Made in China – and now sold there, too15th Jun '16
Continuing the Routes to Growth series on trading in Asia, Andrew Cave meets an old China hand plugging new opportunities in the country’s fast-expanding hotel sector
Company: TeleAdapt Trading in: China and Singapore Sector: Electronics
For nearly 20 years, TeleAdapt has made its power adapters, chargers and Wi-Fi connectors in China. Now it is waking up to the country’s potential as a market for selling them.
“I guess I could be regarded as an old China hand as we have been manufacturing through contractors in the Pearl River Delta for two decades,” says chief executive Gordon Brown. “Yet our first dozen years in China essentially used it as a low-cost manufacturing base to service Western markets.”
TeleAdapt, formed by Brown with £5,000 of capital in 1992, now has a turnover of £10m, supplying specialist products to hotels for guests’ internet, power and media needs. With headquarters in Watford, it has 70 employees worldwide and operates in Hong Kong and Singapore as well as China.
“China retains its capacity to surprise, but you have to be there if you are in our business”
Its biggest market is the US and China currently represents less than 5 per cent of its sales, but Brown sees it becoming ever more significant with time.
“We have established a Wholly Foreign Owned Enterprise (WFOE) allowing us to market and sell in the Chinese domestic market, and that has been very successful,” he says.
“We see China as offering two opportunities to British companies – as a low-cost manufacturing base and a major market for sales expansion.”
TeleAdapt sells exclusively to hotels and the number of them in China has multiplied over the past 20 years. But because many hotels are not run by the big global groups, sales growth has to be managed carefully.
“The Chinese hotel market is huge and still growing,” Brown says, “but the investment required is a major barrier as it is such an enormous country. China eats up time. It takes time to build relationships with local partners and networks and the country has changed significantly.
"We have an office in Dongguan with a Chinese sales manager who is focusing on the Western hotel brands growing there. The big hotel groups want established suppliers with strong standards and brands – which we deliver – but there are a lot of local operators and that market is tough to break into.”
One example is Changping, a town the size of Coventry in the Pearl River Delta Economic Zone, China’s main electronics area. When Brown first visited it 20 years ago, there was only one hotel. “Now there’s a choice of 15 to 20,” he says. “But they’re mainly local brands. Western brands haven’t reached Changping yet.”
TeleAdapt’s Chinese local workforce has also changed. When it started, the company supplied dormitories for contract manufacturing workers, typically aged about 25. Many still work for the contractors but now have families, homes and cars.
Brown’s travels have also become more routine: “When I first went to China, it was an adventure. You really felt you were on your own behind the bamboo curtain.
“You basically disappeared for a few days and told the office you would get in contact on your way home. Now there are multiple ways to stay in touch and many more people from the West, but you still have to be always prepared for the unexpected.
“China retains its capacity to surprise, but you have to be there if you are in our business and that is only going to become more important."