What do you do when you interview somebody and you don’t quite get the article you expected out of it? You blog, of course.
And that’s the case with my interview with Ramsey Walker, co-CEO of Freeborders. I profile Freeborders in “Inside a Service Provider: Freeborders Shares Its China Growth Plans.” (The company offers services to clients in the retail, financial services and software segments, with most of its operations in Shenzhen, China.) But that article is based on a second interview I did, this time with co-CEO John Cestar. Since I couldn’t figure out a smooth way to integrate some of the more relevant comments from Mr. Walker into that article, I present them here…
What’s your strategy? To grow big and get sucked up by somebody else?
Ramsey Walker:
We think there will be an Infosys of China, and we think we will be it. And if we are the Infosys of China, then we don’t need to be sucked up by anybody — we will be doing the buying. That is really the strategy, to be the Infosys of China…What is the state of the China development market right now? What does it look like to you?
There is just a huge new supply of qualified, educated technical programmers coming out of schools, coming out of some of the captive sites that Microsoft and others have set up. So what we see is just a tremendously educated, tremendously motivated supply of labor. That is enormously attractive to US and European and rest-of-the-world clients. So, start with the labor pool.
Behind that is, of course, an education system, and the education system in China is outstanding and really very horizontal. Unlike India, where you have much more elite type of an education system with relatively few people coming out of [one of the Indian Institutes of Technology] schools and some of the other [schools], China is much more broad, and so that is driving the labor supply.
The other aspect is no one has broken out on the vender side with any kind of scale. We think we are in the process of doing that. What I mean by that is real scale — in this business, many thousands of people, not 50, not 100, not even a couple of hundred. It is many thousands of people. We will have 700 or more by the end of this year — between 1,000 and 2,000 next year. We have Fortune 100, Fortune 1000 customers today, and we are simply adding to that.
We are optimistic both on the supply side and on the competitive landscape and on the demand side.
When you talk about the China market, there is a focus on regions. How do clients even decide? Is it the case that most of the US or European companies going over there are looking for sourcing solutions and are sticking with regions where they have already got a toehold through their manufacturing?
We are in Shenzhen — right across from Hong Kong, a 40-minute ferry boat ride. That is a tremendous advantage. It has 11 million people. It is obviously a big city. It has increasing amounts of first-world infrastructure. In Shenzhen there are a couple of advantages. Number one, the supply of labor is strong. It is a point of attraction for many of the regions all around China, people coming into Shenzhen.
Number two, the proximity to Hong Kong is a tremendous advantage for us because customers are coming to Hong Kong all the time. They either tack on this trip, or they come to see us and then they will tack on other stuff. They are in Hong Kong, the business center of the world and so it is very easy for them.
The costs in Shanghai are actually higher, and the supply is lower. Beijing, to be honest, I don’t have the statistics on.
What kinds of mistakes are American companies making around doing business with China?
One mistake would be to drop a bunch of westerners in to manage the operation. That is not what we have done. We have used Chinese nationals to manage the team there. That is one thing — how you set up the organization.
Two is, of course, respecting the culture, respecting the holidays. Don’t force them to buy US holidays and that sort of thing.
I think the other thing is to recognize that doing work offshore is not the same as doing work onshore. You don’t get the water cooler conversations. You need to have really well documented processes to succeed.
