Made in/for China
By Carrie Henderson
with contributions by Becky Kalajian
REGION – Language barriers, unfamiliar customs, and manufacturing difficulties aside, several northern Michigan businesses have made exporting to China a top priority, if not the only priority, in growing the bottom line.
Traverse City-based AlcoTec Wire Corporation is one of several local companies meeting the demand for American products in China. It produces aluminum welding wire used to help build everything from cars and trucks, to boats, bicycles, and even yard furniture. AlcoTec's general manager Irene Scheffler says half of the company's products are shipped abroad. China has been a major customer since 1994.
"There's a great deal of opportunity in China," she said. "Their growth rate is phenomenal and they have a strong desire to succeed. We supply a much-needed product for their economy, and can successfully compete with Chinese manufacturers."
So how does AlcoTec do it? Scheffler says the wire produced in Traverse City is loaded into shipping containers and sent via truck or rail to U.S. ports. From there, it's loaded onto cargo ships for the three- to four-month trip across the Pacific Ocean.
But the relationship doesn't stop there. As with domestic customers, Scheffler said it's important to maintain personal contact with customers, even if they live halfway around the world. Traverse City employees travel to China several times a year to meet with clients. They also teach a three-day "weld school" to show Chinese businesses how to best use the aluminum wire.
While the language barrier is an issue, Scheffler said it's no different than doing business in other parts of the world.
"We overcome it via our in-country sales and technical support personnel and local distributors in China who are multi-lingual," she said. "Our technical services and support is unparalleled in the industry and helps to ensure the success of our customers globally."
Traverse City's Century Extrusion has also taken steps to overcome the language and culture gap. To help, it hired China native Michelle Zhang as its regional sales manager for Asia. Her job is to find customers for the company's plastics manufacturing and commercial food mixing machines. She also acts as a liaison between the company's Traverse City facility and its plant in Nanjing, China.
"China is a booming market for Century Extrusion," Zhang said. "The growing economy there allows us to increase our export business substantially. Our customers there include local Chinese companies, and multinational companies which have manufacturers in China."
Zhang described China as a country that is both a big supply resource and a marketplace, "but it's very different from the U.S.," she said.
"In order to be successful, local companies have to recognize the differences, and expect a certain level of frustration before enjoying success," said Zhang. "If you're communicating with people in English, and your Chinese listeners nod and say 'yes,' it doesn't necessarily mean it's the same 'yes' as you're thinking. It's possible they say 'yes' because they think they understand you correctly. But actually their understanding is somewhat different from yours, due to the language obstacle." [See sidebar.]
Although she's based in Traverse City, Zhang spends up to 50 percent of her time working in China. She said the trips are necessary because Century Extrusion is competing against companies from the Americas, Europe, and Asia and doesn't want to give up any potential opportunities.
"We choose to embrace the global marketplace," she said. "We continue to work hard as we earn our place in it."
While AlcoTec Wire and Century Extrusion focus on exports, other local companies have found success importing products from China. One of them is Hybra Energy. It gets the energy-efficient LEDs it needs to make lights for roads, parking lots and other large spaces from a Chinese manufacturer.
"Hybra sought out the technology in China to be a joint venture in providing energy efficiency products worldwide," said company co-founder Joseph Thiel. "You can't find this quality of work at this price."
Finding the right partner wasn't easy, however. The company Hybra chose to buy from was just getting started. Thiel and his company had to work with the Chinese government to get support for the venture. But it worked out in the end: Hybra has been getting LEDs from China for the past two years.
"China is an ally," said Thiel. "They have a high level of people. The local government was very beneficial. We have a wonderful relationship."
Eventually, Hybra Energy hopes to bring some Chinese jobs to the U.S. Thiel says the company's long-term plans include building an assembly factory in downstate Michigan, which will employ up to 200 people.
While some local companies have found success working with China, there are things to look out for. Fred Sorensen imported parts from China for more than a decade, while president of Traverse City-based auto parts manufacturer Acra. He suggests companies take a hands-on approach when dealing with overseas manufacturers.
"In virtually every case, there were quality issues to resolve, fix, or sort out," he said. "I know buyers who have to be on-site during their build because they never know what they will end up with if they do not personally watch every single step."
Sorensen said companies should also factor in the time it takes to ship products from China to the U.S. Shipment times can range from a few days by air to a few months by boat. Customs inspections can add days or even weeks to the process when the shipment arrives stateside.
Sorensen said the expense of opening factories and trading goods with China is rising as the country becomes more popular with U.S. firms.
"As their middle class expands, their pricing will increase due to rising labor costs," he said. "I have contacts that complain it's already underway."