Scaling the Great Wall

The world is getting smaller, and barriers to international trade are not what they once were. The success of emerging economies’ export markets when it comes to items such as electronic components and consumer products is well established. But the West has also become increasingly receptive to higher-end products made in countries such as China and Japan in recent years, and, as such, Asian manufacturers of wide-format printing equipment in particular are experiencing a steep rise in demand. Of course the cheap labour available in some of these countries delivers attractively priced products, but this cannot be the sole reason for Asia’s international success.

When talking to companies who are prospering from these free trade conditions, it becomes clear that export strategies are high on their financial agenda. So, what can our own island-bound industry learn from the success of Asia? And should our Government be doing more to help the products and services we produce start to flow in the opposite direction?

For some Asian companies, the simplest solution to exporting to the UK comes from opening up regional offices. Universal Digital Technology Equipment is a Chinese-based wide-format printer manufacturer, which set up its European brand, Galaxy Printek, in England three years ago and is headed by general manager Stanley Cheng. Genie Liew, sales and marketing manager at the company, comments on the move: “Our business in Europe is growing, albeit slowly.”

She continues: “Being closer to international customers is beneficial; we understand more of what they really need and want. In addition, we can provide faster and more effective on-site technical support.”

Yet Liew goes on to say that the real, primary task for the European office is to ‘build up the name’ of Universal Digital Technology Equipment. “The product is the same,” she reveals, adding that the strategies used to improve the brand in Europe are based on ‘price’ and ‘service’.

“We provide fast service and good quality products at a low price. That’s what makes us competitive. And we have several engineers and staff working in the European office to make this possible.”

The company estimates it needs another three to five years before it becomes well established in the European wide-format print market; following this period Liew predicts its revenue will begin to increase at an exponential rate, as it marries a good product and service with China’s advantageous export set-up.

A closed shop

Whilst Universal Digital Technology Equipment has found success in launching an overseas site, it should be noted that before 1979 when China launched an ‘open-door’ policy, this would have been impossible. According to a research paper written by  Lin Yifu, senior vice president of the World Bank, the introduction of this policy, and the subsequent economic activities, has increased the total value of Chinese imports and exports from £13bn to £319bn—a 25 fold increase.

Indeed, data from China Customs shows that from 1983 to 2013, China averaged an income of £26bn from exports. Export growth has been a major component supporting China’s rapid economic expansion, now constituting 30 percent of the countries GDP. The data also reveals that one of China’s main exports is electro-mechanical products (57 percent of total exports).

There can be no doubt that the changes to legislation and the support and encouragement from the Government has had a major impact on Chinese manufacturers international success.

A research paper written by Arvind Panagariya, a Professor of Economics at the University of Maryland, describes how China’s Central Government launched several initiatives in order to encourage domestic manufacturers to export goods and services. These include the set up of special economic zones (SEZs) and open cities (Ocs),  as well as production networks for exports (PNEs), and the trade credit offered to Chinese exporters.

Prof. Panagariya writes in detail about the benefits of these initiatives. In terms of the SEZs and OCs, he states they create, ‘a more liberal environment’ for economic activities like manufacturing and exporting. Companies in targeted sectors, such as print, also offer support services and business advice, such as technological upgrading. Associations like the Printing and Printing Equipment Industries Association of China (PEIAC) also work to introduce domestic companies to foreign business partners, while the Bank of China offers credit for Chinese exporters.

Entrepreneurial spirit

With the Government behind them, it is unsurprising that there has been so many success stories from Chinese manufacturing when it comes to exporting. Yet this does not mean that anybody could have done it; business knowledge and the drive to succeed are still crucial factors in running a profitable company.

Guangzhou FH-Union Digital Technology is an international advertising equipment and materials supplier that has been trading for the past ten years. Roney Lee, the sales manager of the corporation, attributes the company’s sales success particularly to the business-to-business (B2B) trading website, Alibaba.

He explains: “It is a well-known trading website, which introduces many international customers to us. It is simple and easy, and dramatically reduces our operational fees.”

There is currently a debate in the industry about the most effective way for technical manufacturers or suppliers to reach international customers. Some say options such as business-to-business trading websites are the most efficient conduit, while others believe the best way is to open offices abroad. Lydia J. Price, marketing professor and associate dean at the China Europe International Business School in Shanghai, believes it depend on the company in questions. Yet she does point out the benefits of employing the services of well-established trading websites.

“Alibaba is changing the way people think about availability of products, pricing of products, and how you get information,” Price explains.

However, Bettine Pellant, events and administration manager for Picon, presents the other side of the argument, commenting: “If you are paying in excess of half a million pounds for equipment, then you are probably not going to buy that online. You want to have your hand shaken and actually see the product working.”

Indeed, Tim Cox, managing director of web-to-print supplier, Vpress, says that it does not use trading websites to sell their product. He explains: “The target technology we supply needs to be understood by both us and our customers, meaning there are a lot of conversations about what they need and where they want their businesses to go.”

Greener grasses

With the UK economy only gradually beginning to get back on its feet, many UK printers may be keeping a keen eye on Chinese export strategies, in the hope of replicating the success.

Staci Reeson, marketing executive of Integration Technology, and Tim Cox from Vpress, agree that having an overseas site can help develop a UK companies brand, and improve relationships with international customers. Integration Technology, which designs and develops UV curing solutions, exports 95 percent of its products. Vpress works throughout Europe, as well as in South Africa and Australia, and the business grew by nearly 40 percent last year.

When considering opening an overseas site, cultural differences and infringements on intellectual property are factors to be considered. Vpress’s Cox concludes: “The resources it will take to set up abroad and adapt to the changes need to be taken into account, if you are to see a return in a reasonable period of time.”

Reeson from Integration Technology acknowledges that cultural differences are often the main concern for businesses expanding abroad, but says that the firm’s staff have experience in coping with this.

“We don’t see cultural difference as any barrier to selling our products,” she asserts.

Making use of trading websites and having bases overseas from which to sell their products seem to be the main export strategies for Asian manufacturers at the moment. As those involved in the industry have identified, only specific technologies, products and services are suitable for online trading—something British manufacturers looking to expand into overseas markets should bear in mind. There are some circumstances, however, where manufacturers may be able to provide a comprehensive and thorough consultancy service online, a dramatically cheaper alternative to opening an office abroad. Whichever way you are looking at doing it, there can be no doubt that building a presence in a foreign market could prove a highly lucrative move for your business.