To be the most influential supplier in a niche market

An interview with EZshine's president.

Interviewer: https://www.cncaa.org/

Interviewee: Richard Deng, Owner, President of EZshine

I met Mr. Deng and got to know a company that focuses on a small and narrow field, makes the best of its products, and becomes the most influential brand and supplier in this field. It was because of the second training on coated abrasives technology held by the Association this year.

Looking at the list of trainees, there was a rare diamond company among all the trainees in the coated abrasives industry, and it was the chairman of the board who came to the training together with the chief engineer and technical staff.

What kind of company is this? Why did they come to the training on coated abrasives? Is it a special focus on learning, or is it a crossover to a different profession? It's not necessarily a good idea to cross over, as the structural overcapacity in the abrasives industry is already quite serious.

There are many questions, so let's meet and talk.

Cross-border training, gaining things you can't learn from your peers

Interviewer: As a diamond products company, why did you come to attend the training course for the coated abrasives industry?

Richard： We have been in the diamond grinding and polishing business for more than 20 years. 5 or 10 years ago the market was very good, but now the competition is fierce.

In the process, everyone is making progress in competition and we have been moving forward. But recently we feel that we have encountered bottlenecks in some aspects, for example, when polishing, there is only one standard called gloss in China, but in the United States gloss is only an indicator for testing products, there is another indicator called clarity. It is to take the gloss instrument test, the light 60 degrees angle shot in and then reflected light how much, 100 degrees is the ultimate, generally can not reach, 90 degrees above is very good. But even if the gloss is very high, the surface still looks like a layer of fog with the eyes, which is not good enough clarity. There is no such standard in China. We have imported a clarity testing instrument from the USA, which as far as I know is probably the first of its kind in China. It has a completely different definition of clarity and a different method of testing. This also made us realise that the product can only throw "gloss" is not enough to compete with foreign products, but also to work on "clarity".

We work with many universities in China, such as my alma mater, Xiamen University, Sichuan University where I studied, as well as Hua Qiao University and South China University of Technology, etc. We are constantly communicating with the universities, hoping to learn from them what is the theoretical core of the polishing mechanism and why it is necessary to polish in this way. Without understanding the mechanism and the testing criteria, it would be purposeless. I happened to read this training notice from the internet and saw the subject of "Grinding and Polishing of Hard to Wear Materials" presented by Dean Zou, and I felt that although it was about coated abrasives, the reasoning must be similar. I felt that although the topic was coated abrasives, the reasoning must be similar.

As expected. Dean Zou talked about the principles and solutions for grinding and polishing of many different materials. For example, when polishing aluminium and magnesium alloys, because the material is relatively soft, polishing is easy, but there will be some scratches on the polished surface, this is because the polishing material used is relatively hard and produced. In fact, this problem is encountered no matter what material is polished, and we have encountered it when polishing other materials. The way to deal with this is to use different polishing materials at different stages, as Dean Zou said. The first stage is for grinding, to be efficient; the second stage to remove the scratches produced, to change tools, of a different material or a different bond; and the final polishing to change to another bond, or a different material, some even using wool or something chemical, not purely abrasive. Dean Zou's class gave me a great insight into how polishing can be done with different materials or different forms of tools to solve practical problems. This is something that I would not normally be able to get from a purely technical point of view or from my peers.

During the coffee break between classes, I said "ordinary grinding is very strange, no matter what polishing basically to 800 grit", he said, "down to throw it will not be able to throw down, what to do next"? I said, "1500#, 3000 #, up can not be"? President Zou said, "No!" In fact, this is one of the problems we are currently experiencing. I asked, "Why?" He said, "Because this number is too small when it holds 1500 or 3000, and if you use a hard substrate when it reaches it, it will scratch the surface that has been thrown. In the top to the object to be processed, it will be top in, in fact it will have no cutting force, na,tural can not play a polishing role. Therefore, if the polished material needs to be polished after 800#, we have to think of other ways".

This is also a very big gain. Although our processing object is different from the coated abrasives, Dean Zou gave me an idea: we can't go in one direction to 3000 #, we even went to 6000 #. we have to try to change other materials or bonding agents. Of course, I haven't figured out what to do when I get back, but I know we're going to have to change our thinking and do a lot of work, and we're going to be more directional. That was my biggest takeaway, and one that I didn't expect before coming.

Such training I think is too short, yesterday Dean Zou only spoke for one morning, I think this subject should be covered for at least a day or two and could be more detailed. I think we need at least a day or two on this subject to know where the world's most advanced are and where the direction is. President Zou spoke of the most cutting-edge things, understand these and then go to the customer, from the customer's point of view, you talk to him about the most advanced things, he will think that you even study this thoroughly, the small things have no problem for you. This is actually a very high marketing model.

Homogenisation forces outward-looking companies

Interviewer: There is a big market demand for domestic diamond products, why did you choose the international market?

