Macau know-how helps Hovione grow in China

At the foot of Taipa Grande hill there is a small factory almost hidden between a wall and surrounding trees. Hovione Macau is actually one of the few success stories when it comes to economic diversification. The company – part of a Portuguese multinational – produces and exports active pharmaceutical ingredients.
Since the local factory began operating, back in 1986, the Hovione group has grown exponentially. Macau’s weight “has decreased,” the general manager Jorge Pastilha told Macau Daily Times. However, its importance “is strategic, it’s about the know-how we have here”.
Two years ago, Hovione bought a factory in Zhejiang province and sales have since grown five-fold. “One of the reasons why it’s going so well is the fact we already had the Macau factory,” he explained. For instance, the deputy general manager of the mainland China plant is the former industrial director of the Taipa facilities.
The group has promoted exchange between the two factories, hoping to benefit from the Macau staff’s unique situation. “They have experience and the Hovione work ethos, as well as the Chinese culture,” Pastilha explained.
The local plant has the highest productivity of all the group’s units and its “technical knowledge” will be “very important to support Hovione’s growth,” he assured. In fact, the staff is being encouraged to learn Mandarin, because “not knowing how to speak Mandarin is still a big disadvantage in mainland China,” the Portuguese executive said.
Macau has been important for Hovione also because of its proximity to China, where the group buys more than 60 percent of its raw materials. “It allows us to get to know quite well our Chinese suppliers and audit them,” Pastilha said. In the pharmaceutical business, “the supply chain quality is critical,” he underlined.

‘Only employer in Macau’

The Taipa factory currently represents “between 15 and 20 percent” of the Hovione business, Pastilha said. However, its significance is “obviously” decreasing, he added, as the group grows. For instance, the Portuguese executive, said, the Cork factory in Ireland “is probably 10 times bigger”.
All of the active ingredients produced in Macau are exported, mainly to the US, but also to the European Union, Japan and Australia. Still, its economic importance to MSAR is “very close to zero, compared to the casinos,” Pastilha admitted. “But it’s not irrelevant for people,” he stressed.
Around 125 people currently work in the local factory, including “a whole lot of people who wouldn’t find another job that suits their qualifications,” the Hovione general manager said. The company has “special characteristics,” he added, because in some areas, like chemistry, chemical engineering and even biology, “is the only employer in Macau”.
Priority has been given to local-born professionals who decided to study abroad, Pastilha said. Hovione believes the “international mentality” of these workers makes the communication with Western clients easier. “There is a lot of people studying outside who are only waiting for a job opportunity to return to Macau but the offers are scarce,” he explained.

Struggling for local workers

More than 70 percent of the Hovione Macau staff are permanent residents, supplemented by workers from mainland China and Philippines. However, human resources “is an area we are having problems in,” Pastilha admitted. “Everyone talks about the unemployment but we at Hovione can’t seem to find any jobless local to work here,” he bemoaned.
According to the general manager, the Taipa factory still has 6 to 8 open positions. But “we have had an ad going around for three years and no one has applied,” he said. “First of all, there is very little unemployment and locals are aware they will easily find a job, if not today, then tomorrow,” Pastilha stressed. “Secondly, casinos and hotels are an attraction almost impossible to resist,” he added.
The Portuguese executive believes “there is sort of a fallacy in Macau. On the one hand, imported labour quota is not renewed because they want to give priority to locals. On the other hand, we want to employ locals but nobody is interested.” The restrictions on non-resident workers “are holding the Macau economy back,” he said.
“There might just be too much politics involved in this issue,” Pastilha emphasised. As a result, authorities “have always only approved a small part of imported workers we requested,” he bemoaned. “We will keep trying,” the Hovione general manager said.
The group plans to keep growing in Asia but definitely not in Macau, he confirmed. Besides the “manpower shortage,” the lack of available land is another problem. “If coming up with six or seven workers for this factory is already close to impossible, can you imagine hiring 100 or 200 to open a new one?” Pastilha asked.