INTERVIEW: Ginko expecting a bright future

Ginko International Co, which operates Formosa Optical in Taiwan and manufactures Hydron-brand contact lenses in China, secured a leading position in the Chinese market soon after its creation in 2007. The company enjoyed robust sales and strong profits despite the economic slowdown last year. Ginko chairman Tsai Kuo-chou shared the company’s development plans for this year during an interview with Taipei Times staff reporter Crystal Hsu on Thursday

Mon, Jan 07, 2013 - Page 13

Taipei Times: How does Ginko International Co (金可國際) look at its sales and profitability this year, as the economy is recovering from a global slowdown?

Tsai Kuo-chou (蔡國洲): We are upbeat about the industry’s outlook improving. Last quarter, the company set up two production lines in China and three production lines in Taiwan.

We might start full operation of those lines next quarter, which will significantly boost the company’s manufacturing capacity.

Last year, the company’s revenue grew more than 20 percent from a year earlier, while net profits jumped more than 40 percent.

We aim to have a stronger performance this year with sales increasing by double digits.

We expect our profit margin to remain comfortable, thanks to a high entry level for the business. We do not see any formidable rivals on the horizon.

TT: Will the company increase its headcount and capital expenditure to meet expectations of rising demand?

Tsai: We plan to add 300 workers to our payroll, which currently stands at 1,500 in both Taiwan and China, with more than 300 staff based at the Central Taiwan Science Park (中部科學園區).

We intend to increase our workforce here by 100 this year.

The company has invested NT$1.5 billion [US$51.7 million] in establishing five production lines in Taiwan after expanding local manufacturing facilities two years ago.

To better serve local consumers, we plan to produce high-end products here. Last year, we spent between NT$700 million and NT$800 million on new equipment. This year, we may spend a similar amount.

However, this year we will focus mainly on making colored contact lenses, which are gaining popularity and generate higher margins.

Such products are not for correcting eyesight, but are sold as fashion accessories.

The company also plans to develop a plot of land measuring 10,000 ping (33,000m2) in China this year and purchase new equipment in order to expand production facilities there.

TT: Ginko’s share price has outperformed its peers in the biotechnology sector listed on the GRETAI Securities Market as well as the Gretai index since its debut last year. Would you share the company’s growth secret?

Tsai: Established in the Cayman Islands in 2007, the company is devoted to the production of conventional contact lenses, disposable contact lenses and lens care products, targeting China as its main market.

The firm’s subsidiary, Haichang Contact Lens Co (海昌眼鏡), is a globally branded contact lens vendor and sells its eye care products under the Hydron brand in China.

Today, we command more than 30 percent of market share in China after proving the favorite branded contact lens among Chinese college students from 2008 onward.

We attribute the firm’s rapid growth to a [successful] business model by starting business in rural areas and then expanding into urban areas such as second-tier and fifth-tier cities.

The company spends sufficient resources on boosting its brand awareness and value by hiring pop singers Jolin Tsai (蔡依林) and Show Luo (羅志祥) to endorse its products, a marketing strategy that appears to have paid off as reflected in sales figures.

TT: Haichang was awarded “well-known trademark” status in China last month. How will the company benefit from this success?

Tsai: Haichang’s is the second well-known trademark the company has been awarded in China after Formosa Optical (寶島眼鏡).

Only four Taiwanese companies won this recognition in the second half of last year.

The status will help protect the company’s economic value as it allows quicker and easier access for the company to government interventions over brand piracy disputes. Brand piracy is a big headache for companies that aim for excellence [in China].

There are more than 3,000 different Formosa Optical outlets, including fake ones, in China.

Among them, we only own 1,300 outlets.

I walked by three Formosa Optical stores on the same street of a Chinese city, but none is legally authorized.

Haichang contact lenses are also the target of brand piracy. Hopefully, the Chinese authorities will step up its efforts to crack down on illegal use of trademarks in the future.