An established presence in China is undoubtedly a bonus when getting to grips with the market opportunities there. Read Jim Barker's 5 lessons from the Trade Exchange.
29 Jul 2011:
Having an established presence in China is undoubtedly a bonus when getting to grips with the market opportunities there. For Jim Barker, Chief Executive of fastener and components supplier Trifast plc, the past 25 years have allowed the company to develop its manufacturing operations with a solid understanding of how business is done in the country.
Even so, says Jim, his recent Trade Exchange visit to Shanghai prompted some new challenges as well as ideas surrounding the changing business climate and Trifast’s future plans in China.
Lesson 1
“After decades in China, we’re now finding that there’s a real demand for good workers, due to high staff turnaround and increasing wage inflation. With the population at 1.3bn people, I find this quite remarkable. The discussion sessions we had at the Trade Exchange on China’s ‘second cities’ helped confirm my thinking that we could consider moving west. There, it’s possible that we would find staff with greater loyalty and less of the pressures faced by workers in places like Shanghai.”
Lesson 2
“Getting a foothold in China involves tireless networking with contacts, potential partners and even with your competitors. We find that trade associations are very good places to start. If you approach your competitors through these, they will often speak very openly.”
Lesson 3
“Enlist the support of bigger organisations who can help you establish a presence. Support doesn’t just come from the corporate sector either – the Singapore authorities gave us good advice and support when we were organising the set-up of our manufacturing site in Suzhou.”
Lesson 4
“Be aware that in China you can unwittingly become part of the guanxi culture, even if you don’t consciously practise it. When we first came to China and Hong Kong, we’d have the odd lunch with contacts. This would slowly develop into dinner with their family and friends. The younger family members would start calling you ‘uncle’ and you’d be invited to their weddings!”
Lesson 5
“It’s wise to constantly refresh your business approach. The nature of opportunity in China now has changed quite radically since we first entered the market. We came in on the back of our multinational customers who had transfer projects from Europe and elsewhere. This business has since slowed down, and for us, it’s about winning Chinese business from now.”
Our challenge
“Learning at the Trade Exchange that we can now trade in Renminbi was a new development for us. We might currently buy material in Yen; convert it into Singapore dollars; then convert to US dollars for our Chinese operation; and then sell in Renminbi. So we need to find out how this new development could benefit the company.”