原标题：How Fuyao Glass, at the centre of documentary American Factory, became a dominant player, and why it is under pressure now
本文转载自：南华早报
记者：刘予婧
• Netflix documentary is putting a spotlight on business created by ‘rags-to-riches’ Cao Dewang
• Slowdown in China’s auto industry is huge challenge for glassmaker tied closely to it.
Fuyao Glass Industry Group, which shot to fame recently thanks to the popular documentary American Factory, has come a long way from its founding as a countryside plant three decades ago to dominate a quarter of the global car glass market.
Seen by many as a flagship of China’s manufacturing prowess, the company now faces a grave challenge today – the slowdown in the country’s car market following years of breakneck expansion.
But investors and analysts are overall confident Fuyao could find new growth in overseas markets, based on its efficient management and competitive pricing.
The fortunes of Fuyao are closely linked to China’s car market, which soared from being nearly non-existent to the world’s largest with 28 million units sold last year in less than three decades. The company counts major carmakers such as BMW, Volkswagen and Toyota as its customers.
Fatter profits
“Fuyao’s success is largely a result of chairman Cao’s superb judgment and persistence … he grabbed onto the massive opportunity in the development of China’s automobile industry,” said Yang Delong, chief economist at Shenzhen-based First Seafront Fund Management. 福耀玻璃的成功很大程度上归功于董事长曹先生的高超判断和坚持......他抓住了中国汽车工业发展的巨大机遇，“总部在深圳的前海开源基金管理有限公司首席经济学家杨德龙表示。
The success also catapulted founder Cao Dewang, also known by his Cantonese name Cho Tak-wong, to the ranks of China’s richest men, from a boy who was so poor he had to drop out of school at 14 to sell fruit and fix bicycles on the streets to help his family make ends meet.
Cao, now 73, sensed the market potential when he worked at a glass factory in the 80s and found out imported car glass could sell for prices that were hundreds of times of its cost. Cao’s rags-to-riches story then began as he founded his own company in Fuqing, Fujian province in southeastern China.
It also helped that Cao was determined to automate production lines and invest heavily in research and development, according to investors.
Yang, who worked as a car industry analyst at a different fund a decade ago, still recalls the days when he visited Fuyao regularly and was amazed by its factories. 杨德龙十年前在另一家公募基金即南方基金担任汽车行业研究员，他回忆起当时他去福耀玻璃工厂调研时的情景：
“I remember seeing lots of robotic arms and only a few workers in each department”, while production at other manufacturers were still largely manual, he said. “我看见了很多机械臂，而且每个车间工人都很少”，而那个时期大部分制造商还在大量依靠人工。
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The fund he was working for, China Southern Asset Management, made a great profit from the company’s A shares as its Shanghai-listed stock soared from 2.6 yuan in 2006 to a high of 19.2 yuan in 2008.
But as China’s car sales declined for the first time in two decades last year, the company is also coping with growth decline. This underscores the importance of its effort to branch out to the US, Russia and Germany in recent years, after it occupied a 60-per-cent market share in China.
And the impact has already reflected on its financial statements. The company on Wednesday reported a 19 per cent year-on-year decline in net profit to 1.5 billion yuan (US$209 million) for the first half of this year.
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Meanwhile, its American factory in Dayton, Ohio – the spotlight of a new Netflix documentary distributed by former President Barack Obama’s production company – contributed 15 million yuan of profits to the company, rising 16 per cent from the same period last year and growing for the second consecutive year.
Some investors are hopeful that the good results from the American unit is a sign the company could find support from the overseas market.
“Fuyao has the highest gross profit margin and net profit margin among its peers globally. I believe it’s capable to expand overseas with its very competitive pricing,” said Jiang Shengxian, senior investment manager at Guangzhou Wanbao Changrui Investment.
The company could replicate its strength in the US and raise its market share there, analysts at Founder Securities wrote in a report on Wednesday.
Analysts have 19 “buy” ratings for the company, five “hold” and just two “sell” recommendations, according to Bloomberg data.
Jiang invested his own money in Fuyao shares at the beginning of this year, motivated by the belief that Fuyao would outperform as soon as a recovery in the car industry happens.
He is not worried that Fuyao may run into more troubles similar to the clash it had with unionising employees at the Dayton factory, as depicted in the documentary.
“Modern corporations have only been around for 40 years in China, and Fuyao is one of the best in management,” he said.
(Corrects location of Dayton to Ohio state)
This article appeared in the South China Morning Post print edition as: Downturn puts Fuyao successes to the test
