Hong Kong E21 Establishes Wholly-Owned Subsidiary Shenzhen Boqi, Building an Integrated International Trade System

On March 18, 2016, by resolution of both shareholders' meetings and upon filing with the relevant authorities, Hong Kong E21 International Trade Co., Ltd. formally completed its full acquisition of Shenzhen Boqi Industrial Co., Ltd. The integration is being rolled out in stages from April 1, with all business systems expected to be merged within the year.

Why this integration

For the past three years, the two companies worked together under a cooperation agreement: E21 handled overseas markets and customer relationships, while Boqi handled domestic sourcing, inspection, and export execution. That division of labor was efficient enough when volumes were small, but as orders grew, three problems surfaced.

First, broken information flow. Customer requirements traveled from overseas to China through four steps — sales, sourcing, inspection, and documentation — each with its own forms and standards. The specs of the same machine have shown up inconsistently across four different documents.

Second, blurred responsibility. When problems appeared after cargo arrived at port, customers often did not know whom to contact. Of the seventeen complaints we handled in 2015, six took more than seven working days to answer because of poor internal handoffs.

Third, duplicated resources. Both companies kept an office and a documentation system in Guangzhou and Shenzhen. Neither team was large, but the fixed costs came in pairs.

The structure after integration

Once integrated, Shenzhen Boqi becomes a wholly-owned subsidiary of E21, keeps its independent legal status, and all existing employees stay on.

Operations are divided into four centers:

The sourcing center, based in Shenzhen, handles domestic supply development and supplier management, with nineteen people.

The inspection center, based in Guangzhou, handles machine testing, grading, and photo archiving, with twenty-seven people, including six certified appraisers.

The documentation and customs center, based in Hong Kong, handles customs clearance, paperwork, letters of credit, and foreign-exchange settlement, with eleven people.

The customer service center, based in Hong Kong, handles overseas customer relations, after-sales, and parts supply, with fourteen people.

All four centers share one order-numbering system. Every record of a machine, from inquiry to after-sales, can be traced with a single number.

System migration timeline

April: migrate customer records and historical order data. This is the most tedious step, because the two systems define fields differently. We spent nearly three weeks on field mapping across more than 11,000 historical records.

June: merge the inspection photo archives. Photos were scattered across servers in two cities and several portable drives — about 400,000 in total. All go into unified storage, re-indexed by machine number.

September: consolidate financial reporting and unify settlement processes.

December: merge the parts inventory systems.

What this means for customers

First, fewer contact points. In the past a customer might have had to talk to sales in Hong Kong and documentation in Shenzhen at the same time. After integration, every customer has one dedicated account manager who follows the matter through to the end.

Second, faster response. We make this commitment: general questions answered within two working days; issues needing on-site verification get a resolution plan within five working days.

Third, traceable inspection records. With the machine number, a customer can pull up every photo and report from intake inspection to loading. We keep the archive for three years.

Fourth, a single contracting party. New contracts after integration are signed under Hong Kong E21, with Shenzhen Boqi performing the domestic steps as the executing party. Existing contracts continue under their original terms and are not affected by the change of entity.

People and team

No layoffs are involved in this integration. All Shenzhen Boqi employees stay on, reassigned into the new business centers.

Two former Boqi managers join E21's management team, taking charge of the sourcing center and the inspection center respectively.

We also launched two training programs: system-operation training for all staff, completed in late March; and unified inspection-standard training, because the two companies' inspection rules differed. Alignment was completed in April.

What's next

After the integration, the company will concentrate resources in two directions.

One is standardizing inspection capability. Within this year we plan to extend our grading standards from three product categories to six, with photo examples for each.

The other is moving parts closer to overseas customers. Today all parts ship from China, and lead times are long. We plan to set up one forward parts depot in East Africa and one in West Africa; locations and scale will be announced within the year.

Supporting documents and business-registration change materials for this integration are available from your account manager.