Hero Pen plans to auction 49% stake

By Chen Yang Source:Global Times Published: 2012-11-26 0:20:06

Shanghai Hero Pen Factory, a wholly State-owned enterprise (SOE) popular for its Hero fountain pens, plans to auction a 49 percent stake at a starting price of 2.5 million yuan ($401,500), a move that experts said Sunday would reinvigorate the time-honored brand with new investment and innovative corporate strategies.

Potential buyers should submit their applications before December 17, according to a statement posted on the Shanghai United Assets and Equity Exchange (SUAEE).

"Companies interested in buying stakes must be members of the China Writing Instrument Association, and have annual pen sales revenue of at least 45 million yuan," the statement said, noting that prospective buyers should also agree to maintain the current 148 employees in the factory.

"There are few SOEs in the pen-making industry, so the potential buyer, if there is one, is likely to be a private pen manufacturer," Zhou Yuanzhu, head of the Shanghai Culture and Brand Research Center, told the Global Times Sunday.

But the stake transfer will not include the transfer of the pen brands and the factory's property assets, according to the statement.

The pen factory had net assets of 2.08 million yuan as of July 31, according to the SUAEE. Ye Zhiheng, a legal representative of the factory, noted that the starting price of 2.5 million yuan is already overpriced, considering a 49 percent of stake of those assets is worth 1.02 million yuan, Shanghai-based Jiefang Daily reported Saturday.

The factory makes all kinds of pens under the Hero and Doctor brands. Its sales revenue amounted to 37.79 million yuan last year, but it lost 4.72 million yuan in 2011, according to the SUAEE.

"Through introducing investors, the SOE could make innovations in sales channels, and also expand capacity to realize an economy of scale," Zhou said.

The company's monthly output capacity has shrunk to 150,000 pens currently from 1 million in 2004, according to Ye.

For many Chinese, the Hero pen exists more in memory than in reality.

"During my elementary school years in the 1990s, Hero was the only well-known brand for fountain pens. But I seldom use fountain pens since high school, as they are less convenient than ballpoint pens or roller pens," Song Rui, a 25-year-old school teacher in Hefei, capital of Anhui Province, told the Global Times Sunday.

"We sell Hero pens ranging from 7 yuan to 189 yuan, but the best sellers are pens less than 15 yuan," a customer service representative for tmall.com, a major online shopping platform in China, said Sunday. The store has sold more than 10,000 Hero pens in the past month.

In comparison, a Parker pen is priced from 200 yuan to 4,000 yuan in China. German luxury brand Mont Blanc's pens sell for more than 6,000 yuan.

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