China connection: Xinyi Glass making a niche in North America

Reported by Sahely Mukerji
May 1, 2006
COMMERCIAL, AUTO, FABRICATION : FLOAT GLASS NEWS

After zipping to the lead in Chinese auto-glass exports, Xinyi Glass Holdings Ltd. revs its engine to catch up with other architectural glass Chinese exporters.

Headquartered in Shenzhen, the boom town of southern China, Xinyi Glass started producing auto glass in 1988. Six years ago, it started making and selling architectural glass, and in February 2005, went public on the Hong Kong stock exchange. On Feb. 2, 2005, Xinyi’s share price was 26 cents per share, and on March 28, it was 33 cents.
Back in 1988, “I sensed increasing demand for auto-glass products in China,” recalls Yin-Yee Lee, founder and chairman of Xinyi Glass. “There was a big gap [between] local production processes and the advanced technology adopted by overseas glass manufacturers. Local supply could not meet demand, and a large proportion of auto glass was imported into China.”
An autoclave for processing jumbo-sized glass in the Shenzhen plant.
Xinyi Glass grew as an independent manufacturer without financial and technical support from global glass manufacturers. Unlike many other Chinese glass manufacturers, Xinyi was not previously owned by the state and has no financial support from the state. Founder and shareholders remain majority owners.

To cope with increasing demand for all kinds of glass, in 2003, company leaders secured a huge site of 7 million square feet to develop the Xinyi Humen Industrial Park in Dong Guan, Guangdong Province, China. The park includes:

• A float-glass line producing 700 tons a day.
• Construction site for a second float-glass line to produce ultra-thin architectural glass, opening in October. Daily tonnage has not been announced.
• An architectural glass-processing plant.
• Two auto-glass plants, one for after-market replacement auto glass; one for original-equipment-manufacturer and other auto-glass products.

Today, officials claim that the Xinyi’s architectural glass-processing plant has emerged as one of the largest such facilities in Asia. Before they had the float line, managers would buy float glass from other Chinese suppliers for processing into architectural and auto-glass products. The company does not produce sheet glass.

“Thanks to the senior management team and the committed workforce, Xinyi Glass has achieved rapid and robust growth in the last five years,” Lee says.
 
“Xinyi is a super-large enterprise with a range of automotive, float, patterned and fabricating glass products—a famous glass enterprise in China,” says Garth Hedley, chief industry specialist in the Global Manufacturing and Services Department of the International Finance Corp. in Washington, D.C. “It is the second-largest automobile glass manufacturer in China—Fuyao [Glass Industry Group Co. of Fujian] is number one—with 20 percent of the China market.”

The proportion of processed architectural glass imports going to the United States from emerging markets such as China has gone up in the past few years. For example, the value of U.S. imports of multiple-walled insulating units from China went from $14.5 million in 2001 to $45.4 million in 2004, Garth says. The growth and productivity of companies such as Xinyi were responsible for this hike.

Resources
From a humble beginning in auto-glass production in a small workshop, Xinyi Glass has expanded and diversified through vertical integration. “We have moved upscale to curtain-wall design, fabrication and installation [and] high-performance low-emissivity insulating units,” Lee says. “And with scheduled commissioning of our new float-glass line, we’ll ensure a reliable source of glass supplies.”

In its glass-processing plant, Xinyi Glass has:
• A low-emissivity line from Von Ardenne of Germany, producing low-e coated glass in different colors, light transmittance and solar-control performance for commercial and residential applications.
• Laminating equipment; in December 2005, Solutia of St. Louis approved Xinyi Glass as an authorized laminator for manufacturing hurricane glass complying with Miami-Dade County requirements.
• A full range of fabrication equipment for tempering, heat strengthening, edgework, notches, holes, spandrel glass, screen printing, ceramic frit, insulating units, sandblasting, acid-etch processing and spray coating.

Workers use Glassrobots and Tamglass tempering furnaces from Finland, and Lisec cutting tables and insulating-glass lines from Austria.

