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FAQ
Q 1. Please give us some background on Luxking's key business activities and market strategy?
Q 3. What is the current state of competitive landscape for the adhesive tape industry in the PRC?
Q 4. How high are the barriers to entry? Who would you consider as the Group’s main competitors?
Q 6. What are the main drivers and growth potential of the adhesive tapes market in the PRC?
Q. Please give us some background on Luxking's key business activities and market strategy?
A. Luxking develops, manufactures and markets a broad range of adhesive tape products, from general purpose tapes to higher value industrial specialty tapes that are designed to meet more demanding technical specifications for the electronics and consumer electronics, as well as automotive industries.
With more than 18 years of operating history in the PRC, we are one of the largest domestic manufacturers of adhesive tapes In the PRC. During this time, we have built a sizeable base of more than 1,000 customers from diverse industries such as printing, packaging, food and beverage, automotive, electronics and consumer electronics. Our adhesive tapes are also exported to various countries over the world.
Having established a sound industry reputation in the general purpose tapes segment in the PRC, we are currently working to expand our business in the industrial specialty tapes segment by leveraging our know-how in adhesive technology, as well as investing to improve our production capability and capacity.
Q. What are the key raw materials used to manufacture Luxking's adhesive tape products? How does the Group manage the rising cost of its raw materials?
A. The key raw materials that are used in the manufacture of our adhesive tapes include PP resin, BA, PSA, BOPP films, PE coated paper, 2-EHA, cotton paper, and solvents.
While the prices of these raw materials experience fluctuations from time to time, we have been able to maintain a competitive cost structure due to our constant focus on cost management such as optimizing materials usage and improving the efficiency of our manufacturing processes.
Our manufacturing operations are also vertically integrated as we produce two key intermediate raw materials in-house – BOPP films and Pressure Sensitive Adhesive. This enables us to better control the supply of our raw materials and the production costs of our adhesive tapes.
Q. What is the current state of competitive landscape for the adhesive tape industry in the PRC?
A. There is a significant difference in the competitive landscape of the general purpose and industrial specialty tapes segments.
There are presently few domestic manufacturers who have the requisite technical expertise and production capabilities to manufacture a wide range of industrial specialty tapes, which generally have more stringent requirements as they are used for more demanding applications. The majority of industrial specialty tapes consumed in the PRC presently are imported from overseas.
While the competitive landscape for the general purpose tape market in the PRC is more competitive with many local and foreign suppliers, Luxking’s established reputation and vertically-integrated manufacturing operations has enabled us to serve the needs of a large customer base involved in diverse industrial activities.
We are now placing an increasing emphasis on our industrial specialty tapes segment, to capitalize on our first mover advantage in the PRC as well as our ability to offer products with similar quality to overseas competitors, and at significantly lower prices.
Q. How high are the barriers to entry? Who would you consider as the Group's main competitors?
A. Barriers to entry into the industrial specialty tapes market are significantly higher than the general purpose tapes market. This is due to the substantial technical expertise and production capabilities required in the manufacture of industrial specialty tapes. In addition, the long product qualification period for new industrial specialty tape products also raises the barrier for potential entrants.
At present, most of the industrial specialty tapes suppliers in the PRC are foreign companies, such as 3M and Tesa.
Q. What are Luxking's main competitive advantages? How does the Group intend to sustain its competitive edge?
A. One of the key factors that sets Luxking apart from competitors is our significant know-how in adhesive formulation and technology. This enables us to deliver a comprehensive range of adhesive solutions that meet the varying requirements of our customers. To the best of our knowledge, Luxking is one of few domestic manufacturers that has the requisite technological capabilities to produce a wide range of industrial specialty tapes. While the majority of industrial specialty tapes consumed in the PRC are presently imported, our key advantages over the foreign players are our competitive prices and shorter response time to fulfill local customers’ needs due to our close proximity.
In the general purpose tapes segment, the Group's quality products and services has earned it a good industry reputation and wide market recognition of its Luxking brand. We also benefit from economies of scale and a competitive cost structure, thanks to our vertically-integrated and large-scale manufacturing operations.
To sustain our competitive edge, we aim to continue enhancing our research and development capabilities as well as invest further to improve our production capability and capacity. This will enable us to further broaden our product range, particularly in the area of industrial specialty tapes.
Q. What are the main drivers and growth potential of the adhesive tapes market in the PRC?
A. The adhesive tapes market in the PRC has tremendous growth potential, driven by the country’s growing consumer goods industry as well as buoyant industrial and commercial activities. The electronics sector, in particular, has become a key driver of the economy, due to continued trend of outsourcing manufacturing jobs to the PRC from high-cost locations.
Due to our wide exposure to these growing industries, coupled with our comprehensive product offering, we are well placed to ride the growth of the adhesives tapes market in the PRC and capitalize on opportunities to increase our market share, particularly for the industrial specialty tapes segment.
