An Australian designer learnt some tough lessons about doing business in China when she found her designs being onsold to manufacturers in other countries.
|
Entrepreneur: Renske Carbone, Owner
Company: COA Colours of Australia Pty Ltd
Business type: Designers and manufacturers of felt products, designer garden products and clothing
Founded: 1981
Employees: 6 (three part-time)
Head office: Brooklyn, Victoria
Contact details: +61 3 9315 1551
|
Key learning points:
- China - It's a dangerous market for small business. If you don't speak the language and understand the law, don't risk your intellectual property.
- Resilience - It's an old saying but if at first you don't succeed, learn you lessons and try again. Quitters are never winners.
|
|
The Colours of Australia Story
In 1981 Renske Carbone and her new husband arrived in Perth, Western Australia, from their homeland, Holland. Renske soon set up a small business making children's clothing. The marriage didn't survive but Renske's passion for textiles and business did. In 1991, after completing a visual arts degree at Curtin University, Renske started up Colours of Australia, initially specialising in hand-painted scarves.
After a couple of years, Renske branched out and created a range of hand-painted laminated tablecloths. She says: "This was the real start of the business. I took on staff and moved into a bigger workspace".
In 1996 Colours of Australia set up a factory south of Fremantle and for the next three years the business grew steadily. Renske says: "In 1999 one of my employees, who was Chinese, suggested we look at manufacturing in China. We went to China together to investigate".
The Challenge
The serendipitous process of finding the right overseas partner.
The Solution
In 2000, with her employee's assistance, Renske established a factory in China and found another factory willing to work with them on Renske's idea for painted rubber boots. Renske says: "We found a way to commercially manufacture rubber boots with my hand-painted designs. The factory had to change their production operations to accommodate this new process". Patenting a process in China can take years and must be filed by a Chinese national. Renske's employee filed the patent and stayed on to oversee the China operation.
The boots were a global hit. "We sold hundreds of thousands of them. They were very original and colourful; there was no one else in the world doing anything like it." The range continued to sell well for several years and was expanded to include matching umbrellas, raincoats and backpacks.
In 2005, while attending a trade show in China, Renske was shocked to find other companies offering exactly the same product. "We had a distributor in England who had approached our factory in China to copy our designs; they had no hesitation in copying the process for them".
Soon after that nasty surprise, Renske discovered that the manager of her China operation had been collecting royalties for the patent and the factory was copying the process and her artwork for many other companies. "My art is the heart of this business; it is my signature. I helped my UK distributors set up their business and then the factory happily copied my work for them and others. [I felt] sold out by the factory and my distributors ... it was very hurtful".
By 2006 Colours of Australia had pulled out of China. Renske says: "It was catastrophic for our business. We had a flat, a shop, a factory in China and we closed it all down. It was a very difficult decision, but there was no trust there anymore".
The emotional and financial impact on Renske was huge. "I felt screwed over and thought about walking away. We were down to the bare bones of the business. I made a list of the things that were important to me and decided to stick with it".
Renske identified three key points she needed in order to be able to do business with an overseas manufacturer:
- Open communication. "I needed to be able to speak to people directly without the need of a translator, to look them in the eye and really be able to hear what they were saying".
- Working with textiles. "I missed the fabrics and textures; I needed to bring that aspect back into the business".
- Find the passion. "I was producing things just to sell; I needed to love what I was doing".
In 2006 Renske was exhibiting at a trade fair in Germany. With her new checklist in mind she began contacting other manufacturers attending the fair. “I noticed at the fair that the Nepalese did knitting and felting but no one was doing both. I picked four Nepalese companies there that I liked and gave them instructions to create a bag I wanted".
Renske was cautious after her China dealings and was meticulous in her record keeping of exchanges with the four potential Nepalese partners. “I kept a record of communication, how long it took and their ability to meet deadlines. When I was satisfied with one company, I went to visit them to discuss things and ensure the factory met fair-trade guidelines".
Renske flew to Nepal but on arrival there had been a mix-up. “As we travelled from the airport I realised that the people I had chosen were not the ones I was meeting. After all that scientific approach I ended up getting the names mixed up".
But the mix-up paid off and a successful partnership was formed; designs for six new products were agreed upon. In August 2006 Renske took the new range to the Australian Gift Fair. “My customers went berserk for it — I went straight back to Nepal and got a big range ready for February".
Wary of being imitated again, Renske decided to make a broad line of products. “I thought ‘I’ll give you so many products you won’t know where to start.’ We immediately became the number one felt seller in Australia".
Renske speaks fondly of her Nepalese partners. “We can all speak the same language and we trust each other. I have a permanent room in their house for when I visit; we are like a family".
Renske’s Papoose line includes ranges for home, play, Christmas, bags and craft. In 2008, Colours of Australia branched out into clothing with a fashion range called CLOAK. The clothing label is also manufactured in Nepal and features natural fibres such as bamboo and pashmina wool.
The Result
The impact of pulling out of China was huge for Colours of Australia however Papoose helped the company recover quickly. “We lost about 60% of our business but Papoose took off like a rocket so within a year we had completely recovered”. Turnover has grown by 20% annually for the last two years.
Renske says that working in China taught her a lot. “It was interesting but I would never want to do it again in the same way. It was a learning process that nearly cost me my business”.
Renske’s plans for Colours of Australia are to grow the CLOAK brand and to introduce ‘little cloak’, a range of children’s clothing. “We took our clothes to the gift fair in February and got more than 50 orders, which was remarkable as it isn’t the usual market for clothes and Australia was going through the financial crisis”.
Colours of Australia is planning to streamline the shipping process in 2010 by establishing a warehouse in Nepal.