Kentucky Electrical Equipment Company Nurtures Chinese Growth In Tough Market

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Researched by Industrialinfo.com (Industrial Information Resources Incorporated; Houston, Texas). In what company executives admit is the worst market for electrical equipment makers in 25 years, the management at the 110 year old electrical equipment maker Post Glover (Erlanger, Kentucky) are pursuing a two pronged strategy in which the Chinese market figures strongly.

In addition to pursuing new markets in developing markets like China, which are building their infrastructure from scratch, the company is also developing new products and applications for its products in mature markets like the USA.

Post Glover (PG), a supplier of neutral grounding resistors that dissipate electric current in machinery, has grown a business partnership with the Shenzen Farad, in Shenzen, the boomtown half an hour from Hong Kong, over the past eight years. Currently China represents about 5% of PG's annual revenues of $20 million. But with the growing demand for equipment by Chinese utilities and other manufacturers it could represent 33% of PG's sales some time in the future.

Shenzen Farad already does some finish assembly of components supplied by PG. But a new joint venture is now planned which will dramatically expand the partners' product line in the Chinese market. It will also allow the US company to expand its home market product line by importing some low-tech resistors that it cannot make economically in the US. Company officials in China are discussing plans for its first full joint venture with the Chinese partner that they hope will create a significant increase in sales.

The company sees China as the single largest export market with a population seven times that of the USA. The annual growth of 8-10% will probably increase to double digits in the near future, which fully justifies the numerous trips, that Post Glover, a Halma safety and environmental technology group company, (LSE:HLMA) (Amersham, United Kingdom), executives have made to nurture the partnership and market presence. Shenzen Farad now employs 200 people and has been recognized as a top entrepreneurial company in China. PG has been cited by the US chamber of commerce as an example of how a small company can succeed in China and its executives testified before Congress in favor of China's admission to the WTO.

As testament to the success of their strategy PG are moving into new state-of-the-art premises in Erlanger where the manufacturing and engineering teams will now work side-by-side. This facility will have a new test laboratory that will support current products and new designs under development for home and export markets.

It seems that when the going gets tough, the tough get going to China. Tips from PG are to get lucky in choosing a good partner and take some time to understand cultural and language differences. The PG-Shenzen Farad venture was mooted on the eighth anniversary of their association ('8' is the Chinese lucky number). By the same token the number '4' is unlucky in China so no PG quotes end in that number.