Power Link generates momentum with UK base
Updated: 2015-07-03 07:21
By Meng Jing(China Daily Europe)
Company 'silly busy' as it targets $26 million in sales this year
Carol Yan, general manager of Power Link Machine (UK) Co Ltd, has been doing what seems like mission impossible.
While a lot of companies in Britain are outsourcing their production to developing regions such as China, where production cost are lower, Yan's company, which makes generator sets, has gone in the opposite direction.
Carol Yan, general manager of Power Link Machine (UK) Co Ltd, says her company has been on a development fast track. Jiang Shan / China Daily
Power Link's headquarters in Shanghai shoulders all of the research and development tasks, while its base in Yorkshire does the heavy lifting of producing made-in-UK generators for the European, Middle Eastern and African markets.
The UK arm of the company, set up in Leeds in 2010 with an initial investment of 500,000 pounds ($786,000; 704,000 euros), is the only overseas Power Link branch equipped with a manufacturing facility. The other three branches - in Indonesia, Australia and the United States - function only as warehouses and sales channels.
"The UK's proximity to our target markets, the tax breaks that made-in-UK products enjoy in certain countries, and the UK's reputation to produce high-quality machinery are the main reasons why we made the decision to open a factory here," says Yan, who has built Power Link's UK arm from scratch.
The decision by a Chinese company to establish a production base in the UK was questioned by many industry insiders at the time.
Yan admits that, in the beginning, it was difficult for her company to get financing from banks in Leeds. However, "our sales have jumped from $12 million (10.8 million euros) in 2012 to $21 million last year," she says. "Now plenty of local banks compete with each other to lend money to us."
Production in the UK is more expensive than in China due to the higher labor and operational costs, but made-in-UK products can also be sold at a higher price, Yan says, adding that her company's profit margins are even bigger than for the company's production base in Shanghai because the UK factory targets the high-end market.
Made-in-UK products are held in high esteem, especially in the Middle East, she says. Power Link's diesel generators are highly sought-after in the oil-rich region because the products can be widely adopted in all kinds of circumstances, whether in the desert or in shopping malls.
"Buyers there are willing to pay a premium for made-in-UK products," says Philip Ledson, international sales representative at Power Link UK, who is in charge of sales in the Middle East.
Ledson, who joined the company about a year ago, says business is "very, very, very good".
"The Middle East is a cash-rich area. However, the power supply in the region can be a challenge. So the demand is increasingly strong," he says, adding that he has to use two computers to improve his work efficiency due to the "silly busy" workload.
Moreover, generator production is not a labor-intensive industry. Production requires experienced workers, who are in abundance in developed industrial powers such as the UK.
Yan's company has 25 employees, including 10 technicians who assemble all the locally sourced components into generators, and has a goal to reach sales of $26 million this year. On average, she estimates, one employee generates about $1 million a year.
The goal is highly achievable, she says, because the company has been on a development fast track.
"Compared with our competitors, we have a strong research and development team in China with 60 members of staff. A team that big is rare in our industry," she explains.
To reach the $26 million goal, Power Link UK has been looking for a new space to expand its business, because its current premises are filled with container-like generators and there is no extra warehouse space if the factory wants to produce more.
"We're looking for a space between 8,000 and 9,000 square meters, which is about twice or three times the size of our current premises," she says. "The investment is about 4.5 million pounds."
Once the expansion is completed, potentially early next year, Power Link UK plans to add anther production line to make more-environmentally friendly generators, which is expected to boost business further.
(China Daily European Weekly 07/03/2015 page21)