Jefferson Harcourt is the Managing Director of Grey Innovation, with offices in Australia and Hong Kong .
What is the nature of your business?
Out-sourced product development and engineering services.
What do you regard as the key factors for your business to succeed in the global business market?
We have the experience and infrastructure required to design and manufacture products which can compete on price and functionality with any tier one electronics manufacturer globally. The fact that we are relatively small, coupled with an Australian engineering workforce (over EU or US) adds to our competitive advantage through relatively low overheads and wage costs.
How do you/your company help companies to achieve business success overseas?
We design products which are export ready. In other words, these products meet global regulatory requirements, and are priced so they can be placed in mainstream sales channels successfully. Our products are manufactured off shore, and our design and production model is best practice.
How can companies turn their strategic intentions into global business outcomes?
Take action. Be careful, and where possible work with trusted parties. Leverage off other business and build a network before you start moving.
What are some affective business models for scaling a business overseas?
We have achieved our goals rapidly through partnerships. We looked for synergy opportunities to exploit, giving benefit to our partners as well as ourselves. We found that we were being pulled off shore as much as we were pushing.
What are the pros and cons of establishing direct and indirect business channels in different parts of the world?
Advantages are a much greater potential market, and the ability to exploit operating cost differences where present (engineers are far more expensive in Europe than Australia , for example). Cons are numerous – of course there is the cost of establishing the channel in the first place. Australia is so far away – it’s easy to be saddled with all the blame by local players if there are problems – it’s harder to defend yourself.
What operational factors must a company consider when attempting to expand their business globally?
Finance, tax and tariffs.
Which companies would you say have had sustainable global growth? Why?
Google. They are everywhere – the cost of entering a new market is so relatively low. It’s a great business model, and very well executed.
How different/difficult is it to negotiate transactions in other countries, as opposed to the domestic market? Give examples.
It can be near impossible without local knowledge. We normally work with westerners, or very westernised Asian suppliers. All negotiations with native Asian suppliers are done using our partners as intermediaries. Language and culture is a constant issue. We all know in Asia that ‘yes’ does not necessarily mean ‘yes’, however putting this into practice and not getting caught out is difficult to do. We once had production tooling underway with weekly status reports coming in. It was only after a suspicious project manager requested photos of the tool that we realised the tooling had not started at all, and we lost six weeks.
What are your company’s competitive advantage(s)?
In Australia we have advantages based on the fact we are producing high volumes of product, even though the production is not occurring here. We have direct access to head office of large semiconductor manufacturers, and the ear of major players in the industry. This means we can offer a design at a lower unit cost than our local competitors.
In the Asian market, we are seen as software experts. Asia is not as experienced in developing large scale, complex software systems. Our experience in automotive and defense software systems has allowed us to pull projects back to Australia because the local engineering capabilities were not sufficient.
In Europe and the US , we can compete on the overall development costs. Australian engineers are less expensive than their European and US colleagues, and our overheads are lower.
How do you nurture your company’s competitive advantage(s)?
We have to deliver quality products. At the end of the day, the competitive advantages we have are inherent to our business model. So long as we continue to recruit talented designers and engineers, and continue to win projects off-shore to develop back home, we will retain our advantage.
How do you leverage your company’s competitive advantage(s) to achieve desired outcomes?
We promote heavily to the local market, and use our product’s success in foreign markets to try and win more off-shore contracts. Our global partners benefit from what we do, so they are out selling for us.
What general advice would you give to a company that is expanding their business overseas for the first time?
Find a partner who will benefit from a close relationship with your business. Once that relationship is strong, the benefits are immense, and the cost is relatively low. There is no way we could have gone into the markets we’re now in without the assistance of our partners, and we’ve all benefited as a result.
Thank you, Jefferson, for your time.