Thu, Jun 13, 2019 - Page 11 News List

Health & Life to focus on exports with Hanoi plant

By Kao Shih-ching  /  Staff reporter

Health & Life Co Ltd (合世生醫) yesterday said that it is investing US$4 million to set up a plant in Vietnam, as it plans to move out of China to avoid the effects of the US-China trade dispute.

The medical device supplier has purchased land-use rights in Hanoi, as Vietnam has little private ownership of land, Health & Life chief financial officer Tina Lee (李淑芬) told the Taipei Times by telephone.

The company expected construction to be completed in the third quarter of this year, but unexpected rain over the summer last year delayed the work, so it is likely to begin operations at the end of this year or in the first quarter of next year, Lee said.

Health & Life has been manufacturing its two most lucrative products — a blood pressure monitor and nebulizer — in Suzhou, China, since 2006, she said, adding that the EU and the US are its two main markets.

It has been considering leaving China for the past few years, as labor and fire protection costs increased, and the US-China trade tensions were a catalyst to spur the move, Lee said.

Tariffs imposed by US President Donald Trump’s administration would affect its business if it continued to stay in China, and the trade dispute is unlikely to be resolved soon, she said.

“We had thought about moving to an inland city, perhaps in Jiangxi Province, but gave up that idea as operating costs would still rise in the next three to five years,” Lee said.

Vietnam was the most favorable choice, because it has signed several free-trade agreements with other nations as well as regional agreements, and its labor costs are much lower, she said.

“Initially, we would still import components from suppliers in Taiwan, but industrial clusters are forecast to be formed in Hanoi,” Lee said.

Given that 90 percent of production in Suzhou went to the US and EU markets, the company plans to transfer most of its production lines to the plant in Vietnam, while the Chinese plant would just produce items for the Chinese market, she said.

Health & Life would not distribute a cash dividend to shareholders this year as it has not yet made a profit, it said in a filing to the Taipei Exchange.

The company reported a net loss of NT$15.13 million (US$481,387) for the first quarter of the year, compared with the net loss of NT$24.12 million in the same period last year, with losses per share of NT$0.38.

Cumulative revenue for the first five months of the year dropped 35 percent year-on-year to NT$152 million, due to intense market competition overseas, Lee said.

The company this year plans to reduce its production costs and launch new products to increase profits, she added.

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