Case Study 2 - Offshore Trading with China
Company B - Quick Access to Additional Capacity

Company B remains a relatively small UK based manufacturer of high quality cabinet furniture.

Based on the excellence of its design capability, by the beginning of 2001 the company was generating more orders than it could produce via its UK factory.

Anxious to accommodate interest from a large prospective retail client, Company B asked John Mott, the founder of Business Bridge to China, to find a Chinese manufacturer capable of meeting Company B's demanding quality standards plus the equally demanding leadtimes of its retailer client.

It has to be said that, in issuing the brief, Company B was highly sceptical on both counts.

However, a potential manufacturing source in China was quickly found and put to the test.

A set of technical drawings for one piece of furniture (a coffee table) was sent to the Chinese factory. Including the time taken for shipment of the technical drawing to the factory and for the translation of same, this was turned into finished product within three weeks.

Based on the high quality of this initial sample and the speed of turnround, the somewhat surprised owner of Company B agreed to visit the Chinese factory with John Mott in July 2001.

Whilst the manufacturing technology employed by the factory was fairly basic, the owner of Company B was immediately impressed by the Chinese company's ability to invest in significant amounts of hand work - an approach that ensured a wonderful finish and appearance to the furniture they were making (one that is no longer affordable for companies attempting to manufacture product of this quality in the higher wage economies of Europe).

Based on product quality and attractive cost structures, the scope for a 'meeting of the minds' was immediately obvious to all of the main parties.

Company B agreed to set about the task of designing a complete new range that it believed its prospective new customer would like. The Chinese factory subsequently completed a full range of samples in approx. four weeks - in time for a factory visit from Company B's customer scheduled for September 2001.

The factory was approved by the retailer and a deal to buy the new range was concluded on the spot - subject to the first container load of finished product being ready for shipment within just three weeks.

John Mott then negotiated a supply contract on behalf of Company B and, in conjunction with his Chinese staff, controlled the manufacture, quality, and shipment of the products.

The first container load of furniture was shipped within the three week deadline, and thereafter the factory geared up to producing one complete shipping container per week.

Since that time a second complete range of cabinet furniture has been designed and made for the same major customer in the UK.

All shipments for both ranges were made on time - and no manufacturing defects have been reported in respect of either range (either by the retailer or its customers).

Quick access to a reliable source of additional production in China allowed the owner of Company B to contemplate the servicing of a major new customer without piling additional pressure onto his already stretched UK facility and without compromising the high quality standards that had always been his trading hallmark.

Company B therefore provides a good example of how Chinese production can provide short term flexibility and/or additional long term capacity without necessarily threatening an established UK manufacturing base - and, if handled via Business Bridge to China, how additional offshore capacity can be brought on stream without making any significant demands on the time of the UK company's management.