Yoke Har Lee: China the key to growth ambitions

Roger Latimer, Managing Director of Teknatool. Photo / Brett Phibbs

For decades, Teknatool International's business has been developing and making woodturning equipment.

Today, the company is still in the same line of work, but it also has another focus: marrying New Zealand and Chinese values to propel future growth.

"China's not a market you can take lightly. It's like riding a tiger - once you are on it, you've got to hold on to your nerves. It is certainly not for the fainthearted, and it is certainly not for the casual," says Roger Latimer, Teknatool's managing director.

Teknatool, based in Albany on the North Shore, manufactures electric motors and high-end stationary power tools for DIY workshops. Its range includes lathes, electronic controllers, motors and accessories.

The company began life more than 50 years ago, initially as a general engineering business, and has been making woodturning equipment for more than 30 years.

Its initial entry into the Chinese market was done the traditional way - by engaging in a 51:49 joint venture with a Chinese partner, Fortune Extendables.

A new manufacturing facility was set up in 2005 in Qingdao, in Shandong province, a location chosen for its infrastructure and because it was home to clusters of manufacturing facilities.

But by the end of 2006 Teknatool bought out its Chinese partner when it became clear they had differing goals for the business.The Qingdao Teknatool Manufacturing Company was formed and is now fully New Zealand-owned.

Latimer says the Chinese company's DVR (digital variable reluctance) motor business has the potential to provide a quantum leap for Teknatool, which hopes to eventually spin off a company to list on a Chinese stock exchange.

Teknatool has high aspirations for the DVR technology, which it developed in 2004 with the help of Massey University, initially for its own use in a new generation of clever woodworking machines.

"We recognised that to be highly successful, we needed to focus on manufacturing," says Latimer. "The DVR technology, we realise, will give us a chance to have a real expansion due to its wide applications." He believes the DVR motors have the potential to grow the company "100 times".

Latimer says selling points for the DVR motor include its low energy consumption, wide speed range and its ability to adapt to various voltages and frequencies.

"Traditionally, electrical motors have very standardised solutions, which basically involves telling the motors what to do. In developing our own performance for our lathe, we had to have adaptive technology to provide an intelligent motor for maximum efficiency. Apart from energy efficiency, there is a safety-sensing aspect to the motor."

Latimer says the DVR motor has the capacity to provide up to 80 per cent energy savings in comparison with conventional motors.

Qingdao Teknatool will be showcasing its DVR motors at its booth at next month's Canton Fair.

For Teknatool, the success of its Chinese venture exemplifies the perfect union between Kiwi and the Chinese values. "We were very determined from the onset that we would develop a sophisticated Western manufacturing base in China that focuses on the development of its people and the best manufacturing practices."

The cultural divide is great, Latimer acknowledges. For example, New Zealanders like to share their knowledge and there is open sharing of information within the workplace.

"In China, knowledge is power. It is hard to support an open learning culture or an open information system. We are working hard on changing that."

But China is also a very active environment. "For colleagues in China, we would be considered conservative. In New Zealand, we would be considered bold, making these international moves," Latimer says.

It takes a while to establish trust in the Chinese workplace. "But we pride ourselves on being able to attract a good calibre of people in Qingdao," he says.

And although China represents an opportunity to make products at a good price, it must not be seen simply as a low-cost environment, he says.

"The core of our strategy is to harmonise the best elements of China with a sophisticated manufacturing system. Companies that are set up and evolve to match this ongoing evolution of the China economy will prosper."

Latimer cautions against placing too much emphasis on the benefits of local relationships in China. "Partnering [with a local] can be beneficial. Relationship building is an important element but these relationships tend to be specific and localised, hence should not be overrated."

For international companies, their needs cover a wider spectrum, involving relationships with a broad base of international suppliers, he says.

"Being in China is like being on an escalator going up. You get ahead just by standing on the escalator."