Kasen gear up for the automotive market6 February 2002
I have met many people in the leather industry who have impressed me. But few have impressed me more than Kasen Zhu, president of the Kasen Group. To me, he represents everything about being an entrepreneur and he epitomises the way in which his native China is approaching the world of business and free enterprise. Kasen Zhu is a tanner, a garment and furniture manufacturer and even a wine bottler! He started his empire as recently as 1988 (aged 24) with six workers, US$5,000 and no experience of the leather industry. Today, his group exports 200 containers of finished leather products and furniture a month, his tannery processes 5,000 raw hides a day, seven days a week, and around two million woolskins a year, plus an unspecified number of garments and bottles of wine. He is still only 37 years old. Clearly, he has had some help along the way by means of foreign and local investment, but his personal drive and energy has provided employment for several thousands of local people in the Haining area. Over 1,000 people will be employed at the new furniture factory using leather made at the Kasen tannery. The Kasen Group now employ more than 4,000 people. 'The footwear manufacturing and supply industries are already well represented in China and the competition is strong', Kasen Zhu, told Leather International. 'I saw an opportunity to develop upholstery leather and then furniture made with leather in China. Now, Kasen is the leading manufacturer of these products following our expansion.' The completion of the furniture factory is the third in a four-phase development of the group. The fourth and final phase is to produce automotive upholstery leather for major motor manufacturers. Last year, when Leather International was invited to visit the Kasen factory, one half of the site was a fully operational tannery while the other was little more than a field. By the time of the second visit, the field has been transformed into a vast 40,000m2 factory which was prepared with new equipment and other necessary logistical support required to produce cut automotive leather panels. The factory is situated in Haining City, approximately 200km south of Shanghai, and a full report of the last visit was published in Leather International, February 2001). Furniture manufacturing The furniture factory began production of leather chairs, sofas and armchairs at the beginning of this year. Other items made from wood and textiles will also be produced and all finished items will be sold and marketed under the Haining Kareno Furniture Co Ltd brand. The new furniture plant is located 5km from the tannery in Haining in a purpose built 25,000m² building. 100% of production is for the export market and the US is the main export destination. According to Zhu, approximately 200 containers leave the premises every month bound for overseas destinations. The Kareno furniture operation is a US$6 million investment from Kasen and represents the third of four phases of investment growth from the company following the setting up of the tannery and the cutting and sewing operations. Automotive upholstery The next step in the rapid development of Kasen is to move into the ever competitive automotive upholstery market. The company have so far only managed to make leathers for the local 'after sales' market but technicians from the tannery and leading chemical suppliers have been working on a line of automotive leathers for initial sale to motor manufacturers in China and south east Asia. Currently, most of the automotive leather is made outside of China and is imported into the country where it is cut and fitted. A number of US and European car makers, such as GM, Volkswagen, Audi and Citroën, have already established production sites within China and more are expected in the future. As the Chinese economy continues to expand and since China and Taiwan's entry into the WTO in the past few months, local consumers are looking to greater levels of luxury in their products. In 2000, Citroën reported that up to 50% of their cars produced in China contained all or part leather trim. Zhu wants to break into this market by the end of this year and he is already the largest producer of furniture upholstery leather in China. So far, he has managed to achieve all of his goals and he is confident that Kasen can crack this market. Kasen already make full, semi-corrected and corrected leathers for the furniture market in over 100 different colours. 'The cutting and stitching plant is now complete and so far the company has invested US$10 million in new technology and logistics aimed at courting the automotive sector. Now we have to persuade the motor manufacturers to buy our leather', says Kasen Zhu. Future developments Kasen are currently in serious discussions with a foreign company in the leather industry looking to set up a joint venture. Zhu was being tight-lipped on disclosing the name and nature of the other company but said that an announcement would be made later this year. It is believed, although unconfirmed, that a European tannery is looking to process leather in China using the European brand, sales and marketing.