An overwhelming enthusiasm for operating businesses in China, despite the challenging environment, was the stand out commonality of this year’s winners of the Westpac ACBA:2013, writes Sophie Loras.
The winners of the 2013 Westpac Australia-China Business Awards, announced at a gala event in Beijing in June, represented a diverse range of sectors – from a hotel management business, to a leading steel and engineering company, a resources business, a boutique ecological personal care products retailer, a specialist niche manufacturer of heavy duty equipment and a loyalty programs business for the Chinese banking sector.
The Australia-China Business Awards have a long history in Greater China as a signature event of the Australia-China calendar since their establishment in Hong Kong in1993. For 20 years, the awards, which rotate annually between Hong Kong, Shanghai and Beijing, have showcased the extraordinary achievements and successes of Australian businesses operating in greater China.
This year’s event was hosted by AustCham Beijing in conjunction with AustCham Hong Kong and Macau and AustCham Shanghai. Westpac was the title sponsor for the third consecutive year.
Westpac Group Chief Executive Officer, Ms Gail Kelly, delivered the keynote address highlighting the dynamism of Australian business in China and the role Australian businesses play in the bilateral relationship.
“As Australian business leaders, we have a remarkable connection with Asia, and opportunity to be part of the Asian century,” Ms Kelly said.
Ms Kelly specifically referred to Westpac’s trade capability as a key part of Westpac’s strategy to support customers as they build their relationship and presence in China.
“At the heart of our strategy is the depth of our relationships with customers and that we want to be part of their journey in Asia,” Ms Kelly said.
She drew attention to a number of recent milestones in the Australia-China relationship, including the announcement in April, for the direct convertibility of the Renminbi and the Australian dollar. Westpac is one of two Australian banks to be awarded a market maker licence by the Bank of China for direct currency trading between the RMB and the Australian dollar.
Andrew Whitford, Westpac Head of Greater China, said the bank was immensely proud to support the awards. “The awards absolutely align with our strategy in Asia, which is supporting the growing number of Australian companies that are looking to do more business in Asia,” Mr Whitford said.
David Olsson, AustCham Beijing’s outgoing chairman, said the Australia-China Business Awards had come a long way in their 20-year history, showcasing companies contributing to the vibrant, robust commercial relationship between Australia and China.
“The united Australian Chambers of Commerce across the Greater China region are proud to support iconic Australian businesses to the entrepreneurial enterprises which are breaking new ground in China,” Mr Olsson said.
WESTPAC ACBA: 2013 Winners
The Austrade Business Excellence Award for Small and Medium EnterprisesWinner: Mitchells Equipment (Hebei) Co., Ltd
*Pictured: Mic Mittasch, CEO and Owner, Mitchells Equipment, accepting the Austrade Business Excellence Award for Small and Medium Enterprises at the Westpac ACBA:2013 in Beijing surrounded by members of the Mitchells team. (AustCham Beijing)
Engaging the right people and following a strong ethical work strategy has been at the core of Mitchells’ success in China, with the business more than quadrupling its sales to US$13 million since 2006.
Mic Mittasch has been working in China long enough to be certain of one thing – taking time to do things the right way in China has a long term pay off.
Since acquiring the heavy-duty equipment manufacturing business – Mitchells – from its Canadian owner in 2006, Mr Mittasch has expanded the business to grow from 75 employees to more than 100, and from exporting to six countries to more than 30. In that time, Mitchells has also seen sales revenue quadruple from US$3.2 million in 2006 to US$13 million today.
The range of equipment the business manufactures has also changed and expanded –
mostly to being bigger equipment. Mitchells major customers include Cargill, Mars Petcare, Bunge, Noble Group, Yihai Group and Sinograins.
mostly to being bigger equipment. Mitchells major customers include Cargill, Mars Petcare, Bunge, Noble Group, Yihai Group and Sinograins.*Pictured: Mitchells produces heavy-duty equipment for clients in more than 30 countries including bulk flow conveyors and other equipment.
Before acquiring the company, Mr Mittasch worked with US company Cargill as a project engineer and project manager, building soybean processing plants across China. It is this previous experience that has helped him include personal touches to many of the business’s products.
