With E-Portal, YFY Aims for No. 1 Spot In Cross-Strait Paper Market

Dec 31, 2003 Ι Industry In-Focus Ι General Items Ι By Quincy, CENS
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Two years and NT$350 million (US$10.26 million at US$1:NT$34.1) later, Taiwan's Yuen Foong Yu Paper Manufacturing Co. (YFY) recently formally inaugurated a B2B (business to business) e-commerce portal it hopes will secure the company a leading place in the paper markets on the two sides of the Taiwan Strait.

YFY vice president Chong Hung-chih holds a color paper box made by his company.

Chong Hung-chih, president of YFY's paper-products division, says his company plans to pour another NT$100 million (US$2.9 million) into connecting new mainland Chinese plant facilities set to come online to the portal, providing "one-point order placing, multi-point delivery" service to customers there.

In addition to the B2B e-commerce portal, YFY has been developing advanced software systems to enhance its design, manufacturing, and printing operations. Such initiatives are part of the company's plan to transform its Taiwan headquarters into an information-logistics center in the supply-chain network straddling the Taiwan Strait.

In the lead-up to the formal inauguration of the new B2B e-commerce portal, Chong says, several major customers helped the firm in trials of the new system, including Wal-Mart, Hewlett-Packard (HP), and information-technology hardware makers Asustek Computer Inc. and Compal Electronics Inc.

Chong says that even in the trial period a threefold increase in revenue from e-operations was experienced in 2002, to about NT$530 million (US$15.5 million), and the value is expected to break NT$600 million (US$17.6 million) this year. The e-transaction platform is also expected to cut personnel costs for design work by NT$6.3 million (US$185,000) annually.

Efficient and Customer Friendly
According to Chong, the new online platform greatly enhances transaction efficiency and puts customers fully in control of every stage of the transaction process, from order confirmation and design-blueprint review to production and delivery tracking. Customers can easily check what they ordered and adjust delivery volumes over the Internet, cutting transaction costs and inventory levels by as much as 20%.

Chong claims that YFY is the world's first papermaking company to initiate a one-point order-placing, multi-point delivery information system. The vice president says that his company plans to expand the system to handle transactions, ultimately, with over half of YFY's customers.

According to Chong, YFY officials made fact-finding visits to papermaking companies in France, the Netherlands, Japan and other countries and has been cooperating with companies in the U.S. and mainland China to develop a comprehensive series of automated production processes over the past year.

Such automation efforts have helped YFY significantly accelerate production processes. Pre-printing operations (such as blueprint drawing, confirmation, printing plate-making and plate delivery) can now be completed in about two days, compared with five to seven days before; and in-house plate making and delivery times have been cut to eight hours from two days. With the introduction of an automatic ink-feeding system, ink costs have been cut by about 20% and the ink-preparing period has been shortened to under an hour.

Earnings Up
With the newly constructed e-commerce platform and the growing demand for paper products in mainland China, YFY's revenue from its industrial paper product business grew to NT$12.5 billion (US$366.57 million) this year, up 13.5% from last year. The company says that its pretax earnings are expected to reach NT$1 billion (US$ 29.3 million), translating into earnings of over NT$2 (US$0.06) per share.

To meet the strong mainland demand, YFY will open eight new paper product plants and five color paper box plants in 2005. With two new facilities soon to be completed, YFY claims that it will have 25 plants in mainland China in 2005. At that time, the company's revenue from industrial paper on both sides of the Taiwan Strait will reach NT$20 billion (US$587 million).

YFY currently runs two papermaking plants, five pulp plants, and one color paper box plant in Taiwan. Anticipating new demand from Taiwan's recovering electronics and consumer products industries, the paper maker plans to set up two new color paper box plants on the island. YFY has 10 paper-box plants in mainland China.

YFY's mainland industrial paper business generated revenue of about NT$3.5 billion (US$103 million) this year, accounting for about 30% of the company's total revenue. The mainland figure is expected to grow to reach NT$5 billion (US$147 million) next year and account for about 40% of the company's total revenue of about NT$16 billion (US$469 million) next year.
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