Lessons to learn

Herman Miller¡¯s President for Asia Steve Cox talks to EuroBiz about the balance between learning and teaching that is fundamental to running operations here in China

----By Jody Braverman

Exciting, challenging and daunting are all words that Herman Miller's President for Asia Steve Cox uses to describe his first impressions of China. After his initial 12 weeks heading up Asia operations here, Cox is enthusiastic and optimistic about what he and his company can achieve in the China market. Now in his 21st year with Herman Miller, Cox has worked in all areas of the business from operations and engineering to marketing and sales. But even with all his experience, Cox is excited about the numerous opportunities to learn and grow - both personally and professionally - with which China has presented him.

What is Herman Miller's business in China?

It starts with sourcing and manufacturing of our furniture and seating products for both the contract office furniture market, and for residential, lifestyle stores. We also have a division with lighting and sound products and a healthcare division, but we're not starting with those two initially - we're starting with contract furniture and the home. And what we're looking to do is to manufacture at least 80 percent of what we sell in Asia in China, whereas we were doing that from a mixture of Korea and Singapore. Now we're choosing to make China our one manufacturing hub both to sell to China, but also to consolidate to one single point our shipping to customers in Japan, Australia, Singapore, etc.

What is the balance of production for export and production for domestic sales?

The balance at the moment is about 80 percent exports and twenty percent domestic. We hope to grow that.

What was the major push for coming to China?

Supporting our global customers was the initial reason; giving our customers the same level of support wherever they are in the world. Those international customers, whether they be North American customers or European or South American, being able to support them where they venture to expand their operations around the world.

Why did the company choose Ningbo to locate manufacturing?

Once the bridge is complete, travel time to Shanghai will be really good. Ningbo has a reputation and a history with injection moulding and we use a lot of injection moulding in the company. So the skilled work force in that area was appropriate. That's one reason. The supply base that was already there is pretty relevant to us, but the other factor is port congestion. The port in Ningbo has the capacity, both for importing and exporting, so with 80 percent of what we produce being exported out to other parts of Asia, flexibility at the port and capacity at the port was really important

Were there other benefits?

The trade development board in Ningbo were extremely welcoming, very flexible about location and working with us on encouraging us to be in Ningbo. and it was a good relationship there. It felt like when we met the people there that this was the right place to be. For our business, for our manufacturing centre, we just felt it was the right place to be. What about issues of human resources? Was that a factor in the decision to locate in Ningbo? I think for our technical resources, for our factory people and technical support at the factory, Ningbo was a good choice. We had no difficulty in finding good people, but clearly our commercial activities are in the major cities, in Beijing, Shanghai and Hong Kong, etc.

Are there any plans to expand to other places in Asia, say India or Vietnam?

Both are developing markets; clearly India is a market that we are researching very carefully at the moment and when the timing is right we will start the investment in India. But I'm very much a person that says we've got a lot to learn about China first. We'll start learning our lessons here, and I'm sure there are a lot of lessons to learn in China that will be good learning for entering India. We have a commercial presence in India, but we don't have a manufacturing presence at this stage, but we will in the future. We've just come back from a study of sourcing potential in Vietnam at this stage. We've got a couple of partners in Vietnam and suppliers. We do a little bit, we have a couple of commercial deals in Vietnam already, and we'll watch that market carefully as we are other markets, like the Russian market, around the world. Russia's a potential market for us, so is Brazil. We have core markets and we have developing markets and we think the developing market with the most potential is China. I don't want to start off in too many places all at once and have too much learning going on and putting strain on our resources and our experience.

What lessons are there to learn in China?

I think there are many lessons, and after 12 weeks, I wouldn't give you any indication that I had learned any of them yet. How do the circles of trust and relationships work across our very Western business culture? How, as the new boys on the block, do you start to build that trust before you can expect to get business? How you manage patience for growth in the market; how you balance that building of relationships against commercial success; how you have to be patient. I think that is something I'm beginning to see every day, and the learning is how you manage external expectation and speed of expectation. The scale over time isn't a problem, but the speed at which people want to see progress is a challenge.

