Zhulian was listed on Main Board of Bursa Malaysia on 27 April 2007 with Syariah status. The group is involved in multi-level marketing (MLM), and has diversified interests in the manufacturing and trading of costume and fine jewelry, consumer products and printing. The group had 273 agencies functioning as distribution centers and > 480K distributors in Malaysia, Thailand, Indonesia and Singapore.
From a small local costume jewelry company to a regional MLM company. Zhulian’s journey began in 1989 with founder Mr. Teoh Beng Seng’s idea of bringing the concept of gold plated jewelry back to his homeland from Europe. Within a mere 4 years after inception and due to the overwhelming demand, the group commenced the construction of its first plant at Bayan Lepas Industrial Estate, Penang.
In 1996, in order to reduce its dependence on its core products, gold plated jewelry, the group started to diversify its product portfolio, switching from a single-product strategy to a multiple-product strategy. Since then, Zhulian has grown into a group of companies with widely diversified manufacturing facilities. At the same time, the group also began to venture abroad by establishing Zhulian Thailand and Indonesia through the appointment of a master agent. In 2003, Zhulian set up its Singapore Regional Office.
In May 2009, the group took a strategic move by acquiring a 60% stake of Zhulian Indonesia with the aim of improving its operation in that country and increasing its market share.
Expertise in costume and fine jewellery manufacturing. The group’s founder, Mr Teoh Beng Seng, has more than 25 years’ experience in fine jewelry production and has successfully turned Zhulian into a leading manufacturer of costume jewelry in Malaysia. Given its expertise in this area, these products have been the group’s core product until 1996 when it diversified its product range in recognition of cyclical nature of the jewelry business.
Wide product range.
As a result of product diversification, Zhulian now offers a varied range of products including jewelry, nutrition products, food & beverages and water filters, with each accounting for approximately 20%of the sales pie. Hence, as opposed to some MLM players who rely heavily on certain products, Zhulian’s risks are spread out across a mixed range of elastic and inelastic goods which act as an earnings buffer during an economic downturn.
Vertical integration.
Zhulian manufactures > 80% of its products in-house at its 4 manufacturing facilities in Bayan Lepas, Penang. Only the production of personal care, home care, skin care and cosmetic products are outsourced to third parties, mainly through a trading subsidiary, Master Square SB. The group will then market its products via its own direct selling channel. This vertical integration enables the group to increase its margins through economies of scale, close monitoring of product quality, ensure timely delivery of products to distribution centres and control of product supply. Compared to its peers, which outsource most of their products, the group has achieved superior average EBITDA margins of 25% over the past 3 years compared with its peers’ <20%.
Early expansion to new market helps stave off competition.
The group has spread its wings to Thailand, Indonesia and Singapore with the setting up of 49% owned Zhulian Thailand Ltd in 1996, PT. Zhulian Indonesia via the appointment of master agent in 1997 and Zhulian Singapore Pte Ltd (100% owned), which commenced business in 2004. These companies were established under Zhulian Management SB, which was set up to support the group’s overseas operations.While the local market still has ample room to grow given that the group targets mainly Bumiputra, it is among the first to expand overseas as Zhulian recognizes that early expansion into foreign markets is necessary to fence off future competition by strengthening its brand earlier than its competitors. This opens up new growth opportunities and serves to complement organic growth in the Malaysian market. Although the group is present in 4 countries, the “Zhulian” trademark is registered in Malaysia, Thailand, Indonesia, Philippines, Singapore, PR China, Taiwan, Hong Kong, Japan, Australia and New Zealand, which makes it easier for the group to set up its operation in these countries in future. The current plan is to expand its operation to Indochina.
Malaysia and Thailand are the main contributors.
Both Malaysia and Thailand contributed >90% of group revenue.
2012 Updates
FINANCIAL OVERVIEW
Despite the prevailing situation of global uncertainty, such as financial crisis in Europe, rising costs due to surging prices of petrol and raw materials, especially food, the Malaysia’s economy showed positive recovering signs during 2011 with a GDP growth of 5%.
As for ZHULIAN Group, our domestic and export market demand remained resilient with a positive growth in the year under review where we took the Group’s revenue up a notch to RM357.5 million, which is equivalent to 11% growth from previous year’s revenue of RM322.6 million, a remarkable increase as compared to growth of only 2% in 2010. That also means ZHULIAN Group was able to sustain the uptrend for five consecutive years, a remarkable track record that serves as a testimony of the Group’s resilience in steering through the growing competition and great challenges in the MLM industry. Thanks to its prudent management and dedicated Distributors who always have strong faith in the business, also driven by the innovative and proactive strategic initiatives taken in shaping the Group’s future.
