“We Have Traditionally Seen China As A Supply Base, The Real Frontier In China Is Tapping Its Potential As A Customer Base”

“I don’t have the perfect roadmap drawn out, but I do know which roads I’ll never drive down again.” (Brittany Burgunder). Lots of people say, “learn from your mistakes,” but of course none of us can perfectly predict the future. We will sometimes make a turning that we discover is the wrong one. Behind me, […]

“I don’t have the perfect roadmap drawn out, but I do know which roads I’ll never drive down again.” (Brittany Burgunder). Lots of people say, “learn from your mistakes,” but of course none of us can perfectly predict the future. We will sometimes make a turning that we discover is the wrong one. Behind me, I see a path littered with potholes and bumps. Some of those roads were important, but I certainly know that I don’t want to turn and go back and experience those potholes and bumps all over again!”

I had the pleasure of interviewing Brad Done VP of Reliance Foundry. Brad is a 3rd-generation co-owner of Reliance Foundry Co. Ltd. He has more than 30 years’ experience with the company, and 15 years as the Vice President of Sales and Marketing. Educated both in metallurgy and business, Mr. Done both enjoys overseas travel to find foundries and other vendors, and provides Reliance’s comprehensive marketing and growth plan.

Thank you so much for doing this with us! What is your “backstory”?

Mycompany, Reliance Foundry Co. Ltd., was incorporated in 1925 as a regional manufacturer of cast iron and steel products. First my grandfather and then my father ran a steady family business, providing cast iron architectural items, machine parts, and industrial wheels to customers in our area.

The 1990s brought challenges to North American manufacturers, and Reliance was not immune. Around us, my brother Brent and I watched colleagues shut their doors. We considered walking away, letting retirement of the older generation close the business. Only I couldn’t imagine myself anywhere else. I loved Reliance, our family’s history in the area, and instinct insisted the company was our family’s future, too.

When Brent and I took over, we knew we had to reinvent the business model or go bust. Local, customized production was no longer profitable. We asked a handful of loyal customers to take a leap of faith in us as we reached out into contract manufacturing overseas. For a while, these custom orders were still our major trade, but then we saw there was appetite for stock product lines — and global distribution. Doing business in China was the beginning of a whole new era for Reliance.

Today, we are a fast-paced, growing company, focused on design and innovation. Although we still do some custom casting for large products — having the expertise and knowledge to oversee high quality custom work at each stage in engineering and manufacture — our specialty is traffic safety products.

We have become experts in bollards, those short traffic posts that guide traffic and protect people and property. As cast-metal experts, we provide a variety of classical cast-iron looks, as well as modern bollard lines in other materials like stainless steel and polyurethane. Other items in our traffic safety catalogue include bike racks and lockers, speed humps and bumps, and corner and wall guards.

We know that it is not always easy for a foreigner to do business in China. Can you share an interesting story about a challenge that you faced, and how you overcame it?

As Reliance Foundry struggled with changes to the North American manufacturing picture, watching our orders disappear to brokers selling goods produced overseas, we were forced to decide: innovate or close. Yet when we considered outsourcing, we had a lot of pushback with loyal customers. They had stayed with us because there was a very bad connotation to the quality of goods wearing the “Made in China” label.

Still, even our most loyal customers had a bottom line, and our margins were razor thin. Something needed to change for all of us.

Our history in the North American market meant we knew that all industries have their share of high and low-quality manufacturers. As metallurgists and foundry workers with decades of experience in the North American market, we would be better suited than brokers with no such expertise to evaluate the foundries we were ordering from. Perhaps the problem was not Chinese foundries, but importers who did not really understand what they were ordering.

We asked our customers to have faith in us, and we travelled to identify quality manufacturers in China. We saw some factories that did not come up to standard, but we also visited foundries who had as much expertise and ability as we had at home. We asked our existing clients to believe in our oversight, and we proved that we could deliver their orders with excellent quality, inexpensively, and on time. We started slowly, producing only one of our industrial wheels, and tested the manufacturer rigorously, before we began to move more of our production lines over.