What other lessons are there to be learned?

My biggest lesson is be open minded, that you can't impose your culture on this culture, that you've got to learn how to adjust your style to this culture and the way that people are in this culture, and therefore to use your mouth and ears in the right proportion. You've got to listen more than you speak. For me, personally, that's pretty challenging, from the culture I come from, but it's one I really do recognise.

How is China unique among the Asian markets you've spent time in?

Great sense of humour. I think hard-working, but also a great sense of humour that I can relate to as a brit. The whole issue of working relationships for the medium- to long-term is vitally important, rather than a nice thing to do as it is in other environments. Here it's essential, and therefore the way I spend my time is dramatically different to how I'd have spent my time in London or somewhere else in the world. But I think the proportion of your time spent building relationships is way more important here than in other places. Other places you've got to be very task-orientated; here you've got to be very relationship-oriented, which is great learning.

What is the strategy for growing Herman Miller's brand recognition in mainland china?

It's through our innovation, through reinforcing the use of independent designers, but also through our research and development. Our brand recognition will be around knowledge and learning; we will quite quickly start to employ Asian designers, not only to develop solutions and think about challenges in the work, home and healthcare environment within China, but also to take that innovation back to other markets. What learning can we have here that might be relevant in North America and Europe? We're a business that doesn't believe that innovation just occurs in the Western world. Really, there's great innovation in every culture in the world. Therefore, we need to be alongside the most talented, the most innovative people there are anywhere in the world. So, one of our key goals is to get alongside universities, to get alongside designers and start to research and do R&D in this market. I'd say that's the foundation of what we truly believe will differentiate us in this market as it has a rich heritage of doing so in other markets.

What is your target market in China?

It is obviously multinational customers with whom we have relationships elsewhere in the world. But a hugely growing market sector of Chinese businesses as well - Chinese businesses where their brand and their interiors really matter to them. You look around the skyline, look at the Chinese businesses that are putting towers up and architectural statements about their brand through buildings - they need interiors to match those. We've got a growing number of Chinese businesses that recognise the importance of ergonomics for their people and the importance of their interior, and they're very quickly developing their interiors from what could be described as behind the times to right up to the present day very quickly.

With some recent changes in labour laws and currency valuation and other applicable regulatory changes, is China as attractive now as it was three years ago?

I think if you're just looking for a cheap place to make things and ship them elsewhere, there probably is always going to be somewhere cheaper as the economy develops. I think if you can balance the overall of components, supply, technical capability and selling in this market, it's the right place to be. For us, it's the right place to be.

What is a typical day like for you here?

It starts early in the morning at my home office with connection to the US as it's their early evening. I take my three children to school, then I sit with my blackberry in the car for an hour, hour-and-a-half, commuting with my driver, then it's into the office for mostly either video conferences with other parts of Asia, or face-to-face with the team here. I'm pretty hands-on at the moment because we're building from a start position, so I'd say between 9.30 and six it's very focused on what we need to do to support the team in China, whether that be setting up the IT systems, whether that be dealer relationships, whether that be product offer - it's pretty widespread at the moment. What I'm trying to do now is share my knowledge and get momentum round subject areas across the business. It's very, very diverse, and it's a lot of time spent with thinking about our offer, thinking about our promotion, thinking about our relationship with the architecture and design community. It's about sharing and learning in equal measure. I attempt to get home before my children go to bed and then the evening shift starts with Europe and then the US connection. The importance of a home office and these hip-attached blackberries is huge. The important thing is knowing when to put them down and shut them off. I have a rule that at 9pm it goes of, regardless. And then there's a bit if quiet time with my wife.

How has your family adjusted to the move?

They have settled in probably faster than I have. Where I worried about it was would my kids adjust to school, and how would my wife feel left as the wife at home? But she's adjusted incredibly well - she's gotten involved with an orphanage - she doesn't want to be a typical expat wife that lunches, but rather to get involved with doing something that helps her learn about the real community, the country she's part of.