Finding Your Competitive Advantage – Lessons Learnt in China
June 30, 2014

Nick and I have recently returned from the Brentnalls National Affiliation conference held in Hong Kong.

This venue provided the ideal platform from which to garner valuable insights into the cultural protocols and practices of one of the world’s most influential economies. We were fortunate to have the opportunity to hear from key entrepreneurs who maintain strong business relationships within the Chinese business community. These dialogues highlighted the considerations Australian companies need to address before embarking upon offshore negotiations with our Asian neighbours.

Understanding the complexities of foreign jurisdictions, including matters of taxation, cultural nuances and international governmental requirements, are fundamental to ensuring your business establishes and maintains harmonious, profitable global growth. During our brief stay in China, BrentnallsNSW had the good fortune to learn more about how business is conducted in this region, specifically with regard to importing/exporting within the tourism, agricultural, manufacturing and retail sectors.

We also accepted an invitation to visit one Australian manufacturer based in Guangzhou, located a couple of hours north-west of Hong Kong. Naturally the practices of this sole operator cannot, and should not, be mistaken as indicative of all Chinese factories. Like you, I am aware that some factories have less than satisfactory reputations particularly when it comes to their employees. Suffice to say, I am not in a position to make a well-informed judgement about how the industry operates as a whole, nor do I endorse their operations en masse.

Notwithstanding, our visit to this particular factory certainly was enlightening. Whilst many back home believe manufacturing in China is more affordable because of low labour costs, current trends indicate otherwise. Chinese wages are on the rise, thanks to workforce shortages in traditional manufacturing regions. Some employers are now being forced to set up shop in regions where potential workers reside, rather than urging workers to come to them.

Despite increasing labour costs, the factory we visited cleverly maintains its competitive advantage through a strategy that includes strict manufacturing procedures, efficient production lines, rigorous quality controls and tight stock management. Further, these measures assure quality control to such an extent that very few goods are returned and waste is kept to a minimum.

Some Australian enterprises could learn from this particular factory’s work practices; i.e. to identify and capitalise on their own competitive advantage to help counterbalance the effects of rising costs elsewhere on the ledger. Enlisting expertise and business mentoring can help you to identify where your real edge lies and what measures need to be established to leverage from those advantages.

Further, I urge you to expedite this process. Within the next two decades, China’s increasing wages will help to grow its middle class which will in turn put pressure on Aussie enterprises not currently impacted by Chinese competition. These industries include innovators in engineering, product software, and medical development.

Time is of the essence and I encourage you to seek advice around developing your competitive advantage before your market share is further tested by increased foreign competition.

For more information, please contact BrentnallsNSW on (02) 8252 5555.