Control Products, Inc., an electronics manufacturing company headquartered in Chanhassen, Minn., has found continued success by building a production facility in Suzhou, China, located an hour outside of Shanghai.
Mr. Paul Carlson, President of Control Products, was recently interviewed by China Insight to find out more about the company and their expansion into China.
Similar to many other industries, the U.S. electronics manufacturing industry continues to face growing competition from regions of the world that offer low labor costs. In response to this foreign competition, Control Products made the decision in 2006 to penetrate the Asian market by establishing a manufacturing plant in China.
Control Products’ management believed China operations would enhance the overall business proposition of Control Products, offering growth opportunities both internationally and here in the United States. As Carlson explained, “Today customers not only demand the lower pricing available from Asia, but they also expect the high quality, short lead times, and flexibility to which they are accustomed from local U.S. suppliers.”
Frequently, original equipment manufacturers (OEM) select foreign partnerships based on little more than a handshake, and the end results are disappointing because of unexpected costs, poor quality, long lead times, added complexity and challenging cultural issues. By leveraging the strengths of their Suzhou, China plant, together with their two Minnesota plants, Carlson commented that they can now offer U.S. customers the cost advantages of China, and the logistical advantages of dealing locally.
Thus, as Carlson stated, “our customers enjoy the fact that they can work directly with our U.S. associates and avoid the cost and complexity of dealing with oversea suppliers. All of our plants conform to the same ISO 2001 standards which assure customers of uniform high quality products. To further reduce transaction risk, we offer the option to tool products in both the U.S. and in China. This allows us to manufacture the bulk of the product’s volume in China at a lower cost, but also gives us the flexibility to produce the units locally in the event of a sudden increase in demand. It also allows the customer to minimize the cost of extensive safety stock. Many of our U.S. customers also have plants in Asia and our Suzhou plant provides local support for these multi-national customers. In summary, the result of this paradigm shift in our business model enables us to further assist our customers in being globally competitive.”
In response to how difficult it was to establish a plant in China, Carlson stated, “The process of establishing a plant in China involved many months of preparation, but the journey has been rewarding. The Chinese people are very friendly and very accepting of Americans. However, our experience has taught us that building a plant in China is only the tip of the iceberg in terms of challenges. Managing a foreign operation from a distance can be the most difficult part of the process. The single biggest challenge is dealing with a cultural mind set much different than our own. As a result, Control Products has been making a concerted effort to expand its Mandarin speaking workforce here in Minnesota. The addition of associates here at the home offices that have an understanding of Chinese culture and language is extremely valuable towards our long term success as a multi-national company. Our U.S. career tracks were also modified to include time by U.S. associates in our China operations, as well as our Suzhou associates spending time here in Minnesota.”
Carlson also shared with us that the U.S. management team has been taking Mandarin language lessons, but he warned us that they are not quite ready to be trusted ordering dinner in China!
Founded in 1985, Control Products, Inc. has been a leader in electronic design, embedded communications and global manufacturing solutions. Control Products’ primary business unit, the Custom OEM Division, designs and manufacturers proprietary electronic products for equipment OEMs. Its products are used in many commercial and consumer applications around the world. Applications include electronics for commercial, food service equipment, medical, HVAC and industrial equipment manufacturers. Control Products is a member of the US-China Business Connection (UCBC) association.
To learn more about Control Products visit controlproductsinc.com or call 1-800-947-9098.
Editor’s Note: The founder and CEO of Control Products, Chris Berghoff, was a panel member at A Roadmap for Business Success in China, a business forum that recently was held. See Page 5 of this issue for more about the seminar.