Long before the ``China price'' became a topic of everyday conversation in manufacturing circles, Mike Maczuzak and Kelvin Hou were searching for their own ways to tap into the changes China would bring.
Maczuzak, president of product development firm Smartshape Design Corp. in Cleveland, spoke Mandarin fairly fluently after studying it in college in the early 1980s. A summer in Taiwan and travels in Asia after he launched his company in 1989 convinced him China was required reading.
For Hou, a Taiwanese businessman who studied in the United States, the experiences of his family's business making vacuum formed hard-shell plastic luggage cases proved crucial.
In the mid-1990s, price competition was heating up and that industry was leaving Taiwan for the mainland. Hou said he convinced his father to invest in better design, and he credits those changes with helping the company penetrate lucrative markets and survive challenging times.
When Hou formed his own injection molding and tooling company in 2001 in Shenzhen, he decided it needed to have a product development and industrial design focus.
And since Maczuzak had been searching for the right Chinese manufacturing partners for his industrial design firm, and had met Hou through mutual contacts, the two small companies decided to form a partnership that has become a significant portion of their business. Today, Smartshape has two of its dozen industrial designers stationed full-time in Hou's Shenzhen company, Merit Technology.
And Merit, with 150 employees and 12 injection presses, has a design connection that provides entry into new business.
Both men sat down for a late January interview at the Shenzhen factory, just across the border from Hong Kong, and talked about their attempts to link U.S. design and Chinese manufacturing.
``Kelvin was more interested in product development, rather than trying to make as many soap dishes as possible, [and] I set out to find this kind of a relationship,'' Maczuzak said.
The companies, which mainly collaborate on products for export from China, said they are seeing increasingly sophisticated equipment made there, products like medical devices and higher-technology consumer products that previously would have been built elsewhere.
``Many well-known medical companies now have parts made here that didn't in the recent past [and] virtually all of the [liquid crystal display] televisions are made in China now,'' Maczuzak said. ``There's definitely a trend toward increasingly more and more expensive equipment, sophisticated professional equipment, medical equipment and parts, being made here.''
Both Hou and Maczuzak said they see their ties strengthening. As well, Hou said, Merit has an alliance with U.S. rapid prototyping firm Solid Concepts Inc., which brings clients to Merit. Those customers together form the single-largest bloc of business for Merit, Hou said.
``I don't classify myself as a toolmaker or an injection molder,'' Hou said. ``It's more like product development.''
It's a philosophy that Hou traces back to the transformation of his family's luggage-making business, Linglun Daycrown Case and Bag Industries (Shenzhen) Co. Ltd.
In the mid-1990s, Daycrown was selling most of its vacuum formed luggage to the Middle East and Africa, very price-sensitive markets. But Hou said he convinced his father, who owned the company, to invest in design to improve the look and function of the luggage, and tap better markets.
It paid off. Today, 90 percent of Daycrown's luggage is sold in the more lucrative American, German and Japanese markets, and the company makes bags on a contract basis for some of the world's best- known luggage brands.
Adding design was expensive, but without it, Hou thinks Daycrown would not have survived industry changes: ``If we hadn't made the move [into design], we probably wouldn't even be here anymore.''