Introducing innovative financial instruments to traditional tin industry
----Interview with He Shijin General Manager Feite Metal Technology Co., Ltd.
Located in Yaoshan Industrial Zone, Xiegang Town, Dongguan City, Feite Metal Technology Co., Ltd. engages in R&D and production of medium and low temperature tin alloy and tin alloy powder. The company produces 500t of tin ingot and 100t of tin power, which is developed and used for SMT surface, on a monthly basis.
Asian Metal: Firstly, thank you for joining our interview. Please give us a brief introduction of your company.
Mr. He: Jiuding Tin Industry, the predecessor of Feite Metal, specialized in smelting and electrolysis. After developing for 16 years, our company has established a complete industrial chain including raw material collecting, powder production and deep-processing. Our monthly output of tin ingot is 500t and that of tin powder is 100t. We mainly produce tin ingot, tin powder, tin bar, tin wire, tin paste, tin anode bar, tin solder ball and so on.
Asian Metal: What are your management ideas and your advantages?
Mr. He: We keep improving and try to produce the best product based on reasonable cost and provide top-quality product at the most reasonable price. Feite Metal has served customers with demand for high-end tin products for years. With an excellent management and technical team, we operate strictly according to standards of ISO9001 quality management system. We have perfect production and testing equipment, such as advanced Germany spectrum detector, vacuum cyclone centrifugal powder processing and advanced ultrasonic screening equipment, precise oxygen detector and high-definition microscope, laser particle size distributor and the like, so we can research and produce products that meet requirements of customers. Our tin ingot has been accepted by CooksonAlpha, a U.S. listed company, and our company has become the largest supplier of Alpha. Apple Inc. appointed UL-CCIC to conduct an audit on our company and results were encouraging.
Asian Metal: Could you let us know your main customers? What are your troubles in doing business?
Mr. He: We mainly sell our products to world-class tin manufacturers, such as Alpha and Electroloy, and domestic leading tin manufacturers and electronics manufacturers, such as Chigo and NVC Lighting. Most of our customers have strong demand, but they always suffer the problem of capital turnover. 70% of our customers adopt deferred payment now. We mainly sell products to end users, electronics companies and consumers as well as traders. In particular, electronics companies take nearly 70% and traders take about 30%. The former ones usually settle the payment in 60-90 days while the latter ones usually settle the payment in about 30 days. Deferred payments of downstream customers significantly affect our cash flow. From the perspective of cost accounting, our profit margin is reduced to some extent. Therefore, payment term is a big trouble for us.
Asian Metal: What are your solutions to such problems?
Mr. He: We invest a lot in our products, which have received recognition from most customers. Our customers release payments in a deferred way because they receive payments from downstream users in the same way. In order to develop together with customers, we applied for "Feite Jinbao" with a large listed company jointly and have established "Feite Jinbao" by cooperating with a number of banks, including Bank of Communications, ICBC, Bank of Jiangsu, CGB, Bank of Shanghai and other famous banks in China. As a financial instrument, "Feite Jinbao" could provide a loan of RMB20 million (USD2.98 million) in the first phase. With the guarantee from the listed company, banks will provide a loan to Feite Metal. Then, with the guarantee of Feite Metal, downstream customers could receive an one-off loan up to RMB3 million (USD447,101). For using this loan, customers need to pay an annual interest of 6% and a guarantee fee of 3%. The instrument solves both our and customers' problems in cash flow. Besides the loan, we will work more smoothly with our customers and have a try in adopting the innovative financial product together.
Asian Metal: The Sino-U.S. trade friction started from last year and will continue to exist in 2019. In your opinions, what impacts will exports bring to tin solder consumption?
Mr. He: The Sino-U.S. trade friction has made negative impacts on the market. With increased uncertainties, market prices fluctuated to some extent. As China carries out countermeasures in a timely manner and increases export rebates, electronics exporters benefit from such actions. Thus, demand for tin solder from OEM service providers increases. With new applications of tin solder and development of 5G network, tin solder will continue to be indispensible. It's predicted that tin industry will have an excellent future in the following years.
Asian Metal: What will the opportunities and challenges be in Chinese tin market in the next three years?
Mr. He: There will still be uncertainties in the coming year, such as supply shortage of tin concentrate and demand for tin solder from end users. Against this background, prices are expected to fluctuate. However, the market will stabilize gradually with good news from Sino-U.S. trade talks and continuous discovery of tin concentrate both in China and foreign countries. In the long run, Chinese economy will continue to grow at a high speed from 2020 to 2022, resulting in higher consumption of tin products and increased tin ingot prices. In the next three years, Chinese tin market will face both opportunities and challenges.
Asian Metal: Could you share your future development plan for the following three years with us?
Mr. He: Being always integrity-oriented, Feite Metal aims to make "FT" into a leading brand of high-quality tin powder. We require all employees to be down-to-earth and realistic, follow industry development rules and act based on specific actual situation. We keep protecting our brand with quality, take invention and innovation at the basis and consider invention and innovation as the only way for Feite to march forward. In future, we will continue to deliver high-quality products and achieve industry innovation by taking advantage of financial instruments and internet in order to bring a new look to the industry.
Asian Metal: Thanks for your wonderful comments. Feite Metal is a pioneer and leader of the industry. We hope Feite Metal will have a more prosperous business under your guidance.
Mr. He: Thank you. Wish Asian Metal a brighter future!
