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Exceptional, July-December 2012 - Made in China: PCH - EY - United Kingdom

Exceptional, July-December 2012Made in China

“In today’s world, doing business in China is less a challenge of knowledge than one of execution. You simply have to have world-class execution.“
Liam Casey, CEO, PCH International.

PCH International’s Liam Casey traveled all the way from Ireland to China to take advantage of a manufacturing boom that still shows no signs of slowing down.

Liam Casey, the Ireland-born CEO of PCH International, compares his company to a sophisticated middleman. “We like our clients to be really strong at R&D, to come up with great products and to give great customer service, while we manage everything in the middle.”

Managing processes is what PCH does best. The China-based supply chain management company is one of the world’s leading manufacturers and distributors of smartphone and tablet accessories, working with consumer electronics brands to produce devices and ship them to customers around the world.

It’s a business model that has worked wonders for PCH, which has seen rapid growth in both developed countries and emerging markets. In 2010, the company recorded revenues of approximately US$413m (and posted a US$14m profit), while last year also saw healthy growth.

Casey began his Chinese odyssey in 1995, leaving his home in Cork, Ireland, to follow the example of a friend who had been making a good living from importing Chinese hardware into the US. After flying to Taiwan to attend a trade show, Casey started his own business importing cables from Shanghai, in China, to Cork.

Since that time, Casey has become something of a standard bearer for sensible, progressive and sustainable investment in China. Now leading one of the best-performing supply chain companies in the world, he is keen to dispel a few of the myths that have come to color the European and American view of doing business in China.

For one thing, the idea that the country is just a haven for cheap manufacturing is, he says, at least 10 years out of date. “When I first went to China, I saw it as a place to make cheap products; then it became a cheap place to make products; now it’s the only place to make them,” he points out.

Transparency is key

“We’ve been transparent since we started up,” he says. “Every factory we work with knows where the product is going, and every client knows where it’s being made.”

The business was built on that transparency, says Casey, explaining that PCH’s success as a start-up in China depended on making processes as straightforward and understandable as possible. “The big challenge was to take confusion out of business, so we had to keep things simple,” he says. Consequently, as Western businesses’ interest in China grew, PCH was ideally placed to help them find a clear route into the Chinese manufacturing sector.

Casey has spent the past decade honing PCH’s business model to the point where it can   guarantee timely and reliable execution at every stage of the supply chain.

“Building a sustainable supply chain is a huge part of what we do. We look at a triple bottom line — environment, people and the numbers — because these are the really important things for any business.”

Addressing the concerns

Casey’s comments reflect a broader public concern about employee welfare in places such as China. How does PCH respond to accusations that Westerners’ hunger for gadgets is coming at too high a cost to the millions of people toiling in Chinese factories?

It’s a topic that Casey is keen to address.

“It’s important, and we want the truth to get out,” he states. “There’s been a lot of reporting of bad working conditions in China. This needs to improve — and it will. When I look at China today compared with when I first came here, I think that it’s a different world. But it does have problems, and the Chinese Government is working to address them.”

Lean machine

The Chinese manufacturing model has become progressively more efficient as the country has developed economically — and PCH has adopted a similarly lean financial structure. From 1996 to 2003, it was essentially a trading company — “sell and buy, not buy and sell,” as Casey puts it — before it went on to establish itself as a manufacturing facilitator. After that, Casey introduced a fulfillment capability so that the company could offer an end-to-end supply chain service.

By 2008, with this model in place, PCH was ready to take the next step toward growth. The obvious place to look for additional funding was the venture capital industry — a route that suited the company perfectly. PCH had no shortage of interested funders and now has 10 major investors, including venture capitalists in Silicon Valley, a sovereign wealth fund in Singapore, a New York-based entrepreneur and a small Chinese fund.

“Investors want returns, of course, but if you pick clever ones who understand the client base we’re working with, that helps,” says Casey. “Our funders also have an appetite for doing business in China and understand the trends here, so they’re happy with the progress we’ve made.”

That progress will continue this year. “We’re focusing on expanding our engineering and customer services outside of China, and last year we acquired a distribution company in Ireland called TNS,” he says.

It’s just another step on PCH’s journey. The company, Casey argues, is ideally placed to ride the next Chinese wave, which will see the country progress from a low-cost manufacturing base to the world’s biggest economy. “There’s a Chinese expression: right place, right time, great people,” he says. “They know that this is their time and they don’t want to miss the opportunity.”

The same must surely go for Liam Casey and PCH.

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