Richard：I have a postgraduate degree in diamond, then I worked for many years in foreign companies as a technician and then in business sales, and when I became familiar with these two sectors, I started a factory with a friend in 1993. In the early days, we were also doing domestic business. At that time, the stone industry in Fujian was very well developed and diamond saw blades were the main cutting tool and were in great demand. However, as the products were similar, the stone factories could use one and then another, so the payment was not easy to collect and it became an unspoken rule to default. I got angry and simply exported, after all, I had the advantage of English language and other aspects.

Many companies in our industry have not had to change their recipes for 20 years because the market does not demand much from them, but our products are in the international market and we are competing with the most advanced international ones.

Our workers are all local farmers and it took a long time to get them into good habits. Now they know what is and isn't allowed, and we are very strict about it. If we're going to do lower grades, we definitely have to lower the standards. If you tell a worker today that he has to lower it, tomorrow he'll get used to it, but it's too difficult to pull it up again.

Here in Fujian a lot of people want to do everything, and we also made saw blades at first. But when you try to do everything, you can't do anything well. When you meet a big order you think, just drop the price, make it worse, he wants it anyway. In the process, many people are willing to give in. But you must think clearly about what you want for yourself, what is your goal? In our company this is not allowed, the low grade is firmly out of the question, I would rather have no orders. Of course it is not possible to have no orders, because this part of the customer has been positioned there, and there may be fewer of them to find. It is true that they are not easy to find at home, but they are plentiful abroad.

There is a very big company in Switzerland, just like 3M in the USA, with a very high level of polishing, so we compared ourselves with him and their customers were attracted to us. My products must be better than his, in some details I do not do worse than him, and the price is not cheap, much more expensive than in China and a little cheaper than in Switzerland. In the United States, Germany and Japan, we are also in competition with local companies to steal customers from local suppliers. Two years ago we beat a Swiss company, and now they have a new product that beats us, which means they are improving. I am very anxious that if we don't improve, he will take my customers away from me in a while. That's how the market is. This competition has its advantages, it's a healthy competition, he progresses, you progress too, everyone is running forward. And our eyes are always on the world's most cutting-edge users.

Competing on the same platform as foreign companies

Interviewer: Many small companies in Europe, small in size, are at the top of their field. How can you compete on the same platform as them?

Richard：We started exporting to Germany and Europe in 1995. At that time, many foreigners thought that Chinese goods were just cheap bad quality stuff. One year when I was exhibiting in Germany, I had pictures of my products hanging there and an Italian man walked by and asked how much they were selling for. Because at that time, people had the impression that Korean products must be much better than Chinese ones, he thought that because my products were not as good as Korean ones, the price could not be more expensive than Korean ones. Indeed there are two diamond tool companies in Korea that are doing very well and are very well known all over the world. This made me feel deeply that it is very difficult to compete with others or to get the next dealers to buy your stuff if you don't have the quality advantage.

The positioning of the company determines the quality requirements of the products and the investment in research and development. We are willing to learn and invest in technology or experience in this area, and the entire investment in R&D accounts for about 5% of the company's sales. It is hard for anyone to believe that we have signed an American technician for such a small company and we pay him the same level of salary as in the US, as long as you can produce benefits; in terms of R&D, we have hired a university professor who is very famous in the industry and pays hundreds of thousands of dollars a year for consultancy, he does not come to the company but just gives him a call when we have a problem; we have technical R&D cooperation with several universities in China. Some of them help us test our products for a long time, and some of them visit us occasionally to discuss and give us some advice at the end, which I think are very valuable things.

The investment in technology is not just about money, it includes research and development, and instrumentation. Advanced instruments can assist you, as well as standard tests. The same people will say that you can only afford to do this because you are selling at a higher profit. But if you don't even have testing equipment, how do you know if the product is good or bad? We bought a few pieces of equipment from Germany, but no one in the domestic industry went to buy them, originally they were to be equipped by the users, others said they were useless, but I think they must be useful. If you don't even know the international standards, how can you do it to meet his requirements? So all the international standard inspection equipment related to the upstream and downstream must be available. Whenever a new product comes out, we bring out these instruments and buy back the top three best products in the international arena to make comparisons, test each item and take photos of the data. This is the kind of money I dare to spend, as long as it is useful.

If we do the domestic market, we don't have to think about this for ten years, we mainly win by price, saving costs and being efficient. But we can't go down that road, we have to play to our strengths. Technical advantage is the best, we also found when we go technical advantage, in the international exhibition of the same industry, peers are very respectful of us, because he knows that your stuff is very strong, despite the competitive relationship but will still be very respectful of you.

?Detail-oriented and making the product the best it can be. This is something that I have been very influenced by with German and Japanese customers. Ten years ago, a Japanese company bought from us and sent out a search for orders, and almost 20 of them were received. Their requirements were very high, nearly 10 times higher than the norm, and many did not reply because they could not meet the requirements, but we did. In the end, we were the only one in China, after a selection process that left three. The product we provided was 30% short of their standard and relatively close to it. The Japanese technicians came over several times to give us details and notes on various aspects and the samples finally passed. We benefited a lot from this process, and the most crucial thing was the focus on quality and concentration on details. Since then, our factory supervisors have visited them every year, looking carefully at the workshops, bathrooms, staircases, their cleanliness and the management of their warehouses. Their warehouse space is very cramped and they try to save as much space as possible, but things are arranged very neatly and cleanly. When we came back, we felt that we were still far behind and that there was still a lot of room for improvement. Under their influence, we used to have to clean up in advance when customers came in, but now we can keep it that way every day.

