Cheap imports can end up costing money and reputations. The key is to find good suppliers – and that takes research, effort and money.
| Entrepreneur |
Robert Date, Managing Director |
| Company |
Welling & Crossley |
| Business type |
Import, manufacturing, distribution |
| Founded |
1926 |
| Employees |
45 |
| Head office |
Melbourne, Victoria; Sydney, Brisbane and Perth |
| Contact details |
+61 3 9398 0855 |
Key Learning Points |
|
Product selection
Look for products that fit existing operations. Have distribution channels in place before importing. Choose products that will integrate smoothly with your distribution network.
Product quality
It is better to pay more and get a better-quality product. Test products thoroughly before purchase. Constantly maintain and improve product quality.
Business communication
Make sure that you know who you are dealing with in overseas markets. Are they the business principal or an agent? It is often best to avoid dealing with agents. If sourcing product, deal directly with manufacturers.
|
The Welling & Crossley Story
Overseas alliances are central to Welling & Crossley’s growth strategy. It is not hard to see why. The company imports about 65% of its raw components, including diesel engines, petrol engines and alternators. The firm has two main business areas: fire sprinkler system components and electricity generating sets. The generators range from portable camping machines with power for lights and a television to turn-key installations with enough power to light a small town or a multi-storey building. Welling & Crossley has succeeded in exploiting its niche markets by sourcing components from countries such as Brazil, South Korea and more recently, China. The allure is price.
Welling & Crossley’s managing director, Robert Date, says: “We get power points for our portable generating sets made in China, for example. They cost $6 in Australia; they cost 50 cents there. Purchasing components overseas allows us to be extremely competitive.”
A strategic overseas partnership has allowed Welling & Crossley to compete with multinational firms such as Caterpillar and John Deere in supplying diesel engines to the fire sprinkler system market. In 2000, the company allied with the South Korean manufacturer Daewoo, enabling Welling & Crossley to import a range of diesel engines. As a result, Date says his company now has by far the largest market share in the domestic fire sprinkler engine supply market.
To find overseas product suppliers and partners, the hurdles of unfamiliar business cultures and languages must be crossed – and that calls for legwork and persistence. Date says: “A lot of it is a grind. You have to meet many people, buy many samples, test those samples. It’s networking, attending exhibitions, walking up and down corridor after corridor, seeing nothing, coming away depressed, then going back the next day and doing it again.
“The most important thing that we’ve learnt is to look for things that fit what you do. Look for products that fit your distribution network, look for things that can substitute into products that you make at the moment. At trade exhibitions, you see thousands of products that could sell to Australia. But even if the price is right and the quality is good, how do you get it to market?
“We are not looking to set up whole new businesses,” Date says. “Our philosophy is to creep along, cut our costs, focus on being competitive in the products that we do now and then add extra products to that same distribution network.”
Welling & Crossley has had to learn by trial and error about overseas business relationships. Date says: “When you’re in China initially, you meet a lot of people who say they can do everything. Really, however, they are agents and you are not dealing directly with the manufacturer. The trouble is that if the agent falls out with the manufacturer, then they fall out with you.
“In one case, we were dealing with an agent who had registered their business name in the same name as the company we thought we were dealing with. The person fell out with the company but kept the same name and then started to supply us with product from a different manufacturer. We needed to get back to our original supplier and we didn’t even know who they were! It took us eight months to solve that problem and during that time we had trouble supplying our customers.”
In August 2003, the company hired a China sales representative, Helen Chen, who is based in Wuhan. She now does all the company’s purchasing in China, ensuring that Welling & Crossley has a local person with excellent English skills who can deal directly with manufacturers.
Date says products must be carefully tested and there must be a strong commitment to research and development. “You can afford to pay more for a better product. Maintain that quality. If the product no longer meets the standard, solve that problem immediately. The cost of rework in Australia will kill any advantage that you may have gained by buying at the right price. It’s so important to be putting new products into the marketplace or constantly improving existing products. Your competitors will catch up quickly.”