“Having worked in China before, I had a good idea of what was good equipment and what was bad. So when I bought Mitchells, I came with that experience from the other side, the user side, and I knew what I would want in good machinery,” says Mr Mittasch.
The Global Financial Crisis in 2008 created challenges for businesses worldwide, but Mitchells instigated a business strategy – not to lay off a single employee, which continues to reap rewards for the business to this day.
“We restructured our roster a little and dropped to a four-day week, but everyone stayed on the pay roll,” says Mr Mittasch.
Mitchells enjoyed two major benefits from having retained all staff throughout the difficult GFC period – the business retained its skilled workforce and didn’t have the problems associated with re-hiring and retaining people as the economy recovered, and, in the process, instilled a greater sense of company loyalty.
In addition to providing all required social benefits to employees, Mr Mittasch encourages his staff to demonstrate initiative and responsibility, but concedes this type of employment model doesn’t work for everyone – especially in a Chinese context where not all employees want to have responsibility and accountability when things go wrong.
However, over time, he has built up a work force that shares in the team outlook of the business.
“When I bought the company, the previous owner had run the business using
old-style management techniques where the boss made all the decisions. Everyone knew what their role was and followed the rules. I came from a very different background and gave people accountability and responsibility and not everyone likes to work like that, so initially we did lose some people as this work environment was outside their comfort zone,” says Mr Mittasch.
Staff retention in China is a major challenge for businesses across all sectors, but Mitchells’ strategies for an inclusive work force have paid off.
His recruitment policy is to employ young people who thrive on responsibility and enjoy a challenge. “In return they have the opportunity to work in a growing company, deal with our global customers, travel outside China and really contribute to the growth of the company,” says Mr Mittasch.
“They can see where this company is going and that gives them good job security and that’s also a great way to keep retention up.”
Mr Mittasch says the business’s strong values on integrity and accountability have also helped the business to grow exponentially in China as increased regulation and transparency creates problems for competitors who may not have always operated to international standards.
Mr Mittasch says being a recipient of an Australia-China Business Award has given the business recognition that “we are doing business in China the right way.”
“This award is great for our company and great for our customers. This award gives us credibility for our business – that our skills are up to international standards.”
The AustCham Greater China Business Excellence Award for Start Up Enterprises
Winner: Pinpoint China
*Pictured: Bob Gilman accepts Pinpoint China’s AustCham Greater China Business Excellence Award for Start Up Enterprises. (AustCham Beijing)
Securing its first bank in China was the biggest challenge for loyalty card business Pinpoint China in entering the Chinese market, but since then, the business continues to grow exponentially.
Pinpoint is a leading marketing and loyalty company in the Asia Pacific with Australian-based clients including Westpac, ANZ, Citibank, Macquarie Bank, Diners Club, Myer, MasterCard and Caltex. But despite successes in Australia, tapping into the Chinese market has not been without its challenges.
Starting its first foray into Asia through the Taiwan market in 2001, Pinpoint secured the Taishin Bank, Sinopac Bank, Citibank Taiwan, Shinkong Bank and Union Bank. It then began exploring the Chinese market in 2004, receiving approval for its first WFOE in China in early 2007.
It was at this time that Pinpoint China Chairman Bob Gilman decided to relocate to China and fully explore opportunities on the Mainland.
“I could see and feel the energy of the marketplace and this gave me significant confidence we could adapt and localise our business model in China,” Mr Gilman says.
He soon discovered however, that the business’s single biggest challenge would be convincing Chinese banks to hand over their credit card data.
“In China we would come to learn that not only can the banks not ship data overseas – it cannot leave the banks’ firewalls,” says Mr Gilman.
This meant re-engineering how Pinpoint would operate its business if it were to remain in China. The process cost the business an extra 18 months, but as a result, it remains the sole provider of loyalty cards to the Chinese banking sector in China.
Another initial challenge for the company was that while many major credit card issuers in China indicated an interest in the loyalty programmes, almost all said it would be impossible to implement. Many indicated they would be interested, once an initial Chinese bank had signed on.
