34 doing business with china
Kosnic couple sheds light on a complex market
For a UK company trading with China, Kosnic’s best-of-both is a winning formula. The Newbury-based lighting company is unique in that it manufactures in both countries, drawing on the respective strengths of each. Carry de la Harpe met with founders Dr WenTao Kuang and Ying Hu in the specialist light of the company’s demonstration room
The winning-combination theme carries through to the founders. Co-managing directors Dr WenTao Kuang (product and technology) and Ying Hu (commercial and operation) are not only husband and wife – and UK citizens with China as their country of origin – but with his strengths in design and technology and hers in management and innovation they also make a powerful business duo.
The story begins with Kuang’s father sending him to the UK for a western education, where he obtained a degree in engineering and a PhD in robotics from Sheffield University. Hu came later to join him and studied an MBA at Hull University. After graduating, Kuang began a career in engineering, but the couple always wanted their own business and, as Kuang’s father is a manufacturer of light bulbs and lamps in China, lighting was the obvious choice.
Starting just with distribution in 2004, Kosnic has doubled its turnover almost every year since, and is now a leading designer and manufacturer of light bulbs, lamps and luminaires, and an established expert in LED technology.
With this proven track record, and insight into the workings of both the British and Chinese markets, the couple is particularly well placed to advise Thames Valley businesses considering trade with China.
“First of all,” they say, “you want to be selling rather than buying. And a UK company moving to China needs to aim at the middle and high-end of the market. There’s no point going into the low end – the Chinese already have low cost products.”
“The industries worth moving
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our design to a lighting manufacturer. We’ll outsource instead to an electronics manufacturer for example. We have the parts manufactured separately and then assemble ourselves.”
Rising labour costs are also an issue. “Yes it’s my pain all the time,” says Kuang with feeling. “It’s why China is no longer competitive in some markets, and why we have to shift to medium to high-end products. It’s not in our interest to fight into the bottom of the market.”
into are services, design and luxury consumables,” says Hu. “There’s a huge consumer market – and a lot of people have the money but can’t get the quality. That’s why so many tourists come to the UK – to shop.
In China
they pay double or even triple the prices for the same goods.
Here Kuang emphasises the importance of trading online: “Ecommerce there is much bigger than it is in the UK. People are far more accepting of Internet shopping … but they don’t trust individuals on websites, so you’re forced to use the big platforms, like Jingdong for example which is the Amazon equivalent.”
“Social media also has much more influence in China than in the UK,” says Hu. “The Chinese are brand conscious and followers. They are not independent thinkers. We don’t want to be out of the box, we want to be in the box. So friend recommendations are taken very seriously and social media is an extremely important part of promoting high-end products. Price is not the issue, but the reputation is very important and British products have a good name. Dyson, for example, has suddenly
become quite the thing in China, seemingly from nowhere.”
For UK companies wanting to import from China, the couple says control is a big issue – you need to manage every part of the process. And you can’t buy a product at a good price and not worry about the reason. “The Chinese will make whatever you want,” says Kuang. “Ask for a product to be made for 50p and they’ll make it for 50p, but they’ll cut the corners they have to cut to do that.
If you want to buy
from China, spend the time, put in the effort.”
Asked how to overcome quality issues, he states simply: “Check every one.” At the office in Shanghai, Kosnic goes right to the level of checking individual components to make sure it can deliver with confidence. “That’s the degree of attention you need.”
Companies choosing to manufacture in China will also face the issue of copying, admits Kuang. The quality of patents is bad, so it’s very easy to obtain one, but then very hard to protect it. But as with every system, there are ways around it. “That’s why we don’t outsource
On delivery, it’s good news and Kuang believes turnaround time is faster in China than the UK, saying it’s a very efficient nation in terms of making things – people gear up very quickly. Shipping is five weeks on the water, and Kosnic has a regular weekly airfreight slot for more urgent orders.
Speaking on general issues, Kuang points out that in China everything is shades of grey. In the UK ‘yes’ means: ‘I understand, I can do it and it will happen’.
In
China, it means: ‘That’s the best case scenario and I’ll try’. This means there are more holes in the agreements, but there’s also more flexibility and forgiveness.
If the couple were starting a business now, would they do it again? “We wouldn’t do any of it right now,” says Hu. “It’s really hard.” and they both laugh. “I think we caught very good timing for LED technology; we were there just as it took off. But that’s just this industry.”
So it might be too late for lighting or similar markets, but Kuang and Hu’s advice – to sell and to aim for the high end of the market – is likely to be another winning formula.
Details:
www.kosnic.com THE BUSINESS MAGAZINE – THAMES VALLEY – SEPTEMBER 2015
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