We bring the most added value from China to Europe
Tech-Long Europe GmbH has been headquartered in the heart of Grinzing - a beautiful area of Vienna - overlooking its famous wine yards. It is from here that the company is setting out to conquer the European PET packaging market with its blow-moulding machines and bottling equipment. - Interview with Dominique Lipinski, CEO, Tech-Long Europe
Please tell us a little bit about yourself.Lipinski: Originally, I am a food flavour and additives engineer and started in the packaging industry when I joined Sidel in 1993 as Sales Manager for the Middle East. Then I took over gradually different areas as Regional Sales Director, Central and Eastern Europe, Africa, North Europe... In 2003, I moved to Vienna to set up the regional headquarter of Central, Eastern Europe and Middle East region as Zone Vice President. After a few years, I moved to Mexico as Vice President for Latin America, where I stayed 4 years, then moved to Thailand as Vice President for South East Asia & Pacific. When the company decided to make a major organisational shift, I took the decision to leave the firm.
And now you are working for Tech-Long in Europe.Lipinski: Tech-Long is the leading company in Asia for bottling equipment. We specialise in PET, meaning that most of our business volume is PET-driven. The company was founded in 1999 by Mr Zhang Song Ming. International sales began in 2005 and Tech-Long was listed on the Shenzhen Stock Exchange in 2008. Tech-Long Inc. opened in Atlanta in 2012, and now we are sitting here today in Vienna at Tech-Long Europe. Why? Within just four years, our new subsidiary in the USA has enabled us to sell some 100 or so machines in the American market to date. This success has persuaded Tech- Long to attack the last remaining market – Europe.
It is well known that Europe doesn’t have the biggest growth rates for PET packaging, which begs the question: Why does Tech-Long want a base in Europe? What does it hope to achieve?Lipinski: After setting up successfully subsidiaries in fast growing markets as South East Asia, Middle east and Africa, Our experience in the Americas not only taught us that it can work, but also how. Like Europe, the Americas do not exactly have huge annual growth rates in PET packaging. Nonetheless, since entering the market there, we have achieved phenomenal commercial success. As a consequence, Tech-Long has realised that the international mature markets, whilst extremely challenging, are also very attractive. This naturally led us to ask “What about Europe?” and the decision was made to venture into this market. The second aspect, of course, is that Europe is home to our main competitors. Operating in Europe is therefore a great challenge.
I visited Tech-Long in Guangzhou around ten years ago and was very impressed.Lipinski: I can understand why, and developments at Tech- Long have made rapid progress since then. Even with my background, I have to say I was amazed. At the time, I really didn’t consider Tech-Long to be a dangerous competitor. But what I saw, both in terms of quality and the production set- up, more than impressed me. Today, the company has its own R&D centre, its own full range of production machines and is driving its own machinery and technology concept by constant innovations.
How have things developed in terms of Tech-Long’s staffing?Lipinski: The number of employees has increased to around 1,500 since 1999, though it is important to state here that the staff figures for R&D have risen disproportionately in this time. With some 350 design and development engineers, almost a quarter of the company’s current workforce is employed in R&D. Today, we have the capacity to build approximately 350 filling machines, 250 packaging machines and 120 blow moulding machines every year on a shop floor measuring over 210,000 m2.
How big are your average blow moulding machines?Lipinski: In the recent years, an average blow moulding machine has 12 to 14 stations. We are now into the fifth generation of our blow moulding machine series which, and I want to emphasis this, has many exclusive features developed in-house. Ultimately, this has meant that we now have either a blow moulding machine or a complete line installed with almost all major filling brands.
In your opinion, where do the greatest challenges currently lie for Tech-Long here in Europe?Lipinski: The biggest challenges are naturally in service and sales. Here in Vienna we have two highly experienced Sales Directors for Europe. Both have more than 15 years of PET experience and are now responsible for the European market. At the same time – and I believe this to be the more important factor here in Europe at present – we have the quality of Tech- Long’s service platform for our customers. We work closely with partners and sub-contracted engineers to provide this. There are several highly qualified service engineers in Europe who, after working for renowned suppliers such as Krones, KHS and Sidel, are now self-employed. They have a vast range of experience and value their autonomy. This means that we have technicians at our side who have over 20 years’ experience in servicing blow moulding machines and bottling lines. We give them training on our machines, and some only need a week to get up to speed.
