Businesses in China dealing with COVID -19, an interview with Melchers’ China CEO
Today we interview one of our strategic partners, Anton Melchers, the CEO of Melchers China. Establishing its first Asian branch in 1866 in Hong Kong, Melchers Company is engaged in doing business with China ever since. Melchers focuses on selling luxury goods, machinery, industrial materials and spare parts in China for automotive, aviation, packaging and other industries, as well as providing a suit of other complementary services.
Please can you briefly introduce the Melchers Company and your business in China?
Originally founded in 1806, Melchers was a shipping and trading company in Bremen, Germany. In the 1860s, Melchers began trading with China which resulted in the establishment of its first Asian branch in Hong Kong in 1866.
Over the past 150 years, Melchers China has evolved alongside the development and transformation of the Chinese economy. With a mission to become a long-term oriented partner for foreign companies wanting to do business with China, we provide invaluable solutions and services tailored to all individual business needs across a wide range of industries and sectors.
At Melchers, we specialise in machinery and industrial products (in over 12 different industries), business software, and luxury retail. We are a highly diversified company, offering a variety of services ranging from sales, marketing and distribution (as the agent of the manufacturer/brand owner), after sales services, sourcing and QC services, as well as corporate services for brand owners. This also includes equity investment into our partner’s business operations.
As one of the oldest mid-size German companies still active in China, what is Melchers’ secret for long-term survival and success in China?
We have been doing business for more than 150 years in Greater China and have the potential to become an even larger company with more employees and higher revenue. Yet, we feel that sustaining a company for such an extended period of time in a country like China – with its dynamic and historic environment, is a huge success in itself.
Ultimately, the most important factor for us, is our employees. Attracting, retaining and developing talented staff is the company’s most important role. As a private company, Melchers has a long-term vision for its development and therefore values its stakeholders and employees above all. At Melchers, we aim to cooperate respectfully and personally with every member of staff.
Both openness and entrepreneurial thinking have always been important within our company. We haven’t ever limited ourselves to industry boundaries or constraints. For example, if a staff member sees an opportunity then as a company, we want to be able to embrace it and encourage him or her to explore the opportunity. However, we appreciate that not all ventures are successful and failing is also part of it, but by choosing to embrace these opportunities, it has led to many new successful ventures for our company, both in and outside of China. I am proud to say that this kind of entrepreneurship has been part of the Melchers’ DNA and company culture, since the beginning.
How has Melchers coped with the COVID-19 pandemic?
Since the beginning of the outbreak, our main concerns and worries were around the health and well-being of our staff – we fully empathise with any affected communities, especially those that we operate in. Throughout the lockdown period, we communicated regularly with our staff and informed them of any recent measures and special policies within our company, we also gave them guidance on how best to protect themselves, and bought additional health insurance and protective equipment for every employee. We also donated funds to two Charity organizations dealing with different factors of the COVID-19 pandemic.
As with all other companies, our day-to-day business activities were severely interrupted. However, due to our diverse scope of business, the impact of the pandemic varied. For example, in the machinery sector, in order to continue serving our customers with sales and after sales services amid travel restrictions, we leveraged digital tools to keep our operations running, and instead introduced video conferences, remote diagnosis of technical issues, and team and customer collaboration tools.
Whilst in the retail sector, it was important that both our staff and customers’ health came first in order to maintain trust and show that as a brand, our main focus isn’t just profitability. We also implemented hygienic measures at all of our stores, handed free face masks to visitors, and kept in touch with our customers via digital platforms. Whilst product orders were often reserved and made available for customers to collect once the restrictions had been relaxed.
We also used the decline of economic activities to enhance the skill set of our workforce through remote and digital training events. We leveraged the downtime to reassess our business strategy and engage in thorough systematic industry and customer research.
Where do you see the biggest market opportunities for your company in China? What will you focus on?
Despite the enormous market potential, in recent years, business in China has become increasingly more difficult for small and medium-sized enterprises (SMEs). Being in China requires high management attention, full market dedication, as well as commitment and investment. Before COVID-19, companies were already beginning to rethink their setup in China. In today’s highly transformative Chinese business environment, where technology disrupts both industries and business models at an ever-growing pace, it is more pivotal than ever to collaborate with a long-term oriented partner with the market know-how and financial capabilities.
Although we don’t claim to be able to manage all businesses, at Melchers, we do possess extensive commercial experience in China and have a rational, reasonable and pragmatic management style. For example, in May 2020, we established a joint three-party venture between us, a German pharmaceutical product manufacturer, and a Chinese pharmaceutical product distributor. We took an equity share, provided infrastructure and corporate services (such as Finance and HR), and also provided compliance services. Together as partners, we bring the best of three worlds – a relevant product, an effective sales channel, and a reliable and compliant execution.
Within our sectors, we often see big potential in the distribution of luxury consumer goods where brands with long-term visions are looking for a transparent, flexible and reliable partners to help them to develop their business successfully in China. At the moment, we are currently speaking with several high-end brands in different product categories. For example, in our machinery sector, we are exploring new opportunities in the automotive industry, more specifically, fuel-cells, as well as industrial automation.
Looking into the future: how does Melchers view the development of China’s economy?
The aftermath of the coronavirus outbreak and its impact on global supply chains, consumption, and financial markets will set the scene for the upcoming years. However, we are very certain that China will remain a key market in the global economy, even as it faces challenges such as the current decoupling debate and the increasing trade frictions with the US and the EU.
Furthermore, it is clear that the pandemic has accelerated pre-existing trends in the area of digitalization, e-commerce and automation. China is now steering towards a much more digital and smart economy driven by domestic consumption and services, and less driven by exports and government infrastructure spending.
Whilst China continues to grow and provides ample business opportunities for foreign companies, doing business in China is becoming more difficult and more costly, especially for SMEs, but as previously mentioned -adaptation is key.
At Melchers, we have survived and thrived in China for the past 150 years due to constantly adapting and embracing changes as new opportunities. We hope that this approach will help us to continue to be successful in the years to come.
This interview was originally published by Melchers’ Partner HI-COM, an multilingual communication and localization agency with years of experience in the Chinese market. With offices in Shanghai, Guangzhou, Hong Kong, and Nice (France), HI-COM serves its loyal customers in more than fifteen industries, including tourism, hospitality, e-commerce, and retail. The original article can be found here.