Hong Kong Manufacturing SMEs: Preparing for the Future

84The company will invest in research anddevelopment, concentrating particularly on thedevelopment of new manufacturing methodologyand on improved machine facilities. Datamaticplans to install more new facilities and more highendmilling machines. The investment patternduring the last few years has been to reinvest a percentage of company sales revenue into researchand development and the establishment of newfacilities. This practice will continue into the futuresince the old machines depreciate fast and thetechnology changes fast.Datamatic is considering setting up a subsidiaryin the YRD to support its clients in that part ofChina. The company does not envision movingmanufacturing wholesale to the YRD, but it cansee the merit in considering expanding into theYRD so as to have a presence there alongsidemajor clients. Datamatic does not plan tomanufacture outside of China. The company isoptimistic about the Chinese automobile marketand about the opportunities for growth in itsniche. Datamatic enlarged the size of its plantin 2005 and purchased more equipment. Thesechanges allow for further product diversificationwhich will make Datamatic more competitive. TheCompany plans stay at the forefront of advancesin technology and it will continue to focus onmanufacturing high-end products for automobilelighting components.Datamatic aims to be a sustainable manufacturerand to maintain a harmonious relationship with thecommunities in which it operates. The companyis committed to environmental protection so as toprovide for a better future for all people and to thisend it has invested in a waste recycling system toreduce pollution and to be able to claim status asan environmentally friendly firm.Lessons from the Datamatic CaseThere are a number of lessons that can be learnedfrom the Datamatic case.• Firms in the sector need to learn to expect andanticipate changes in market, technology, andbusiness environment, and be ready to adaptquickly in the ways that are needed to survive.• Hong Kong firms must demonstrate their valueto customers that are considering taking theirmould and die work in-house by emphasising theadvantages that accompany sourcing externally,the expertise that a specialist company canprovide, a willingness to better understand andanticipate customer needs, and opportunities toengage in forms of business collaboration.• Firms should diversify customer risk by developingrelationships with more multiple customers inmultiple geographic markets and in multipleindustries.• Hong Kong firms operating in the PRD facehigher materials costs than many of theirMainland competitors as well as potentialmaterial shortages because non-local companiesare required to import some of the criticalmaterials that are used in production.• Since SMEs in the mould and die industry usespecialised labour that can be attracted away bycompetitors or can leave to set up firms of theirown, the SMEs need to have means of attractingand retaining key personnel.• Firms can combat labour shortages by payinghigher wages and offering better conditions andbenefits to workers than competing firms.• SMEs may consider moving their manufacturingoperations to other locations, such as the YRD,where competition for skilled workers is lessintense at present and where costs are lower ingeneral.• SMEs should identify and take advantage ofincentives and policy measures that are put inplace by authorities in Mainland China. Thesewill be different across different locations andwill have time-limits. SMEs will need to do theirhomework to figure out which incentives bestsuit them.