China Ops: Part 2 of $78 Million Posted: 05 Dec 2011 04:50 AM PST
The last few and next few NewBlog entries are dedicated to providing brief and easy to understand overviews on each of the NewMarket subsidiaries. The information in these subsidiary NewBlog entries is a consolidation of publicly available key highlights taken from years of various pubic disclosures. NewMarket is in the midst of reinventing itself to enhance the
“yet unrealized value of the Company’s operating subsidiaries.” A
November 16th NewBlog entry provided an overview of NewMarket’s operating subsidiaries as an introduction to the current series of entries on each individual operation. The last entry,
WALL-E, detailed the first of three subsidiary operations in China. Today’s entry is about the second of three operating subsidiaries in
China that last year (2010) reported consolidated revenue of $78 million. The operation featured today is headquartered in Shenzhen and is called Nubao.
Before proceeding too much further, if you haven’t already, you should read the
WALL-E entry to understand where and how each of the three Chinese operating subsidiaries fits in the NewMarket organization. This entry today will just be about the Nubao operation itself.
Nubao was acquired in December of 2009 from
China Radio Technology Co., Ltd (CRT). Nubao was a start-up subsidiary with little operating activity or history prior to the acquisition. The value of the acquisition was the experience inherent in the operation coming from CRT. CRT was attracted to the opportunity to work with NewMarket to develop a more global opportunity for CRT by providing services to Nubao.
The use of wireless intelligent devices is growing by leaps and bounds. While NewMarket does not expect to compete in the iPad, iPod or iPhone market, let alone the Kindle and Nook market, NewMarket does believe a compelling opportunity exists within the ‘custom’ handheld wireless intelligent device market. Frito-Lay truck drivers carry custom tablets to manage delivery inventories and schedules. Flight attendants process credit cards on custom point of sale devices for drink and food orders. Anywhere you look today you are likely to see the use of a wireless intelligent device: rental car agencies; restaurants; ski resort lift lines; express delivery drivers and classrooms – to name but a very few. The custom handheld wireless intelligent device market is a global growth opportunity and Nubao provides a cost competitive and capable foothold into the market.
Specifically, Nubao designs and manufactures a wide range of custom wireless products specified by customers, with the company’s primary product focus on wireless communication terminals (GSM, GSM/GPRS modules, GPS modules, GPS trackers, and personal navigation devices). Nubao provides its customers with industrial design (ID), mechanical design (MD), hardware design (HW), software design (SW), manufacturing, test and evaluation (T&E) and quality assurance (QA) services covering the full range of wireless communication solutions for intelligent terminals.
While the customer wireless intelligent device market is a growing one, it is not always well known. Mass consumer devices like the ones coming from Apple shout their latest innovations from the mountaintops in hopes that the echoes will send consumers racing to the Apple store. Custom innovations are intended to provide a competitive edge and are not as likely to be shouted from mountaintops so as to keep the innovation as proprietary as possible.
NewMarket’s Chinese operations produced about $45 million in consolidated revenue in 2009. As mentioned above the consolidated revenue in 2010 was approximately $78 million. In the
annual report for the Chinese subsidiary, the growth in revenue is attributed to Nubao and the third Chinese operating subsidiary (featured in the next NewBlog entry). While the specific nature of the custom wireless intelligent device solutions is not publicized, primarily at the request of the customers, the 2010 revenue growth in China would indicate Nubao is enjoying some sales traction.
