Member Article

China in focus

During the 1990s, Gordon Styles oversaw the rise and eventual sale of Middlesbrough-based Styles RPD – one of the first rapid prototype businesses in the UK. Today he owns and runs Star Prototype; another rapid prototype business, which is based in the rather more exotic climes of Zhongshan in China. He talks exclusively on Bdaily about the different challenges he’s faced as a business owner in both China and the UK.

Relocating from the UK came about as a result of a business I was involved in at losing all of its orders to China in a very short space of time.

In fact, the Rotherham-based company, which I set up after the sale of Styles RPD, ceased trading after a little more than a year on the basis that our Chinese competition could do the same 5-axis CNC machining for 15 per cent of our price.

As a result I set my sights firmly on China. And, after some serious research, I set my course for China; arriving in the country in July 2005 armed with an ‘if you can’t beat them, join them’ attitude, a modified version of the business plan I’d used for Styles RPD in the 90s, and £5,000 in cash. My aim being to not only join them, but beat them.

I’ve now been here for eight years and am totally immersed in the country. I speak the language, my wife is Chinese and the culture and way of life is now very much my culture and way of life.

That said, Britain will always be home. My children and extended family live there, and my interest in its affairs are as keen now as they’ve ever been – in fact I went as far as spending £10,000 of my own money on an advert in the FT last year, which highlighted my ten point plan for fixing the economy, but that’s a different story. Today’s focus is what does a man who has operated successful businesses in both Britain and China have to say about the two experiences?

The first, and most obvious difference is language. When I first arrived I felt as if the ground moved beneath my feet many times each day. It was a horribly unnerving and surreal experience and one that I never quite got to grips with until I had learned Mandarin.

I am now entirely comfortable in China and therefore it’s easy to look at business culture in China and draw direct parallels between it and the UK.

Interestingly, there is a lot of fraud (graft) in China. In fact the extent of the problem is such that you need to have checks, balances, and controls in place within your company that I would simply never have considered in the UK.

The Chinese are though amongst the most committed people I have ever known and their attitude towards work is a joy to behold – especially amongst younger people. The average age of our local workers is about 26, and they are a delight. The young men are exceptionally friendly, and the young women often link arms or hold hands and skip to the canteen. Something I’m certain I never saw in all my years in Middlesbrough.

China also benefits because of its stable economic growth, which is in part due to their total control over banking. This stability has resulted in massive investment in public infrastructure; and widespread availability of finance for industry and manufacturing. All of which is further enhanced by the level of professionalism and lack of political corruption in Beijing’s central Government.

In addition, China is one of the fastest growing emerging economies and benefits from comparatively low labour costs, which gives it a natural commercial advantage over the USA and Europe.

Admittedly, the amount of legislation and bureaucracy you face in China is certainly challenging, and at first glance it does seem excessive. But when you look at some of the controls it has in place, it’s fair to say a lot of them would significantly benefit the UK.

For example, companies cannot move money in and out of China at will. The State Administration of Foreign Exchange (SAFE) ensures that you must present customs declarations to the value of all incoming money, and invoices for all outgoing money.

In contrast, the UK has suffered immensely as a result of companies, in particular banks, doing whatever they wish without any proper professional regulation. I often hear UK business leaders complain of red tape, and yet there is such a lack of regulation in the UK that it is a recipe for disaster. Take the audit exemption rule; if you have less than £6.5m in sales, assets less than £3.26m, or fewer than 50 employees, you are not required as a UK company to do an audit. What kind of nonsense is that? Surely that is virtually encouraging fraud.

Another interesting comparison to make is the different attitudes towards debt. In the UK debt is a way of life. For example, virtually half of the money I made selling Styles RPD in 2000 went on repaying the borrowings that funded the business and kept it operational. In contrast, STAR has never been in debt. We make our money, pay our bills upon receipt of invoice and expect the same from those we deal with.

The UK’s seeming reliance on debt actually brings us full circle and back to the question of stability. In the UK so many businesses are teetering on the edge, even those who outwardly appear successful, because of the debt they are burdened with. All it takes is for a bank to pull its credit facilities or a few more customers to add 30-days to payment terms and they will topple.

What this means is that many overseas businesses are put off dealing with British businesses as they fear for their stability and longevity.

As a British businessman I want Britain to be successful. I want it to reach its former glory. I want it be called Great Britain for a reason. But today it is struggling to compete. Yes, there are still great British success stories, companies that do the country proud by leading the world in what they do. They are though the exception rather than the rule.

Having worked in both China and the UK, I firmly believe that China has the right idea. It encourages its businesses to thrive, but at the same time has a firm grip on how they are governed. It has an honest, some may say innocent, approach to business, which allows the best to prosper and is slowly and surely clamping down on those that have previously tarnished the country’s reputation.

China is a tough place to do business; of that there’s no doubt. But opportunities abound, and for those who are willing to put in the hard work the rewards make it all worthwhile. In contrast, the UK suffers because of a lack of strong leadership from Government – without which, I can see no great future for Britain.

This was posted in Bdaily's Members' News section by Gordon Styles .