Chinese promise

Inflexion has a dedicated international team covering Asia, the Middle East, North and South America from their on-the-ground presence in Bangalore, Shanghai, Sao Paolo and Boston. For over ten years, our in-country experts have helped our portfolio to operate in 160 countries. Now their local expertise is crucial in helping businesses mitigate the impact of coronavirus and create a plan back to growth.

Xuan Ye, Inflexion’s in-country expert in China, has been supporting Inflexion-backed companies in China to help address some coronavirus-induced issues and position them for future growth. 

“The priority now for businesses is to preserve what they have – the revenue they have, the local teams they have. It is about looking after these assets and the value they have for the company,” explains Xuan. His base in Shanghai gives him an on-the-ground presence, which facilitates visits to sites and people. This, he says, fosters a richness of insight and strong relationships, neither of which can be initiated with online tools such as MS Teams or Zoom.

“Many are restricted from travelling now and this can create a potential problem. But being present on the ground means a lot can be done to preserve existing commercial relationships and the supply chains in many businesses in our portfolio”.

Xuan feels there are some opportunities to seize amidst all this. Take leading roof system provider, Marley, for example, which has primarily bought from the UK and Europe throughout its long history. The business was backed by Inflexion last year and, over the last few weeks, Xuan has been leading an exploratory project to assess pricing in other countries.

Covid-induced pressure on the export sector means many companies may be more willing to be flexible. “In the UK some factories are being forced to close, whereas in China the factories are reopening. We can exploit the fact that China is reopening and so can assess and better understand the costs in this market and look into new products. We won’t necessarily buy from China, but can better understand purchasing costs with a view to optimising them.” The exercise may be as useful as it is timely.

Team matters

Of course many firms are being forced to reduce cost and nowadays that can mean staff-wide salary cuts. But this may have an adverse impact on morale and so finding alternative solutions may be preferable, as was recently learned by one company.

Peach is a provider of distribution workflow to the global video advertising industry. Like many companies at this time, management considered rationalising costs through an office-wide salary reduction in Shanghai. Xuan was very familiar with the business after having managed it for 12 months following Inflexion’s initial investment, and so was aware such a move could have a very detrimental effect on staff morale. “I saw an opportunity in the need for cost-cutting. It was a chance to review productivity, and ultimately we cut costs and enhanced team spirit by addressing inefficiencies.” This review saw people voluntarily leave the business, resulting in a large cost saving, which enabled other salaries to stay intact and so preserved and even boosted morale. “We also seized the opportunity to negotiate and cut third-party services.” The reinvestment phase for growth is now underway. Rather than stymie growth owing to reduced headcount, the fresh alignment of processes and staff thinking has resulted in the office’s first new client in a year: global consumer giant Kraft.

Optical transceivers business Halo found itself without any local support for a crucial important sourcing centre, China, after its supply chain manager left. It proved very helpful to have a local, on-the-ground resource when no foreigners are allowed to enter the country during this period. “I was able to inspect and keep talking to vital suppliers to carry on sourcing activity.”

Halo began to consider hiring in February, and Xuan provided support here as well by drawing up a list of candidates. Ultimately a strong appointment was made with a Shenzhen-based professional with 15 years’ experience in sourcing and project management, including eight years with Sweden Telecom. By utilising Xuan’s contacts and local presence, Halo was able to save the fees typically associated with utilising a recruitment firm, and now has the right person in place to ensure continuity as well as to inspect and refer new suppliers.

Pockets of light

And they may be increasing in size and quantity as a growing number of countries lift lockdown measures and companies can begin to build on their growth again.

“We are confident that Covid-19 will be over eventually, just as it was for Sars and Mers, but the size and impact on our lives will be greater. Consumers’ habits will change, so businesses will need to embrace this reality and change accordingly. We are in this together, and working together across different geographies can be very helpful.”