China- Are they an Opportunity or a Threat?

by Bill Loeble- COO

Almost any strategic business conversation today includes China. We hear such things as “China is putting American Manufacturing out of business”, “China owns our debt”, “China is bent on taking over the world, economically if not militarily”, “China can’t be trusted with protection of trade secrets”. On the other hand, are comments like “China offers great opportunities for American business”, “the biggest consumer market in the world is China,” “it is necessary to set up manufacturing in China to be a global player” and on and on —–.

Many of the points on either side have merit. The one thing for sure is that China will indeed be a factor to reckon with in global economics.

Beaver Manufacturing Company is involved with China both as a supplier and a customer. To that end, Mike Dubin and I traveled to China in October.

One objective was to visit the Techtextil Exhibition. This is the Asian counterpart of Techtextil -North America held every even numbered year in Atlanta and the Techtextil – Europe held every odd numbered year in Frankfurt, Germany. It brings together fiber producers, machine manufacturers, converters, and support companies from all over the world under one roof. The Asian version held in Shanghai obviously focuses on Chinese manufacturers but attracts others such as our winder manufacturer and our twister manufacturer.

With our suppliers we went a step further by visiting the manufacturing plants of two major polyester fiber producers.

For the last ten years multiple Chinese polyester fiber producers have taken the strategy of finding a broker in the U.S. and selling containers of fiber – simply volume at very low prices. Now many of them are diversifying into conversion – weaving and / or treating. They are setting up strategic joint ventures or corporate divisions in the U.S. that leads to partnerships with U.S. companies on development of specific products for specific applications. That is where Beaver fits in. We have already begun this strategy of developing application specific yarns.

From the standpoint of selling our products into China there is no doubt we have a tremendous opportunity. We have, however, determined not to manufacture in China due to the very real threat of having our technology compromised. Company held proprietary treatments have been our secret to success here for 42 years and we are not about to put them at risk.

That being said, there still is and will be a market for our unique treatments, albeit smaller than if we were there. We currently have active business in China. Mike and I visited our current customers as well as a visit to a potential new one – the largest hose manufacturer in China and maybe in the world.

China – opportunity or threat? Let’s just say there is enough of each to stay close to China