Full Interview with Joe Earley on Doing Business in China

Full Interview with Joe Earley

--How did you get started in China?

We had some experience in that when we had a distribution center for the company we were distributing for [prior to launching Tifosi], but really for our product category there is no domestic production for sunglasses. Whether they are $200 or $5, they are all made in China. It really wasn’t that much of a discussion for us. There is some production in Europe, but the quality isn’t good.

Frankly, we had a price point we wanted to hit at retail, but we had to start in China. It was not really an option to do them there.

--Do you own the facility or do you just partner with/buy from a manufacturer there?

There are multiple facilities that we work with, as many as five different factories that make product for us. Each facility might have multiple lines, so why they are injecting frames in one area, they might be boxing products, cutting lenses, etc. in other parts. They are likely working on 20-30 sunglass company products at a time. We really don’t have any financial interest in our factories, we don’t own any part of it. We say ‘hey these are the specs, the mold finish, these are the colors.’ On some products we supply the lenses from Europe.

We have a certain contact within each company, essentially an inside sales person. For the most part you deal with the factory, and their English is not perfect, but as long as you are communicating through e-mail, it works. I’ve been at trade shows in Europe and Asia and you have people talking to each other in English – it is the common language for business. Most communication is done via e-mail, but it has gotten easier with Skype, which is a free, web based program.”

--How did you go about finding a manufacturing partner in China?

We got on line and started looking. I also went over for a large optical trade show, and met with 300 different optical companies while I was there. On that trip we found three or four companies that could do what we were looking for. They all say they can do what you want, but getting the level of quality you want at the end of the day is harder to achieve. You can’t leave a lot up to interpretation.

--How do you approach the logistical challenges (shipping, etc.) of manufacturing your product internationally?

One person here who does all of that. I used to do all of the ordering. We have one woman, and her whole job is inventory control, communicating with vendors, etc. Our lead time can go from as few as 60 days to as much as 120 and 150 days -- we basically have so much coming, we get weekly updates and decide how to ship them. Managing our inventory has become a bigger challenge as we have grown. We have to plan very far out – for example, we know in Jan. or Feb. what we’ll discontinue for the next year and plan for the inventory.

--How often do you or one of your senior staffers visit China?

On average once a year. We meet with our vendors more often than that at shows in the U.S. or Europe, that way we can fly 7-8 hours vs. the 20 hours to meet with them on development stuff. The main reason we meet with them is for new product development which can’t be done over phone or e-mail.

--How has working with China benefitted your company and the local economy?

We started in April of 2003 and while yes our frames are injected in China (there is no way we can do that here), this was critical for our business model. But if you count full and part time jobs, we have created 16 and 17 jobs at Tifosi in a five year span. Did we take those jobs away from an American manufacturer? I don’t think so. But did we add to the local economy? Sure. This is a pretty good area to live in, good area to hire employees, and we get good people because of that. We have people move here from California and other places, so from that side, we have certainly helped the local economy.

--Do you see much in common between Athens (or Atlanta) and the places you have visited in China?

We do a lot of our manufacturing in a “small town” of 4 ½ million people, and four of [our factories] are in that area. What surprised me is that when you went there, it was a lot more spread out than I expected, it was spread out like Atlanta – it was not like Hong Kong. Driving is the scariest thing. In maybe seven miles from the airport, we saw three accidents. And I mean we either saw them happen or arrived just after they occurred. Basically they get out and check the cars and if they are okay they keep driving. Culturally it is as foreign to here as any place I have been from food to customs to decorations. To me there’s not a lot in common there.

--What has been your biggest "lesson learned" from doing business internationally?

Well, we learned a lot about patents. But one of the biggest things we learned goes back to the communication thing – We’ve had products come in and not be what we expected them to be in production. The bottom line is you have to be very detailed when dealing with Asian production. Every little thing needs to be spelled out, every finite little detail, with absolutely no room for interpretation, especially from an artistic standpoint. The look and cosmetics of things is critical for our product and the judgment of our partners is not the same as an American consumer’s judgment. You can’t leave anything up to chance when specifying things. They can make things as nice as you absolutely want, but if you’re not detailed enough they’ll make a thousand of them, it’ll be the same every time.

--Do you think a UGA-China relationship could benefit your business?

It has in the past. We had an intern last year whose family is from Hong Kong, and she literally came in this week and translated some stuff for me. She has helped us on everything from travel to translation.

Transcript of Interview with the Burtons

Full Interview with Bob and Maxine Burton (comments are from Mr. Burton unless noted)

--What is the size of your Chinese operation?

Our overseas operations and manufacturing are a very important part of our business. A substantial percentage of burton + BURTON imported products come from Chinese ports.

--How long has burton + BURTON used a facility (or facilities) in China?

We first went to China in 1986 to explore the possibility of international manufacturing. We began production over there soon after.

--Do you own the facility or do you just partner with/buy from a manufacturer there?

