Breaking Out of the Comfort Zone: How Wenzhou Hongfeng Tells a New Story About "PCB Copper Foil"?

(Source: Caixin)

Behind this may lie the profound transformation of Liu Shi’s private economy from traditional low-voltage electrical appliances to new-quality productive forces.

In Yueqing, Wenzhou, the story of “China Electrical Appliances Capital” in Liu Shi Town is repeatedly mentioned.

In nearly 50 years of reform and opening up, this coastal town with an area of only 92.3 square kilometers has produced a number of industry giants such as Chint Group, Delixi, People Electric, and Tengen Electric, as well as nurturing a leading niche company focused on electrical contact materials, Wenzhou Hongfeng (300283.SZ).

Latest data shows that Liu Shi currently has over 17,800 private enterprises, contributing nearly 70% of the country’s low-voltage electrical appliance capacity. Its industrial output value has exceeded 100 billion yuan for three consecutive years, and it is the only modern industrial cluster in the national advanced manufacturing industry dominated by a county-level area. Behind these achievements, Wenzhou Hongfeng’s support is indispensable.

Zhejiang Hongfeng Copper Foil Co., Ltd. successfully completed the debugging of its 50,000-ton annual copper foil production project. Source: company official website

Notably, in July 2024, the company’s two-year, 2.1 billion yuan cross-industry PCB copper foil project was officially completed and put into production. In February this year, it announced a 450 million yuan private placement plan to further expand production of lithium battery copper foil, electronic copper foil, and semiconductor etching lead frame projects. Behind this, it also reflects the deep transformation of Liu Shi’s private economy from traditional low-voltage electrical appliances to new-quality productive forces.

Rewinding to 1992.

That year, the rectification of the “Eight Great Kings” reignited the spark of Liu Shi’s private economy. Nan Cunhui and Hu Chengzhong’s electrical appliance businesses also grew increasingly prosperous. Amid the nationwide assembly craze, 23-year-old Chen Xiao set his sights on another business opportunity: at that time, there was no company in Wenzhou specializing in electrical contact materials, which are essential components in low-voltage electrical appliances, known as the “heart of low-voltage electrical appliances.”

In 1993, Chen Xiao founded Yueqing Qunxiang Powdered Alloy Factory, beginning a life of “being a boss by day and sleeping on the floor at night.” From internal oxidation processes to melting infiltration technology, he worked almost 365 days a year in the factory, relying on his determination to earn his first pot of gold.

In 1997, Wenzhou Hongfeng’s predecessor, “Yueqing Hongfeng Electrical Alloy Materials Co., Ltd.,” was established, mainly producing silver-tungsten and other alloy materials. After China joined the WTO, the company was renamed “Wenzhou Hongfeng Electrical Alloy Co., Ltd.” and invested in automated production lines, beginning to provide sample testing services for international giants like GE, Emerson, and Schneider in the domestic market.

By 2005, several foreign material industry giants approached with acquisition intentions. However, the subsequent two years did not shake Chen Xiao’s resolve; instead, it sparked his interest in exploring the capital market.

Wenzhou Hongfeng listed on the Shenzhen Stock Exchange. Source: Zhejiang Radio and Television Group “Fengyun Zhejiang Business” program

After five years of preparation, in 2012, Wenzhou Hongfeng finally listed on the ChiNext, becoming the first domestic company in the electrical contact materials field to go public. With this funding, Chen Xiao invested hundreds of millions of yuan to build a modern R&D and talent training system, collaborating with universities such as Zhejiang University, Shanghai Jiao Tong University, and Xi’an Jiaotong University to establish multiple industry-university-research platforms. This enabled a full-process R&D system covering product design, manufacturing equipment informatization, and welding molding processes, significantly enhancing its independent innovation capabilities.

As of now, Wenzhou Hongfeng has accumulated 175 valid patents, including 17 international patents, participated in drafting or revising 90 national and industry standards, and led 22 provincial and ministerial projects, making it one of the largest producers of electrical contact function composite materials, components, and assemblies in China.

This is key to Wenzhou Hongfeng’s cross-industry layout into PCB copper foil.

From a technical perspective, the core processes involved in manufacturing electrical contact materials—such as wet chemical coating, precision rolling, surface treatment, and micron-level etching—are fundamentally related to PCB copper foil production. The company stated in investor research in 2022: “Relying on the micron-level etching technology accumulated in the electrical contact materials field, we have innovatively applied mature PCB lithography processes to lead frame manufacturing, successfully breaking through high-precision graphic bottlenecks.”

Regarding industry implementation, in August 2022, Wenzhou Hongfeng invested 38 million yuan to establish Zhejiang Hongfeng Copper Foil Co., Ltd. (referred to as “Zhejiang Hongfeng”), officially entering the lithium battery copper foil track. The listed company holds 70%, while Chen Xiao and two employee shareholding platforms hold 20% and 6%, and 4%, respectively. Six months later, it further invested in its subsidiary “Jiangxi Hongfeng Copper Foil Co., Ltd.,” aiming to develop ultra-thin PCB lithium battery copper foil production lines in Shangrao, Jiangxi. Between 2023 and 2024, Zhejiang Hongfeng also received a total strategic investment of 40 million yuan from Wenzhou Haijing District state-owned assets and Wenzhou municipal state-owned assets to accelerate copper foil production.

