The opening of Futuris Automotive’s first wholly owned manufacturing facility in Wuxi shows there is still a future for Australia’s automotive sector – but strategic, long-term planning into international markets is the key, writes Sophie Loras.

In 2005 Dexter Clarke was sent to China by his Australian company as part of a team to set up its first Chinese manufacturing plant in a joint venture with a Chinese car manufacturer. Two year’s earlier the company had begun its foray into China, visiting 180 car producers and suppliers, then working with Austrade to set up a strategy map. For one year, Mr Clarke commuted between his new home in Nanjing and the factory outpost of Wuhu in Anhui province to work on the project between his company – Futuris Automotive – a Melbourne-based business which designs and manufactures automotive seating and interior components for vehicle makers – and Chinese car maker Chery.

At that time, Mr Clarke could not have foreseen just how significant that first venture in China would be. That year Chery produced 70,000 cars in China. Today it produces 700,000.

The initial project in Wuhu not only gave Futuris its foothold in China, but has helped it secure new business opportunities across the Asia Pacific region. Today, Futuris has manufacturing plants and joint venture projects in Wuhu, Hefei, Changsha, Minyang and Dalian, and regional headquarters in Shanghai.

In November 2013, Futuris launched its first wholly-owned foreign enterprise – a manufacturing plant in Wuxi, to supply parts for Chinese passenger car and commercial vehicle manufacturer, SAIC, Ford and US electric carmaker Tesla. The Wuxi plant is expected to double the business’s turnover in China.

*Pictured left: The official opening ceremony of Futuris’ new wholly owned manufacturing facility in Wuxi.

Futuris has also expanded its operations in Thailand where its 1000-strong work force in Rayon make up almost half of all Futuris employees. It also has operations in Australia and North America.

Future markets being considered include India and Indonesia.

When Futuris first entered the Chinese market it strategically targeted ‘rising tigers’ such as Chery, Chinese truck and passenger car-maker JAC, Sichuan car manufacturer Brilliance, and more recently winning supply for SAIC’s domestic sales. Futuris manufactures its products in the countries where clients manufacture their cars. And while the Australian auto sector has continued to shrink, expanding into growing Asian markets is proving a boon for the business.

Today Mr Clarke is Futuris’s Chief Financial Officer. He says operating in China has been challenging in a positive way. “It’s a continuing learning curve – knowing what is possible and what is not. What we had to learn was mainly cultural – how to work with the Chinese businesses and people and what their expectations were,” he says.

In the early days, much of his time in China was spent training people who were keen to learn but just as keen to take their new foreign experience to higher paying jobs into the major cities. “The challenge was retaining staff, but today, people are more career influenced,” says Mr Clarke. It has been important for us to learn to run our businesses like Chinese businesses, he says. “We needed to culturally adapt to our customers – understand how to negotiate and to listen to what our Chinese customers really wanted, and deliver product the market wanted and not forcing a product on them.”

Mr Clarke anticipates continued growth in China, with plans to add to the business’s customer base, build and manage relationships, have more factories in China and look at potential acquisitions.

“China is one of our cornerstone markets going forward – it has to be. It’s the world’s biggest automotive market,” he says. He says one of the biggest misconceptions about China is that the streets are paved in gold.

“People see the opportunities and think it’s easy – and it’s not – you have to work twice as hard in China as you would in your own country.”

Guanxi – the Chinese concept of networking and developing strong relationships – is also misunderstood.

“The advice we give others is that in China there is a level of importance around some of the superficial stuff but fundamentally strong relationships are the key everywhere,” says Mr Clarke. Futuris currently employs over 2000 people globally, with 700 in Australia. As the auto sector in Australia winds up, Mr Clarke concedes that many jobs in the industry will move offshore.

“Automotive manufacturing careers will open up for Australians in Asia,” he says. “There has definitely been a shift in that respect. And people from Australian industry are in demand in China.”

The business has faced many challenges expanding into China but has stuck it out, Mr Clarke says – “thankfully they did.” “The Chinese have been doing business for a very long time – the history is long and deep and they do business very well,” says Mr Clarke. “What we are proud of is that we’ve created an Australian business that has a life beyond what happens here in Australia.” ■