China. It's everybody's business.

It’s not exactly the elephant in the room. But it just might be the dragon! You’ve no doubt heard plenty in recent years about the emergence of the aluminum extrusion markets in the Far East, particularly China. This emergence has been greeted by various extruders and equipment suppliers with delight, dread, and everything in between.

What can’t be disputed, however, are the facts. And it’s helpful to look at a just a few:

• China’s population is at approximately 1.3 billion. (That’s a lot of consumers, no matter the society.)
• It is the biggest aluminum-consuming country in the world.
• China’s economy is among the fastest-growing in the world.
• Over the next decade, the demand for aluminum in China is projected to grow an average of 10% each year.
• In 2001, the World Trade Organization conferred Most Favored Nation status on China
• Internally, the Chinese government is now encouraging foreign investment.

The equipment manufacturer’s perspective.

As manufacturers of extrusion technology, we find a few more facts quite relevant to Granco Clark. Whereas there are approximately 450 extrusion presses in North America, there are over 2,000 in China. And Bensen Wu, Group Sales Director for Kam Kiu Aluminum Group, has estimated that from 400 to 600 new presses will be needed to keep up with demand over the next ten years. Reflect on that for a moment: more new presses in the next ten years than are currently in operation in North America.

An equipment maker who doesn’t think that’s significant isn’t one you’d want to put your money on.

And here’s a critical factor: the people establishing those extrusion facilities in China want the same things any extruder does: advanced, productive “high” technology; attentive, on-the-ground service; responsive parts support.

Granco Clark and China

This explosion in the Chinese aluminum extrusion industry comes as no surprise to Granco Clark. We have supplied a significant amount of equipment to the Far East and China in particular over the last several years. Installations to date include four complete systems and a number of individual components, including, for example, 14 double pullers.

With the customers we already serve in the country, it is only logical to consider how best to ensure the proper support of those customers, and take advantage of the imminent opportunities in extrusion equipment business in that market.

As early as 2003, it was evident that a physical presence “on the ground” would not only help Granco Clark provide local supplies, service, and support, but would be a wise business move for the company, as well.

The beachhead is established.

Working with a trusted partner who has served as our sales representative in China, we have entered a Joint Partnership and Shareholder Agreement,

and formed what in China is known as a “Wholly Owned Foreign Enterprise.” Its name: Granco Clark (Suzhou) Extrusion Technologies and Equipment Manufacturing Company.

It is a marriage of not only convenience, but of outstanding potential. Granco Clark will provide the superior technology, while our partner’s organization will provide the marketing resources and contacts to do business successfully in that arena.

We have already located and begun to fit a manufacturing facility to serve that market through our “on the ground” presence. We look for this Joint Venture to give us the credibility and in-market “horsepower” to make our equipment a highly sought commodity in China in the coming years—important ones, to be sure.

As always, there are challenges…

Nothing in business comes easily, especially these days. And our Chinese venture comes with several challenges. The culture itself is, of course, quite different. And while our frequent trips have made us somewhat comfortable in that environment, the language and other cultural issues add a degree of confusion and slow things down.

In addition, China presents problems in some areas of business itself. The recent emergence of China as a manufacturing hub has created a great demand for qualified management candidates, which is currently outstripping the country’s supply.

In addition, perceptions of “quality” can vary significantly in different parts of the world. A Granco Clark Belt Table, for example, contains more steel than is necessary in the opinion of some Chinese customers and manufacturers, creating a potential price disadvantage. The challenge is to remain competitive without compromising quality as Granco Clark defines it.

All things considered, however, we look for great success in our Chinese operation over the next few years, and expect it to provide a boost to the company, and be an extra source of pride for every Granco Clark employee.