A recent Plastics News article, ``One size doesn't fit all [July 30, Page 1],'' discussed how U.S. manufacturers can compete in the new globalization era. One point raised by economist Peter Mooney was the need for plastics processors to recapture the ``creative, entrepreneurial `animal spirits' '' of the past.
An area in which processors need to call upon those creative spirits is in forming profitable global partnerships that last.
D-M-E Co. of Madison Heights, Mich., provides mold technologies. With 12 manufacturing locations worldwide, partnerships and joint ventures in nearly 50 countries and a strong customer base on every continent, D-M-E knows what it takes to operate successfully in a global market.
Successful partnerships, both informal and formal, provide consistent quality and delivery. These relationships can be difficult to establish, but there are steps you can take to pave the way.
Business relationships can come in the form of a joint venture, partnership, wholly owned subsidiary or acquisition.
The bureaucratic tie-ups and challenging transportation logistics you may face in countries such as India can make establishing your presence a slow process. Having the right local contacts through a joint venture partner can help you avoid some of these problems.
Exclusive partnerships also offer an opportunity to create global relationships. They often involve sharing technology and proprietary information.
Therefore, mutual trust is paramount. You must have a deep-rooted, carefully considered agreement where both parties understand each other's objectives, challenges and strategies.
Finally, wholly foreign-owned enterprises can provide exclusivity, flexibility and control. Establishing a WFOE in a country like China is a complex process, but it's also often worth the effort because it can ensure consistent quality and reliability for your customers.
A WFOE can also help your company avoid import expenses for products sold.
In China, that can account for as much as 20-30 percent of costs.
In deciding which type of business relationship to pursue, you need to consider government regulations, tax compliance requirements, workforce availability and other issues.
The primary goal is to ensure all worldwide entities serve your customers as well as your domestic operation does.
Don't let common misperceptions get in the way of a good decision. Many people have said they tried to work with companies in China, but ``the product is junk.'' I tell them the product isn't junk because it's coming from China, but rather because it's not being managed properly.
It takes time to get a quality product - anywhere in the world. If you want to put your name on something that stands up to your quality standards, you'd better be willing to spend that time.
I tell everyone who's looking to expand globally that they must actually go there. An on-location visit gives you a sense of the corporate culture, practices and strategies firsthand.
You also must invest resources into technical training with strategic partners, so they know as much about your products as possible.
It can be daunting to travel alone to a foreign place, so first seek legal and financial support in that country. Certain countries even require you to use native support, which gives you the opportunity to get some input and guidance, typically at a relatively low cost.
Great partnerships require time, energy and trust. If you seek a quick fix, the gain will only be short-term, and you'll probably be left picking up the pieces.
Take the time to get it right - the quality, the people, the processes, etc. - and you'll end up with a more powerful, global presence.
Dave Lawrence is president and chief executive officer of D-M-E Co.