Shenzhen, China. It all started as a small machinery workshop in Hong Kong some 30 years ago. Today the LK Group is the world’s largest manufacturer of die casting machines.

If only one company were calling up to illustrate the remarkable economic growth and industrial success that has taken place in China over the past three decades, it might well be the LK Group.

A Developing Industry

Liu Siong Song, founder, the LK Group

In the 1970s, Hong Kong had established itself as an Asian business center, with a labor-intensive manufacturing industry that was ranked second in Asia, behind Japan. A young Indonesian-Chinese, Liu-Siong Song, saw the opportunities and founded a small machinery workshop there in 1979.

“At that time, Hong Kong was growing fast,” says Liu. “However, the salaries were also increasing rapidly, and many factories looked at automation as a way to reduce the operational costs. I was thinking that we could help our clients achieve this by sourcing, or even better, producing such machines locally since most of these machines were at that time imported from Japan and were very expensive.”

The year before, at the pivotal Third Plenum of the 11th Congress of the Communist Party of China in 1978, the Chinese leadership had adopted economic reform policies that included encouraging direct foreign investment into China.

As a result of this new opening-up policy in China, in the 1980s tens of thousands of small and medium-sized manufacturers from Hong Kong crossed the border into China to establish their businesses in Guangdong province, where the salaries were much lower than in Hong Kong. Liu was one of them.

Forays into Die Casting

His company began production of hot chamber die casting machines in Hong Kong in 1985, and in 1991 the LK Group in Shenzhen (Guangdong) was established as the company’s first manufacturing facility in mainland China.

“There were many advantages to moving the production to Shenzhen,” says Liu. “The costs were much lower, and we could become more competitive. But there were also disadvantages. At that time automation was not encouraged that much in China since it would reduce the number of jobs in the factories.”

The LK Group produces hot and cold chamber die casting machines and other kinds of machines that increase productivity for manufacturers around the world.

After the initial years, when the company doubled its sales each year, the growth rate slowed in the early 1990s. However, when China’s then-leader, Deng Xiaoping, made his famous southern tour of China in the spring of 1992, it sparked a new era of reforms and investments.

This was the start of the rapid transformation of Guangdong from a sleepy rice-growing province and a magnet for migrant labor from the hinterland.

Cities such as Shenzhen and Dongguan blossomed into major  industrial centers with industrial parks making toys, apparel, machinery and, eventually, computers, mobile phones and iPads.

The demand for automated machines increased substantially. Both domestic and foreign company owners wanted to realize what Deng had been quoted on his southern tour as saying: “To get rich is glorious.”

The LK Group could soon expand and build several new factories in other parts of China. Today the company has become the world’s largest die casting machine manufacturer, which holds a 50 percent market share in China, and a major injection molding machine manufacturer in China.

“This is very much due to the rapid development of China, which has provided us with the opportunity to grow at a similar pace,” says Liu.

“However, we have also put much emphasis on the quality of our products and services. We care about the success of our clients. If they are successful, we are successful as well.”

Die casting is a process for producing engineered metal parts by forcing molten metal under high pressure into reusable steel molds. These molds, called dies, can be designed to produce complex shapes with a high degree of accuracy and repeatability. Parts can be sharply defined, with smooth or textured surfaces, and are suitable for a wide variety of attractive and serviceable finishes.

Die castings are among the highest-volume mass-produced items manufactured by the metalworking industry. They can be found in thousands of consumer, commercial and industrial products, ranging from automobiles to toys.

Productivity Improvements

The LK Group's Shenzhen's production facility.

The LK Group’s customers are to be found in these and many other industries. Initially, the clients were manufacturers of toys and consumer electronics. Soon there were many motorcycle manufacturers on the client list. Today companies within the automotive industry are the dominating clients, but there are several other industrial clients as well.

Sandvik Coromant has long been a supplier of the LK Group. The cooperation started in the 1990s, and Sandvik Coromant has been a productivity partner of its customer, helping the LK Group improve efficiency.

“In the past, the salaries in China were cheap, but now they are expensive,” says Liu. “We have to count on efficiency to increase productivity. That is where Sandvik Coromant comes in. Sandvik Corormant is a famous brand, and we rely on using its products, which will subsequently also increase the productivity of our customers.”

The LK Group is transforming, in tandem with China. China has become a global magnet for research and development, with thousands of foreign-funded R&D centers established countrywide.

The LK Group established a company in Taiwan for making computer numerical control (CNC) machines, and then moved those products to Kunshan, close to Shanghai, for mass production.

“Today the Chinese government encourages automation, so we would like Kunshan to be our CNC major production base,” says Liu.

The LK Group is also cooperating with several leading universities, such as the Tsinghua University in Beijing, the Zhejiang University in Hangzhou and the Hong Kong  Polytechnic University, and has established a 200-member R&D team.

Following an acquisition in 2008 of the Italian company IDRA, the LK Group is strengthening its internationalization strategy and is looking forward to foreign acquisitions, says Liu, “if the price is right.”

Technical Insight: A fruitful relationship

Zhou Peng, area sales manager at Sandvik Coromant (in the yellow coat), with Li Gang, Deng Lipeng and Chen Guojun, production supervisors at the LK Group

Sandvik Coromant has forged a long-standing relationship with the LK Group, saving the company 10,000 hours in accumulated production times and nearly 10 million yuan (about $1.5 million) in production costs.

The LK Group started to use Sandvik Coromant milling and turning tools in 1998 and in 2006 began using numerous Sandvik Coromant milling cutters. As a result productivity has doubled.

Furthermore, Sandvik Coromant has used its Productivity Improvement Program to analyze the LK Group’s entire production and identify areas where machining productivity could be substantially improved.

In one hole-making operation in a circuit block, the solution of CoroDrill 880 plus tailor-made boring tools helped reduce the machining time per workpiece from 40 minutes to five minutes.

“By applying a series of solutions provided by Sandvik Coromant, machining productivity was enhanced significantly,” says Peng Zhou, area sales manager at the Sandvik Coromant office in Shenzhen. “The machining speed was enhanced and roughly 10,000 hours were saved annually after the improvement. The productivity improvement mean that the LK Group’s profit and competitiveness were enhanced in the marketplace.”

Originally published in Metalworking World 3.2011, a business magazine published by Sandvik Coromant.

Text: Jan Hökerberg
Photos: Ringo Ho