We contract with individual manufacturing plants all over China. Most of them have been working with us for a long time, so we have established close business ties with them.

--Do you have or utilize facilities in countries other than China?

Yes. We manufacture in the Philippines, Korea, Taiwan, Sri Lanka, Mexico, and India.

--How do you approach the logistical challenges (shipping, etc.) of manufacturing your product internationally?

We have an entire Imports department that handles all of the complexities of manufacturing overseas. They are knowledgeable in the regulations and customs of the different countries in which we operate. They are responsible for managing our freight, quality control of incoming product, and new product development. They understand the nuances of Asian culture and work hard to help us avoid many of the pitfalls that can occur. We’ve spent over 20 years learning the ropes and establishing solid contacts over there. Strong relationships with vendors are critical.

--What are the challenges to operating a facility (or having a significant amount of our manufacturing done) in China?

There are significant challenges. Obviously there is the distance. There’s no such thing as a “I need it tomorrow” project when dealing with overseas manufacturers. Most of our products will spend 4-6 weeks “on the water” just getting to us. This is in addition to the time needed to produce the goods. There is also the time difference. Our working hours in the US are the middle of the night for the Chinese. When it is 8:00 am here, it is 8:00 pm in China. As a result, we rely heavily on e-mail.

There’s no such thing as just “going over to China to start-up operations.” Business owners who don’t spend time developing trusted relationships and learning the way Chinese businesses run will likely encounter major problems. Additionally, there is the learning curve associated with US customs and imports. Confusing trade tariffs and products “stranded” in West Coast ports due to strikes are just two of the potential challenges we deal with.

--What were the domestic business challenges or opportunities that led you to do some of your manufacturing in China?

Many of the products that we carry are no longer available from domestic suppliers. If we wanted to continue to provide our customers with the variety of products they need, we had to find other sources. We also found that China was one of the few places that could meet the demand we were experiencing. Many of our products are very intricate pieces made by skilled artisans. No domestic vendors can (or will) supply container-loads of hand-blown glass vases, or intricately woven handmade baskets at the competitive prices available from China.

--How often do you or one of your senior staffers visit China?

I and Maxine are each in China about 3 to 6 times a year. Most of the trips are about 2-4 weeks long. We also have several members of our imports and design teams that spend a significant amount of time overseas designing and purchasing product. We have offices with full-time staff in two Chinese regions who manage many of the day-to-day tasks.

--How was the experience for you and your team as a part of the Governor's Trade mission to China? Did you learn anything new? Any other takeaways?

Mrs. Burton: The experience was a great one. The interaction with Chinese business leaders during the opening reception for the new Trade Office allowed us to exchange viewpoints on trade and to hear first-hand their perspective. It was also very valuable to meet others from the state of Georgia who are in the imports/exports business.

--Many perceive the Chinese relationship with the U.S. as a "one way street" where we outsource jobs to China and there is no return for Americans (except lower prices). However, the state seems to be reaping significant Chinese investment already, and seems poised for more with the new Delta routes, the UGA relationship, and other focused efforts.

Do you see significant opportunities for Georgia for doing business with China, and if so where and how?

Georgia enjoys a huge export business with China. Containers travel fully loaded both ways, so contrary to popular belief, trade with China is a two-way street. This results in a huge, positive economic impact for the State of Georgia.

--Do you see other connections between Athens/Northeast Georgia and China specifically, or areas that could be leveraged to help improve the economic situation in this area?

The World gets smaller everyday. With instant communication available to anywhere, and the never-ending knowledge base that is the Internet, the gap between Georgia and China narrows daily. Now and in the future, there’s not much that happens economically or politically in China that doesn’t somehow affect Georgia and vise-versa. It’s the old “butterfly effect” cliché, that says a butterfly flapping his wings in China starts a ripple effect in the air that eventually affects the weather all the way around the world in the US.

--Has your role with the Georgia Ports Authority opened your eyes to the power of international trade and what it means to Georgia? If so, in what ways?

Mrs. Burton: It has been very eye-opening to learn the amount of products Georgia exports to China. Georgia is a major exporter of forestry and agricultural products, and minerals like kaolin and gypsum. The Georgia Ports Authority has done an outstanding job of attracting business to the State, resulting in increased revenues for Georgia. Thanks to the job the GPA has done, Georgia ports are now the fastest growing ports in the United States.

--What has been your biggest "lesson learned" from doing business internationally?

Probably the biggest, and most rewarding lesson learned has been that when you put language, political, and cultural differences aside, our international vendors share many of the same goals as we do. We both want our businesses to be successful and to provide for our families and the families of our employees. We value friendship. We want safe places to raise our children, and a comfortable lifestyle. As we travel the world, and sit down with our international partners over dinner, face-to-face, and talk one-on-one, we see that we’re really not so different. The similarities in our overall goals make it easier to do business, despite the cultural and geographic barriers between us.

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