Continuing oversight, including travel to evaluate vendors, is essential to our success. Although production may happen elsewhere, our company still is invested in the same dedication to quality.

Are you working on any new or exciting projects now?

We always have new and exciting projects in the queue! Innovation continues to be an important part of our business model. Many of our products create site-specific pedestrian and cyclist safety and therefore we keep on top of architectural trends, and different problems affecting urban and organizational planning, to anticipate our clients’ needs.

What advice would you give to other business owners who do business in China, to help their employees to thrive?

It may sound silly, but the biggest tip I’ve got is: don’t be afraid. Just jump in. There are challenges, of course, with a country like China that is developing so quickly — growing pains are evident in pollution, legislation, and workforce shift. Lots has been written about these challenges. For some business people I’ve talked to, all this attention has left them with the sense that cultural and economic differences will be too hard to navigate, while still getting the quality and relationship they want. I have found it very easy to have a good experience in China. I’ve always been treated very well. These days, with China modernizing so quickly, the Western business traveler even has the option of having a very Western experience, staying in hotels aimed at them. I encourage everyone to be a bit more adventurous than that, however. These relationships are a growth opportunity, both personal and corporate.

None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story about that?

Interestingly, the person who has made the biggest difference to Reliance Foundry is someone neither my brother (President Brent Done) nor I have ever met. We were both profoundly affected by Michael Gerber, who wrote a book called The E-Myth: Why Most Businesses Don’t Work and What to Do About It.

As the third-generation owners of a manufacturing business, we fell into many of the “Technician” traps that Gerber documents in his book. After reading the book, we took a coaching course based on these philosophies. Through the granular exercises we did, we saw the strengths in our business from a different perspective. We had been focusing on making history repeat, instead of really seeing where our business was working best. By pivoting and leaning into our current abilities, not just our historical expertise, we were able to offer what we do best to a market that needed us, rather than trying to re-invent the wheel. This is almost literal, in our case: we provide industrial steel wheels, for manufacturers, and were not understanding the potential power of our own stock.

What do you think are the new untapped markets in China that may become the next “big thing”?

We have traditionally seen China as a supply base. The real frontier in China is tapping its potential as a customer base.

We keep hearing about the “Trade War”. What are your thoughts about it? Given the unknowns, how do you plan to pivot?

Trade wars are an expected cost of doing business. There’s no point in history where trade has been conflict-free: every year, every month, every minute of Reliance’s history has featured some trade struggle. We’ve watched tariffs rise and fall and must be responsive to those cost inputs the way we’re responsive to any change in our cost-structure. We see tariff changes as a fact of life. If you are robust enough to manage challenging tariff situations, you’re that much ahead of the game when they come down again.

We try to limit some of our exposure by working in USD, even though we’re based in Canada. It is part of our model to absorb the tariffs so that customers are protected from short term exposure. We have six months inventory so that we have lead time to integrate supply chain fluctuations. Sometimes we can manage increases through negotiation with suppliers; everyone’s profit line contracts slightly, but trade continues being done. We are always looking for lowest cost at best quality. Sometimes a tariff restriction gives us motivation to look at any parts of our supply chain where there has been cost creep, or to find new technologies that could bring down our expenses. Diversification of product lines across the company is also essential.

A few years ago, we saw a 6–9.5% tariff increase on one line of products. That year we had a 40% sales drop in sales on that category. Some was the tariff, some was the cyclical nature of our sales. We’d planned for these contractions, and had a diversified base, and so even though this wasn’t our best-case scenario, nor was it devastating.

What are your “5 Things You Need To Know To Successfully Do Business In China.”

