he Chinese characters on the cardboard container might be cryptic to Bill Whitehurst, but the bespectacled cartoon figure with the white beard is undoubtedly Col. Sanders. The fried chicken inside is a faint echo of home, far away on the other side of the globe. As he finishes his lunch, the vice president of business development for Pentair Water Pool and Spa in Sanford, N.C., glances around the glassed-in conference room. He seems pleased with the new factory his company has just built in the ancient city of Suzhou, about two hours outside the modern bustle of Shanghai.
Whitehurst comes to China with a message. “This U.S. company is global,” he says. “Now that there’s this globalization focus, we’ve got to be here and we’ve got to do it right.”
Like his Chinese colleagues, Whitehurst hopes to promote the Pentair name to be the KFC of water products. As China continues to modernize, there is an increasing need for healthier, cleaner conditions nationwide. Uncontaminated water in kitchen taps and swimming pools are two demands the company is already working to meet.
Today, the market for pool equipment nears $1.055 billion renmenbi, which is about $131.9 million U.S. dollars. And Pentair officials believe that operating from within is the best strategy to meet these needs.
The company’s vision for China is as clear as water treated by its products.
Pentair has armed itself with a new factory in Suzhou, a corporate office in Shanghai, an enthusiastic team and a straightforward strategy. In fact, Pentair is the only equipment manufacturer with an on-the-ground presence in this country. It does not depend on a distributor. This difference is what separates the company from other manufacturers, while joining it with the Chinese market.
Eastbound
Today, Pentair’s market share is in the single digits because, Whitehurst says, “we haven’t been here that long.” But taking advantage of the new China is a driving force behind his firm’s movement east.
“The only way to achieve goals is to continue to be innovative,” a Pentair-Asia spokesperson explains. “For example, once you make it fashionable that you need to live in a complex with a pool and to have healthy living for your kids … the number of swimming pools will grow.”
According to a market study commissioned by Pentair, four major forces will grow the Chinese market: schools, hotels, real estate developers and large natatoriums.
Currently, the new Suzhou factory focuses on drinking water sanitation, but Pentair plans to take advantage of the growing popularity of residential and commercial pools.
Pentair is aware of its competitors, but doesn’t perceive them as a threat because those companies continue to operate through Chinese distribution. “They’re still depending on those distributors to be their eyes and ears,” Whitehurst says. “They’re going to have to change that if they’re going to grow and survive here.”
Staying power
Pentair’s plans to invest in China are a far cry from its original Asian strategy. In the past, the company depended on its distributors for access. “We began transitioning from the way we used to do business over here: We used to have a sales guy … who would come to Asia twice a year, and we had a couple of distributors,” Whitehurst recalls. “We had our office in Taipei originally, and … it made more sense to be in Shanghai. You’re on the ground, in the market.”
Though the company was happy enough with its former distributors, they “had us under their thumbs,” Whitehurst says.
Pentair needed to wriggle free and find out who its customers were so that it could concentrate on globalization.
But more than just splitting from the distributors was required for Pentair to write its Chinese success story. In addition to paying close attention to the changing China, it has focused on four other strategies.
Staffing: Having specific types of employees join the team is a critical part of Pentair’s vision. The Shanghai office hires people who are more than just bilingual — they also comprehend the inner workings of Western business practices. This is one way to break cultural barriers between the East and West, Whitehurst says.
For example, Charles Gao is director of sales for Pentair Water-Asia. He is the model for a Pentair employee working in China: He speaks fluent English and Chinese, has an MBA from Bowling Green State University in Ohio, and has experience working for an American company.
Forming partnerships: Gao says promoting Pentair as a trustworthy, international brand is also part of its staying strategy. One of the best ways to accomplish this is by creating relationships. He plans to team up with builders and the end users. By forming partnerships with major contractors, he explains, Pentair can expose end users to their products. These include the investors that Pentair is eyeing: hotels, gyms, real estate developers, and the like. The theory is that if the contractor promotes Pentair’s products over local offerings, the end user will happily accept Pentair as well.
Making acquisitions: In addition to forming partnerships, Pentair hopes to acquire local companies to expand its global manufacturing business. Currently, Whitehurst hopes to buy a pool equipment company that will supply the warmer, southern regions of China where the industry is taking flight. “I’m going to be disappointed if we’re not making pool equipment by way of an acquisition down there within a year,” Whitehurst says.
Working the niche market: Pentair plans to attract Chinese buyers with niche products. The company is already promoting heat pumps to current customers, such as the state-run Nanjing Olympic Center.
Pentair also plans to switch over from stainless steel filters to fiberglass to reduce corrosion, Whitehurst says. The company also hopes to break into the pump business, which is tough because of the large numbers of pump manufacturers already here, Whitehurst says. And because China is famous for its knockoffs, Pentair needs to protect itself from companies replicating its products and selling them for less.
“The price is still sensitive here in China,” Gao says. “People will say, ‘Your brand and quality are good, but what is your price?’ We know we cannot compete with the local price, but we can give more value.”
So far, Pentair is acclimating to the new culture and its second home in the push to go global. “The only way for us to be in the game here is to be on the ground,” Whitehurst says. “If we’re going to be a $10 billion business in five years, $4 billion of that needs to be outside of North America. That’s the goal.”
