Manufacturers seek to raise US worth, profile(2)

East meets West

Chang Liang, chairman of Aland, a Jiangsu-based nutritional supplement company, also said quality is his company's primary focus. Starting as a domestic bulk drug producer, his company in 2007 began its transition to a nutrient producer and sought to acquire a US company to tap the US market.

In 2010, Aland successfully acquired International Vitamin Corp, a US nutritional supplements manufacturer. In just three years, the company's sales almost tripled and no employee was laid off because of the buyout.

Chang said a major reason for the company's success is its products passed the certification of US Pharmacopeial Convention, an authoritative third-party certifier. So far, Aland is the only Chinese nutrient company to receive that certification. Now IVC's products have entered many major pharmacies across the US.

"What Chinese companies usually have is strong manufacturing and R&D capability," Chang said. "US companies usually have exceptional management. We combined the two."

Chang said Chinese companies have different perspectives about quality control. "Take mug making as an example. Chinese companies only care about the finished product. On the other hand, Americans also care about every step of the manufacturing process. In this respect, we have learned a lot from them."

Of course, in Chinese manufacturers' crusade into the US market, there is inevitably fierce competition, sometimes, even dirty tricks. Dong from Smal admitted she has encountered many local battles.

"Transforming from an ODM supplier to a brand owner means you are turning your previous clients into direct rivals. And they will fight back," she said.

At first, according to Dong, one rival claimed her products had patent issues. After failing to find evidence of that, he tried to discredit Dong by calling her buyers and saying he would file a patent infringement lawsuit against her. Having applied for all her patents in both China and the US, Dong replied that she would sue him in China if he sues her in the US.

Her rival eventually gave up.

"My principle is, I will not bother you if you don't bother me. To grow, I need a peaceful environment," Dong said.

But more often than not, Chinese manufacturers find enormous opportunities cooperating with talented people and US businesses. Many Chinese companies in the US hire most of their employees locally.

"It is impossible for a Chinese company to run a US business without a professional local team," Dong said. "You would miss out on a lot of information without them. And in many areas like legal and customer relations, Chinese ways of tackling problems do not apply here."

Chang keenly felt this at the beginning of running his US team. At the end of the first year after Aland acquired IVC, he wrote in a draft letter to his senior US executives: "You worked hard this year. Your working result is well."

"You should not say that in this way. Otherwise, they will not understand," one of his colleague, a Chinese who had lived in the US for many years, said after reading the draft.

"You should tell them explicitly that they did not meet their targets, and the board of directors is very upset about that. Put it more clearly: 'You will be out of here if you do this again next year'." his colleague said.

'Made with China'

Besides creating jobs, Chinese businessmen said their largest contribution to the local market is still their products.

By directly establishing distribution networks in the US, they get rid of several stages between the factories and the stores, thus saving the markup in the process. This has ensured their profit margins while offering local consumers a fairer price.

Cao from Taotao said by getting rid of the distributors and building his own sales network, he successfully cut retail prices by 10 percent and improved his profit margin.

His US customers also enjoyed the benefit. The ATVs he sells use an average $100 less in gasoline than an average car, which made the products very popular with young people in cities such as Las Vegas.

"I think the concept of 'made in China' has been discussed too much, as if China is the only beneficiary. In fact, in this globalized world, 'made in China' actually is 'made with China'," said Song Ru'an, deputy consul-general of China's consulate in San Francisco.

Asked what she hoped the Chinese government could do for her company, Dong smiled: "Of course we like subsidies and a lower exchange rate. But I would be more glad to see more government overseas branding of the concept of 'made in China'. A positive image is so important for us."