Friday, April 06, 2012

China Business 2012: Small businesses making it big

Beca: The market is huge and rife with opportunities

Beca's Beijing-based China chief has resorted to Kiwi-style team building by taking his young team on "Outward Bound" adventures.

Attracting and retaining young engineering talent is one of Derek Lowe's key priorities. "There's keen competition for good staff," says Lowe. "Ours are very young and energetic."

Beca's Chinese employees can also qualify to become shareholders if they meet particular criteria. There is also a retirement fund and medical benefits.

Lowe has been with Beca since 1998 moving to China eight years ago after other roles within Asia. At a rapid run-through of the many projects he has on the go in China he points to a quotation from deceased US motivational writer Earl Nightingale: "The world in which we live and work is a mirror of our expectations."

Beca's expectations are certainly high.

"The market is huge, with no shortage of opportunities for engineering consultants working in this region." Its building services engineers are in high demand as China's growth continues at a rapid pace.

Urbanisation and the high costs of first tier cities such as Beijing and Shanghai has seen the development of second and third tier cities, where property and rental prices are more affordable for many businesses as well as city dwellers.

Beca's niche is the tourism market, with 70-80 per cent of its current business being driven by the rapid expansion of hotel projects through the country.

As the cost of operating in Beijing's CBD or financial district is escalating year-on-year, more companies are moving to the outskirts of China's capital. This year Beca has secured a building project in the Daxing district, about an hour's drive from Beijing's CBD.

The mixed development comprises office, retail and hotel space, and will sit on a 120,000m2 site.

Beca employs more than 100 staff members in China, based in offices in Beijing and Shanghai, as well as in satellite offices on project site locations as needed throughout the country.

"We have developed a strong local team, with a mix of expatriates and Chinese nationals, and a bi-lingual service is part of our approach," says Lowe.

Zuru: Billion dollar plans for toy firm based in China

Anna Mowbray is one of three Kiwi siblings driving the rapid growth of Zuru Toys from their head office in Huadu.

Mowbray predicts Zuru Toys will sport revenue of about US$35 million this year. Possibly more if the company's star product - Robofish - can be successfully launched in the US consumer market.

From their humble beginnings in an old factory some five years ago, where Mowbray resorted to "showering over the toilet" and "borrowing back" wages from staff to keep the show on the road, the upshot is a great story.

In essence, the Mowbrays have gone straight to market and established an international business from China.

None of the business is situated in New Zealand.

Mowbray put Robofish through its paces in a glass watertank during a visit to Zuru Toy's factory, which doubles as HQ and the R&D plant.

It's a nifty device that is likely to excite kids. Particularly when operated by remote control.

But right now Zuru Toys is facing a legal fight with a major US company which claims the IP for Robofish belongs to them as it was developed by a Chinese inventor while he was still in their employ.

Not so fast says Mowbray.

Zuru's chief operations officer believes the Chinese inventor signed all the relevant releases before departure.

The IP battle is a major for the small company which looks to be at the risky stage where it warrants putting a more traditional corporate structure in place.

From their grass roots beginning in Cambridge, 28-year-old Mowbray, her elder brother Mat who is CEO and younger brother Nick who later joined them as marketing director, have developed a range of toys including "Schnooks" (voted hottest toy in Woolworths Australia in 2009/2010); Crazies and serious guns.

They currently have 250 Chinese staff working at the factory where they live in dormitories.

Zuru has no debt and has expanded by utilising cash-flow. Their toys are distributed in 60 countries.

Walmart is a major customer.

And Mowbray has no doubts the trio could develop the toy business into a US$100 million company.

They want to build a billion dollar empire.

They are plunging US$100,000 each year into funding the development of a novel housing project and have contracted two Chinese factories to work on the prototypes.

More than 40 patents have already been sought.

But that's about all she is saying.

Phitek: Silence is golden, as Shenzen based company shows

Phitek's Paul Van Tol is happy to be a good sport and demonstrate a pair of the more "out there" noise reduction headphones at his Shenzhen office and design shop.

The bright gold funky headphones are a hit with young 20-somethings in China. But Van Tol's personal taste is for something more elegant.

The Phitek director, who originally came from the Netherlands, stepped in to head the company nearly two years ago after the shareholders pushed founder Mark Donaldson out of his job.

It was a tough call says Van Tol.

But the company has now been stabilised and is evolving as a world leading innovator in advanced electro-acoustic technologies for personal listening.

Its "Blackboxes" are sold online and through outlets like JB Hi-Fi and Harvey Norman.

Van Tol says it has done a deal with Soul Technologies to produce more funky products.

But the major breakthrough is in technology which essentially inserts noise cancelling technology into smart phones reducing noise sufficiently that you could have conversation on a cellphone in a busy street without having to cover the phone.

Within three years Phitek has established a commanding lead in the supply of integrated and headphone-based noise cancellation solutions to major aviation customers including Singapore Airlines, Qatar, Emirates, Air New Zealand and Finnair.

Today it has two business units, Avionics, focusing on the needs of airline customers and Audio, focusing on the development and marketing of world-leading Active Noise Cancellation Technologies for the mobile phone and music industry.

Since developing its first battery powered noise cancelling headphone Phitek has produced a wide variety of products for companies including Logitech, Audio Technica, GN Netcom, Panasonic, Maxell Corporation, and Creative Labs.

Though Shenzhen is one of China's most important R&D hubs - particularly for ICT technologies, Van Tol says he is now looking at putting some of the R&D operations across the water in Hong Kong.

"It is cheaper." 5:30 AM Wednesday Apr 4, 2012

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