How to clean up in China18th Feb '16
Petrol is still used as a cleaner in China. Now the country is seeking safer products, which is good news for UK companies, says Chris Price
Company: Arrow Solutions Trading in: China, South-East Asia, Russia, the Middle East Sector: Specialist chemicals
“China is improving health, safety and environmental standards. That’s where we come in.”
Founded in 1968, Leicestershire-based specialist chemical manufacturer Arrow Solutions is part of a £25m-a-year turnover company with around 250 staff. It has just set up a Shanghai operation. Sales director Jonathan Lane explains how it happened.
How did the move come about?
We started looking seriously at China around 2010. Over the past few years we have developed a number of clients in the country, so last year we decided the time had come to put our own wholly-owned subsidiary in place there.
It is important to have a presence in China. It allows us to engage far more easily with customers – in their time zone and their culture – as well as trade directly with any customer.
Our customers also see we are serious in our commitment to the country. Without that level of credibility, we cannot access larger potential business, especially state-owned enterprises.
It involves setting up a trading business, but in our case we require a dangerous goods trading licence, which is a bit more difficult. We are setting up our business in the Shanghai Free Trade Zone and this will allow us to trade across South-East Asia and into China.
Can UK companies capitalise in China by producing better, safer goods?
China is moving up the value chain and away from lowest-cost manufacturing. As a part of this, and also for social reasons, China is improving health, safety and environmental standards. That’s where we come in.
Who are your clients in China?
As Arrow, we make a wide range of professional cleaning products. Our focus in China is mainly in the industrial sector. That includes aerospace and other engineering companies. We are also starting to collaborate with the oil and gas industries, and we supply several rail and metro systems in China.
How has industrial cleaning in China changed since your arrival?
Legislation in China is moving much more towards health and safety, but petrol is still widely used for cleaning in some industries. Of course, it’s a terrifically bad idea. There was one incident where petrol vapour had gone up the sleeves of a guy’s coat and when he had a cigarette break he set himself on fire.
Similarly, a major oil company was using petrol in a dip tank for cleaning components and had a fire that damaged the building. We helped them design a new ultrasonic tank system using our product and they’ve been trouble-free since, as well as achieving better cleaning.
How easy was it to set up your business in China?
It’s now very difficult to get a dangerous goods licence in China, especially since the events in Tianjin [in August 2015 a series of explosions from a container-storage station handling dangerous chemicals at the port killed more than 170 people].
In fact, we did initially look at that site as part of our logistics solution but discounted it because we didn’t feel it was up to scratch. Instead we chose Shanghai.
Is your Shanghai operation running yet?
We’ve got a small team getting everything set up, ready for our official launch at the beginning of Q2. It’s mainly sales, marketing and sales support staff who will be based there. There will probably be around 10 staff as the company matures over the course of this year, but we have big plans for the business.
We already have warehouse operations in several countries including Russia and the Middle East and we have overseas staff in those countries, too. But our base in Shanghai is the first wholly-owned separate entity outside the UK.
Do you see an international shift in your business?
Currently around half of our business is outside the UK and we expect that to increase significantly in the coming year, with around two-thirds of our business predicted to be outside the EU by 2020. However, the manufacturing of the cleaning products will remain in the UK.
You must spend all of your time travelling…
I currently spend around 100 nights away from home, visiting sales staff, distributors, customers and suppliers in other countries. I probably spend at least 20 days a year in China.