KEY POINTS:
China's recent economic rise has struck fear into many New Zealand businesspeople, but a group of entrepreneurial young Kiwis are proving partnerships with Chinese firms can make for an exhilarating ride.
Zuru Toys is a manufacturing business situated in Huadu, just north of Guangzhou, the capital of Guangdong province, which is owned and operated by the Mowbray family, from Cambridge in Waikato.
The company was founded by Matt Mowbray, 27, who began selling toy hot air balloons before he'd even started secondary school.
By the time he left, he was selling about 10,000 a year. He dropped out of university after a year of study to concentrate on his business and his younger siblings Nick and Anna, cousin Simon Rushbrook, and Anna's boyfriend Tom came on board.
Their first contact with China was when they began getting some of their production outsourced there.
Pretty soon they realised China offered the best prospects of taking the business further and two years ago moved their entire operation to Huadu.
Since then, their growth has been phenomenal, particularly in the past year.
Their main product line is a range of sports balls which are illuminated with fibre optic technology to enable play in the dark "like a real life video game".
Their products are now sold in more than 60 countries by most major retail chains around the world, including Kmart, Wal-Mart and The Warehouse, and are advertised on TV in 24 countries.
"We've broken into the market very, very quickly," says Nick, an energetic 22-year-old, who talks of "going on a rampage" at the toy trade fairs held in Hong Kong every January and October to promote their products and generate sales.
"We've been really hungry to break into markets, 100 per cent hungry to get into the major retailers. We constantly hound them."
Anna, 23, adds: "But right now for us it's trying to up our production capacity to meet demand."
A year and half ago they had 10 employees, now they have more than 250 and will need to increase that to 500 just to meet their production schedule.
They believe they will achieve up to $15 million in sales this year.
"If we could fit in the orders we're receiving it would be a different story," she says.
"If we had the capacity we need to, we could probably double those numbers."
Despite their success, the Mowbrays say they are not rich ... yet.
At this stage they are putting all their profits back into the business.
"We now understand the industry worldwide, we now understand China, we understand manufacturing, we know all the partners around the world. Now it's a matter of using that system to develop awesome product lines and just putting them into that system so that our growth can actually be exponential from now on," says Nick.
"The reason we've expanded so quickly, is number one, because we've been price hungry in China. We're doing incredibly innovative products, and we're able to do it because we're completely vertically integrated, we do absolutely everything ourselves, so we're able to do absolutely phenomenal prices."
That drive to keep prices low by keeping all aspects of production in- house has seen them adopt what they call a "Chinese mentality" to solve problems.
When the company needed a rotational moulding machine to make the plastic bladders for their balls, they sent one of their Chinese engineers to get a job in a rival's factory and work for a week to learn everything he could about the machines, then Simon, the family's engineering expert, built one himself.
Zuru's low prices mean distributors are working with margins that allow them to support the products with marketing dollars.
Of course a significant factor in Zuru's competitive prices is lower wage costs.
In Guangdong, they can employ eight engineers for the same pay as one in New Zealand, and that's even when paying between 1000 yuan ($174) and 5000 yuan per month per worker as opposed to Huadu's minimum wage of 690 yuan per month.
Apart from the Mowbrays' talent, energy and determination, they are quick to point out the contribution of their friend, partner and general guide to the Chinese business world, Vicky Zhang. She was their first point of contact when they initially began outsourcing manufacturing to China, meeting them at the airport when they first arrived.
"We couldn't have done it without her, and I think that's one of the keys to China. It's all good being enthusiastic and out there and wanting to do it but if you haven't got that key Chinese person who is your link between the two cultures it would be absolutely impossible."
Zhang's family owns the business which was handling Chinese manufacturing for Zuru when it was still based in New Zealand. Now the two families have a partnership in an OEM (original equipment manufacturing) company which provides product research and development, sales and promotional services to other manufacturers. Through that company, they hope to do business with other New Zealand companies.
Anna says that's typical of Zuru's "rip, shit or bust" attitude which has seen them run into some potholes along the way, including a lawsuit which saw them recently change their name from Guru Toys.
But despite the considerable challenges of doing business and even just living in such an alien environment and culture, the Mowbrays are clearly fired up by what they are doing, with Nick and Anna's patter at times resembling a machinegun shootout.
"We're really young, and that's half the reason we're doing so well," says Anna.
"We've got the energy and we're really focused."
New Zealand Trade and Enterprise's North Asia regional director Merv Stark says one of the reasons why more New Zealand companies have not taken advantage of potential opportunities in China is that they are more often than not small and owned by "guys that are 55 and above and there's not quite the same impetus to get out there and do new things. The companies that are the most successful are the companies driven by younger, entrepreneurial people".
Zuru is a vivid illustration of that view. "I think we've proved in a short amount of time that if you are really hungry to get into China and really hungry to get into the markets you can do it," says Anna.
* Adam Bennett travelled to Guangdong as a guest of Guangdong Overseas Chinese Affairs Office, Cathay Pacific, and The New Zealand Chinese Herald.
