Ni Hsin enjoying better cost control, more orders

SERI KEMBANGAN: Cookware manufacturer Ni Hsin Resources Bhd’s decision to drop the distribution rights for “Buffalo” brand stainless steel cookware a year ago and retain its position as the premier brand’s manufacturer has led to better cost control and negotiation power with original design manufacturer (ODM) and original equipment manufacturer (OEM) customers.
Ni Hsin managing director Chen Shien Yee said, previously, sales generated from Buffalo products were paid in the form of royalties to Buffalo.
“But we found that it is a complicated arrangement. So we cancelled the royalty agreement but Buffalo still appoints us as a licensed manufacturer. But we don’t sell directly to customers now. We sell to Buffalo and Buffalo will sell the products to customers,” Yee told SunBiz.
Buffalo stainless steel cookware was founded by Hsiao Tsai Sheng in 1957 in Taiwan. In 1989, Ni Hsin Corp was set up in Malaysia to take over the manufacturing operations in Taiwan.
In 1992, Everpro Sdn Bhd was established as the main distributor of Buffalo products in Malaysia for Ni Hsin Corp. The Hsiao family remains a major shareholder in Ni Hsin.
Ni Hsin’s wholly-owned subsidiary Ni Hsin Corp Sdn Bhd had on Jan 1, 2016 terminated its trademark licence agreement with US-based Standardworld Holding Ltd, which holds the right to the Buffalo brand, so it can realign its direction to the ODM and OEM markets. Ni Hsin, however, continues to be the manufacturer for Buffalo products.

“For us to control costs, it is better this way (without the need to distribute Buffalo products).
“In the former arrangement, we need to keep an expensive marketing team, which cost us RM1 million a year. Without this arrangement, the marketing goes back to Buffalo. We just become a manufacturer,” Yee explained.
He added that when the group was distributing Buffalo products, its ODM customers often had the misconception that Ni Hsin owned the Buffalo brand as it was selling their products.
“Whenever they (ODM customers) have new products to develop, they worry that we copy their concept and pass it to Buffalo. There’s a bit of sensitivity involved.”
Yee said its Japanese customers, the largest export market for Ni Hsin, were reassured after they ceased the distribution of Buffalo products. Similarly, its Chinese customers were also pleased and increased their orders with Ni Hsin.
Thus, Ni Hsin expects its revenue for the financial year ending Dec 31, 2017 (FY17) to surpass FY16 and FY15, and to be driven by improved sales and new customers from China.
“As a manufacturer, our basic trust for credential is to protect the know-how of each ODM and OEM and we managed to achieve that,” said Yee.
Besides manufacturing cookware for ODM and OEM markets, Ni Hsin created an in-house brand, “Pentoli”, for multi-ply stainless steel cookware.
“Pentoli is our in-house brand but there is no conflict with OEM and ODM,” said Yee.