When sharing IP is a good idea21st May '16
Continuing the Routes to Growth series on trading with Asia, Tracey Boles meets an engineering company exporting hardware and know-how for the car industry
Company: Grainger & Worrall Trading in: China Sector: High-precision casting
Loss of intellectual property is sometimes seen as one of the hazards of working in China, but it can be good for business.
This surprising view comes from a British engineering company successfully exporting prototype castings and expertise for propulsion systems.
Family-owned Grainger & Worrall, a high-precision casting specialist, generates 8-10 per cent of its £50m annual sales from exports to China.
“Communication is always challenging. Yes does not necessarily mean yes”
Known for its work with performance and Formula One cars, the Shropshire-based company uses rapid prototyping to bring concepts from the drawing board to production.
Elements of design and manufacturing are sometimes transferred when it exports its wares. However, the engineering firm views such loss of intellectual property as a quid pro quo for generating new revenues, which can be reinvested in fresh ideas.
“It is not something you should be scared of,” says Edward Grainger, its managing director and the youngest of three brothers in charge.
Grainger & Worrall’s products and services are popular with Chinese manufacturers of automotive original equipment (OEMs), which make parts for other companies.
Its exports to China include prototypes in various stages of production, from complex castings ready for processing to fully-machined engine assemblies set for completion.
Grainger & Worrall creates prototypes for 300-400 new projects a year, with the car industry accounting for 70 per cent of its Chinese sales. After a five-year push, it does business with five out of the top 10 automotive OEMs in Beijing, Shanghai and Changchun.
The company is undeterred by the recent cooling of the Chinese economy. “It is coming into balance, like other mature leading economies,” Grainger says. “The scale of the opportunity is still significant."
To tap into it, long-term, trusting relationships with the right people are fundamental. Representatives from the company visit several times a year.
Grainger & Worrall has three Chinese agents in the country to help with communication in the broadest sense. This involves understanding the culture as well as the business environment. “Communication is always challenging. ‘Yes’ does not necessarily mean yes,” he says.
The firm’s entry has been further helped by the appointment of an export administrator who is half Chinese. Scully Ya-Wen understands the subtleties of Asian culture and acts as a bridge between the company and its customers.
Grainger & Worrall has also benefited from the support of the Department for Business, Innovation & Skills and UK Trade & Investment (UKTI). They have helped open doors, and advised on strategic export controls and training.
Even with a range of expertise on hand, there have been hurdles to clear. Marketing in China, particularly online, was a steep learning curve for Grainger & Worrall. Its first website encountered local restrictions.
Showing a company’s location on Google Maps, for example, could mean the ‘contact us’ page may not be shown successfully. Equally, video hosted on YouTube will not be shown in China.
Hiccups aside, Grainger still regards China as a glittering prize for UK engineering firms that are globally competitive – and with good reason. China has helped his company lift exports to half of revenues – up from 10 per cent a decade ago.
But British companies should never expect instant results. “Nothing happens quickly,” says Grainger. “You need to view it as a long game.”