YPB Group Ltd (ASX:YPB) is continuing along a growth path with two new channel partners in China signing three-year contracts expected to generate around A$75,000 in revenue during the first year.

One contract is with a large, high-volume pharmaceutical packaging supplier, Suzhou-Haishun Packaging Material Co Ltd, which marks YPB’s entry into the China pharmaceutical sector.

The second is with a Beijing-based well-established label printing company, Beijing Haihui Printing Co Ltd, which has a broad, blue-chip customer base.

As the contracts advance and YPB’s product authentication and consumer engagement solutions are on-sold to the channel partners’ end customers, there is upside expected in years two and three.

Effectiveness of China strategy

Group CEO John Houston said: “Securing two new, high-quality China channel partners in new end-customer segments that are immediately revenue-generating and with the sales process occurring through the difficulties of COVID-19 reflects the increasing effectiveness of our revised China sales strategy.

“Over the past 10 months, YPB China has developed new channel partnerships in a number of large, lucrative sectors.

“We are now better at demonstrating the value, relevance and simplicity of our forensic tracer-scanner solution.”

Building business in China

YPB’s new sales strategy is seeing business opportunities in China continuing to build with the China business sustaining the company’s improved new business momentum.

Houston said: “The fact that major intermediaries are staking their own reputations by offering YPB’s solutions to secure product authenticity for their customers’ products is proving that there is indeed a significant market for high-quality anti-counterfeit solutions.

“We’ve always had great technology and after years of toiling we are now creating an effective sales machine.”

The Australian-based company is focused on the rapidly growing Australian, South East Asian and Chinese markets.

YPB’s proprietary smartphone-enabled technology suite allows consumers to confirm product authenticity and, for brands, that triggers consumers’ engagement.

Its focus is dairy, cannabis, alcohol and cosmetics where the viral growth of fake products, particularly in Asia, affects brand value and endangers consumers.

“Steadily building base”

Houston added: “We are steadily building a base of longer-term contracts and with strong client management we can generate repeat orders and recurring revenues.

“Obviously, the China opportunity is enormous and our growing suite of channel partners give us leveraged market access to those very high volumes.

“Sound channel management should result in revenue growth and ultimately a profitable China business over time.”

Suzhou-Haishun Packaging

The first three-year contract is to supply Suzhou-Haishun Packaging with YPB’s proven T2 tracer-scanner authentication solution.

Suzhou-Haishun will incorporate YPB tracer into an advanced foil application for a pharmaceutical customer in China and YPB T2 scanner will be used to confirm product authenticity through the supply chain.

YPB will supply its proprietary tracer and scanners with minimum annual take or pay conditions, and with additional incentives for increased volume.

Suzhou-Haishun will promote the brand and consumer protection benefits of YPB’s solutions more broadly to its customers and YPB anticipates growth beyond the contracted minimum value over time.

Suzhou-Haishun Group is a large pharmaceutical packaging material and flexible packaging material (laminated foil and end products) manufacturer in China producing cold-forming foils, tropical blister foils, suppository films plus lid stock of all types for pharmaceutical, cosmetic and food applications.

It has a portfolio of major clients domestically and globally and is certified by the US Food and Drugs Administration (FDA) and DMF (Drug Master File).

Beijing Haihui Pringing Co

The contract with Beijing Haihui Printing will integrate YPB’s product authentication tracer and scanner technology into anti-counterfeiting label printing for its customers.

Haihui is a well-established printing company that has been operating in China for more than 20 years, delivering integrated planning, design, production, printing and packaging.

It specialises in the technical research and development, design and printing services of self-adhesive label identification, anti-counterfeiting label identification and various composite label identification.

Haihui provides labelling services for nearly 100 customers across a diverse range of sectors and customers include Nippon Coatings, CQC, Sinopec, ZFT, Duoduo Pharmaceutical, Tsinghua Unigroup, Sony Ericsson and French Andros among others.

‘Smart’ product packaging

The combination of YPB’s smartphone authentication solutions and its SaaS Connect platform, creates ‘smart’ product packaging, opening cost-effective, digital and direct marketing channels between brands and their consumers.

Connect gathers actionable data on consumer preferences. It can then host tailored marketing campaigns directly back to the scanning smartphone.