By Ninette Cheng
NORTHWEST ASIAN WEEKLY
A war in the Persian Gulf led a surprised Percell Johnson to China. In 2003, Johnson, the owner of Cassell Inc., a manufacturer of custom flexible packaging products, took his business overseas by establishing a business relationship with Chinese businessman Tony Yuen.
Johnson’s Bellevue, Wash.-based business faced hard times when it was affected by the Gulf War in the 1990s. As oil prices began to escalate, Johnson’s oil-based plastic products began to increase in price.
“The average raw material price went up during the Gulf War once a year,” Johnson said. “After the Gulf War began, the prices began to increase on a quarterly basis.”
Eventually, they began to increase monthly.
“The only way to get around that was to lower cost,” he said.
This was when Johnson decided to take his production to China.
“Because we were a small company, people kind of laughed at the notion we would do business in China,” Johnson said. “The more folks laughed at me, the more persistent I got.”
Johnson met Tony Yuen through his relationship with the UW’s Foster Business School. He said Yuen is well established in China and owns a business named Goldhero.
“He was a professor in the university (and) a member of the government,” Johnson said.
Johnson invited Yuen and his daughter Sally Yuen to be his houseguests in the U.S. before they became business partners. After the partnership was established, Sally Yuen became the liaison between the two businesses.
“I think the partnership is a great idea as it creates synergy for both Cassell and Goldhero by utilizing their own area of expertise,” Sally Yuen said.
However, the partnership was not all smooth sailing. There was a language barrier between the two and a lot to be learned about the Chinese culture for Johnson.
Johnson said communication was a major obstacle. Sally Yuen served as an interpreter for Johnson and Tony Yuen.
“Just learning to speak the language is not the answer,” Johnson said. “You need somebody who not only can interpret the language, but also understands the business that you do.”
Johnson said Chinese businessmen are more cautious than Americans.
“I find that the main cultural difference is that Americans, we’re used to going right at it,” he said. “The Chinese, they’re not as quick as we are. They like to get to know you, to understand something about you, and then they’ll make a decision.”
He added that he was prepared for this because he researched Chinese business customs beforehand. Sally Yuen said Johnson adapted to the new customs well.
“In some areas, doing business involves drinking alcohol to show respect and friendship, which is difficult to understand in Western countries,” she said. “However, Mr. Johnson has handled this very well as he (understands) the meaning behind it.”
“I’ve had to use my mind and stretch it to an eighth degree. That’s what makes it exciting to me is stretching my imagination, and it’s just been wonderful,” Johnson said.
Both Johnson and Sally Yuen said they see a bright future for U.S./Western-Asia business relationships.
“I think it’s the wave of the future,” Johnson said.
“The Chinese weren’t doing what they’re doing now 20 years ago,” he said. “They’ve caught up. (The Vietnamese) are coming fast. Many things are being outsourced to India right now by the American companies.”
Sally Yuen thinks business will continue to go down this path.
“I don’t think manufacturing would go back to the U.S. at this stage,” she said. “Every country has its own area of strength. Outsourcing enables the firms to focus on what they do best and achieve greater efficiency in economic sense.”
Meanwhile, Johnson believes eventually, it will come back to the U.S. – if it works hard.
“To be the kind of sophisticated country that America is, they’re not just going to lay down forever,” Johnson said. “Some of the outsourcing is going to come back to the U.S. but it’s going to have to be competitive.” ♦
Ninette Cheng can be reached at email@example.com.