I recently made my second trip to the People’s Republic of China and I must admit that it is always an educational experience for me. The culture, as you can imagine, is very different there. Guangzhou, where our office is located, is a city of 10.3 million people (China’s 3rd largest city behind Beijing and Shanghai), which is just over 2 million more people than New York City, which is by far the largest city in the US. It is striking to note that China has 3 times the population of the US, yet has only about half the livable land. So, China is very crowded, and there is a large separation between classes of people. The middle class is emerging, but it is not like what we enjoy in the US.
The manufacturing culture is also very different. Some factories have living quarters on site (it is not uncommon for a husband to live at the plant site and only see his wife once every few months), other bus people in and out, and many use a bike, moped, or scooter to get to work. Very rarely do plants try to work with as few people as necessary as we do in the US, because they seem to want to keep people employed, and labor is still cheap in China, although this is changing. I have visited factories where we would have 5 people to perform a task, and they would have 20. I highly suspect that as this middle class emerges and the Chinese become more savvy when it comes to automation, that this will change as well.
To digress for a moment, it is an interesting story on how we even ended up in China. Larry Bailey, our founder and CEO, knew the day was coming because customers would not continue to support LSI executing projects in China in which 30% of the budget was travel. We had worked for several multi-national clients and it was becoming apparent that our cost structure was becoming a hindrance to execute more projects. So, Larry began the search for the right person and the right opportunity. I must admit that Larry did his homework and had great insight into the culture there before starting an operation over there. One thing that is of great value in China is family. The Chinese people are extremely loyal to families, and not always to companies. He had to find someone who felt a part of the LSI family and someone who takes much pride in his or her work. The right man for the job came along in 2003. Hansen Hu, China branch manager, spent two years in the US with his family learning our country’s culture, the company culture, he came to understand “western quality,” and most importantly, he became a part of LSI’s family. In 2005, Hansen started the Guangzhou operations, which now employs 9 people.
On my two trips to China, I have truly started to understand our value over there. We have several people now who not only are technically capable, but they understand and can speak good English (read and write), and they certainly understand the culture in China. I went on a sales call with Hansen at a process plant just outside of Guangzhou in Nansha. The call was on a US engineer who will be spending the next 5 years in Nansha, along with some of the Chinese staff at the plant. I simply gave a presentation on LSI’s DCS capabilities and our experience with his particular process. However, it hit me as we were walking to lunch as I watched Hansen walk ahead of us, talking with the Chinese process engineer, REALLY what our value was. I told the American engineer as we were walking, what I saw was our value – I stated “we have a guy who speaks English, speaks Chinese, understands both cultures, AND he knows the technology.” The customer recognized this as he made the statement (with a chuckle) “yeah he can talk with my engineers to find out what is really going on around here.” What I didn’t realize until the next day is that we have more than one person who is like this in our China office. Hansen has several capable engineers who have delivered results to US based clients. I have spoken with these customers, and they have been extremely pleased with our engineers’ work over there.
We have just sent one of our engineers, Mark Anderson, from the US to support this first DCS project in China at the plant I mentioned above in Nansha. This will greatly enhance our skill set in China and will also add to our client list. I am confident that I will get a good report on his return.
Other capabilities that we have in China are drafting, programming, panel fabrication, project management, and electrical installation management and execution.
One other great value that we bring to a customer in China is that we have connections on how to get things done over there. We have learned much in our 10 plus years of doing business and our 5 plus years of being on the ground over there. For instance, we understand how to import parts into country if needed (no small feat), how to get electrical installations completed with “western quality” (again, no small feat), and we can certainly consult with any customer on how to execute projects in China or anywhere else in Asia, as we have been there and made the mistakes that many make the first, second, or even third project in the region. I will never forget a call from a panicked customer who asked me if Hansen could help them get a control panel into country as theirs had been flagged in customs for not being CCC (the Chinese UL essentially) compliant. Unfortunately, it was too late for us to help that situation, but we did rebuild the panel for them in China. Once the flagged panel showed back up in the US, we stripped it for spares and sent the parts back to China for the client.
In 2009, on the largest project that LSI has executed in its history, the China office helped LSI get 1100 drawings completed in 6 weeks, as we were literally working on drawings for 24 hours a day for weeks on end. The US would mark up drawings to send to China, and the guys in the China office would make the edits and have them back in our engineer’s inbox when they came in to work in the morning. We would not have been successful without Hansen and crew.
I must admit that if I hadn’t gone to visit Hansen and his people, I am not sure I would have the true appreciation for what they can bring to a multi-national client. I am thoroughly convinced that we have yet to scratch the surface of what value we can deliver in China. I am excited to see the business grow each time I visit.