In a webcast yesterday, John T. Verges, CEO of NewMarket China, Inc. repeated that he expects a 25% sales increase for the company in 2008. Based on business currently in place, he forecasts sales of $50M in 2008, up from $40M in 2007. Verges also stated that the company is working hard to obtain additional business, and that he could change his revenue projection later in the year. He said that additional business could result either from acquisition or from obtaining new business in Latin America.
NewMarket China, Inc has two main business segments: 1. It provides technology and telecommunication services to customers in China, and 2. It provides software development and maintenance outsourcing services to US customers. The diversification of products and services has allowed it to “get its foot in the door” by selling lower-margin computer hardware and networking services in the Chinese market, and to leverage that experience to provide higher value-added software development outsourcing services.
When the company began doing business in 2006, it first concentrated on establishing relationships in China, so that it could quickly grow its sales. It recognized that, unlike developed Western economies, the Chinese market places higher value on tangible assets such as computer hardware, rather than on intangible assets such as software development expertise. With this in mind, NewMarket China’s early focus was to sell and integrate computer hardware technology, rather than to be a high value-added software developer. It sells such well-known brands as Hewlett-Packard, Sony, IBM, Lenovo, and Cannon. Its customer markets include education (schools and universities), government and military administration, and private business.
In the past year, NewMarket China, Inc has noticed that it is more and more difficult to outsource software development to India. Indian software development companies are saturated with large contracts from US and European customers, and are increasingly outsourcing their own work to China. Since China is educating an increasing number of software engineers, NewMarket China, Inc will employ these engineers and use them to provide high value0added software development to the US, Europe and Latin America. This is a higher margin business, which should significantly improve NewMarket China’s earnings.
NewMarket China, Inc’s financial results are undeniable. With 2006 revenue of $29M, 2007 revenue of $40M and expected 2008 revenue of $50M, NewMarket China, Inc has shown that it understands the Chinese market, and is taking intelligent steps to both grow the company and to be a technology leader in that region.
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