Through a dense mesh of company connections, one of Taiwan’s leading camera manufacturers appears to have effectively gained control of the Kodak camera brand.
While some may see the hiring out of an iconic US brand to a foreign company as a negative, there doesn’t seem to be much of a down-side for the struggling Kodak in what could be described as an exercise in virtual vertical integration: the licence fee it earns is easy money ($100 million, 200 million per annum?), while the Kodak brand is in the safe and competent hands of a manufacturer with a proven track record, and the marketing is also with competent and experienced executives.
– Just keep sending the cheques!
In fact, many of the same players involved in the Kodak deal had previously done something similar with the GE brand which, given its relative lack of traction in the camera market, has done quite well in its few years of existence.
A few weeks ago Photo Counter revealed that the newly-minted, Californian-based company JK Imaging, named by EKC as the new licensee for Kodak cameras, shared the same office address as General Imaging, the company which holds the GE camera licence.
While JK Imaging holds the licence for Kodak cameras, Photo Counter believes the real backing behind the Californian start-up is the Taiwanese manufacturer Asia Optical, which in exchange secures the rights to design and manufacturer Kodak cameras as a kind of unofficial licensee. AO is a long-established company with manufacturing operations in the Peoples Republic of China specialising in lens and camera component manufacture.
It’s one of four Taiwanese companies which compete fiercely for contracts to manufacture cameras for all the leading brands. With the backside falling out of the digital compact market lately, that competition is set to become even more brutal.
As well as sharing office space, both GE and Kodak share AO as a manufacturer. In our last story we also noted that AO’s IT department was involved in setting up JK Imaging’s website.
It emerges that the names of the same executives recur at the top of the corporate structure of both JK Imaging, General Imaging and another company, RedDot Imaging, which until recently distributed AgfaPhoto cameras into the US market.
In 2007 Joe Atick, now the CEO of JK Imaging, appeared in Brazil with GE’s vice-president for Sales, Rene Buhay, fronting the podium to announce that Jaacx, Mr Atick’s Miami-based CE products distribution company, had been appointed to distribute GE cameras into Latin America.
By 2009, Rene Buhay was not only vice president of Sales for General Imaging, but the President of RedDot Imaging (AgfaPhoto cameras). RedDot was another of Mr Atick’s companies. It since seems to have ceased operations in the US. (In fact, AgfaPhoto as a camera brand seems to be fading away.)
Mike Feng is another executive whose name continues to crop up when exploring the connections between General imaging, JK Imaging and AO.
He is, or until very recently was, president of General imaging. He is now also the ‘registered agent’ listed in the official company details for JK Imaging.
He was on the advisory board of AO in the early 2000s, at the same time he was a partner with InveSTAR, a venture capital firm with offices in the US and Taiwan. (General Imaging, by the way, is reported to have been set up with venture capital.)
Kodak and Asia Optics
AO manufactured cameras for Kodak, and Kodak’s withdrawal from the camera market in 2012 was a blow to the manufacturer. It revised down the proportion of its consolidated revenues from digital camera manufacture from 45-50 percent in 2011 to 30 percent in 2012. company.
Kodak’s announcement later in 2012 that is was moving to Chapter 11 bankruptcy was a further blow, as AO is the third largest unsecured creditor of Eastman Kodak.
Then in June last year salt was rubbed into the wounds when a New York federal judge granted a US$33.7 million judgement in favour of Eastman Kodak in a contract dispute with AO.
Based partly on the Kodak experience, AO decided to move away from the volatile and low-margin business of OEM low-end camera manufacture towards design, manufacture and, via close relationships with companies like General Imaging and JK Imaging, marketing and distribution of cameras.
‘AO has facilities and manufacturing capabilities for all digital camera components. Vertically integrating to camera branding is a way out for them,’ explained an informed Taiwan-based source.
This is a big development for Chinese camera manufacture, and perhaps a small chapter in a bigger story. Securing control of brands, rather than being merely an order-chasing manufacturer, would seem to be the next step in China’s economic development.
Our informed Taiwanese source explains why Kodak was attractive to AO:
‘GE is actually not a very good brand for cameras. When Kodak still handled digital cameras, there was no choice for them. GE was the only brand available.
‘When Kodak became available, it’s a good chance for them to get away from GE gradually.’ He added that ‘Kodak has some very good staff in Japan. AO, which is a company run with a very Japanese style, could use them as a bonus to the deal.’
He also noted that Kodak may own AO some money.
The handling of the communications by the various parties involved in the story is instructive.
Kodak and JK Imaging put out an unusually low-key 200-word press release which said very little beyond announcing that JK imaging was the new licensee for cameras and other consumer products under the Kodak brand.
(Naturally, there was universal corporate delight and excitement all round, along with the making of good business sense and a bright future moving forward. But not much detail.)
Responses to follow up questions was reluctant and uninformative. Very much a case of, ‘move along, there’s nothing to see here.’
But just a few days after the licence agreement was barely made public, AO held a major press conference in Beijing to show the new camera range and announce it was the exclusive manufacturer of Kodak cameras. This would be like Apple’s principal manufacturer, Foxconn, handling the launch of the latest iPad!
A Chinese distributor and a JK Imaging executive, Mike Hackett, were in tow, but the star of the show was Asia Optics founder and current head, Robert Lai and the new Kodak M43 mirrorless camera he presented along with other cameras in the range, with obvious enthusiasm and perhaps a little paternal pride.