Is service a key buzzword for Tech-Long?Lipinski: Service is the main aspect driving the success of our strategy. We believe we know what we need to do here to make customers satisfied, and we are free to adapt to the demands of the market. Customers are key references for us. We don’t simply add our customers to a list; we give special focus to each and every one. There is a deep and strong willingness to provide excellent service in our organisation.
Do you offer other advantages in terms of service?Lipinski: We deal with spare part services differently to our competitors. All key components from our machines are from International renowned OEM suppliers For example, our customers can purchase any spare parts they need directly from our subcontractors, and are familiar with all the components. As a result, you won’t find modified product catalogues with shocking mark- ups on identical parts from us. This strategy is both transparent and customer-friendly.
What applications and markets do you cover with your blow moulding machines?Lipinski: We cover all liquid filling applications in the blow moulding and filling sector. These include CSDs, energy drinks, drinking water, soya, vinegar & oil products, fruit juices, tea and household products. We supply complete turnkey lines for everything from water and beverages to blowing, filling, labelling, packing and palletising. We therefore provide both complete lines and standalone machines to the market. In the market here, machines need to have a technological edge and/or an excellent price point. In the USA, blow moulding machines form the core of our sales business, and we anticipate that this will also be the case in Europe. There are many excellent suppliers in Europe, which means that imported machines need to offer advantages. That is the only way they will be able to compete. We think that our blow moulding machines and blow-fill-cap combi- blocks offer significant benefits both in terms of technology and price. Additionally our range of capability in terms of container sizes is today the widest amongst all blow moulder suppliers. This is the reason why we are where we are now: in Europe.
Do you offer the entire blow moulding machine range here in Europe?Lipinski: Our blow moulding machine concept spans from two to 26 cavities, with bottle and container sizes ranging from 0.2 to 20l for some machines. Producing 10 l bottles on a rotary blow moulding machine is really quite something. The station output for 5 l bottles is 1,400 bph, whereas output on standard water bottles is at the 2,400 bph mark.
What big changes did you make between Generation 4 and Generation 5?Lipinski: We replaced some standard local parts with parts from International OEMs. This means that the key components found in our blow moulding machines are the same as those found in products from KHS, Sidel and Krones. As a result, we can achieve the levels of reliability and efficiency – and of course output – required in today’s European and American markets. We have already talked about the importance of a technological edge. For instance, we have a patented air recovery system which allows up to 55% of the HP compressed air to be reused. This is thanks to our special, three-step blowing process. It is standard practice nowadays to include pre-blow and final blow stages in production. We use an additional, intermediate step, and we recycle the air from upstream process steps for each subsequent stage of the blow moulding process. Our G5 range also includes servo motor stretching systems, and other very innovative key features allowing best in class preform heating profiles and thus PET material stretching.
Is it still possible to produce things more cheaply in China today?Lipinski: You will be aware that our competitors produce equipment in China as well. I think everyone realises that Chinese production no longer brings major cost benefits today. Wages for well-trained employees, engineers etc. in China have risen sharply. Even importing parts into China in order to construct the machines incurs costs. I believe that the costs of the machines themselves are comparable with machines of similar quality from production plants in Europe and in the USA. For us, the biggest factor in our costs competitiveness is our unique lean corporate structure. In our opinion, the big companies have too many employees who do not operate productively, i.e. they don’t work directly on the product/ the customer. The bigger the company and the more people that are involved, the longer and more complicated the processes become. As a consequence, there is no clear allocation of responsibilities, little sense of accountability and decisions get delayed. Decision processes such as these drag on and often drift generating deep customer dissatisfaction. Once companies realise this is happening, they hire expert consultants who, in turn, are responsible for immense costs. They make lists of corrective measures which actually should have been obvious, and usually are. These organisations are too sluggish, too streamlined to respond to special requirements and customer requests, and they slow down and reduce business efficiency. Our set-up is completely different. We need to be able to adapt to individual customers, not the other way around. The likes of Coca-Cola, Pepsi, Unilever, P&G as well as any individual customer each have their own unique requirements.
Does Tech-Long have specific targets in Europe for the next two to five years?Lipinski: I explicitly don’t want to base our operations here on figures. At this point in time, our goal is simple: we want to demonstrate the quality, efficiency and service of Tech Long. We can talk about sales figures and market shares when we reach the next phase. You are a supplier to big brands around the world.
Have you had conversations with brand owners where placing Tech-Long machines in customers’ European production plants was suggested?Lipinski: Yes we have. Major firms are always looking for competitive alternatives, the big equipment companies keep on reorganising and I believe the market and customers are looking for stability, for strong commitments and for experienced and passionate people. This gives us a chance to gain a strong foothold here.
