ROANOKE TIMES
Copyright (c) 1997, Roanoke Times
DATE: Saturday, January 4, 1997 TAG: 9701060036
SECTION: BUSINESS PAGE: A-5 EDITION: METRO
SOURCE: JEFF STURGEON STAFF WRITER
Innotech Inc., Roanoke-based manufacturer of lens-making systems for eyeglasses, intends to establish a joint venture that would open a huge market in China for its products.
The agreement would be with Suzhou Medical Instruments Factory, a maker of optical diagnostic equipment. It would provide marketing and distribution of Innotech's products to hundreds of millions of potential customers.
But Innotech warned success for the venture is not certain.
The company's statement, announcing the signing this week of a letter of intent to establish a joint venture with Suzhou said there is a risk that modern plastic eyewear won't win acceptance among the Chinese. And even though China's population is huge and its eye problems are more severe than in Western countries, lower income limits who can afford prescription glasses.
"We don't have lofty goals," said Steve Bennington, president and chief operating officer. "Our biggest challenge, as well as our greatest opportunity, will be in educating and converting the Chinese optical market from a glass, single-vision market into a plastic, multifocal market."
Innotech manufactures devices that make eyeglass lenses quickly in retailers' offices rather than in remote laboratories. The company also sells supplies needed to operate the devices. The company sells the machines and supplies to eye doctors and eyewear retailers. Innotech has done business only once in Asia, when it sold one lens maker to a buyer in the Philippines.
Under the new proposal, Innotech would own a majority of a new China-based entity and supply most of the products it would sell in that country. Of its product line, all machines and some supplies are made in Roanoke, but the company was unprepared Friday to say whether sales to the Chinese would mean higher production and employment locally. Innotech has operations in Petersburg and Roanoke. About half of the 6-year-old company's 180 employees work in Roanoke.
The new venture could begin selling goods this year, if negotiations go as planned, Innotech said.
Innotech lost $8 million on sales of $7.4 million during the first nine months of last year, the latest available financial report. About 35 percent of Innotech's sales last year originated in foreign countries, most of them in Europe.
Innotech common stock, traded on the Nasdaq stock market, closed Friday at $8.50 a share, up 371/2 cents.
Larger than Innotech, with 800 employees, Suzhou Medical Instruments Factory near Shanghai is at least partly owned by the Chinese government, Bennington said. He said he did not know if private investors owned any portion of the company, which makes eye instruments and equipment used in 90 percent of China's government-owned, hospital-based eye clinics.
Those clinics have been the country's main supplier of eyewear, but private retailers are becoming more common as the free-market economy grows. Suzhou Medical also sells to the new retailers, Bennington said.
There are rough estimates of how many Chinese might be in the market for a set of Innotech-brand lenses. In Western nations, more than half the population needs glasses or contact lenses. China's 1.2 billion people experience near-sightedness at twice the rate of North Americans, meaning the Chinese market could surpass 600 million, according to industry sources quoted by Innotech.
But far fewer Chinese currently own eyeglasses - perhaps as few as 78 million - and one study found that the glasses of only about one in three Chinese were up to modern standards, Innotech said.
LENGTH: Medium: 67 linesby CNB