John Penhallow10.10.14
ILLOCHROMA HAONENG EUROPE
Woudstraat 6 B-3600 Genk, Belgium
www.illochroma.com
Very few Western label converters have set up business in China, and even fewer Chinese companies have set up or acquired label converting plants in the West. That fact alone makes Haoneng a company to watch.
Haoneng is a major force in its domestic label market, and claims worldwide label production of 340 million m2/year, mostly in China. Its specialty is wet glue (cut-and-stack) labels for beverage bottles, but it also makes pressure sensitive labels for both beverages and foods, and a limited range of flexible packaging.
The Franco-Belgian converter Illochroma has had a checkered past. In 2003, it formed a joint-venture with US converter Spear, and in 2005 the name of the company became Illospear. In 2006 Spear acquired 100 percent of the business, but then an MBO followed in 2007, and the name reverted to Illochroma. In 2009, the company had annual sales of €26 million ($34 million at today’s rate). With plants in France, Belgium and Poland, it ranked among the top ten label producers in Europe. But the giant had feet of clay, and in 2011, unable to meet its debts, it was placed under administration (a procedure similar to Chapter 11). Haoneng was at that time looking to expand its global coverage and in April 2011 it acquired the assets of the three Illochroma plants. Employment at the French plant was cut from 76 to 35, and there were similar reductions in Belgium and Poland. The new owners invested in upgrading or replacing the old Heidelberg rotogravure presses, and in 2013 the French plant saw the installation of a seven-color Rapida 105 sheetfed offset press from German press manufacturer KBA, with fully automatic plate change. Commenting on this sale, KBA said, “The Rapida 105 in this configuration runs at 15,000 sheets per hour in UV or IR mode. The revolutionary plate change unit means that Illochroma can now change all the plates with a simple push of a button in less than three minutes. This will make them competitive even with short runs, which will give it a significant competitive edge.”
Illochroma Poland, with over 60 employees, is today said to be expanding its business and aims to convert 60 million m2 this year. In Belgium, the group has a fully automated warehouse serving all Illochroma Haoneng’s European operation.
The group’s CEO for its European operations is Anna Lee, who worked for ten years as marketing director of Haoneng China before transferring to Europe in 2011. Speaking last year at a Franco-Chinese Investors’ Forum in Paris, she said that while she recognized the advantages of France in terms of technology and management expertise, she and her company had come up against “real difficulties.”
Illochroma Haoneng Europe is reluctant to go into details about these difficulties, but it is all too easy to imagine the twin problems of culture and market that the company faces in Europe. As the first and so far only Chinese-owned label converter in Europe, Haoneng is a trailblazer, and as any pioneer can testify, trailblazing is hard work and beset with dangers. The group’s French site is in the rust-belt area of Northern France where coal, steel and cotton once flourished, and where trade unions still carry a heavy – and macho - punch. Even gnarled and case-hardened French managers often go pale at the thought of confronting the unions, and one can only imagine the culture shock on a newly nominated female CEO fresh out of China. Then there is the market. Haoneng’s strength is in long-run wet-glue labels, where volumes are static in Europe and margins are being squeezed. Despite the assurances of KBA, neither the Rapida nor the Heidelberg Speedmaster is really competitive in the short-run sector. Haoneng does not, as far as can be ascertained, have roll flexo production in Europe, and has not invested in digital.
Haoneng’s three European companies certainly have the backing of their powerful Chinese parent, but such results as are published suggest that profitability is a long time coming. Illochroma Haoneng France, for example, had annual sales of approximately $15 million in 2012, but with a deficit running at some 3% of sales, and negative equity. No figures have so far been published for 2013 although its situation is said to be improving.
There is a French expression which says, “To live happy, stay hidden,” and more than one French company takes this to heart. Illochroma Haoneng has possibly taken this maxim a little too much to heart, having never (as far as can be ascertained) published a press release or advertisement or taken part in a show, or done anything else to attract attention. Inscrutability in a mandarin can be a virtue, but a business enterprise needs to be…well, just a little bit scrutable.”
