Michell Wool - Case Study
From the Asialink Business China Country Starter Pack
In 2006 Australian family business Michell Wool opened their 14,000-square metre factory in Suzhou for carbonising wool.
Expanding manufacturing facilities to countries such as China not only opens doors to one of the world's largest markets, it can also ease access to goods restricted by Australian import regulations or tariffs.
But it is not without challenges, chief among them sourcing talent, staff turnover, quality assurance and cultural differences.
In 2006, 145-year-old Australian family business Michell Wool opened their 14,000-square metre Suzhou factory for carbonising wool – a required process to clean the wool. They bought a 220-metre-long machine from a Taiwanese competitor that was closing down, and transported it to mainland China in 86 shipping containers.
"The Chinese factory wasn't to replace the Adelaide factory, but rather was to increase capacity through providing access to imported wool from countries such as France and South Africa, an opportunity not permitted in Australia due to quarantine regulations," says Peter Michell, executive director of Michell Wool. It also moved them closer to one of the world's largest pools of textile manufacturers – China's direct buyers of carbonised wool.
"In China, don't assume when it comes to occupational health and safety. The Chinese perception is often production first, not safety,” explains Michell. “Contractors and factory workers are getting used to Western OH&S requirements but you still need to demonstrate how it is done, particularly from the top down."
Michell Wool does this by sending their Australian managers to China to train staff, and bringing Chinese senior management to Adelaide for training and development. This helps create a corporate culture that reinforces safety.
"In China, don't assume when it comes to occupational health and safety. The Chinese perception is often production first, not safety."
Cultural sensitivities can also be problematic in the factory environment. "When you're the foreign boss, to save face, they often won't tell you if something is wrong or if they need help. For this reason it is vital to make the right decisions in front of them so they can see and follow you as an example," highlights Michell.
"There have been times where something hasn't been fixed that was meant to be on my last trip to China, and I have had to shut down the whole factory to reinforce the importance of repairing it despite costs. Safety and quality have to come first."
Retaining staff can also be a problem, particularly around Chinese New Year when many employees return to their family homes in western China, and don't always return after the holiday.
But as years pass, Michell Wool is developing a capable workforce. "There was a lot of training in the beginning, but our managers are now becoming a lot more affluent and we are hiring more local Suzhou staff than when we first opened as the area develops," says Michell.
Having a good relationship with Australian government officials in the area, such as consulate staff, has also eased Michell's Chinese operation.
"We open our Suzhou doors whenever an Australian official visits, which helps demonstrate to Chinese government officials that we are well connected and respected at home. The guanxi we display from Australia is often as important as our local guanxi."
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