Doing business in China
Tuesday 27 July 2010
To most people, when British companies do business with China it usually involves outsourcing manufacturing to the rapidly emerging economic power’s low-cost factories. However, it does not have to be like that.
For example, Lincolnshire-based Cherry Valley Farms plays as key part in the production of that Chinese restaurant staple – the Peking duck - through supplying high-quality breeding stock to a market that last year amounted to 3.3 billion birds. The company has been trading with China since 1980, right at the start of the country’s programme of opening up to foreign investment, and has built up the business to the point where last year 60 per cent of the ducks consumed in China came from Cherry Valley Farms stock.
Richard Bird, managing director, stresses that it has been a long process based on building strong relationships with a team of Chinese people. Whether working through joint ventures or wholly-owned operations, the key to success has been “identifying the right parties” to work with, he says. It is a sign of the success of the company’s efforts in this area that in the 30 years Cherry Valley has been operating in China only one small joint venture has failed. This achievement helped Cherry Valley, which celebrated its 50th anniversary last year and supplies breeding stock to about 80 countries around the world, win the prize for Continued Commitment in last year’s Cathay Pacific China Business Awards, established to acknowledge and celebrate UK business dynamism and success in Hong Kong and China.
In fact, the Chinese operations – which now employ about 5,000 people – dwarf the UK business with its 550. This is partly due to the size of the country being served but is also down to a move downstream, into processing, in China, whereas the UK business is centred on developing breeding technology, which requires comparatively few people.
Bird stresses that that technology is constantly evolving, with Cherry Valley’s leading role in it another major factor in the company’s success in China. Thanks to such developments, Cherry Valley is appealing to the Chinese government’s desire to encourage healthier eating by producing birds that typically have a fat level of less than 27 per cent, compared with more than 35 per cent for the traditional Peking duck.
Relationships have also been key to the success of another British company heavily involved in a Chinese ritual. Jing Tea is a young company founded by China and tea enthusiast Edward Eisler because he saw an opportunity to supply high-quality tea to hotels and restaurants and the general public. Several years of research and establishing connections in remote parts of China and other tea-producing countries in Asia have paid off and Jing Tea’s products are now on the menus at several of London’s leading hotels and restaurants.
Eisler explains that in China there is a whole culture surrounding tea so that, although on one level it is an agricultural crop, on another it is “an art form a bit like wine”. Accordingly, for a foreigner to enter this world could be seen as quite difficult, he says. “It requires a lot of investment in time and building of relationships. To be successful that time has to be spent.”
He says spending time with people – not discussing business but getting to know them – has been fundamental to the success of his business, which now sources 80 per cent of its varieties from China, accounting for 60 per cent of its total volume.
But having made that effort, he has found the experience of trading in China a good one. Jing, which is based in south London, runs a small office in Hong Kong dealing mostly with sales, but does not employ anybody directly in China. Instead, it has built a network of partnerships with local suppliers. “The people are very flexible and would work very hard to meet standards, especially if you work with them,” says Eisler. He adds that the expansion of the economy and the abundance of money make improvement and expansion of the business relatively easy.
Add this “helpful attitude” to the other advantages, such as the lack of pollution affecting the tea because of the remoteness of the producing areas, the natural resources and that tea culture, and you can see why China has become such a vital part of a business that has rapidly expanded to the point where it enjoys an annual turnover of more than £3m.
The other winners of the Cathay Pacific awards were the Chartered Institute of Environmental Health and, in the category for small and medium-sized businesses, Sigma Components, which supplies parts for aircraft manufacturers. Entries for this year’s awards can be made at cathaypacificawards.co.uk and must be received by 31 October.
Teas from China and other countries can be bought via the Jing Tea website – jingtea.com.
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