Undeterred, Mr Gilman remained confident about the Chinese market.
Persistence, perseverance and dogged determination finally saw Pinpoint cross the line,
launching its first Chinese program with the Bank of Communications in June 2010.
launching its first Chinese program with the Bank of Communications in June 2010.
Securing that first Chinese bank created a domino effect. A year later Pinpoint signed on the Bank of Shanghai, followed by the China Minsheng Bank and Citibank in 2012.
Today, Pinpoint is in advanced discussions with another major Chinese bank to launch a loyalty card programme later this year. If the deal goes ahead, Pinpoint will lift its current membership base from 43 million members to over 65 million.
It has also since developed and launched a program called MasterCard Traveller Rewards program for members in China, Hong Kong, Macau and Taiwan.
“We are in the process of bringing our additional business platforms to China and will continue to do so over the next two to three years,” says Mr Gilman.
“The scrutiny, pain and frustration have been worth it as we now have a substantial business [in Greater China].”
The Westpac Special Recognition Award
Winner: Argyle Hotel Group
*Pictured: Kevin Zhang, CEO of the Argyle Hotel Group, receives the Westpac Special Recognition Award from Westpac Group Chief Executive Officer, Ms Gail Kelly in Beijing in June 2013. (AustCham Beijing)
Despite the challenging market for newcomers to the Chinese hotel sector, Argyle Hotel Group has steadfastly built up a stable of more than 40 hotels across China in less than a decade – and continues to expand.
Argyle Hotel Group is a uniquely Australian brand, operating across China. Since its launch in China in 2005, the group has grown rapidly to include 40 hotels and assets under management worth more than RMB 18 billion (US$2.8 billion).
The group offers resort management, hotel management, hotel pre-opening management and hotel consultancy services, as well as architectural and functional design services.
Its six distinct brands – Argyle Grand Hotel, Argyle Resort, Argyle Hotel, Ausotel, Argyle Boutique Hotel and Metro Hotels – cover every segment of the market ranging from three stars to five star ratings.
The group has shown great initiative in expanding its business frontier throughout greater China – with many of the developments in second, third and fourth tier cities.
“As a group of Australian businessmen we had an ambitious idea and vision of what we wanted to do. Each of us already had extensive experience in business, hotels and education, which we saw as being imperative and fundamental to running a hotel management company,” says Argyle Hotel Group CEO Kevin Zhang.
“China, with its rate of growth and emerging middle class offered us an extraordinary business opportunity.”
Building off AHG’s reputation for professionalism and trustworthiness, the business continues to expand across China. Mr Zhang credits the group’s success to its very high standards in hotel and resort management services as well as its staff recruitment and retention records.
“The hotel industry has grown at such a rapid rate in China, that finding and retaining good talent can be challenging in such a tight job market, local training academy’s are also struggling to keep up with the demand hotels place on them for quality employees.
We have found that there is a scarcity of experienced staff as a result,” says Mr Zhang.
We have found that there is a scarcity of experienced staff as a result,” says Mr Zhang.
To overcome this, AHG has its own in-house human resources department responsible
for the hire and recruitment of staff and a special training department responsible for training.
for the hire and recruitment of staff and a special training department responsible for training.“If we did not have the right people then we would not be the success we are today.”
*Pictured: An Artist’s Impression of the Argyle Grand Hotel, Nanping.
Mr Zhang says other challenges associated with doing business in China include choosing the right cities for hotel developments.
Mr Zhang says other challenges associated with doing business in China include choosing the right cities for hotel developments.
“Because we develop hotels chiefly in second and third tier cities, we have to be very meticulous when we are carrying out due diligence on these cities as there are over 500 such cities across China. We always make sure we find out about the local history, culture and consumer habits, so as to best adapt hotel services to the local needs of the area,” says Mr Zhang.
“Mitigating risk is essential to the success of our business – you also need to be upfront
with owners, instead of blindly developing in an area where there is limited demand.”
with owners, instead of blindly developing in an area where there is limited demand.”
