MELCHERS CHINA CEO IN DIALOGUE WITH MADE IN CHINA PODCAST – PART IV
Topic: How do you support companies to be successful in China, as a distributor, service partner, joint venture partner or the like, and what kind of cooperation is suitable when?
(Our CEO Anton Melchers has been interviewed for the Made in China Podcast to talk about his personal journey to China, the history of Melchers and business in and with China. This is part IV of the series.)
Anton Melchers: We are classically the agent or distributor for companies from abroad in the market and do the classic market development of marketing, sales, and after-sales services, that is where we come from. I would say before Covid, that was a model that has certainly come under pressure. The middleman for the strategically important Chinese market was certainly not a model for the future. Perhaps we need to look at this again against the current background but going into joint ventures is definitely a path we have taken, and one that has been intensified and implemented in recent years before Covid.
We have set up a sales joint venture with a manufacturer from Europe, in this case even a 3-party JV, i.e., with a Chinese distributor, the German manufacturer and us, and this sales JV works the local market. This is an interesting model because it brings together the strengths of different partners. The Chinese partner has the distribution network, the German manufacturer has the product and the brand behind it, and we are the hygiene factor that ensures that the interests of the majority owner, in this case the German manufacturer, are safeguarded here in China. In other words, the other JV partner, even though he is in the minority, is not free to act here in China, but is presented with certain requirements. We do this by providing the legal person responsible, i.e., the person who signs and stamps here in China, but also by taking care of the bookkeeping and human resources to really ensure that everything works in the interest of the majority owner from Germany.
This is an exciting model, which in my view is totally viable for the future, regardless of whether Covid, or cuts of a different nature, become stronger or less strong here, because the different strengths are really brought together. And I also believe that China is fundamentally so important when a company decides to go to China that you must deal with this market yourself. But when you work this market yourself, you very quickly face challenges in the whole area of administration, and then you should perhaps try to focus on what you can really do, what you are strong in, i.e. the product and sales and marketing, and then perhaps work with a partner, for example Melchers, in the area of corporate services.
There are various possibilities. You can also form a 2-party JV that you only have with the manufacturer, there are also examples that we are currently initialising but also started many years ago. But that means that the market must have a certain relevance. I wouldn’t blindly recommend this to everyone if you want to work in the market from 0 to 100. You can then start in another way, with companies like Melchers or other local partners who work in the market as distributors or agents. Or you can first call in a consultant to do a market study, so to speak. To a degree, we can also offer that.
For further reading of this podcast – Part III: Melchers is represented throughout Asia. What is the future strategy with your customers? China Plus One has been mentioned a lot lately. Are Vietnam, Singapore and Thailand, where Melchers has also been represented for decades, benefiting from China’s current crises?
