On September 12, Shoujia Technology (00103.HK) announced that the company signed a joint venture agreement with RZHL on September 11 to establish a joint venture in Singapore. Its main development goal is to vigorously explore and maintain overseas sales markets, and at the same time assist the group company in promoting overseas investment, mergers and acquisitions. This move symbolizes the official trumpet of Shoujiao Technology's entry into overseas markets.

RZHL is a wholly-owned holding company owned by the company's shareholder Mr. Zhao Yue. According to the joint venture agreement, WMEL and RZHL will jointly invest 2.8 million US dollars (equivalent to about HK$21.84 million), and the two parties will hold 50% and 50% of the joint venture's shares respectively. The joint venture represents and sells a series of products such as the Group's steel cords, and independently accounts for financial results.

As early as July 31 of this year, the company announced the introduction of Redamancy.Z Holdings Limited, controlled by Mr. Zhao Yue, as a new strategic shareholder to seize huge overseas market development opportunities. In fact, the company has also continued to expand its overseas business footprint in recent years. The company's share of export sales has increased significantly year by year, from 20.7% in 2019 to 31.1% in the first half of 2024. The company's goal for overseas markets is to achieve more than 50% of overseas customer sales, Logistics and service networks. With the help of new shareholders and a newly established Singaporean joint venture, this goal is expected to be achieved at an accelerated pace.

According to public information, Mr. Zhao Yue is a veteran in the industry. He has worked in the steel cord industry for nearly 10 years. He has worked for leading companies in the industry in international sales, and has rich experience and resources in the international market. It can be seen that Mr. Zhao Yue's background is highly compatible with the company's overseas expansion goals. It is expected that it will help the company start overseas production base construction as soon as possible and help the company expand its international business. Previously, Redamancy.Z Holdings Limited, owned by Mr. Zhao Yue, invested in Shoujia Technology at a premium of nearly 3 times, which also fully demonstrated confidence in the company's overall business and significant expansion of overseas markets.

Shoujia Technology chose to enter overseas markets at this point in time, mainly seeing broad prospects for overseas market development. According to market data, overseas automobile sales are growing rapidly. In 2023, China's automobile production and export volume reached 4.91 million vehicles, making it the world's largest automobile exporter for the first time. Entering 2024, Chinese cars are still going overseas. According to data from the China Automobile Association, China Automobile Association data shows that from January to July this year, China's automobile exports were 3.262 million vehicles, an increase of 28.8% over the previous year; major countries in the world, including the United States, Japan, and Europe, showed double-digit growth in automobile sales in 2023. At the same time, in an environment where internal pressure is severe in the mainland market, many Chinese car companies have chosen to “go overseas” to build factories, and a number of car companies, including SAIC, Great Wall, BYD, and Nepeo, have announced the construction of factories in Southeast Asia, which has led to a significant increase in overseas automobile production capacity and sales. At the same time, it will also drive a significant increase in overseas market demand for supporting tires, thus driving the continuous expansion of the radial tire steel cord market.

Before officially paving the way for overseas markets, Shoujia Technology had been working in the domestic steel cord field for many years, and had built strong core competitiveness in various aspects such as “products, services, and operational efficiency.” In terms of products, the company adheres to the management policy of “standing by quality and building soul with brand”, continuously overcomes the difficulties of developing and verifying products with new specifications, and has received many technical awards to continuously enhance product competitiveness. The company's steel cord “Oriental” brand has always enjoyed a reputation for stable quality in the industry; in terms of service, the company provides customers with “deep customization” services through technological empowerment. Backed by the strong background of Shougang Group, the majority shareholder, the company was able to deepen business linkages upstream and downstream of the industrial chain to generate synergy effects, thereby improving its service level to provide customers with customized raw materials. In terms of overall business operation efficiency, the company uses cost reduction and efficiency strategies to continuously improve production efficiency. This forging strong strength has laid a solid foundation for the company's current voyage to sea.

Currently, Chinese automobiles mainly go overseas by car companies, and they have not yet formed a situation where the entire industry chain system goes overseas, including support supply chains, etc., but as Chinese car companies invest and build factories overseas, the demand for building a more localized full-life cycle system is increasing. As an important part of the automobile industry, overseas demand is naturally rising. However, there are few companies in the current steel cord industry that can vigorously enter overseas markets. Shoujia Technology will use its strong strength to “stand firm”, adjust its strategic layout according to major trends, and lead the advanced overseas market to seize business opportunities and expand overseas market share. The overseas market expansion strategy is expected to become a strategic high point for the company to form a stronger competitive advantage, help the company continue to grow through the ceiling and form a “second development curve” of rapid growth, promoting the company's share of overseas revenue to increase the company's share of overseas revenue, This greatly enhances the company's overall performance.

The company is confident in the future development prospects of overseas markets and has set a number of clear goals. In the future, in addition to expanding the market, it will also make full use of the integration window of the steel cord industry to seek strategic cooperation opportunities in overseas production capacity. The company's management said that by setting up joint ventures to meet the company's international strategy and multi-channel strategy, it will help the company seize new opportunities in the field of technology manufacturing and build a more influential “Oriental” brand around the world. It is expected to expand the company's high-quality customers and establish an international market operation network to achieve perfect global operation and accelerate the pace towards becoming Companies in the fine steel cord manufacturing industry with an annual output of 0.3 million tons or more are moving forward.