Olympics: And the winner is… Australian business
Tuesday, 29 July 2008
Last Updated: Tuesday, 29 July 2008
By Amita Tandukar
The world’s top athletes will vie for gold in Beijing, but keen Australian businesses have already won from the Olympics.
In just 10 days, the eyes of the world will glued to the Beijing Olympics, hoping Australia’s team of 433 athletes can bring home the gold. But for a handful of small and medium sized Australian exporters, the Olympics are much more than just a sporting event – it is a once-in-a-lifetime chance to tap into the world’s largest consumer market.
After many months of preparation, event planner Maxxam International, logistics company SmartTrans and plastic bag manufacturer Biograde are intent on providing flawless service during the event. The extra challenge is to create flow-on business from such a high-profile opportunity.
In the lead-up to the opening ceremony, leaders from the three companies took time to share their tips about doing business in China with SmartCompany readers.
Put in the hard yards; make plenty of personal visits
The Olympic Games began in March for Di Henry, the managing director of Maxxam, which is organising the torch relay.
The planning needed to stage such as a complex journey around the world and through China’s many provinces, including to the top of Mount Everest, was monumental.
However Henry says the real work began even earlier – in fact several years ago when the company was bidding for the contract.
Maxxam planned the torch relays from the 1992 Barcelona Olympics to the 2000 Sydney Olympics, and more recently consulted on the 2006 Melbourne Commonwealth Games and the 2006 Turino Winter Olympics. But the contract for the Beijing Organising Committee for the Olympic Games (BOCOG) was a tough one. It was a two-horse race between Maxxam and a US company.
During a series of meetings over many months, Henry decided to try a different approach. “You offer a workshop instead of a pitch,” she says. “At the same time you see their offices and find out if you want to work with them.”
The two-day workshop worked. Henry says: “It would have knocked anyone sideways in terms of the details.”
Companies must be prepared to budget for such personal visits. Maxxam spent between $50,000 and 60,000 on airfares, meals and transport before landing the contract. It was a sizeable investment for the company which employs six permanent staff and has an annual turnover of $1 million.
Keep on the right side of the referee
Personal visits are important, but the constant contact with decision makers that is needed to land a contract often requires a person based in China.
Henry says it is invaluable to have a person in China, paid by retainer, to assist planning. She recommends Austrade as a good place to find the right contact and suggests companies could also tap into the sizeable Australian network in China through the Australian chambers of commerce set up in major Chinese cities.
Henry has employed five people to work on the BOCOG contract this year and created her own Australian network to help find jobs for another four people with the torch relay sponsors.
Remember Muhammad Ali; talk up your technical excellence
China’s political and business leaders are hungry for world-class technology to ensure the country’s manufacturing sector remains relevant.
Frank Glatz, the managing director of plastic bag maker Biograde, says the company won the contact to supply 5.5 million plastic bags to BOCOG by highlighting its technical ability. It manufactures bags to break down in line with the European standard. “It is the gold standard of biodegradability,” he says.
The timing of the contract was important because the Chinese Government wished to promote its new laws banning ordinary plastic bags and mandating 15% starch content in all future bags from 1 June.
Although Biograde is Australian owned and application development is carried out in its Melbourne headquarters, the company’s product development and manufacturing is carried out by a factory employing 35 staff in Nanjing, China. The Nanjing connection allowed the company to compete on price and guarantee its ability to deliver the bags to BOCOG’s tight deadline.
Pick your target events early
Australian logistics company SmartTrans is no stranger to the massive task of transporting athletes, officials and spectators during an Olympic Games event. During the Sydney Olympics, the ASX-listed company won the contract to run the allocation of vehicles and the provision of directions and maps to drivers.
But for the current games, BOCOG was not tendering for the same service to assist drivers to travel around Beijing, even though many Westerners cannot speak Mandarin and are not able to ask people directions or read street signs.
Undeterred, the company saw the gap in the market as an opportunity to launch a new product to the many Olympic sponsors and companies attending the games.
The company’s EventTrack technology uses a mobile phone application that allows visitors to request a pick up from a location and the request is passed to the driver in Mandarin, showing the driver exactly where the delegate is on a map on the driver’s phone. A concierge service is also available.
Bryan Carr, the chief operating officer of SmartTrans, says clients such as Schenker Logistics and BHP Billiton will use the technology and it will assist between five million and eight million people movements over the six-week Olympic period. Services will include transporting VIPs and their families to and from the airport, hotels and social engagements.
It’s a long campaign; prepare for setbacks
The logistics of launching a new product in China is difficult at the best of times, but restrictions in the lead-up to the Olympics have been an extra challenge.
Restrictions on new internal wiring, the allocation of new internet protocol addresses, the import of server equipment and the purchase of Chinese SIM cards were some of the barriers Carr faced in launching EventTrack before August. “Doing business in China is not for the faint hearted,” he says.
SmartTrans enlisted the assistance of a Chinese partner, China Alarm, to overcome what sometimes appeared to be insurmountable problems. Carr says: “Essentially, Beijing Alarm Networks will be providing the hosting environment, which includes high-speed internet connections, while SmartTrans is providing GPS tracking route optimisation and mobile data software systems.”
SmartTrans will have a support team of five people from Australia working with a local team of 20 in China during the Olympics.
The EventTrack product has already provided a boost to the transport software company, which employs 18 people in Australia and had an annual turnover of $1.5 million last financial year. China Alarm has taken an equity stake and is now the company’s second largest shareholder.
Gold comes to those who wait
Patience is the big prerequisite for doing business in China, says Maxxam’s Di Henry.
Decision-making is often carried out by senior managers, which Australian business people might find hard to meet. “There are a lot of meetings and negotiations,” she says. “Time is needed to find the right contacts. It is about laying the groundwork and waiting for decisions.”
Once you’ve got the gold, cash in
A key element of the contract for Biograde was the negotiation of a communications campaign following the games, according to Glatz.
He says the campaign will focus on the company’s ability to meet the new Chinese plastic bag standards. It will provide an important endorsement for the product from the Chinese Government to the company’s potential clients; regional leaders, brand owners and retailers.
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