The wheels turn in sales drive that eyes China

Updated: 2012-09-14 09:47

By Cecily Liu (China Daily)

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The wheels turn in sales drive that eyes China

Made-in-UK products such as Rolls-Royce cars regard China as a key market. Provided to China Daily

British engineering has long been a poor cousin to its German counterpart, but the UK government hopes to change that with new alliances

Advanced manufacturing and engineering companies in Britain are increasing their exports to China even as the British government shifts its strategic focus from financial services to technology exports to promote growth.

Rising labor costs over the centuries have eroded the capacity of heavy industries, but investment in technology and innovation has kept advanced manufacturing and engineering industries competitive.

"We continuously invested in technology to make our production efficient, and consequently our products are cheaper than that of our Chinese competitors," says Rob Holmes, sales manager of Bulwell Precision Engineers, a manufacturer of aircraft components in the English Midlands.

The company has sold aircraft components to Chinese importers of Airbus aircraft and Rolls-Royce aircraft engines for a decade, including Xi'an Aero-engine Company.

As the imported aircraft and engines are partly assembled in China, the Chinese importers could have bought some of the smaller components from local suppliers, but Bulwell's price competitiveness helped it to secure growing orders.

"We keep labor to a minimum. For example, if we used to have one worker control one machine, we now have one worker control three machines," Holmes says.

Although Bulwell has no representative office in China, its engineers visit Chinese customers every year to sound them out on their needs.

"Our exports to China have grown alongside China's import of aircraft, and we expect this market to be huge over the next few decades," he says.

This month the US aircraft manufacturer Boeing forecast in a market outlook that China will need 5,260 new commercial airliners valued at $670 billion (523 billion euros) over the next 20 years.

Like Bulwell, advanced technology is also giving the British company Satra Technology a competitive edge in China.

Having entered China in the 1970s to provide a leather grading system to help Chinese tanneries understand the quality requirements of Western brands' outsourcing production, Satra has started selling its leather testing machines to China's domestic shoemakers in recent years.

In April Satra opened a laboratory in Dongguan, an export hub in Guangdong province, to provide tailored services to its customers, including product research, design and testing, chemicals analysis and quality control.

Bulwell and Satra's stories are shared by many more small and medium-sized businesses in the English Midlands, Britain's manufacturing hub, where abundance of coal and steel paved the way for the Industrial Revolution.

According to UK Trade and Investment statistics, East Midlands' exports to Asia and Oceania (in which China comprises a great many) was worth 2 billion pounds ($3.2 billion, 2.5 billion euros) in the six months to June, a 24 percent increase on the corresponding period last year. The region's exports to its biggest market, the European Union, shrank from 4.2 billion to 4 billion pounds.

Realizing the need to look beyond traditional markets, the British government staged an exhibition to showcase its advanced manufacturing and engineering brands at the Science Museum in London during the Olympics period.

Mark Prisk, who was then minister for business and enterprise, said at the exhibition that his team had led an increasing number of trade missions to emerging markets such as China for technology businesses in recent years.

"Historically we've tended to look more towards markets close to us, but one thing we've tried to do over the last few years is to reach beyond the immediate markets to look at South America, China, India and elsewhere."

The exhibition, titled UK Manufacturing: a Global Success Story, included world famous British companies such as Rolls-Royce and Jaguar Land Rover, which have significant exports to China.

China overtook the US last year to become the largest market for Rolls-Royce, and during the year the company sold 3,538 cars, a record in its 107-year history. Jaguar Land Rover also enjoyed record sales last year, with a 76 percent sales growth in China.

Prisk said a second reason for staging the exhibition was to encourage Britain's young people into highly skilled engineering jobs, London's financial-services industry having lured away the nation's best talent with big bonuses for decades.

"A very small number of people in the financial services industry get very well paid, but actually most of the people in retail banking are no better paid than skilled engineers," Prisk said.

The exhibition attracted more than 4,000 visitors in just the first few days, he said, including many British families, which he said was a sign that the country's young people and their parents are beginning to see engineering as a career option.

As well, the British government is investing 1.5 billion pounds in the financial year 2012-13 to support 700,000 apprentices in training.

"We are strengthening the curriculum for young people coming out of schools into training, because we actually have some great companies here and they need more people," Prisk said.

To better commercialize output in university laboratories, the British government launched a network of what it calls catapult centers to conduct research and development in key areas, including high-value manufacturing.

The first such center opened last October, and six more are expected to be fully operational next year.

"We have a very strong academic community, but in the past we've not had a great success in taking the bright ideas and getting them into the market space," Prisk said. "And that's really why we've looked at investing in our catapult centers."

Meanwhile, China's demand for technology and know-how to facilitate a shift from high growth to sustainability is creating good opportunities for British businesses with advanced technologies.

One business that has succeeded in capturing this opportunity is Romax Technology, a British engineering company specializing in simulation technology and wind energy.

"Because the Chinese government is encouraging renewable energy, some Chinese companies came to us directly in 2007 and 2008 asking if we could help them develop wind turbines," says Carlo Bianco, sales operations manager of Romax's wind division.

On the renewable energy front, China's current five-year plan (2011-15) set a goal of cutting the amount of energy and carbon dioxide emissions needed for every unit of economic output by 16 and 17 percent per unit of GDP respectively, thus creating financial incentives for companies to develop non-fossil fuel energy.

Having only entered the Chinese market in 2007, Romax's China operations now include 30 engineers in four representative offices, generating sales in excess of 3 million pounds a year.

In 2009 Romax helped Dalian Huarui Heavy Industry International to make a 3 megawatt wind turbine gearbox, which was used in the Sinovel 3 megawatt turbine in China's first offshore wind farm off the coast of Shanghai.

Bianco says the technology Romax sells to its Chinese customers is sufficient to produce wind turbines of a global standard. "They would be able to export to Europe as original equipment manufacturers if they want to," he says.

As well, Romax is also helping with knowledge transfer for wind technology by training its customers' employees, sometimes for months at its headquarters in Britain.

Despite the success that companies like Bulwell, Satra and Romax have achieved in China, Britain's advanced manufacturing and engineering exports to China still lag some European countries, notably Germany.

Last year trade between China and Britain totaled $58.7 billion; the equivalent figure for Germany was $190 billion.

Prisk acknowledged this gap.

"I think where Germany got it right in the past was encouraging the engineers to have a high professional status. Now we want to do it here."

The British government has also launched The Queen Elizabeth Prize for Engineering, a 1 million pound award for ground-breaking innovation, which Prisk said is a key step towards this goal.

"Obviously we want to do more, and we are catching up with countries like Germany, but nevertheless I think that's good success."

(China Daily 09/14/2012 page19)