The same goes for Japanese companies, they have influenced us to improve not just our technology, but all aspects of it. This time they have been here and they have not given us an order. One reason is that our canteen is too close to the testing area and there is a risk of dust from the production area running into the canteen, which is not good for the physical and mental safety of the employees. We had never thought of this problem, and after this reminder from him, I immediately realized that he was right and should be, to really care about our staff and make them feel that you can even think of this for them, and they will be very attentive when they do things with you.

When the market was small, the "tiger" couldn't swing in

Interviewer: The polishing industry is also very competitive, both in the domestic and international markets, so how do you keep your company at the top?

Richard：We are a very small company, all together less than 70 people. We are slowly doing almost enough to be able to take a moment to think about where we want to go in the future. Almost 10 years ago we thought well, we can't do everything, we don't do everything, we start to do subtraction, specialise in grinding and polishing, focus completely on this field, let your brand and influence in this fine, very narrow industry quickly rise up, this is benign. For example, in the past we also do saw blades, then think not, certainly can not compete with large enterprises, more than ten years ago all gave up, the business volume down, deliberately down not to do, we do not waste time and energy to do this, but also do not earn this money, focus on their own things well.

The market for this stuff is relatively small and narrow, and the volume is not large. When the market is small, "the tiger can't swing in". The best in the industry for this stuff is 3M, they used to make all their products, and when I met them in Atlanta five years ago, they said they had completely given up again because they simply couldn't achieve the economies of scale they had. And that's what I want, not to get too big because if it's too big, the big players will compete as soon as they come in and kill prices to the point of sucking.

When everyone goes price competition, there will be a lot of self-improvement stuff that can't be used, a lot of good technology that can't be used because it adds to the cost, and you end up going backwards and getting into vicious competition. But there is not enough profit margin to do research and development, we all go to the price to kill, there is no basic profit guarantee, we all have no food to eat, this is done to death. And we must insist on enough profit to be able to invest in research and development, equipment renovation, and the improvement of the living standards of our employees. In this industry, we are afraid that no one will pull the price and quality upwards, just like when speculating in the stock market, everyone finds out that it will fall tomorrow and everyone will dump it; if someone else pulls it upwards, there will be people who will wait and see, and people's confidence will stay. I am determined to hold on, I will hold on even if everyone runs away, then there will be people who will see that I hold on and will also go up, this will form a benign situation.

In the marketing model, we don't sell our stuff to domestic factories or foreign trade companies, all of them go out through their own channels. Because the market is not big, they sell it and I can't sell it myself. At the same time, we understand the situation of all our customers and the destination of our products at a later stage, and we are also very clear about the feedback on quality.

I like to have fun, I travel all over the world, I run every day and I learn a lot of things in the process. Many of my customers totally agree with some of my ideas and decide to do business with me even before they know our products, because they think your ideas are there and you can't undermine your own ideas with bad products. Unless you don't take it seriously, if you take your philosophy very seriously, you will definitely prove it with your own products, and because of that, I am sure you will be more cautious and careful than I am.

To be the most influential supplier in a niche market.

Interviewer: What is your ultimate vision?

The first German businessman I met back in 1995, also a manufacturer, was an old man in his 70s, a very nice man, and many of his ideas gave me a lot of ideas, people focus on one thing for their whole life, and for several generations.

Richard： When your aim is just to make money, if an order works out to make 300,000 RMB and another order doing the high end might only make 100,000, why not do the high profit orders? I said, our ultimate aim is not to just make money, we are past the time of making ends meet. In the first five years of business you have to make money just to stay alive, and now we're past that stage. We've sorted out what we want to do, what our long-term thinking is? What is the business trying to achieve? Our vision is to make EZshine a symbol of high quality, to change the low-quality image of Made in China once and for all, and thus to become the most respected supplier of grinding and polishing diamond tools in the world.

After many years in foreign markets, money is never earned, but the value of this life is high when you gain respect in the market, especially in the peer field. I often telvolumesl my staff that the company's greatest desire is to be the most respected supplier, not how big it is. If you sell a lot of volume but the quality sucks, again no one will look up to you. People will only respect you if you have good product quality, good service and a high reputation, and you won't get that satisfaction if anything is missing. Although we don't sell a lot of volume, the quality is there and people will respect it. When our staff go to the top peers in the world, whether it's their purchasing or general managers, they respect our salesmen and they come back with a super sense of satisfaction. This is not ordinary pride, it is a very high level of satisfaction. This satisfaction is something that must be spoken of in terms of quality.

That is what we are after. This pursuit also means that it has to be backed up by high quality, and high quality has to be backed up by technological investment in research and development, which is all strung together.