Challenges in the China market

by Ella Lee

Anthony Leung, managing director, Continental Conair Limited
Photo: Edde Ngan

Long-term strategy helps to avoid common risks

Every company is aware there are great challenges associated with breaking into the China market and some have therefore taken a deliberately cautious approach and found success when expanding their business activities.

Conair, a manufacturer of personal and healthcare appliances, fits into that category and, for the time being, is relying on two major sales channels.

"Firstly, we have global retail partners such as Wal-Mart and Watson's to distribute our products, but we also run our own counters in major mainland department stores," says managing director Anthony Leung. "This sales strategy has helped us to build a solid foundation in China."

He notes that difficulties may stem from cities or provinces having different legislation, and companies should therefore pace their expansion with great care so as to minimise the degree of risk.

This approach also allows the company to ensure its logistics network is well established. Mr Leung is aware that infrastructures such as transportation, warehousing and distribution in China are maturing and further enhancements are much anticipated. These will soon match the levels of efficiency seen in Europe and the US.

We will target students taking design and engineering courses, as well as those taking subjects such as business, sales and marketing, finance and merchandising

Similarly, a gradual rate of expansion makes it possible for Conair to keep an eye on the protection of the company's intellectual property rights for its branded products. "Parallel products may appear out of nowhere whenever a new product has been introduced in the mainland," says Mr Leung. "That is not an uncommon phenomenon but impacts on the brands remain very low."

In overall terms, he believes the mainland market for health and beauty products, kitchen items and small electrical appliances has enormous room for future development. "Current demand in China for personal care products and smaller appliances is like it was in the US about 30 years ago," he says. Consequently, countries in Europe, North America and Southeast Asia remain the company's major markets and will account for most of the 12 per cent growth forecast for 2007.

New centres

As the pace for sales and distribution network expansion steadies, Conair intends to establish worldwide operation centres in Hong Kong and China to make the most of lower costs and the ready supply of labour.

"The centre in Hong Kong will look after financial control, general merchandising, innovative market research and product design," says Mr Leung, "R&D and engineering will be in the mainland and will take charge of product development." Within three years, a new global customer service centre will also be built in China, making it necessary in due course to hire multilingual customer service staff able to handle hotline enquiries in various languages including English, Putonghua, French and German.

The company will be looking for innovative designers and marketers in Hong Kong and will also cooperate closely with mainland universities to attract and develop competent young professionals. "We will provide scholarships and organise sandwich courses and summer training," explains Mr Leung. "We will target students taking design and engineering courses, as well as those taking subjects such as business, sales and marketing, finance and merchandising."

Team spirit

Conair already has more than 300 staff in China, including around 30 from Hong Kong. Most of them are managers or supervisors, with at least 10 years' experience in shipping, engineering, R&D or sales. As mainland operations expand, additional staff from Hong Kong will be stationed across the border. Anyone hoping to be considered must speak fluent Putonghua and demonstrate commitment, leadership skills and the ability to adapt.

"A great team spirit is essential to our operations, so managers must build close ties with their mainland subordinates," says Mr Leung, "Therefore, instead of travelling frequently, we expect them to be stationed there."

To give Hong Kong students a chance to gain practical experience, the company has employed university graduates to join its trainee programme. They can have a chance to work in a mainland office and see what it takes to perform effectively in the world of business.


Taken from Career Times 01 September 2006
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