We started out as a small trading company, and in 1975 we began to do our own designing to differentiate ourselves as a contract manufacturer."
Discussing its present-day market profile, he says that changing from trading to manufacturing was thought to be too big a step. "We saw that many factories came and went, struggling to keep up with the seasonal demands and changes in the marketplace and so pure manufacturing did not appeal," Mr Jacky recalls.
"On the other hand, trading companies also face extremely tough competition. They have the disadvantage that when manufacturers go direct to the buyers they are left high and dry," he adds.
"We are clearly middle-of-the-road. We design and tool our own products, and we handle orders for our approved manufacturer. This way we get the best of both worlds and can concentrate on the day-to-day marketing of the products."
Early products included an AM radio that featured a lacquered case. Later, the firm started to incorporate small audio systems in wooden cabinets and even porcelain.
"In 1975 we were producing one product and by 1976 had two," Mr Jacky says. "We have reached a position now where we design a new product every week, which is more than 50 a year. We have slowed down a bit recently, and are averaging 30 products a year because competition is high and we want to concentrate on quality rather than quantity."
While Mr Jacky admits buyers are keen to reach deep into the Chinese mainland for direct contact with factories there, he says that Panashiba still has a few advantages to offer its clients.
"For example, growth in China is not just exponential but also geographical. It is no longer only in Shenzhen, but also south to Zhuhai and north to Beijing," he points out. "Buyers from overseas looking to go direct to mainland suppliers face a daunting task. There is no way they can check out all the factories themselves."
Panashiba therefore benefits from a sourcing service it started in 2007. "We provide buyers with a means of getting what they want without the near impossible task of finding products matching their needs from among a huge number of options," Mr Jacky says.
"We act as a liaison office and we can negotiate exclusive rights for buyers," he adds. "This is the best of both worlds for all concerned, and brings an opportunity to beat the competition, which is what everyone wants."
The company also conducts factory audits free-of-charge for any buyer. "We do this because we want to maintain our good reputation, too, and do not want to deal with unreliable factories as our name is on the line," Mr Jacky says.
Products are tested and checked for reliability and to guard against fake certification and laboratory reports. "To that end we have our own in-house Quality Assurance staff to conduct proper physical checks to see if what is said is valid," Mr Jacky assures. "Our inspection service is also free."
To stay viable, Panashiba applies an overall commission charge of just 2% on the order value. "At this level, everyone is satisfied and business can be done for a long time. Our commission rate is set to attract buyers rather than see them try to go direct to the factory."
Nonetheless, he stresses that the mainstays of business are innovative products and supplying variety to the market. A modern example includes a ceramic cup-and-saucer music station for iPod/MP3 players. "The cup is an active loudspeaker-amplifier and the saucer, which is also ceramic but which has the appearance of porcelain, helps make the item a smart desk accessory," Mr Jacky says.
Panashiba is also able to supply sports electronics items. "These days, everyone is fitness crazy," Mr Jacky declares, "and we have been in that line since 1985. We have an MP3 player for swimmers, for example, which enables the user to listen while swimming at a depth of up to three metres."
Looking to the future, he says that new products for 2009 and 2010 are already at the planning stage. "We are always seeking out new design ideas, and at this moment we are looking into using bamboo housings for certain electronics items," Mr Jacky smiles.
The firm's major market ratios show 30%-40% of production going to the US and 35%-45% to Europe: "At least 70%-80% goes into those markets and the remainder goes to Japan, Thailand, Korea, Singapore, Australia and New Zealand or to Saudi Arabia and Dubai. We also sell in South America, Argentina and Brazil."
TEXT BY TONY HENDERSON