It was last September when 600 Group announced a new key strand of its global strategy, as Dalian Sales made its debut at EMO. ‘Highly relevant because Germany is the most demanding market,’ observes marketing director Stephen LeBeau; ‘and they were asking all the questions about quality, spares, support, reliability.’ So were there any awkward silences? No, because 600 Group had done all it could to minimise the uncertainties and surprises.

‘We’d done our research by asking customers and distributors what it was about Chinese machines that they didn’t like - what were their prejudices,’ explains LeBeau. The result is that the ‘top four’ prejudices - Specification, CE compliance, Quality and After Sales - are addressed in the ‘Four Star Assurance’ programme. ‘And so for example we said right, we’ll factory inspect every single machine with our own team.’

To be specific, an independent team of quality control and inspection engineers - a Chinese-Western combination - is employed by 600 Group and managed by 600 China, and inspects every machine before shipping. The Group underwrites the quality and inspection process for all ‘European’ machines; and manuals have been revised in format to include the information required by the Western market.

‘That is absolutely key and it’s one of the differentiating factors,’ adds CEO Andrew Dick. ‘Nothing leaves China that is going to be sold in connection with 600 Group, which hasn’t had full inspection by our own people.’ This includes Colchester Harrison machines which the Group has manufactured under the relationship as well as the Dalian machines. ‘There are many people who are prejudiced’ continues Dick, ‘but many said the same things about the Japanese. ‘We also have battle-hardened people within 600 Group whose views probably reflect those that exist more generally; so we had to do some internal selling to a lot of very sceptical people.’

This process included holding the 600 Group conference and strategy meeting at Dalian, enabling 600 Group staff to meet their counterparts and see the scale of investment. What we have now is a fairly mature partnership - not surprising, as the story began in the late ’90s with 600 Group’s activities in global sourcing, seeking for example a company to manufacture the carcass of the Colchester and Harrison manual lathes, products subject to a very price sensitive market.

It selected DMTG, because it had a good understanding of quality standards, was already manufacturing transfer lines and centre lathes (10,000 per annum) for the Chinese market, was embarking on a range of VMCs - and had just established a JV with Index to make lathes for domestic consumption. Also, it was planning to move to new premises in DD Port, an area in Dalian province receiving substantial government funding.

Quality must be built in - not inspected out - so 600 Group engineers worked with DMTG to design a modern and efficient process to produce the carcasses. This included development of the quality control and inspection processes; intellectual property of the lathes remains with 600 Group. This close and continuing participation of 600 Group’s engineers culminated in 2006 in the establishment of 600 China. The aim was to manage the 600 Group workforce at DMTG as well as to more efficiently further develop market opportunities in the Far East.

With both partners benefiting, the relationship strengthened and became more productive, building trust as well as an effective commercial affiliation. In 2006 this prompted DMTG to ask 600 Group to work with it on developing the export of its own products into the West. By now DMTG was the major supplier to its domestic market, and its range had expanded to include CNC lathes and vertical and horizontal machining centres.

Under a new collaborative arrangement 600 Group established a team of its own and independent UK engineers to evaluate each range of machines, and each machine within that range. The aim was to ensure that the machines met European and American standards (eg CE mark) - and would be acceptable to the West on technology, quality, accuracy, ergonomics and aesthetics. The eight-man team was headed by Peter Cook, a time-served Group engineer and previously Technical Director of Colchester Lathes and 600 Lathes. He was a member (the ‘UK expert’) of the European committee that developed the CE Standard for lathes, and is currently involved in developing ISO standards for machine tools.

The team first had to ensure that the specifications were suitable for Western markets. The lathes now benefit from the rotational accuracies provided by Gamet precision bearings. Designs were modified to match Western expectations, as were electrical and electronic components, and finish was also enhanced. The team then set out to ensure that the appropriate quality and health and safety standards could be met. For example the materials in the vision panels for example had to be changed to meet Western standards; and headstock noise had to be addressed - previously gears had not been crowned because the Chinese market was unconcerned by noise emissions. The machines were then adapted for convenience of use and automation - such as developing a barfeed interface. ‘The whole concept of automation came as a shock to them’ says LeBeau. ‘60 per cent of all the lathes we manufacture and sell will have bar feeders or some sort of loading system; the equivalent proportion in China is zero!’

This anti-automation culture springs from the low cost and high availability of labour, but can this kind of East-West relationship be catalyst for positive change? 600 Group’s experience suggests this could be so. ‘Look at the progress they have made in terms of working conditions’ says Dick. ‘I wasn’t in the machine tool industry, but I knew China ten years ago - and conditions were pretty unpleasant. But I think now that 99 per cent of Western people would be delighted to work in the Dalian factory.’

Over his two years as CEO Andrew Dick has returned regularly to China, and taken every opportunity to meet with the Chinese senior management when they visit Europe. He believes that underpinning all the technology you need a network of relationships across the two companies: ‘You need to work on it long term. I have a very good relationship with the senior management of our partner companies but you have to build relationships in parallel all the way down through the organisation; we have had continuity with people like Peter Cook. The total team is about twelve at the moment, expats and local people whom we employ. The number is growing as we increase our logistics and our technical support.

‘It’s something you have to work on constantly; you have to go back again and again, to make certain, to keep probing, to keep checking, to keep making sure that what you perceive is right is also right as far as your partner is concerned.’

Which partner endured the greatest culture shock? Probably the Chinese, suggests Dick. ‘The Chinese want to become world class, to improve and develop to meet the standards of the West. Nobody likes to be told what to do, but they accept - from senior management downwards - that working with us will allow them to get there more quickly and more effectively. If we can explain what isn’t right and what they need to do, that’s going to feed back into their overall manufacturing capability - they recognise that we are raising the standards for the whole of their business.’

Alongside relationships ‘the other element is mutual respect,’ says LeBeau. ‘They respect us for the management, technical and marketing elements. We respect them for the enormous changes they’ve made and the enthusiasm, energy and capability they’ve got.'

‘There’s a recognition that what we have is very complementary’ says Dick. ‘They have this massive factory capability, and a strong and massive home market; but they recognise that they don’t understand how to market in the west and therefore need partners. We’d be the last to say that everything in the garden is rosy; but even in the two years that I’ve been here the progress that’s been made has been absolutely staggering.’

As to the future, Andrew Dick forsees an enduring relationship, with Dalian learning how to work in a quality-focused Western manufacturing market place. ‘You can’t go into something like this hoping it’s going to work just because you happen to see complementary opportunities,’ he says. The key to mutual prosperity, he believes, is to accept that this is ‘not a one-off opportunity to make some money. With that approach you’ll be dead in the water. It has got to be a long term thing, taken step by step.’

http://www.600group.com