Finding a manufacturer in China seems to be an inevitable process for a vast number of Australian start-ups, suggesting it’s relatively easy to do.
But according to Rod Shepperd, there are always unseen challenges.
Four years ago, Shepperd hurt his back while attempting to turn off a power point. This made him realise how unnecessarily difficult it is to switch off appliances.
A builder by trade, Shepperd wanted to use his passion for energy efficiency to tackle the problem of wasted or standby power.
He came up with the EcoSwitch, an energy-saving device that makes it easy to switch off multiple appliances and eliminate standby power.
Based in Marysville in country Victoria, EcoSwitch now employs three full-time equivalents and continues to grow.
“We’re expanding rapidly into the SME market,” Shepperd says.
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“We have interest from a host of countries, including New Zealand and the South Pacific, but our focus is really on nailing our own territory first.”
But as Shepperd explains, several mistakes were made before the business found its feet.
“The first one was when we engaged a [Chinese] party to secure a manufacturer for us in China. I think the nicest thing to say is we had a misalignment of moral scruples,” he says.
“That cost a lot of money and a lot of development time… [And] because the contract was in Chinese jurisdiction, I had no claim.”
“I then did some researching for a local equivalent… I made sure it was an Australian contract and in Australian jurisdiction.”
“But I’m sad to say that after 13 months with this party, and about US$50,000, it was incompetent.”
Shepperd decided there was only one thing left to do.
“With very little savings left, I went against all good advice and took my sad little body over to China, not speaking a word of the language, and gave it my last shot,” he says.
“While I was in China, I was looking for large companies.”
“I thought they were more trustworthy, their IP would be more secure, they were more interested in my business, and they were very fluent with western companies.”
“But I wasn’t really getting past the salesperson level. I couldn’t speak to the owner of the factory and I found that discomforting.”
On the last day, someone told Shepperd to speak to a smaller, less well known company. As it turned out, this company proved to be a perfect fit.
“I entered into a relationship with the company, which checked out, even though it hadn’t done any business with western companies before,” Shepperd says.
“But the short of it is, with this small company, I’ve managed to do in five months on my own with no experience what others couldn’t do in almost two years.”
“I’m dealing directly with the factory. There’s no middle man involved. I don’t have to go through someone else. The chain of communication is direct, and they’re just wonderful, wonderful people to deal with.”
“They’ve been really supportive, offering me credit when times are tough.”
Based on his experience, Shepperd has some key advice for the hundreds of other Australian start-ups looking to manufacture their products in China.
“They want to do all the design work in Australia. They want to have the concept all resolved before it gets to China. Don’t leave anything open to interpretation,” he says.
“If you are going to have someone managing the relationship between you and a Chinese factory, do tons and tons of due diligence on them.”
“Make that arrangement watertight and in Australian jurisdiction.”