ZHULIAN Group has gone through a year of enormous strategic change in order to position itself to compete effectively in the market and march into the new stage of growth. Initiatives were taken to expand market share, increase product mix, refine business model, improve infrastructure to boost efficiency in
coping with increasing business volume. The positive momentum augured well for the Company’s long-term growth prospects.
The Group did not start up the year on a positive note as there was a drop in its first quarter’s net profit compared to 2010 first quarter’s Profit After Tax. That was mainly due to the drop in gross profit margin as a result of the strengthening of the Ringgit Malaysia against the US Dollar. However, the Group recovered strongly later on in the 2nd and 3rd quarter, backed by an increase in the number and productivity of Distributors, better sales performance and higher demand for our products in the regional markets.
During the last quarter of 2011 when coping with the trials and tribulations of the flood disaster in Thailand, the Group managed to come up with contingency plans to overcome the logistical challenge in flood area promptly without disrupting our supply chain. Such effective remedial action enables the Group to sustain the uptrend momentum till the final quarter to conclude the year with a 11% increase in revenue to RM357.5 million for the year under review, compared to RM322.6 million for year 2010. Profit Before Tax increased to RM115.1 million against the previous year’s RM105.9 million while Profit After Tax (PAT) increased
to RM95.3 million in year 2011, an increase of 10% from last year’s PAT of RM86.7 million.
BUSINESS NETWORK
The Group’s overall business network in the region has shown strong growth of 6% of which its core distributor Force reached 573,883 in year 2011 from a total of 540,583 Distributors in the previous financial year. Meanwhile, up till the closing of the financial year under review, its agency network that span across Malaysia, Thailand, Indonesia and Singapore also expanded from 293 to 315 authorised agencies.
INCREASING PRODUCT MIX
The Group continues to innovate in order to capture new market opportunity and meet the needs of the constantly changing market. In 2011, the Group added BEYOND FOOD JUNCTION DETOXIFYING UNIT and also SMARTSEAL FOOD STORAGE CONTAINERS to its home technology product range. Meanwhile, BEYOND MICROPLASMA AIR PURIFIER with added improved features was also re-launched as the upgraded model. Recognising the varied taste and demand of the health-conscious market segment, a new range of Traditional Herbal Supplements under the brand name of GREENLEX which includes GREENLEX I-COMPLEX, GREENLEX MEMO COMPLEX and GREENLEX ORGANIC SPIRULINA was strategically introduced to the market to attract a new group of Distributors and consumers. In additions, the Group had also launched jewellery products to meet the seasonal demands of Hari Raya Aidilfitri as it used to every year as the jewellery product range has successfully carved a niche in Malay market. The new launches managed to create excitements among our Distributors and generate considerable amount of sales revenue for the Group.
ENHANCING BRAND POSITIONING
In 2011, the Group made use the power of media to reach and engage the community. The Group has placed a total of 153 Billboards featuring a slogan which says “Bersama Menyambut Ulang Tahun ke-50 di Tahun 2039” (meaning “Together We Celebrate the 50th Anniversary in Year 2039”) along the North-South Highways, East Coast Region and Klang Valley in Peninsular Malaysia. The billboard campaign is part of the Group’s effort in increasing the public awareness about ZHULIAN Group and it’s brand. The slogan is used to signify the foresight or vision of the Group that always places importance in sustaining the business
GAINING STRONGER POSITION IN THAILAND MARKET
In the year under review, exports to Thailand, Indonesia and Singapore contributed 52% of the Group’s total revenue. The Group managed to gain its competitive edge in Thailand Market in year 2011 whereby the Group’s export to ZHULIAN (THAILAND) LTD. leaped 12% from RM149.2 million to RM167.2 million. Our products, particularly nutritional beverages, health supplements, jewellery, water treatment system and bedding products, continued to maintain strong demand which were not impacted by the flood disaster that happened last year, thanks to the strategic marketing programmes initiated by the Company.
The strong performance also stemmed from our proven business model as well as solid supports from Zhulian International Headquarters based in Malaysia with reliable and efficient supply of quality products marketed under household brand name of “ZHULIAN”.
