Manufacturing 21
products such as televisions, dishwash- It is necessary to understand China’s 4000-
ers, washing machines, cameras and year history to understand how Chinese
microwave ovens, has changed; many people think, how they react and how they
Chinese companies now have a major manage various issues to do business
focus on innovation and production ef- successfully there. Without partnerships,
ficiency (many new plants in operation) there could be many layers of people and
and will continue to do so. organizations involved in sourcing materials
and products, investing in manufacturing
The message is clear: European manu- facilities and even in exporting finished
facturing companies need to embrace products out of the country. This is a key
the considerable advantages which Far cultural difference between doing business
Eastern — particularly Chinese — pro- in the West and the Far East, and without a
duction facilities can give them. Some of clear understanding of these differences a
these include the following: company could find itself at a disadvantage
■
Lower production costs in their China initiative.
■
Continuing high levels of quality
■
The increased efficiencies of a knowl- In setting up an operation in China there is
edgeable workforce a need to establish whether the Chinese
■
Opportunities regarding new market- government will allow such a technology to
places in the Far East. be established by a foreign investor … and
Inspection and test station at whether the final manufactured products
So, instead of viewing Far East manufac- High Wycombe (UK). may be exported to another country. Many
turing strengths merely as an unstoppable are allowed, but it is recommended that a
threat, surely we should consider combin- review is conducted with official depart-
ing them with intrinsic European skills to ments representing both import and export.
create innovative and cost-effective prod- Walters Group has been conducting busi- Not establishing these facts at an early
uct solutions for the global marketplace? ness in China for many years but, almost 2 stage can prove to be a costly exercise later
years ago, opened its first manufacturing on, not to mention the vast amounts of time
facility in Nantong province. Known as Yan lost while the maze of red tape is navigated.
A New Model Walters, this is a 50/50 partnership with
Chinese entrepreneur Yan Jixia, and has China now actively encourages foreign
We need a new business model for this to already allowed several companies within investors for many reasons: increasing job
succeed! Several UK and European compa- the Walters Group to expand their own opportunities for its people in potentially
nies have taken up this challenge, including manufacturing operations there. A second undeveloped areas; creating industry
my own organization, Walters Group, and factory was opened in late 2006, right infrastructure; upgrading manufacturing
initiated new approaches to Product Life- next door. This base in China has enabled capabilities; and increasing the immense
cycle Management. These allow products to Walters to offer a comprehensive range of value of exports. The advantages are well
be designed, developed and manufactured services to its customers and is also under known to all, but without conducting a
in low to medium quantities here in the UK direct British management, maintaining comprehensive assessment, including tax,
and transferred to larger scale production high European quality standards. A third legal issues and intellectual property rights,
facilities in China when volume requirements facility is due to be opened during 2007, there could be high risks involved.
increase. Then, when the product reaches containing a wide range of advanced QA
the end of its life and volumes decrease, pro- functions designed to dovetail into the Working closely with a trusted business
duction is reverted back to Europe. Walters Group’s manufacturing plans. partner to set up a manufacturing opera-
Group terms this approach: “The Blended tion in China is an approach of proven wis-
Manufacturing Model.” Conducting business in China is complex; dom. In less than 2 years, Walters Group
it is dynamic, still evolving and often dif- has almost completed a third manufactur-
Whereas China’s consumer electronics ficult. In this environment, working closely ing facility. And, working without a close
manufacturing industry is set to more than and confidently with a partner towards business partner, this would arguably not
double by 2010, reaching more than $150 shared values and objectives becomes a have resulted in such rapid development
billion; we must not lose sight of the fact must. The importance of true partnerships in the investment.
that more than half of China’s electronics cannot be understated, and the need for
manufacturing revenue is funded from interpersonal relationships is fundamental John Walters
foreign investment. China is a major manu- to business in China. Founder and Chairman
facturing source for many of the world’s Walters Group
top electronics manufacturers. www.waltersgroup.co.uk
June 2007 Supply Chain Europe
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