Hushan Autoparts Inc. - Once Selling Plastic Car Door Handles with a 3-Month Lifespan, Feeling Increasingly Uneasy... He Spent 5 Years Developing 'Unbreakable Handles,' Selling 10 Million Units Annually and Dominating 70% of the North American Market.

How did a Taiwanese manufacturer come to dominate the North American automotive door handle aftermarket (AM) with annual sales reaching 10 million units and revenues exceeding NT$1 billion? The answer lies in their unwavering commitment to quality: 'Our products must not only surpass competitors but also be better than the original manufacturers.

Upon entering the headquarters of Hushan Industrial Company (HUSHAN), located in New Taipei City's Ruifang Industrial Park, a luxurious 150-ping showroom filled with 200 different handle models comes into view.

Hushan's chairman, Chen Ying-zhi, dressed in a sharply tailored navy suit, explains that these samples are just the 'tip of the iceberg' among the company's tens of thousands of products. Casually grabbing a handle and banging it against a table, he proudly remarks, See, it won't break no matter how hard you hit it. Unlike the original manufacturers who use plastic, we, as an aftermarket supplier, use metal. Our production cost is double, and our selling price is five times higher.

Historically, the AM market has been synonymous with cheap, but Chen Ying-zhi, armed with an MBA from Harvard, left a million-dollar salary at an architecture firm at the age of 30 to take over the family business, vowing to redefine its reputation.

Under Chen Ying-zhi's leadership, Hushan transformed from a trading company exporting low-cost products to the Middle East and Africa into the leading player in North America's AM market, capturing over 70% market share. Their products now cover 90% of vehicle models, including high-end brands like Mercedes-Benz, BMW, and Cadillac.
 

Exclusive Supplier to Two Major U.S. Automotive Parts Companies

Hushan is currently the exclusive supplier for LKQ, a major U.S. auto parts company, and AutoZone, the largest automotive repair chain in the U.S. A single handle can sell for as much as NT$6,000. Under Chen Ying-zhi's leadership, the gross profit margin has increased from 7% in his early years to 42% this year.

According to the financial report, Hushan's revenue for the first half of this year was NT$609 million, a 9% increase compared to the same period last year, with a net profit after tax of NT$277 million, reflecting a year-over-year growth rate of over 93% and an EPS of NT$4.03. Analysts expect the company's revenue and profit to reach new heights this year, aiming for a public listing next year.

Over the past 20 years, what exactly has Chen Ying-zhi, the second-generation leader, done to transform Hushan?

Back in 2004, Hushan's annual revenue was just NT$20 million, relying on plastic handles that were prone to breaking. As long as the prices were low enough, loyal customers would keep returning. After gaining a foothold in the North American market, revenues began to double year after year.

But the more we sold, the more uneasy I felt,' Chen Ying-zhi admitted. Aftermarket handles on the market seemed to come with a 'timer,' often breaking as soon as three months after replacement. 'I didn't want to do nothing when there was room for improvement.

In 2010, he resolved to invest in creating 'unbreakable handles'—a product that no one else in the market wanted to make. Over the next five years, he redesigned molds and improved the strength of at least half of their products. Once successful, he boldly took on over NT$10 million in losses by scrapping all the old inventory. In 2015, he further upgraded the materials from plastic to metal.

Although Chen Ying-zhi was confident that the more durable handles, despite doubling in cost, could be sold for five times the price, this bold reform faced skepticism not only from wholesalers but also from his own employees, who felt anxious.

Facing doubts from all sides, Chen decided to let the product speak for itself. He proactively approached 20 clients, giving each one 10 samples of different new handle designs, hoping that consumers would be willing to buy them and prove that his persistence was the right choice.
 

Comparable to OEM Quality, Yet Affordable

Every time I find an OEM handle broken, I see it as a gift from them because I know I can make it better!’ Chen Ying-zhi's strategy was simple: in the U.S., 30% of car owners opt for aftermarket parts, but there are hundreds of manufacturers competing for this segment. By targeting the 70% who only buy OEM parts, and offering aftermarket handles with OEM-like quality at a lower price, he aimed to create a blue ocean of opportunity.

This strategic shift inevitably led to a production adjustment period. At the time, Hushan’s best-selling handle sold 400,000 units annually, contributing about 10% of the company’s revenue. After making the handle more durable, the extended usage time slashed demand by half. Nevertheless, Chen Ying-zhi persevered, continuing to innovate and raise prices, and after five years, wholesalers finally came around.

Proactive Planning and Product Diversity Secure Hushan's Market Leadership Hushan has maintained its position as the leader in the handle market by continuously expanding its product line, currently boasting over 10,000 handle models and adding at least 1,000 new models annually. Unlike competitors who wait for demand before creating molds, Chen Ying-zhi insists on purchasing and studying every new car model upon release. The cost of research and mold development alone burns through NT$100 million annually, roughly 10% of the company’s revenue.

With handle sales reaching their peak, Chen is considering a second transformation.
Seeing the opportunity from the U.S. government's 2018 mandate requiring all new cars to be equipped with rear-view camera systems, Hushan has heavily invested in camera development, again targeting the U.S. AM market. They currently have 500 camera models, which account for 10% of the company's revenue, and project an annual growth rate of 40% in automotive camera sales.

Chen is confident that by 2030, the U.S. automotive camera market will reach NT$10 billion, with Hushan aiming to capture a 50% share. To achieve this, Hushan has partnered with Onsemi, the leading automotive chip manufacturer, to develop an 8-megapixel automotive camera, staying ahead of the competition. The company also has over 100 CAPA-certified camera models, each certification costing nearly NT$100,000. Developing 1,000 different camera models requires an investment of at least NT$100 million, with an additional NT$50 million spent on R&D each year.

Manufacturers also rooted in the U.S. automotive AM market believe that unlike those only focused on low-cost handles with high replacement rates, Hushan’s high-quality products increase consumer purchasing appeal. Product diversity prevents easy replication by Chinese competitors. However, how Hushan will use new product lines to compensate for the longer replacement cycles of its durable handles remains a challenge. Rapid development continuously builds inventory, necessitating the constant search for new buyers.

Starting with seemingly low-value-added car door handles, Hushan has become irreplaceable in the industry due to its willingness to evolve. The key question now is whether the company can replicate its success in the automotive camera market by maintaining the same pioneering spirit.