John Davies, Managing Director at TDSi discusses Exporting UK Technology to China.
“In terms of the trade deficit, the UK will always struggle to tip the balance in its favour with China. With well over 1.3 Billion people (a staggering 19% of the world’s population) any nation would be hard pushed to successfully tap the full opportunities of such a vast potential market. However, the answer for many companies looking to export to China is to find the perfect niche and to build towards a commanding market share
“China deservedly has a reputation for being one of the key manufacturing centres for the global market. Producing a huge variety of different manufactured products, whilst in contrast, the UK has a relatively weak production output. However, whilst Chinese businesses are superb at offering high-volume wide-market goods, the UK is finding avenues through more specific products. At TDSi we have not only made significant inroads into the Chinese market, we also do so with products that are designed and built in the UK as well.
“But what is it about UK products that tempt a savvy Chinese market to sit up and take notice? We believe it is partially down to the quality perception of British goods. Customers in China recognise the well-deserved reputation that UK goods have for quality. Whilst their local suppliers can offer you the cheapest, this doesn’t always equate to the best value for money. The Chinese security market wants quality and products which are the result of cutting–edge development – and it is willing to pay a premium for the best.
“So why would Chinese buyers specifically look for non-domestically produced products? We believe it has a lot to do with the expectations the market has. The Chinese regional market has become a massive one, not just for producing and selling goods for local buyers and exports, but also in terms of needs inherent in a country which is growing quicker than ever envisaged. In our experience the market will often pay 15-20% extra for products people believe will be better quality and more reliable. Reliability is a popular attribute in China, as much as anywhere else. If an item fails to deliver it’s a bad investment, so looking to pay the very lowest price all the time is often seen as a bad move.
“Having a reputation for reliability is a key selling point. We have a long standing relationship with several Chinese and specifically Beijing-based, telecoms companies that our products. After over 16 years of faithful service from our solutions, these customers regularly repeat buy from us – it’s a great example to take to the marketplace and has proven to be very well received. The Chinese security industry is a close-knit one, with many key people knowing one. These professionals understand security needs and look for the very best to protect their organisations, rather than trying to save a little bit of their budget on cheaper/inferior alternatives. Having an excellent reputation for quality is often more valuable than simply trying to raise your profile in a sometimes overcrowded marketplace.
“This year we are marking the 20th anniversary of TDSi selling to the Chinese security market. Of course we haven’t reached this milestone alone. We realised very early on that any manufacturer in the security industry needs to be paired with the best local partners to truly penetrate any market. It’s the case in the UK and especially important in China. As the market has grown so have our partners and our reputation together. Naturally this also attracts the best local security industry talent and I believe that in combination with our own determination, investment in technology and product development, this has greatly added to our longevity in the Chinese security market.
“Because of the nature of our solutions and the market we operate in the volume of products, compared to a mass consumer market, is quite low. In terms of economies of scale it still makes sense to manufacture in China, but for smaller numbers it is very competitive to produce in the UK. Equally, we sell to markets around the world so producing in the UK near our Head Office and distribution centre in Poole makes a lot of sense from a logistics point of view. We can manufacture items and send them to wherever they are required very rapidly. Also, in the case of selling to China the goods don’t have to be shipped to the UK from a Chinese plant, only to make the return journey once we have sold them!
“We believe our success in the Chinese security market could be an important example for many businesses looking to sell into the country.
“Rising labour costs in China have made a huge difference to the feasibility of selling UK made goods into the local marketplace. Equally it is possible to take advantage of the positive reputation of UK manufacturing to export well-targeted and high quality products. By finding the right local partners and being sensitive to the needs of the Chinese market there is no reason why UK businesses can’t win a good share of one of the biggest markets in the world.”
John joined TDSi in 2003 when it was owned by Norbain SD Limited and led the management buyout in February 2005. TDSi manufactures electronic access control and integrated security systems.
John is active with the BSIA (British Security Industry Association) having been Chairman of the Export Council and is also an industry representative on the Security Sector Advisory Group (SSAG) for UKTI DSO.
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