Clevest Solutions Inc. wanted a power boost from the world's most populous country. The Richmond, B.C., company, which makes software for work force management and smart grid operations for the utilities industry, has a worldwide clientele. But chief Thomas Ligocki saw huge growth potential in China, which is investing heavily in smart grids so power providers can electronically gather meter and other information.
Clevest already had several Chinese clients, a mix of state-owned enterprises that control the nation's power industry and private companies that serve them. To keep things moving in the right direction, the company wanted to build strong relationships with the state-owned firms.
That was easier said than done. As Mr. Ligocki explained in the original Small Business Challenge column that appeared in March, state officials expect regular visits from him and other top Clevest execs. As of early this year, he'd made about 15 trips to China for face-to-face meetings. But even though Clevest had staff working in the country, it had chosen not to open a Chinese office as part of its effort to strengthen ties.
For his part, Mr. Ligocki wanted the Chinese companies to be more transparent about how they make decisions. He was also keen to safeguard Clevest's intellectual property in China.
(Check out the original Small Business Challenge story about Clevest here.)
Three experts took stock of Clevest's challenge.
- Chris Griffiths, director of Toronto-based Fine Tune Consulting, suggested that the company protect its intellectual property by securing Chinese patents. As it turns out, Clevest has taken that step. “We didn’t do that as a result of the article, but the article is a confirmation of our strategy,” says Mr. Ligocki, who is the Clevest’s president, chief executive officer and chairman.
- Stanley Chao, managing director of All In Consulting in Rancho Palos Verdes, Calif., thought Clevest would improve relations with Chinese state-owned companies by acting more like a domestic company. Among Mr. Chao’s recommendations: Open a local office and take a Chinese name.
- David Fung, Canada China Business Council vice-chair, encouraged Clevest to find a reliable local partner rather than go to the expense of opening an office.
Although Mr. Ligocki agrees that it's important to be as local as possible, Clevest has no plans to launch a Chinese location anytime soon. But it has found some valuable partners: resellers that serve the utilities industry.
"They have the local presence, and they effectively achieve what [Mr. Chao is] saying, which is you need to look like a local company," Mr. Ligocki says. "But it doesn't necessarily mean that we have to have a local subsidiary."
Clevest's need to operate in so many regions of China makes a single office unfeasible, Mr. Ligocki explains. "I don't want to just have a poor little office in one part of the country," he says. "If we're going to do it, I want to have a strong presence and in multiple parts of the country."
Recent events have worked in Clevest's favour as it keeps winning Chinese business. In late November, as part of her government's recent trade mission to China, B.C. Premier Christy Clark joined Mr. Ligocki in Beijing for some deal signings. Having Ms. Clark there was a coup for Clevest in a country where senior politicians command great respect.
"We signed a couple of pilot projects," Mr. Ligocki says. "But more importantly, one of our existing customers, we signed a multimillion-dollar add-on phase to that project. It wasn't a new client, but it was very good because it demonstrated the value that we're providing and the fact that they want more of the same."
Mr. Ligocki is also happy that the central government is splitting up State Grid Corp. of China, which supplies power to the country's northern half, creating a total of six regional utilities including China Southern Power Grid Co. The various players' IT departments will have to bid for projects.
"Now there will be greater transparency and more of a competitive bid approach to new projects," Mr. Ligocki says. "So I think it means that we will have more opportunities."
Clevest's local partners notwithstanding, Mr. Ligocki remains a frequent flier to China.
"I am still needed to make more trips out there," he says, noting that it helps having his assistant on hand to translate. "Me being there and being able to effectively communicate has been important and continues to be important."