Doing Business in Both Markets: Dubai and China

  As a biggest kingdom of the United Arab Emirates, Dubai plays an important role in UAE's economy and trade. Many Chinese textile and apparel enterprises have trade relationship with Dubai, or they settled their plants in Dubai. Dubai's crisis has impacted these textile enterprisers more or less to such an extent that textile enterprises in Shishi of Fujian Province suffered a delayed order placing or cancellation. But there's still a sunny day for other companies, Zhen Jiasong, a blanket boss in Jiangsu Province, has achieved a good performance in spite of the Dubai crisis. Confused, I made a deep interview with Zhen on his business idea and strategy. What's more, he also gave me some detailed understanding regarding the situation of blanket market in Middle East according to his previously valuable experience.

  Zhen Jiasong, the owner of Jiangsu Hongruichangtai Textile Co. Ltd., invited me to visit his enterprise in China on Dec. 30, 2009. This company is a private enterprise located in Jintan, produces and sells blankets to China mainland. In Zhen's blanket plant, I have found the environment is excellent with neatly-uniformed operators working at rumbling machines that are running at a controlled noise level.

  Zhen is a business man from Zhejiang province, seeking a business opportunity in United Arab Emirates many years ago. Like many enterprises from Zhejiang Province, Zhen has the pioneering spirit of career and excellent judgment of market. Zhen Jiasong started his business in United Arab Emirates, and operated his manufactory there for several years. Moreover, the local business relationship of Zhen in United Arab Emirates is good owing to his good reputation and high-quality products. As we all know, the consumption of blankets in the Middle-East is much higher than that in other regions of the world because of its culture and custom. Hence, setting a blanket manufactory in Middle-East must be a perfect choice that can reach the target customers easily. To my naive surprise, in the 2004, Zhen turned his business idea to Chinese market, setting a blanket plant in China with the purpose of developing blanket market here. From the interview, I learnt that his decision confused many people, including his managerial term that had been working with him in UAE for many years, and who also knew that blanket computation in China stood at a low level at that moment. But what that Mr. Zhen is, distinct from all other in his business performance in a way so aggressive just as he had ventured UAE market before.

  Before the year of 2000, the business performance of Zhen's enterprise in UAE was booming and the annual sale reached to more than 20 million USD. However, in the 2000, UAE market changed worse because the labor cost rose so high that he had to pay more salary to his workers than he had done previously. Cost reason aside, there were still more driving factors for Zhen to shift his market strategy form UAE to China, which made it necessary for Zhen to develop a new market and extend his business in order to cope with these changes. "Go back China and develop Chinese market" comes to Zhen's idea at that time. After downsizing the scale of the enterprise in Dubai, Zhen transferred a part of his assets to China, opening a new plant in Jintan in 2004. Hongruichangtai, Zhen's new plant in China, produces and sells blankets to the whole China.

  This was not a production relocation but a new investment which brought about good business performance and large production for the following four years until the second half year of 2008 when global economic tsunami drowned all most all his business, leading to sale decline and order withdrawal in 2008 and at the beginning of 2009. To cope with it, Zhen adjusted his business strategy in 2009. In terms of blanket products, the off-season in Chinese market is April to October, while there is no such off-season for blanket market in Dubai. With that in mind, Zhen did not downsize the production scale in off-season demand fall in China, and even enlarged production to supply the Dubai market mainly. To challenge the current Dubai debt crisis, Zhen downsized the production scale of his host-enterprise in Dubai to expand home-based production for Chinese market. Through his strategy adjustment, his business performance bounced to an admiring position in 2009, the total sale picked up 500 million USD at this moment.

  Zhen also mentioned the production and styles of blanket in term of culture issues. In the Dubai, the blanket has two functions- bedding and decoration. According to the Arabic culture, the decoration is the major function of blankets in Dubai. Hence, the products that focus on Dubai market should satisfy its culture. In comparison, the products which target the Chinese market should focus on simplicity because the function of blanket in China is bedding mainly. Adjusting the design and production process according to different countries' cultures, Zhen can master the market easily and build long-term relationships with his customers.

  At the end of this interview, Zhen said it is difficult for enterprisers to operate two plants in two different countries, but if each enterprise has complementary advantages, you business can achieve a good performance while challenging the global economic changes.

  In business climate, there's no winter time. When you keep flexible to change with the season by restructuring products and remodeling business strategy, you are sure to avoid the frozen death in a fatal disaster fictioned in the movie - "The Day After Tomorrow".

Source form China Textile Magazine

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