Despite the challenges, the opportunities remain boundless. Mr Zhang says that while the ratio of hotels to people in America is currently 1 hotel per 74 people and in Australia it is 1 hotel per 47 people, in China the ratio is 1 hotel per 700 people.
“Obviously with the emergence of the middle class in China, this offers massive opportunities, the likes of which we haven’t’ seen before in our life time. It will take China between 15 – 20 years for China to be at similar levels to Western countries and we certainly are ready to get a slice of the pie.”
The Green Resources Capital Business Excellence Award for Sustainable Development
Winner: Eco&More
*Pictured: Jeni Saeyang, Founder and Managing Director of Eco&More receiving her Green Resources Capital Business Excellence Award for Sustainable Development at the Westpac ACBA:2013 Awards in Beijing. (AustCham Beijing)
Building on the Chinese middle class’s growing awareness of the importance of environmental sustainability and strong CSR values, Jeni Saeyang, the founder of Eco&More has built a rapidly growing business in China in the personal care and cleaning products sector.
Growing up in Australia, Jeni Saeyang says she was always very conscious of how precious water was. Returning to Shanghai in 2010 however, and exposed to daily horror stories of China’s pollution problems, the environmental values she had experienced in Australia, suddenly seemed even more imperative for China.
“Having lived in Bondi Beach for many years, I was spoiled for choice when it came to finding fantastic green products. I then realized that if even a small percentage of the Chinese population could have access to green cleaning products, it would really make a big impact on the environment and I wanted to be a part of creating and supporting the green industry here in China,” says Ms Saeyang.
In just three years, Ms Saeyang, the Founder and Managing Director of Shanghai-based eco products retailer, Eco&More, has built up her ecological cleaning and personal care range of products using certified organic plant extracts from around the world.
“When I first started my business back in 2010, I could see that there were already some green products, mostly imported, available in the local supermarkets but they were very expensive and often not very appealing,” says Ms Saeyang.
“I felt that if I used my background in design and created a range of green products that didn’t say “buy me and pay more because I’m green” but instead said “buy me because I’m very stylish and I’m good for you,” this would appeal to the middle class Chinese and as it turns out, I’m right.”
“I think the Chinese market is a little different. Where in Australia or Europe or America, a customer would pay extra for a green product just because it’s better for the environment, here in China, our products appeal more to a personal benefit side where customers feel that green products are better for their health.”
Ms Saeyang’s business model is not just about the products themselves – but a holistic
approach to environmental and ecological awareness.
approach to environmental and ecological awareness.This includes two refill stations in Shanghai where Eco&More customers can bring back empty dish wash bottles for a refill in store and a 50 percent discount. This is matched by the business’s strong CSR policy. Since its inception, Eco&More has had a close partnership with Shanghai Roots and Shoots and the Million Tree Project.
*Pictured: Eco&More customers in Shanghai’s Ruijin Lu store can receive a 50 percent discount when reusing their existing containers.
Eco&More runs monthly green movie nights and events at its retail stores to engage the local community with all proceeds going towards planting trees.
As of this year, Eco&More is working with the Shanghai Sunshine Homes – a local non-profit for intellectually disabled people, where Eco&More will help train, employ and empower Sunshine Homes’ members to produce handmade soy candles, among other products.
“Often, I feel as though we are running two businesses simultaneously – one as a foreign-owned business for the expat community and simultaneously as a foreign-owned business for the local community,” says Ms Saeyang.
The business continues to make inroads, with Eco&More recently launching on TMALL – the more professional arm of China’s largest online shopping platform, Taobao.
“This was a big deal for us. It’s going very well which shows me that the Chinese mass market is ready for us. What’s next is mass distribution I suppose with the challenge of keeping our quality. I would love to be in Watsons so if any of you reading this work for Watsons, please call me!”
Quality control remains a key challenge for many manufacturers in China – especially for those whose brand depends on it – and so for this reason Ms Saeyang produces all her products in Shanghai, where Eco&More is based, allowing her to make regular personal visits to inspect the factories the company works with.
“I think many businesses come to China and feel that they need to have a China market entry strategy,” says Ms Saeyang.
