UNIMATECH & Co. Ltd partnership for Taiwan
18/03/2020
Leading the Charge Toward Sustainable Aquaculture: Our CEO’s Insights on “The Future is Circular” Podcast
29/04/2025
You only go to China with an innovative product
International Entrepreneurship - Voka, March 2024
"The chance that things go wrong with a local partner is no greater in China than anywhere else."
— Koen Van Goethem, I-Coats
With more than 4.5 billion inhabitants, roughly 60% of the world's population, Asia represents an immense market. Flemish companies have plenty of reasons, then, to look east to grow their business, and the new Business Club Asia will soon give them extra support in doing so. "An innovative product may be a must, but you still have to deliver results with it," says Koen Van Goethem, CEO of I-Coats and VOKA Global Ambassador for China.
With more than 20 years of experience doing business in China, the managing director of this Antwerp company is exceptionally well placed to assess the potential of the Asian market. I-Coats has been active in China from the moment it was founded in 2016, and some of the contacts had already been established earlier by Van Goethem in his role as business unit manager at the chemical company GOVI.
"Based on our customers' needs, at I-Coats we develop innovative coatings and so-called overlay finishes for fibres, which ropemakers, net builders and players in industry or the automotive sector apply in their own production," he explains. "Those coatings provide better protection for the fibres against internal friction and the effects of, for example, sun, sand and water. Wear is reduced and the lifespan of the ropes and nets is automatically extended. If you use high-quality, and therefore more expensive, fibres, you naturally want to make sure they last longer. "
"Because the Belgian market for our type of product is very small, I-Coats is by nature an export company. Through collaborations with a wide range of players we have built a name worldwide, from Alaska to New Zealand. In China, too, we have been able to build our story."
Answering the copying problem
It was above all in East Asia that I-Coats saw its volumes grow over the past decade, until the pandemic brought business to a standstill. Four years on, a real recovery in China still hasn't materialised, Van Goethem notes. "The Chinese economy flourished thanks to substantial state support for the export and import of basic raw materials. With the pandemic that disappeared, which makes things economically difficult. Many Chinese companies are now focusing more on the local market with lower-quality local raw materials. Quite often these are copied from the original that I-Coats supplies, but that's something you have to accept in China. We arm ourselves against it by continuously investing in the development of innovative high-performance products. In Europe we go a step further by also developing them to be bio-based. Those generate ever more interest, since they help reduce the ecological footprint."
In his view, innovative products are even a must if you want to gain a foothold in Asia as a Western European. "Because not only in China, but also in India and Japan for example, there are plenty of energetic and innovative companies. If you run into competitors there making the very same product, it becomes purely a price war, which you'll lose anyway, so you'd be better off not taking the step. With a commodity it makes no sense at all. And in some areas they're already far ahead in China," Van Goethem points out.
Initially, I-Coats worked there with a distributor, but the company backed away from that arrangement once it turned out that this party was charging customers double the going price. "You're best off choosing a local partner on the recommendation of a fellow entrepreneur. That leads to more reliable candidates, though you can never rule out that it still goes wrong. But that chance is no greater in China than anywhere else. It is safer to work with an agent, since they work on commission. By sharing your agent with partners from the same sector, you can follow up with customers more quickly and so also detect potential sales opportunities sooner."
Image-conscious and materialistic
None of this is without its effect on society, either. "If you go for a run in Shanghai now, you can see the blue sky again. The heavy smog has gone, the general cleanliness in the streetscape stands out, the infrastructure has greatly improved, and you'll find the most magnificent hotels and shopping centres. It just shows how strongly China has evolved, even if the property bubble, after years of building frenzy, has now burst." The CEO is also happy to share a few tips to keep in mind when doing business there.
"Chinese people are image-conscious and materialistic; coming from their earlier rural background, they like to show that they have money. They are already much more open to doing business with the West, but political topics are sensitive, so you'd do better to leave those alone. Authentic Chinese food culture surprises with a delicious, healthy cuisine. They attach enormous importance to sharing a meal as a way of building a business relationship. Chinese business leaders can get by in broken English. Even so, it's useful to be able to fall back on your local agent in conversations conducted in Mandarin or in the vast number of dialects. For European companies, China is and remains an enormous market. There's no reason, then, to hesitate over taking a well-considered export step."
Companies wanting to grow their business in Asia can join the VOKA Business Club Asia. More information via the QR code in the original publication.
By Jan Van de Poel
Photography: Wim Kempenaers
source: March 2024 - Voka
