At our February meeting, Don Harris made an entertaining presentation on “Doing business In China”.
Don was the former President and CEO of the Clayburn Industrial Group, a producer and supplier of clay based refractory products for the aluminum refining industry. He said that at first his company just had a sales representative in China but they quickly realized that they needed to manufacture in China if they were to protect their own technology.
He learned that if you are going to succeed in China the biggest boss has to show up and eat and drink with your Chinese custom-ers. Don related how this policy led him into sampling some most unusual fare.
Don said the people in China were friendly and wanted access to new technology. When he first went in 1996, Don said there was no middle class. There were the very rich and the very poor. Basic housing had no heat and it was not uncommon to find people living in caves dug out from mining pits.
In the years from 1996 to 2004, Don said his company’s business was six to seven times greater than their expectations. They also enjoyed high profit margins thanks to lower tax rates in the early years.
However during the following eight years demand for aluminum dropped off and the emphasis was placed on price at the expense of quality..In 2011 the Clayburn shareholders decided to sell off all hard assets and sold shares to a management team in China.
Don said that by the end of his tenure in China, a middle class had emerged with young people well educated and seeking prosperity in the many huge modern cities.
Don said that one of many lessons learned over the years was not to expect that what works in one country will work in another. He said that Chinese workers are loyal to and not necessarily to the company.
Our March presentation will be “Brock: A Partner with tthe iagaraa Community” by Brian Hutchings, VP Finance and Administration, Brock University