“Our focus is on value-added processed glass such as tempered glass and [fabricated glass with] edgework or holes,” says Daniel Lau, managing director of XYG Glass America Development Inc. of Richmond, British Columbia, a subsidiary of Xinyi Glass Holdings Ltd. “The amount of patterned glass exported in the form of stock sheets is relatively insignificant.”
The Shenzhen plant has an insulating glass production line from Lisec, Austria.
Xinyi also serves as “one of the largest automobile glass exporters in China,” Hedley says. “It has introduced key production equipment from Austria, Finland, Germany, Japan and the United States. Its Shenzhen manufacturing facility has the largest and most advanced automatic auto-glass lines with annual production capacity of 4 million pieces.”

Quality counts

Workers remain committed to state-of-the-art technology and recognize the important role of research and development,” says Antonio Tam, president, XYG Glass America. “We have been able to upgrade our production capabilities to meet the needs of our customers.”

“In sourcing from an overseas manufacturer, our customers are concerned with product quality and reliability of delivery,” Lau says. “We’ve incorporated a quality-assurance program with the International Organization for Standardization’s ISO 9001 accreditation [in the Chinese plants]. All tempered and laminated glass products comply with U.S. safety-glass standards of the American National Standards Institute’s ANSI-Z97.1-2004 and the Consumer Product Safety Commission’s CPSC 16 CFR1201. We have certification from the Safety Glazing Certification Council in Henderson Harbor, N.Y., as well.”

To reduce pollution, Xinyi adopts the strategy of waste avoidance and resource reutilization, says Alice Wong, marketing manager for XYG Glass America. “First, through implementation of ISO 9001 and production process control, we effectively reduce defective products. Second, we re-use and recycle defective glass for pattern and float glass.”

Corporate culture
Being a private enterprise incorporated in Hong Kong with a manufacturing base in China, Xinyi Glass has developed a distinct corporate culture. It boasts a young and dedicated workforce, willing to learn, thus increasing productivity. Top managers are “open and receptive to constructive ideas that make the company more competitive and a better place to work,” Wong says. “It provides recognition on the staff’s outstanding performance with incentives for increased productivity.”

“The needs of our customers are conveyed clearly to factory [workers], resulting in problems resolved to customers’ satisfaction,” Wong notes.
 
“I value training opportunities to upgrade our technical knowledge and supervisory skills,” says Clara Yang, international marketing manager of Xinyi Glass Engineering in Dong Guan. “With business expansion, there are ample opportunities for talented staff to take on increased responsibility.”

The strategic plan in North America
Xinyi Glass exports architectural glass globally to more than 80 countries and territories worldwide. The exact percentage fluctuates depending on market conditions, however, the “export market would typically account for 40-to-60 percent of [the company’s] architectural glass products,” Lau says.

Born and raised in Hong Kong, Lau, 57, moved to Canada in 1996 and began working for XYG in 2000. He proudly relates how he and other managers plan to grow North American architectural glass sales: “We have a physical presence in North America, and we can meet with our customers face to face,” he says. Currently, “Xinyi Glass has a broad customer base [in North America] covering shower-door manufacturers, national and regional glass distributors, glazing contractors and even some glass fabricators. The competitive strength of Xinyi is good cost control.” He refuses to name specific customers. “I’ve consulted with selected customers,” he says. “They would prefer their company names or projects not be mentioned.”

Wong adds, “We have to compete under free-market conditions on product quality, competitive price, customer services and reliability of delivery. We have to ensure that we are always ahead of competitors in innovation, new-product development, effective cost controls and customer services.”

Products get sent directly to overseas customers in ships. Xinyi officials say they have long-term relations with shippers who provide timely schedules. Custom orders take six-to-seven weeks to reach the West Coast and eight-to-nine weeks to reach the East Coast. Typically, shipping for a 20-foot container ranges from $2,000 to $2,800, depending on port location and season. In special situations, glass products have been delivered by air.

“Even though shipping costs may be higher compared with local trucking costs for domestic manufacturers, our glass products could still be competitive [with] local products by 10 percent or more, depending on specifications,” Wong claims.

The future
“In the next 10 years, we need to work hard to further strengthen the brand-name recognition of Xinyi Glass products and aim to establish Xinyi Glass as a top manufacturer in the global glass industry through vertical integration, product specialization, product innovation and effective management,” Lee says.

“Many buyers want the lowest price,” Lau concludes. “However, we do not compete simply on price. We adopt the best-value-package approach taking the totality of product quality, customer services, shipment delivery and competitive prices.”
That powerful approach could soon take Xinyi past the finish line, ahead of lead Chinese exporters of architectural glass.

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