Woudstraat 6 B-3600 Genk, Belgium
www.illochroma.com
Very few Western label converters have set up business in China, and even fewer Chinese companies have set up or acquired label converting plants in the West. That fact alone makes Haoneng a company to watch.
Haoneng is a major force in its domestic label market, and claims worldwide label production of 340 million m2/year, mostly in China. Its specialty is wet glue (cut-and-stack) labels for beverage bottles, but it also makes pressure sensitive labels for both beverages and foods, and a limited range of flexible packaging.
The Franco-Belgian converter Illochroma has had a checkered past. In 2003, it formed a joint-venture with US converter Spear, and in 2005 the name of the company became Illospear. In 2006 Spear acquired 100 percent of the business, but then an MBO followed in 2007, and the name reverted to Illochroma. In 2009, the company had annual sales of €26 million ($34 million at today’s rate). With plants in France, Belgium and Poland, it ranked among the top ten label producers in Europe. But the giant had feet of clay, and in 2011, unable to meet its debts, it was placed under administration (a procedure similar to Chapter 11). Haoneng was at that time looking to expand its global coverage and in April 2011 it acquired the assets of the three Illochroma plants. Employment at the French plant was cut from 76 to 35, and there were similar reductions in Belgium and Poland. The new owners invested in upgrading or replacing the old Heidelberg rotogravure presses, and in 2013 the French plant saw the installation of a seven-color Rapida 105 sheetfed offset press from German press manufacturer KBA, with fully automatic plate change. Commenting on this sale, KBA said, “The Rapida 105 in this configuration runs at 15,000 sheets per hour in UV or IR mode. The revolutionary plate change unit means that Illochroma can now change all the plates with a simple push of a button in less than three minutes. This will make them competitive even with short runs, which will give it a significant competitive edge.”
Illochroma Poland, with over 60 employees, is today said to be expanding its business and aims to convert 60 million m2 this year. In Belgium, the group has a fully automated warehouse serving all Illochroma Haoneng’s European operation.
The group’s CEO for its European operations is Anna Lee, who worked for ten years as marketing director of Haoneng China before transferring to Europe in 2011. Speaking last year at a Franco-Chinese Investors’ Forum in Paris, she said that while she recognized the advantages of France in terms of technology and management expertise, she and her company had come up against “real difficulties.”
Illochroma Haoneng Europe is reluctant to go into details about these difficulties, but it is all too easy to imagine the twin problems of culture and market that the company faces in Europe. As the first and so far only Chinese-owned label converter in Europe, Haoneng is a trailblazer, and as any pioneer can testify, trailblazing is hard work and beset with dangers. The group’s French site is in the rust-belt area of Northern France where coal, steel and cotton once flourished, and where trade unions still carry a heavy – and macho - punch. Even gnarled and case-hardened French managers often go pale at the thought of confronting the unions, and one can only imagine the culture shock on a newly nominated female CEO fresh out of China. Then there is the market. Haoneng’s strength is in long-run wet-glue labels, where volumes are static in Europe and margins are being squeezed. Despite the assurances of KBA, neither the Rapida nor the Heidelberg Speedmaster is really competitive in the short-run sector. Haoneng does not, as far as can be ascertained, have roll flexo production in Europe, and has not invested in digital.
Haoneng’s three European companies certainly have the backing of their powerful Chinese parent, but such results as are published suggest that profitability is a long time coming. Illochroma Haoneng France, for example, had annual sales of approximately $15 million in 2012, but with a deficit running at some 3% of sales, and negative equity. No figures have so far been published for 2013 although its situation is said to be improving.
There is a French expression which says, “To live happy, stay hidden,” and more than one French company takes this to heart. Illochroma Haoneng has possibly taken this maxim a little too much to heart, having never (as far as can be ascertained) published a press release or advertisement or taken part in a show, or done anything else to attract attention. Inscrutability in a mandarin can be a virtue, but a business enterprise needs to be…well, just a little bit scrutable.”