Visit by Wenzhou State-owned Assets Investment Fund to Zhejiang Hongfeng. Source: “Wenzhou State-owned Assets” official WeChat

In terms of performance, Zhejiang Hongfeng Copper Foil’s revenue in 2023 was about 150 million yuan, with a net loss of 64.56 million yuan; in 2024, revenue remained stable, but the loss narrowed to 55.25 million yuan; in the first half of 2025, revenue and net profit were 124 million yuan and 26.83 million yuan, respectively, indicating initial scale effects.

Notably, in August last year, Wenzhou Hongfeng invested 10 million yuan to establish Hongfeng New Materials Research Institute, focusing on high-performance ultra-thin lithium battery copper foil, copper foil for solid-state batteries, high-end standard foil for PCB, and semiconductor etching lead frame materials, aiming to build a full-chain “R&D—pilot—industrialization” transformation system. In the future, it plans to leverage AI large models to further advance its R&D system toward cutting-edge innovation.

Wenzhou Hongfeng patent overview. Source: company official website

In fact, China’s high-end electronic copper foil market has long had a significant “domestic substitution” demand. Customs data shows that in the first half of last year, China imported 39,400 tons of electronic copper foil, up 1.36% year-on-year; exports reached 22,100 tons, up 9.31%. However, in terms of price, the average import price was $16,600 per ton, while the export average was only $12,300 per ton.

Locally in Wenzhou, BYD (002594.SZ) plans an annual capacity of 20 GWh for its Wenzhou Fudi New Energy Power Battery project, and Ruipu Lanjun (00666.HK) has already commissioned its Wenzhou new energy manufacturing base (Phase III). Previously, Wenzhou lacked large-scale lithium battery copper foil manufacturers, and the copper foil required for these battery projects still relied heavily on external procurement, with high transportation costs.

In response, Wenzhou Hongfeng explained in its latest private placement announcement: “Through the implementation of the fundraising projects, the company will expand production capacity, fully release the scale effect of the copper foil business, effectively reduce production costs, and improve supply scale and stability; it will help fill key gaps in Wenzhou’s lithium battery industry chain, foster close cooperation with upstream and downstream customers, and play a positive role in strengthening and supplementing the regional new energy industry chain.”

Of course, this cross-industry expansion is not without challenges.

Wenzhou Hongfeng’s annual revenue performance over the years. Source: Tonghuashun iFind

In 2024, due to high fixed costs and R&D investments, Wenzhou Hongfeng, despite 13 consecutive years of high growth, reported its first annual loss, totaling 107 million yuan. Previously, in 2023, its net profit after non-recurring gains and losses had already turned negative, with a year-on-year decline of 499.07% to 58.26 million yuan; in 2024, it lost another 77.86 million yuan.

Wenzhou Hongfeng’s net profit over the years. Source: Tonghuashun iFind

The pressure of losses persisted into the first quarter of 2025. During this period, the company’s revenue was 757 million yuan, up 39.87% year-on-year, but net loss was 20.04 million yuan, with gross profit margin down 2.07 percentage points to 8.55%. Wenzhou Hongfeng explained that Zhejiang Hongfeng’s capacity was still ramping up; although losses narrowed year-on-year, the company was still in an investment phase.

In its latest private placement announcement, Wenzhou Hongfeng also admitted that due to limited scale effects, long verification cycles for major clients, and relatively small sales scale of copper foil products, the PCB copper foil production line, although progressing smoothly, still requires time from construction to mass production and customer validation.

However, looking at the full-year forecast for 2025, the results of its transformation are gradually emerging. Benefiting from the significant year-on-year growth in the electrical contact function composite materials and hard alloy sectors, along with narrowing losses in the copper foil business, Wenzhou Hongfeng expects its full-year net profit attributable to parent to reach between 18.6 million and 27.8 million yuan, a substantial increase of 125.25% to 137.74%. This indicates that after a brief period of pain, the company is returning to profitability.

From a broader perspective, the technological transformation of private enterprises in Liu Shi is not an isolated case. Previously, Chint has invested in photovoltaic energy storage, Delixi has built smart factories, and People Electric has developed smart manufacturing plants. According to Yueqing Science and Technology Bureau, from 2020 to 2023, the city implemented 854 intelligent technological transformation projects in the electrical industry, covering nearly 90% of local above-scale enterprises.

In terms of R&D investment, in 2009, Yueqing’s total R&D expenditure was only 450 million yuan, accounting for 1.07% of GDP; by 2022, this figure had risen to 4.52 billion yuan, with an average annual growth rate of about 19.43%, and the proportion of GDP exceeded 3% for the first time. Under the backdrop of comprehensive technological innovation, Liu Shi’s industrial output value reached 118 billion yuan in 2025, setting a new record.