CHONGQING, CHINA — Paul Schoenbachler is used to dealing with unusual situations in China for Baja Motorsports, but this factory phone call sent his head spinning.
Nine containers of ATVs — some 650 units — had toppled off of a ship on their way up the Yangtze River to Shanghai, for final shipping to the U.S. They were now sitting at the bottom of the river.
The first problem was to find out who owned the machines — the factory, Baja, or Baja's customer. The second was to confirm that they were properly insured.
Schoenbachler is the main man in China for Baja Motorsports. The lanky 30-year-old Arizona native studied Chinese in college and set up shop in this manufacturing city about three years ago. He represents Baja in the company's dealings with a host of factories here and elsewhere in China. Baja imports a wide range of powersports machines and sells them in the U.S. and Canada to big-box retailers such as Pep Boys, Costco and Canadian Tire. The machines are serviced through nearly 1,500 independent service shops licensed by Baja.
Last year, Baja bought nearly 100,000 units in China and generated more than $70 million in revenues. Most of those machines were bought in this gritty industrial area of 32 million people.
Schoenbachler lives in the center of this city and takes a bus to his office at Hensim, the largest supplier for Baja. Hensim produces ATVs for Baja.
A DAY IN THE LIFE
In one five-day stretch last October Schoenbachler, his boss and Ryan Daugherty (who heads sales and marketing for Baja) toured 11 factories here. I traveled with Daugherty, as did Matthew Camp, an analyst with Power Products Marketing (PPM), the Minneapolis research firm that sponsored my trip.
Hensim, Loncin and HSUN were Baja suppliers; the others were potential sources. Prior to the tours here, Daugherty had checked scooter production in a factory near Shanghai and Schoenbachler had walked the huge Canton Fair in Guangzhou looking for new factories and new products.
Daugherty looked at the factories with a practiced eye: He's been doing this sort of thing for more than 10 years — four with Baja and six with Carter Brothers. Last year, he spent 71 days in China. On our factory visits, Daugherty checked capabilities and factory services, and discussed and rode new products for the U.S. and Canadian markets.
Surprisingly, many of the factories that were planning new products for the 2009 U.S. season had not obtained DOT, CARB or EPA certifications. And some had not even begun the grueling process that often can take up to six months.
Most knew about the requirements of the new Consumer Product Safety Commission (CPSC) legislation passed in August, but needed help understanding how to fully comply.
One, however, had moved ahead of other companies by assigning an employee to translate the entire 62-page law from English into Chinese, and to work with company engineers to meet the new requirements. Of the China factories we visited, Hensim is one of the most sophisticated in its understanding of the U.S. market. That knowledge comes, in large part, from its close-working relationship with Baja and the training it receives from guys like Daugherty and Schoenbachler.
On trips between meetings in vans provided by the factories, Daugherty sat in the back seat pounding on his laptop and working a Chinese cell phone and his U.S. Blackberry. Schoenbachler was lost in his own silent world of text messages in the front seat. It's the only way they can keep up with factory questions, customer requests, government regulation changes and messages from Baja folks in Arizona. Daugherty gets more than 150 e-mails each day.
THE FACTORY VISITS
Each factory was different in its own way, and it's important for the Baja reps to keep abreast of new capabilities and new products. During each visit, factory management teams took time to explain their production capabilities, marketing plans, and research-and-development programs. They also pushed new products that could appeal to Baja customers.
Daugherty and Schoenbachler peppered factory representatives with sharp questions: Certifications? Product availability? Production capabilities? Colors? FOB Chongqing? Terms? Product modifications? Test rides? Parts availability? R&D capabilities? U.S. exclusivity? Quality control on components?
These are the same types of questions any dealer should ask of a potential Chinese supplier. Remember, buying Chinese products isn't the same — by a long shot — as ordering product from your Japanese manufacturers. Don't assume anything; check it out.
But the factory visits weren't a one-way communications street. Factory management questioned us in detail about the U.S. economy and the market for powersports equipment.
At the beat-up, very old, state-owned Jialing factory that makes products for military and consumer applications, we saw 600cc sportbike/sidecar units for the military rolling off the line. The same 600cc bike also had been tailored for consumers, and one was waiting for Daugherty's test ride. He liked it.
One morning, Schoenbachler didn't show up at the hotel for a factory visit. He would be gone for the rest of the tour, said Daugherty. Cause: a problem between a factory and a Baja customer regarding payments and title transfer to be solved in another city. The product had to be shipped soon for the important Christmas season. Schoenbachler was on a plane to mediate the dispute.
The last factory we visited was a sprawling new $100 million state-of-the-art facility being built by RATO to produce engines, generators, ATVs and motorcycles. Its biggest profit center, however, is the plastic injection molding operation that churns out parts for Ford and Gree Air Conditioning, among many others. There was a youth ATV and a 250cc sportbike waiting for Daugherty on the company's large test oval when we completed the factory tour.
(Oh, and about those containers of ATVs: They were owned by Baja's customer and they were covered by insurance. A new shipment was on its way in 15 days. Just another day in the world of China sourcing for Paul Schoenbachler and Ryan Daugherty.)
Joe Delmont can be reached at email@example.com or 952-893-6876.