How Chinese machine parts manufacturer Impro Precision is mitigating trade war tariffs

Impro Precision, a major Chinese maker of parts used in cars, construction and aerospace equipment, said it is localising its factories to reduce exposure to tariffs as the trade war intensifies.

The Hong Kong-based precision manufacturing company, which has factories in mainland China and Europe, is seeking to open a larger plant in Mexico to supply US customers, which generated 42 per cent of its HK$3.75 billion revenue last year.

To raise funds to build the plant, it announced a global offering of 333.3 million shares on Monday, which would raise about HK$1.1 billion (US$140 million) at the maximum price of HK$3.30 per share. The Hong Kong public offering – 10 per cent of the total shares available – launched on Tuesday, and will end on Friday.

“A bigger establishment in Mexico will dramatically improve our service capability, [with] a quicker turnaround and product delivery,” group vice-president Sun Xiaohao told the Post at a press conference on Monday.

It is part of Impro Precision’s larger strategy, which it calls “local-for-local”, to consolidate its supply chain within a region to minimise exposure to trade tariffs, according to chief executive Lu Ruibo.

“This strategy was implemented three years ago,” said Lu, who is also the chairman and executive director. “It was not started as a result of the US-China trade war, but it can solve some of the problems arising from the trade war.”

Impro Precision currently has 15 production facilities in China, Turkey, Germany, the Czech Republic and Mexico. It manufactures precision parts that are used in cars, engines, construction equipment, medical products and, most recently, in the aerospace industry.