Case Studies on IP Trading among SMEs in Asia Dr. Lewis Luk, JP President, Hong Kong Institute of Patent Attorneys 6 December 2013
Content Case Study One: Prof. Roy Chung, former Chairman of FHKI Case Study Two: Dr. Stanley Lau, current Chairman of FHKI FHKI stands for the Federation of Hong Kong Industries Q & A
Case Study One During the 1960s, the young Roy came to Hong Kong to find a job. His first job is a warehouse assistant of a famous electronic company. After many years of hard works, he was promoted to be the warehouse manager. At that time, manager was a senior post. In 1978, an opportunity arose when he founded a company with his partner Mr. Horst Julius Pudwill. The business of the company was to manufacture battery chargers. At the beginning, there were only a few people working in the company.
Case Study One This was a difficult period for Roy. Not only he had to work from early morning till late evening everyday and 7 days a week, he also needed to handle cash flow, purchase orders, product delivery etc. In one of his overseas missions, he discovered that battery chargers were very popular in the overseas market. This became his first turning point from OEM to ODM. He began to strengthen the R&D and production capabilities of the company. He also broadened the product portfolio to include all household and building electrical appliances.
Case Study One In 1988, he moved his factory from Hong Kong to the Pearl River Delta. The engineering and production capacities were substantially increased. In 1989, the Japan Ryobi Limited invested 20% shareholdings in his company. At the same time, both companies have agreed a technology transfer plan. In 1990, the company was listed in Hong Kong, now known as Techtronic Industries Co. Ltd ( TTI ). These 3 events became his second turning point.
Case Study One After 10 years of consistent growth, Roy was looking for his third turning point from ODM to OBM. In 2000, TTI acquired the RYOBI North America for power tools. In 2001, TTI acquired Homelite Garden Tools and RYOBI Europe. In 2002, TTI acquired RYOBI Australia and New Zealand. In 2003, TTI acquired Royal and Dirt Devil. In 2004, TTI acquired RYOBI outdoor power equipment brand license in North America. In 2005, TTI acquired Milwaukee, AEG, DerBo electric power tools brands and businesses. In 2007, TTI acquired Hoover floor care business. In 2013, TTI acquired Oreck Corporation.
Case Study One On 21 March 2013, TTI (stock code 669) announced its 2012 sales and profit results. Group sales reached US$3.85 billion. EBIT reached US$260 million. According to unconfirmed source, TTI also owns one of the largest portfolio of patents in Hong Kong. AEG is a registered TM owned by AB Electrolux (publ). RYOBI is a registered TM owned by Ryobi Limited. Both marks are used by TTI pursuant to Licenses granted by the two companies.
Case Study Two Dr. Stanley Lau started off as an employee of a watch company during the 1970s and 1980s for 10 years. In 1983, he founded his own company Renley Watch Manufacturing in a rented factory in Tsuen Wan. Over time, he expanded his business from simply assembling watches to designing and manufacturing them (from OEM to ODM). This was his first turning point.
Case Study Two In the 1990s, many Hong Kong based industrialists moved their production to the Pearl River Delta. Stanley took a different approach. He decided to remain in Hong Kong and focus on mid to high end watches. He also gave a guarantee that the custom designed watches would not be resold to others, as counterfeit items. This was a common problem for the buyers of watches made in China.
Case Study Two From ODM to OBM In 1990, on making his move to the higher end of the watch market, Stanley set up a watch assembly plant in La Chaux-de-Fonds, Switzerland (7,000 with approx. 10 employees). A year later (1991), he acquire three time honored Swiss brands and their production plants - Jean d Eve, Buler, Sultana. This was his second turning point. He believed, A Swiss Made watch brand can be sold for $10, one would only pay $1 for those made in China. But if it is made in Hong Kong, it can be sold for $3. Hence he developed a home grown brand Temporis.
Case Study Two Riding on the economic growth in the mainland, the company opened its first retail shop in the mainland in 1999. Now there are 10 outlets across different cities in the mainland. In 2003 when Hong Kong became a SARS city, Stanley suffered a difficult time. Hong Kong watch makers were denied to enter the International Watch Fair in Basel, Switzerland. In the second half of 2003, the Central Government announced the CEPA and free travel arrangement for mainlanders. This became his third turning point. Currently the company operates 7 shops in Hong Kong.