“I believe our success is believing that people everywhere, Chinese or otherwise, appreciate good value. It’s that simple. No tricks up our sleeves. No big advertising campaign. It’s just a fundamental belief that if we make the best green products we know how, and offer at the best price we can, then the rest will follow.”
The Cheung Kong Infrastructure Award for Greatest Impact on the Australia-China Bilateral Relationship
Winner: Fortescue Metals Group Ltd
*Pictured: FMG’s Head of Sales and Marketing David Liu, accepts the ACBA:2013 Cheung Kong Infrastructure Award for Greatest Impact on the Australia China Bilateral Relationship, in Beijing in June.
Fortescue Metals Group has cemented its long-term future in China through a diverse range of investments in China, which go well beyond the sale of iron ore.
In just 10 years, Fortescue has become the world’s fourth largest producer of iron ore and is nearing the completion of a US$9 billion expansion to 155 million tonnes per annum from its operations in the Pilbara.
Since 2008 Fortescue has shipped more than 200 million tonnes of iron‐ore to China. It has also established long-term contracts with key customers to continue to supply China well into the future.
In the 2012 financial year alone, Fortescue’s more than 60 customers from China and the greater Asia region helped the company post a record 57.5 million tonnes shipped for the financial year 2012 and record revenue of US$6.7 billion. Profit for the financial year 2012 was US$1.6 billion – up 53 percent on 2011.
“Fortescue has achieved its extensive goals through engagement and support from key stakeholders including our people, local communities including traditional land owners, governments, suppliers, customers, non‐government organisation and the financial markets,” says Fortescue CEO Nev Power.
“As its primary market, China will continue to play a significant role in Fortescue’s ongoing success.”
Fortescue has made several key steps to solidifying its already strong relations with China.
This includes partnering with Hunan Valin Iron and Steel Group, which became Fortescue’s largest Chinese stakeholder and second largest shareholder in 2009, when it took close to a 15 percent stake.
Another key milestone for Fortescue’s Australia-China bilateral relations was the signing of a key joint venture with Shanghai-based Baosteel for the development of the Iron Bridge magnetite project in June 2012. This agreement consolidates one of the world’s most prospective magnetite projects taking into account its massive scale and close proximity to both customers and rail and port infrastructure.
Fortescue’s growth is expected to continue with the opening of Solomon’s Kings mine at the end 2013.
Fortescue cemented its commitment to the Chinese market in 2007 when it opened its first off-shore office in Shanghai, but it is the business’s strong ties to China through the establishment of other strategic partnerships which have drawn praise for its successful China strategy.
These include Fortescue’s continued involvement with the annual Boao Forum, considered one of Asia’s most prestigious events in promoting regional economic integration and attended by regional leaders in government, business and academia from across Asia. Fortescue has been a major sponsor of the event for the past five years and this year, Fortescue Chairman Andrew Forrest led a group of business leaders as part of the first Boao Senior Business Leaders Forum.
Fortescue senior executives also sit on the advisory boards of a number of high profile Chinese universities, including Mr Power’s appointment as a member of the International Advisory Board for Lingnan College and Sun Yatsen University in Guangzhou and his seat on the board of the China Central South University.
“Fortescue believes the first Senior Business Leaders Forum held at the Boao Forum is a significant milestone for Australia‐China business relationship. Its key involvement in organising this forum and ongoing commitment to increasing engagement and business activities between Australia and China will assist its future expansion,” says Mr Power.
“It is a key involvement to continue to build bilateral‐relationships with our largest trading partners.”
Fortescue has also established a new five‐year A$250,000 scholarship program at Central
South University in Changsha, China. The scholarships will annually support 55 undergraduate and post‐graduate students majoring in the metallurgy disciplines of beneficiation and sintering and pelletising.
South University in Changsha, China. The scholarships will annually support 55 undergraduate and post‐graduate students majoring in the metallurgy disciplines of beneficiation and sintering and pelletising.“Since our inception, we’ve understood the importance of our relationship with China, our largest customer and Australia’s largest trading partner,” says Mr Power.