Don’t be afraid of the food

Oddly, this is one of the issues I’ve heard most about. “How’s the food?” I wrote an entire blog post about business dinners in China, since these dinners are a common way to build relationships with Chinese business people. I’ve eaten many things that aren’t available where I’m from, but it was all good food even if strange seeming. What it comes down to? Enjoy the experience!

Create relationships

One of the best things about Chinese business culture is that it emphasizes both corporate and personal relationship building. Working with Chinese businesses, there’s almost a sense of small-town network. Business certainly comes first, but the perspective that we are people who share a common project is also extremely important. I recently had trouble with an order that arrived: a vendor who usually sends very good work sent something truly substandard. I got a phone call in my mid-day, which was 4a.m. for him. He was deeply upset on our behalf, and not just out of fear of us pulling the contract. He was worried that we would personally be affected by this issue.

Have high expectations

I travelled once with a young mathematician business owner who had a sense of confidence and a very rigorous view of the work he did. He spoke plainly, even forcefully, about what he saw as being the correct way to do things. This assertiveness and plain-speech was returned by the business people he was dealing with. Agreements were made quickly and efficiently. Later, at dinner, everyone had a great time and relaxed as friends, forcefulness no longer needed.

I have come to think of it like this: “if it doesn’t seem important to you, why would it be important to anyone else?” Obviously, the point is not to be rude or bullying. However, moving in with great confidence, and stating clearly and assertively what your requirements are, without a lot of joking or dissembling, seems to make everything move smoothly.

Be aware of the international framework

In metallurgy, there are different formulations in each country for popular steel and iron products. Being clear on the conversions and their differences were essential to our doing business. I am sure that this is true in many industries.

There were other things I learned on the fly, things I wish I’d understood better the first time I went out. “Joint ventures” being one of them — we’ve dealt with a few surprises coming out of my misapprehension of a legal structure of one of our vendors. From export licenses to commercial terms: I didn’t have someone to walk me through all these aspects for our industry and suggest getting a heads up from someone who has done similar work in your field. The school of hard knocks is a good teacher, but there are more pleasant ways to get the information. Still, don’t be afraid. Even learning the hard way, all our trading has been a benefit to us.

Go slow, but not too slow.

Developing a steady working relationship has been an important part of all our successful vendor connections. Start slowly, but have initial steps lead to increasing trade.

Due diligence is extremely important when your business contacts are not just down the street and easy to visit. You need a clear sense of all the aspects of your relationship, including those that come from international regulations and frameworks. So be careful and methodical, managing each of the aspects of your business contracts. At the same time, think of this as continuous relationship, like a stream growing into a river, gathering in size and speed, rather than something that can be stopped-and-started. We’ve had trouble being taken seriously when we mistakenly started initial steps before we were ready to go to the first order. Do not set expectations too high: don’t oversell yourselves.

Can you please give us your favorite “Life Lesson Quote”? Can you share how that was relevant to you in your life?

“I don’t have the perfect roadmap drawn out, but I do know which roads I’ll never drive down again.” (Brittany Burgunder).

Lots of people say, “learn from your mistakes,” but of course none of us can perfectly predict the future. We will sometimes make a turning that we discover is the wrong one. Behind me, I see a path littered with potholes and bumps. Some of those roads were important, but I certainly know that I don’t want to turn and go back and experience those potholes and bumps all over again!

You are a person of great influence. If you could inspire a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. 🙂

Business. Too simple, perhaps, but it honestly reflects my experience. Rising tides lift all boats. A growing, thriving business provides benefits to a large community.

We experienced life inside a company in decline (Reliance Foundry, pre-outsourcing days). The company’s challenges sucked the life out of us, our staff, and our families. With a successful and growing company, our families are able to enjoy our assured income, and our company can hire more people who we hope will enjoy growing experiences, challenges, skills and remuneration along the way. The rewards are not just financial, but interpersonal. We are building international relationships with customers and vendors, having interactions with people we would otherwise never have a chance to meet.

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