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Executive Q&A: Michael Yung, CEO of TK Group

Kent Miller | PLASTICS NEWS CHINA

  Michael Yung. Image by Kent Miller.

Shenzhen, China -- Michael Yung studied industrial engineering at the University of Hong Kong and worked in procurement for National Semiconductor Hong Kong Ltd. and AST Research (Far East Ltd.) before a fateful meeting with TK Group founder Alan Li led him to join the growing company's new injection molding business.

At that time, the young company had fewer than 100 workers. Yung oversaw its explosive growth. Today, TK Group (Holdings) Ltd. is a leading mold maker and injection molder with 2015 sales of HK$1.6 billion (US$201 million). The company has more than 3,000 workers in the Pearl River Delta and Germany. Customers include top Silicon Valley brands.

Yung's unusual resume also includes a master's degree in Buddhist studies from the University of Hong Kong.

Q: How did you get your start in the plastics business?

Yung: I was an engineer before in a computer company, responsible for procurement and sourcing. I met the chairman of TK, Alan Li, and we got to know each other. In 1989, he decided to expand into injection molding. That's when he invited me to join TK, as general manager of plastics. The title was big, but we had only a few machines (laughs). These machines were 15, 20 years old. This was a very good experience, because old machines often break down. So I had to learn how to operate them. Sometimes I had to repair them myself. In a small company, you have to learn to do a lot of things. I helped to fill orders, shipping and warehousing goods. I installed the first personal computer in the company.

Q: What advice would you give to anyone entering the plastics or mold-making business now?

Yung: You need to have the passion and the interest in mold making or injection molding. Injection molding is quite an interesting industry in the way that you need to control quite a lot of different parameters -- speed, pressure, temperature, and how you drive the material, the automation involved.

Then you need a good tool, a good mold. There are many things to consider when designing a mold -- machining tolerance, how you design it, the method of injection. I remember when I first joined this industry, when we built a new mold and went to look at the mold test, if something had failed, we needed to make adjustments. We would spend many, many hours, staying late, until midnight, to get it right. In this sense, it's a tough industry. It's getting better now. Mold making is becoming more scientific. But still, there are a lot of minor adjustments that require experience. It was more of an art before, but still, your experience is important.

Yes. The mold is an art piece. We say to be a mold-maker, you need to have the mind of a scientist but possess the craftsmanship of an artist.

Q: You have been in the plastics industry for many years. How do you stay on top of the rapid changes in industry and technology?

Yung: We have a lot of competition, right here in the Pearl River Delta, where there are many mold makers. We always try to position ourselves at the top of the pyramid, by always acquiring new technology and making ourselves stand out.

There are always new challenges, new applications. For example, when mobile phones were new on the market, [in the late 1980s,] the casings were massive. You look at a mobile phone today -- it's lightweight, with a much better finish. There have also been the advances in polymers, metals, machining technologies like CNC [computer numerically controlled machining].

We also try to keep progressing in the way we manage the company, [adopting] CAD/CAM software, SAP, MAS (manufacture executing system) -- software that keeps track of the progress of every workpiece.

Q: What is your management philosophy?

Yung: I have a master's degree in Buddhist studies. Buddhism tells of the doctrine of dependent origination. It means that cause and condition are both sides of the same coin. [So] I always pay more attention to the causes and conditions than to the results. Look at an apple tree. Some people focus on the fruit. "When will it come?" they keep asking. And then maybe they think, "It's not coming, I'll add more fertilizer." But if you have enough sunlight, enough water, good soil, you cannot ask the tree not to grow the apple. It will come out naturally. The result will be there. The result will not come out because of what you want, but because of what you have done, to create the right conditions.

Q: Your sales of wearables, medical/health care devices and smart-home devices all climbed sharply last year. What are the keys to success in these areas? Do you plan to enter new product areas?

Yung: I think we've grown so fast because we have very good mold making technology.

[These customers] pay attention to the aesthetic, the finish of a product. They pay a lot of attention to the details. To deliver that quality, we need to be very good at process control. Also, for these customers, time to market is very short. They always need a supplier to guarantee the supply and the delivery of products. For one customer, we need to deliver 400,000 pieces a month. To do this, we have a lot of machines running in parallel, some with eight cavities, some with 16.

We are installing a production line for making mold components. In this we have to improve our production efficiency by reducing the setup time and idle time and to allow for flexibility of change. Our FMS (flexible manufacturing system) helps with this.

Q: In recent years, you have acquired Nypro Tool (Shenzhen) Co., and Selig & Böttcher GmbH & Co., KG. What benefits do you gain from these companies?

Yung: We acquired Nypro to increase our market share in packaging, especially in high-performance molds of packaging.

Selig -- that was to help with our sales. We see Germany as one of the very important potential markets.

Q: Overcapacity is a continuing problem in the Chinese plastics industry. How do you stay competitive with so much competition?

Yung: Most of our customers are very cost-conscious. For them, we try to have good processes. We try to reduce scrap and improve cycle times. We also offer more cavities. If you have a mold with eight cavities, when we make your mold, we'll double it to sixteen cavities.

We also try to develop customers who are very demanding in quality, on workmanship, on production tolerance. Cost is not so important to these companies.

You need to be either the best or the second best. That was the management philosophy of GE's Jack Welch.

Q: Are you planning to expand production in China or elsewhere?

Yung: Unlike industries such as garments and toys, the mold industry is more capital- and knowledge- intensive. You need a lot of talent -- technicians, engineers. So there's a difficulty in transferring this industry to Vietnam and Cambodia.

It also depends on the supply chain. The industrial infrastructure in Southeast Asian countries is still not that well developed. India is an option, but not in the coming one to two years.

Here in China, over the past 20 years, we have developed a lot of talent, not only in TK but in the whole industry. There are still a lot of ways to improve our overall manufacturing efficiency. And all of this requires talent and know-how. There is still further room to develop.

Q: Do you plan to open or expand sales offices, service centers and application centers in China or internationally?

Yung: We have quite a good setup In Europe. We have a factory in Germany. It was a mold making company [the former Selig & Böttcher] that we transformed into a sales and project-management company with after-sales support. We have a sales office in Barcelona, Spain.

In America, we are planning to expand our sales network. We are considering opening a sales and service center in the Midwest or Canada.

Q: Many manufacturers tell me that hiring and retaining workers is increasingly a challenge in China, especially the Pearl River Delta. Do you agree? What is TK Group doing to confront this challenge?

Yung: Frankly speaking, it's becoming more difficult. Like I think everywhere else in the world, [many] engineering graduates don't want to work in manufacturing but want to become a salesperson or an app programmer.

At TK we always have an internal training program. To train university graduates to become managers and engineers. We have one-and-a-half year of off-the-job training and another six months of on-the-job training. We do not have a binding contract with them, but we provide an opportunity to learn and grow.

It's the company culture. We try to create a very good working environment. We trust and respect our workers. We try to provide opportunities for people. We train them, if they perform well, they get promoted. Some have become part of our core management team. We have a lot of activities. We have leagues for soccer, basketball, badminton, etc. Even I play basketball.

Q: What is your big challenge ahead?

Yung: The worldwide economy. Comparatively, though, we are in good shape.

In the past 10 years, Chinese companies and overseas companies set up in China have enjoyed very good growth. And this expansion has become almost like a law. When this economy suddenly flattened-out and overcapacity emerged as a problem, some players have tried a price-cutting strategy. It will take some time for companies to trim their excess capacity and for some small players to get out of this business.

Q: Are you planning to trim capacity?

Yung: Not us. We are quite fortunate.

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