*Pictured: Fortescue’s Herb Elliott Port at Port Hedland in Western Australia. (Fortescue)
Winning the ACBA:2013 Cheung Kong Infrastructure Award for Greatest Impact on the Australia-China Bilateral Relationship recognises Fortescue’s commitment to forging close ties with China and deepening its relationship with Australia, he says.
Representatives from Hunan Valin joined Fortescue’s China team in accepting the award, which paralleled the Chinese company’s recent success in winning a Chinese industry award for its successful strategic investment in Fortescue.
“Fortescue’s belief in China and its commitment to the relationship has been vital to our success,” says Mr Power.
“We know there is a lot more we can do to build upon that relationship as we compete for attention with overseas suppliers.”
The Westpac Business Excellence Award for Large Enterprises:
Winner: BlueScope Buildings Asia
*Pictured: Stewart Dellar, President BlueScope Buildings Asia, accepts the Westpac Business Excellence Award for Large Enterprises at the ACBA:2013.
By restructuring its China operations and making Shanghai its Asian headquarters, BlueScope Buildings Asia has reinforced itself as a global player in the building sector.
BlueScope Buildings first entered the China market as a pioneer in the metal building industry in 1992. But it is the business’s significant restructuring in the last 18 months, consolidating its worldwide building businesses into a single business, BlueScope Buildings Asia, and headquartering in Shanghai, that has enhanced the business’s commitment to China and its ability for global expansion.
BlueScope Buildings Asia has six manufacturing facilities in Asia, but China is the largest and most mature of its buildings businesses in Asia, showing strong growth with a large potential for continued growth.
In China the business boasts four state-of-the-art manufacturing facilities in Shanghai, Tianjin, Guangzhou and a new soon-to-be-completed facility in Xi’an. It has completed over 3,300 projects in China – with a total construction area of over 45 million square metres.
In addition, BlueScope Buildings Asia’s headquarters in Shanghai will act as the primary location for international export activity into other countries, including ASEAN, Japan, Korea and Taiwan and in the future, as a launch pad for other global markets including Russia, Africa and South America.
“The focus of this organization is for growth in particular to developing countries through either local manufacturing or export, so having headquarters in China reflects this focus on our growth regions,” says Stewart Dellar, President, BlueScope Buildings Asia.
Having only been consolidated in 2012, the BlueScope Buildings Asia business is relatively young.
Mr Dellar says there are many growth opportunities that as a global organization and with a focused Asia team, the business can tackle which were not possible previously.
“We see great potential for growth in our established Asia footprint in Asia, as well as opportunities to expand into new markets such as Africa, Russia and South America. The future also looks very bright in terms of launching new products, services and engineering / operational improvements,” says Mr Dellar.
The move has seen BlueScope Buildings Asia rapidly increase its presence across China with reinvestment into its China operations for more sales networks and marketing centres. Part of that expansion includes a US$60 million investment into a new green facility in the central Chinese city of Xi’an.
As a global leader in the design and supply of high quality pre-engineered metal building systems, the Xi’an facility will demonstrate BlueScope Buildings Asia’s green building credentials first hand.
“At BlueScope we take action and leadership within our business to continually improve, and we practice what we preach. Our construction of the new state-of-the art Xi’an facility in 2012/2013 will be one of the most environmentally sustainable industrial facilities of its kind in the Asian region, meeting stringent environmental design principles and industry standards, being certified as the first 3 Star Rated green industrial building in China,” says Mr Dellar.
“It also proves the business concept that green can be good business when done with the proper expertise. The building will act to help educate the industrial building industry as to how to practically implement green building concepts in a commercial environment. We are excited to be leading this green revolution and help set up green standards in industrial building design.”
Mr Dellar says receiving the ACBA: 2013 award recognizes BlueScope’s success as a pioneer and leader in the metal building industry.
“It also is a great recognition of our over 1800 valuable employees across Asia, who day-to-day deliver our promise to customers. We are humbled by this award and inspired to continue the hard work to improve further.” ■
*The 2014 Australia-China Business Awards will be held in Shanghai.
For more information visit: www.austchamshanghai.com
