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doing business with china 33 Moving into China takes a champion


For a business delivering invisible functionality, Abingdon-based P2i is well and truly making its mark. Set up in 2004, its nano-coating technology already reaches into 18 countries over five continents – a success story that can be attributed to its steps into China, and to the champions who’ve invested their time cementing those steps. Carry de la Harpe met with COO Peter Rankin, P2i’s crucial man on the ground


To demonstrate the technology, Peter Rankin produces two identical-looking tissues and drops some liquid onto each. The liquid on the normal tissue behaves as expected, but on the coated tissue, like magic, it literally beads up and rolls off.


The technology is a spinoff of an investigation into liquid-repellent nano- coatings to protect soldiers’ uniforms from chemical attack. The research, conducted by the company’s CTO Dr Stephen Coulson at the University of Durham and then the MoD, resulted in a gas-based process that puts down an ultra thin polymer film, 1,000 times thinner than a human hair, and can protect an entire product – inside and out.


This cutting-edge science had huge commercial promise, and P2i’s story is one of vision and passion, taking this unique breakthrough to the mass market – through footwear, to electronics and hearing aids, to mobile phones (currently its largest market) – and making it the world leader in its field.


With China heralded as notoriously difficult to break into, P2i made its entry by integrating its technology into a western brand with high-volume manufacturing.


Rankin explains: “Initially we got into the market through major customers like Hi-Tec, which already had manufacturing in Asia and China, and we worked with them for many years coating hundreds of thousands of shoes. As the company has developed we have done more and more business directly with Chinese companies, but initially it was through western brands.”


While this was without doubt a helpful start, he illustrates that it was by no means a short cut. “You’re supplying a US brand that’s subcontracting to a manufacturer in China, and they say, ‘You need to work with that manufacturer’. So you do get the introduction, but you then need to develop that relationship very quickly and build that trust. You also have the challenges of how to get the operation out there.


THE BUSINESS MAGAZINE – THAMES VALLEY – SEPTEMBER 2015


“It takes a huge amount of knowledge, know-how, skill and time to be able to integrate into the mass market.”


In his first two years in the role, Rankin spent 85-90% of his time in Asia, coming home for a week every couple of months. “But it does pay big dividends,” he adds. “Now I set out to China about once a month for a week or so, but initially it required a lot of investment.


“The Chinese want to see that you’re completely engaged and that you’re a trustful person before they’ll open up to you, but the great thing about China is that when you’ve got that relationship the invisible barriers come down and you can move mountains. Before that you’ll get stuck in the mire of bureaucracy for days on end.


“Any company moving into China needs a champion – someone on the ground who can spend a lot of time there, working with the key people and building that all-important trust. That’s without a shadow of a doubt going to help you more than anything else.”


The next essential, says Rankin, is local people. “You do need local people on the ground that you can trust, just navigating the complexities and bureaucracy of the system. And finding that local person, who also understands the western viewpoint, is really challenging.”


In 2011, P2i set up its own WOFE (wholly-owned foreign entity) in Shenzhen and appointed a GM. It got its licence in 2012 and opened up its own subsidiary, and today the company has 30 people employed there and works directly with Chinese businesses.


On business etiquette, Rankin says: “The Chinese are used to dealing with Westerners now, especially in the big cities, so they accept most practices. But I’ve learned so much,” he smiles. “The yes-no issue is possibly the most important. The Chinese will say ‘yes’ even when they don’t understand. So you have to do a lot of circling around to make sure the understanding is there


– and it’s essential you do this without creating any embarrassment.”


Asked about intellectual property and the risk of copying, Rankin says: “If your technology is successful, it’s inevitable that it’s going to be copied at some point; you can’t avoid it. Where P2i is comfortable is that we have a huge R&D team here and we keep ahead of the technology.


“Also in China we provide technology and a coating service, rather than manufacturing, so for us it is not a direct threat. Nevertheless, we’ve protected our IP very carefully – we’ve got 173 patents in 65 patent families.”


Another issue is rising labour rates but this, he says, is sector specific. “It depends on the skill that’s required for that particular product. With a low-skilled product, manufacturing is more prone to chasing the cheapest labour, which is now moving to Vietnam and Malaysia. There’s more stability in electronics say, than the lifestyle industry.”


Rankin speaks warmly of China in every respect: “I have formed very genuine friendships there. They are fantastic people.


It’s almost a stronger bond than


you have with colleagues and suppliers in the UK where relationships are more formal and people are quicker to turn to contracts. (As soon as you turn to the small print there you’re starting to put up barriers.) Business is much more forgiving in China … but, as with everything, that’s only as long as you’ve earned and won that crucial trust."


Details: www.p2i.com www.businessmag.co.uk


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