Innovation and Entrepreneurship
Case Study: Hangzhou Synteam Science & Technology Co.: Growing a Successful Electronic Instrumentation and Control Components BusinessPublished: July 01, 2011
The Oxford-Zhejiang 10,000 Women Entrepreneurship Certificate program, run by Saïd Business School, University of Oxford and the Global Entrepreneurship Research Centre, School of Management at Zhejiang University, launched with its first class of 100 students in June 2009.
Xiao'en Shi was a scholar in the first cohort of the University of Oxford-Zhejiang 10,000 Women Entrepreneurship Certificate program in Hangzhou, China in 2009 and 2010. She was an engineer who graduated from Zhejiang University with a degree in information and electrical engineering in 1996. She founded Hangzhou Synteam Science & Technology Co. Ltd. in 2005 while she was working as a project manager for a small company linked to Zhejiang University that developed automation devices for dyeing and printing. She initially worked part-time, but quit her job in 2007 to run the company full-time. In 2009, she was a finalist in the Oxford-Zhejiang 10,000 Women Entrepreneurship Certificate Program Business Plan Competition.
Hangzhou Synteam Science & Technology Co. Ltd. provides electronic instrumentation and control components and R&D design services to fitness equipment manufacturers. The company has a portfolio of existing products, including fitness meters, controllers and power supplies, and can deliver orders ranging in size from one to 20,000 units. The company also designs custom products for customers. A key issue for the company is selling enough units to recover the R&D costs associated with developing a new product. For example, in its early years, the company invested 50,000 RMB (US$7,700) to develop a new product, but only sold a few hundred units and got back less than 20,000 RMB in revenue.
Hangzhou Synteam Science & Technology has a 600-square-meter production facility in the Yongkang Science and Technology Incubator and has received support from the Yongkang government with space rental and tax. The company is ISO-9001 certified and has one utility patent. The company has 21 people -- two in R&D, one in finance and 18 in production -- and was started with an initial investment of 500,000-600,000 RMB, which was raised from the founder and her family and friends.
Quality, Competitive Prices and Punctual Delivery
The fitness equipment industry is going through a period of explosive growth, with a global market estimated at $12 billion. Chinese fitness equipment manufacturers mainly export to the overseas market, but as local living standards improve and people pay more attention to their health, the fitness equipment market in China is expected to grow rapidly.
At the 2009 business plan competition, Xiao'en presented her plan for growth. Her plan projected that she would grow the business from 0.25 million RMB and 16 employees in 2009 to 6 million RMB and 210 employees in 2012. Xiao'en's long-term goal was to develop Hangzhou Synteam to be a large company in its sector with revenues of 30 to 40 million RMB.
Key differentiators for electronic instrumentation and control components for exercise equipment are: (a) reliability in long-term use; (b) functionality; and (c) cost. Xiao'en's strategy was to provide total solutions that satisfied her customer's requirements and to develop Hangzhou Synteam's reputation based on quality, competitive prices and punctual delivery.
In her business plan, Xiao'en identified a number of key competitors, including Shenzhen Junsd, Hangzhou Hongrui and Zhejiang Blue Sky. Hangzhou Synteam aimed to supply comparable products at about 30% less than Shenzhen Junsd and about 20% less than Hangzhou Hongrui and Zhejiang Blue Sky.