For Sale In China Blog

I won’t bore you with anymore details of my marble purchases, suffice it to say we managed to get it right in the end and are now still trading with the same company after all these years. However, I will tell you about my first ‘big deal’.

We manufacture electric fires in the UK and as it is a labour intensive product to manufacture I wanted to take advantage of the significantly lower labour rates in China. We began to look for a company capable of producing these products for us. We approached on of the largest producers of domestic electrical appliances in the Guangdong region, a company called Kelon. We were given a fairly respectable quotation by one of their senior marketing managers and after several weeks we were eventually down to negotiating the final hard tooling price. I flew back out there and was met by Billy Chen, Kelons senior marketing manager who presented me with a new business card. It seems Mr Chen had business aspirations and had set up a company on his own. Keen to do ‘the right thing’ I contacted Kelon, only to discover that they were in fact in the middle of an administration process and were unable to help me. It also appeared that the two engineers we had being dealing with on this project had also left the company. It turns out they were also working for Mr Chen. Should I take the chance and continue to deal with Mr Chen. To my utter regret, I did.

This is what happened.

I agreed the tooling costs and pre-paid these. A significant gamble in itself as it was in excess of £50,000GBP. It was to take two months to manufacture the tooling, however to my rather pleasant surprise, only three months later the tooling did finally arrive and it worked. We jointly set up the assembly line and went into production. As my representative in China, Chris Chan was to oversee the quality control and ensure production was proceeding as planned. Things started well, but after a few months Chris began to notice things were not quite how they should have been. It would appear that work had been commenced during certain shifts but with no resultant output. The factory was operational between 8.00am and 6.00pm. The tools were suffering significantly more wear and tear than expected and raw materials were going ‘missing’.

Chris got an uneasy feeling and decided to visit after hours. Imagine his surprise when he arrived at 11.00pm to find the factory in full swing producing our fires with our tooling. Where were these fires going because they certainly weren’t going to us. I got the call from Chris and jumped on the next plane over there. Suffice it to say it was an extremely unpleasant meeting which resulted in us being promised all kinds of things which, frankly I no longer could believe. My fires were being produced and sold without my permission, using my tooling to customers unknown. The line had being crossed and there was no going back. Should we go legal…………yeh! why bother……..just pick up the pieces and start again.

In hindsight this episode turned out to be the best thing that ever happened. It prompted me to ‘go it alone’ and build my own factory where we could completely control everything. It was probably the most complex task I have ever undertaken, from the setting up of Hong Kong companies to gain ownership rights to a Chinese company to commencing a major build project from scratch in a foreign land 10,000 miles away. This was the beginning of ‘Fired Up China’

I will tell you all about that in my next blog.

Tags: big deal, business, China, factory, fireplace

This entry was posted on Thursday, February 21st, 2008 at 4:50 pm and is filed under China business. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.