We operate in a market driven by both technology cost. Do you see opportunities for Tech-Long here?Lipinski: As I take up office, my starting point is the spirit and atmosphere within the company: identification, motivation, understanding of our customers’ expectations. These factors provide the dynamism for constantly improving and optimising the technology and machines. The stronger the spirit, the bigger the success. I think that spirits are low at many competitors at the moment. And yet, I also hear that customers feel something is missing. Sometimes success comes down to individuals; It requires leaders who can direct the focus. The transition from one generation to another requires careful management. Rainulf Diepold, Member of the Board at Krones, has been a key figure in this industry and will apparently retire at the end of this year; We will be watching closely to see what happens. Here at Tech-Long, we are working to strongly maintain some of the morale which has been lost elsewhere, and which provides the basis for dynamism, a customer-driven philosophy, innovation, creativity, respect of commitments taken and ultimately success. The market does have examples of companies that have managed to gain a foothold as a result of enthusiasm, good ideas and customer focus. I am thinking here, for instance, of Sacmi when it entered the labelling market. All in all, I think that Tech-Long has an excellent chance in this market. Yes, there is a place for us here.
Can you briefly outline how the performance and prices of machines have developed?Lipinski: To talk about this development I want to look back at the history of the big ‘three’. When Krones entered the blow moulding machine business, this brought about very deep-rooted change. Krones needed volume. As a result, prices started falling. Let’s look at the example of the 10-cavity machine: 20 years ago, such a machine would have produced max. 15,000 bph – today it runs at 24,000 bph and is many times cheaper. As a result, organisations are trying to earn more money from providing services. Customers realise this, however, and they are not prepared to go along with it.
Technologies today are comparable. Machine performance, energy consumption, bottle weight etc. are very similar across the market. How can companies differentiate themselves from others to gain customers?Lipinski: In this case, the distinction lies in the levels of service, customer relations and commitment. These are the things that will matter in future. They provide an opportunity for Tech-Long to enter the market. If a head of purchasing decides to buy machines from Krones, KHS, Sidel etc., this will be met with broad acceptance.
Does it take courage to buy from Tech-Long? What is your strategy for overcoming this?Lipinski: This attitude is a challenge, no doubt about it. If a customer feels as though he is taking a risk, he needs to see some advantages. I believe we have options for offsetting this perceived risk, which of course doesn’t exist in our eyes. Our strategy is to gain a foothold in the European market in a very careful way. We have selected specific machines from our portfolio that will fit the market well, and which on the one hand can be covered easily by the service personnel available locally, and on the other, provide a very clear focus. We are starting with our blow moulding machines and are convinced that demand for complete lines will then follow. And we will meet this demand. So – we bring the most added value.
Let’s talk a little more about visions and strategies.Lipinski: Tech-Long has a vision. If I were being cheeky I would say that our competitors are more concerned with quarterly report results. Some certainly have a more long-term vision. We have our vision and are taking carefully considered, appropriate steps for the internationalisation of Tech-Long. We have installed over 600 blow moulding machines and more than 250 blow-fill-cap combi-blocks in more than 54 countries. We already have numerous references to show. I am convinced that we have excellent opportunities to chip away at the competition’s market share. How do you respond to customers today who say that systems are too complex for the staff they have available as machine operators.
What are they supposed to do when faced with a Chinese production line?Lipinski: This is for sure a major concern for many customers, and it is a point we constantly have in mind when developing/ improving our machines, how not to over engineer, how to simplify, and have user-friendly operational processes. We already have a sense that numerous potential customers are registering their interest. Let’s see what the future will bring. Our start-up here in Europe is in something of a small comfort zone, which is also related to our experience in other parts of the world, and notably in the USA. There, customers make decisions first on technology and then only on costs. And we can see the success achieved by Tech-Long Inc. This gives us a good feeling about Europe. It shows us that we are on the technological level expected by our customers. If customers then purchase a second machine, we know that we have done our job well, particularly with regard to service. The old saying still holds true: the sales department sells the first machine and the service department sells the second.
What will Tech-Long Europe’s focus be at drinktec in Munich?Lipinski: We will be displaying a BFC (Blowing/Filling/ Capping Block) at drinktec, and we are really pleased to be participating again. After the last drinktec we found it difficult to keep up with the potential projects. Things are different now. At the time, we were only in Europe for the period around the trade fair – now we have offices here in Vienna and an excellent network of local partners. We will continue to invest in our start-up and to be active in the market.
Mr Lipinski, many thanks for talking to us.
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