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Shanghai Kawata targets U.S. but wary over tariffs

Rebecca Kanthor | PLASTICS NEWS CHINA

Kawata Machinery Manufacturing (Shanghai) Co., a Japanese-invested auxiliary equipment manufacturer in China, is making a push into the U.S. market.

Top company executives spent nearly a month in North America in November and concluded that Kawata is well positioned for a U.S. push now because of demand for the integrated systems and more automated equipment they manufacture.

But General Manager Wang Rui Xiang admitted to being worried - and caught off guard -- that the potential trade war between the U.S. and China could disrupt those plans.

Wang said President Trump's early April announcement of tariffs, including 25 percent duties on Chinese-made plastics equipment, took him by surprise.

But it hasn't changed his resolve, Wang said in an interview at the Chinaplas show in Shanghai in late April. In the long run, he believes that entering the US market will benefit both countries.

"I was considering this from the global economic structure," he said. "I believe that America definitely needs to develop their manufacturing industry."

"America has always wanted to be the world leader, so they spend so much money on military infrastructure," Wang said. "But when I visited, I saw that the bridges were so old. The roads were so old. Their machines were so old."

He believes the time is ripe for entry to support U.S. industry.

"I think America needs another industrial revolution," Wang said. "America can't just depend on imported goods."

To that end, he said the company could - in the long run - set up a production base in the U.S.

"We could even do production and R&D there because we can't only rely on exporting," Wang said. "If we could utilize the local workforce and resources well, then in the future we could put roots in the US."

But to do that requires the right partner, he said.

"We are looking for partners that have the market capability, assembly capability, and service and technological ability," he said.

While Wang said he doesn't believe Kawata machines could ever be 100 percent "Made in the USA," he does see a way for the company to benefit the U.S. economy and provide jobs.

"Final parts assembly could be done in the U.S. while primary manufacturing continues to be done in China," he said. "We have the possibility to become more mechanized. That way only one worker would be needed to operate several machines."

Kawata, which is part of the Osaka, Japan-based Kawata Mfg. Co. Ltd., set up its Shanghai manufacturing plant in 1997.

The company also has factories in Japan and Indonesia, and Wang said he believes that combination of manufacturing and research capability makes it well-suited for the U.S. now.

"Our products combine Japanese technology with Chinese manufacturing and development," he said. "We are able to combine Chinese strategy with global strategy."

"We need to think further, think global," he said. "Aside from Southeast Asia, our main target is North America and South America, including Brazil, Mexico, USA and Canada."

He said he believes they would have some advantages over U.S. companies.

"There are also similar American companies, but I think we are more advanced," he said.

Still, he said the threat of 25 percent U.S. tariffs on their machinery and components would have a definite effect on Kawata's market in the US.

"This is not a good thing for America though, because they still haven't solved the problem of technological renewal," he said. "They can't just keep producing the old machines that everybody else has weeded out. They need to speed up to the global level."

Kawata's path to the U.S. market has been years in the making, Wang said. In 2017, Kawata established a local office in Mexico selling products from Kawata Shanghai.

"We have a logistics center in Mexico," he said. "We have a huge warehouse and a service team there. There are staff from Japan, China and Mexico."

"We are considering the same for America, to find a partner for service," Wang said. "We could train them to make them understand Japanese techniques and Chinese production."

But first, he said the brand needs to be better known in the U.S.

"To enter the American market, first we need to do a lot of marketing and publicity," Wang said. "Secondly, we need to train our dealership, and so on."

Wang said that while he's preparing for the reality of tariffs, he's hopeful an alternative solution can be reached.

"I have faith," he said. "I think right now it's just a political game between America and China."

 

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