Ted Clark of Products Research & Chemical Corporation (PRC) On the Top Challenges and Opportunities of Doing Business in China

Be ready for layers of government and regulatory approvals and work hard to understand the culture.

As a part of our interview series about about The Top Challenges and Opportunities of Doing Business In China, I had the pleasure of interviewing Ted Clark.

Theodore (Ted) Clark is a businessman, entrepreneur, and investor with over 40 years of experience as a senior executive in both public and private equity-owned specialty chemicals companies. Starting as a shipping clerk, he rose through the ranks to become President & CEO of Products Research & Chemical Corporation (PRC), a global leader in aircraft and construction sealants and coatings. His new book, Buy and Build CEO: Leveraging Private Equity to Build a Winning Global Business (Dudley Court Press, Sept. 13, 2022), chronicles Clark’s 14-year adventure in the world of high-stakes, high-rewards business. Learn more at tedclarkauthor.com.

Thank you so much for doing this with us! Can you tell us a story about what brought you to this specific career path?

I’ve spent much of my career in the adhesives, sealants, and coatings industry, starting as a shipping clerk and rising to CEO of two global adhesives, sealants, and coatings businesses. So, you might say the career path found me and I am grateful it did.

Are you working on any new or exciting projects now?

I recently retired as Chief Operating Officer of H.B. Fuller company, the largest pure play adhesives company in the world and I’m now a partner at Iron Path Capital, a middle market private equity firm, which is a new direction for me.

None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story about that?

I’ve had many great mentors over the years but the most impactful was Dick Cude, a great leader and executive who took me under his wing when I was a young customer service manager and promoted my rapid rise to become CEO of PRC — Desoto International and worked for me for a few years before he retired. I couldn’t have had the success in my career without his advice and guidance.

Let us now move to the main part of our interview. From your opinion and experience, what are the top 3 opportunities that come with doing business in China?

Doing business with China has changed dramatically in the last 20 to 30 years, moving away from North American and European companies setting up low-cost manufacturing and or sourcing products from Chinese companies to sell into their home markets. While this is still a large part of business activity in China, there’s a trend to move from China to other lower cost Asian countries or to re-shore to home markets. This has been partly driven by the recent supply chain issues and companies now trying to find shorter supply chains, but the bigger impact has been the steady rise of the middle class in China and the rising standard of living that has created opportunities for American and European companies to 1) source raw materials, 2) manufacture products, and 3) sell these products in China. Companies now have the opportunity to support the growth of the Chinese economy and support global source/make/sell strategies in the major and developing economies of the world. Major companies, including auto makers, durable goods and construction materials manufacturers, are taking advantage of these trends.

From your opinion and experience, what are the top 3 challenges that come with doing business in China? How would you recommend addressing those challenges?

The challenges are similar to doing business with other countries: 1) you need to take the time to understand the culture and local market requirements and consumer preferences; 2) you need to find and develop the leadership team in China that can lead your business strategy; and 3) you need to understand the political, regulatory and legal requirements to mitigate business risk. Addressing these issues requires developing a network of consultants and third-party professionals with experience doing business in China to help you navigate all three of these challenges. Don’t rush in developing your business, as it takes time to learn the ropes to successfully conduct business in China.

What do you think is the new market in China that may become the next “big thing?” What challenges does that new market face? How would you address it?

China has focused on renewable energy and electronic vehicles and aims to become a global supplier to these markets, much in the way Japan focused on high quality, high mileage cars and motorcycles in the ’80s and ’90s. These markets will need significant infrastructure and alternative energy storage systems to make them viable. They also use difficult to find and hard to process metals, which will be a challenge to source globally. These are global challenges and will require public/private partnerships by countries throughout the world. China is clearly in the lead and the challenge will be for other countries to catch up or become dependent on countries like China to source the materials and products needed for a lower carbon future.

Here is our main question. Can you please share your “5 things you need to know before you start a business that relies on Chinese production or export”? Please share a story or example for each.

1. Make sure you’ve looked at all the options before you pick China. In many cases, it’s no longer the lowest-cost producer.
2. China is becoming a consuming nation with more opportunities to source/make/sell in China.
3. You need to have a trusted local team — and that takes time to develop.
4. Have a well-thought-out strategic reason to be in China and a robust business plan.
5. Be ready for layers of government and regulatory approvals and work hard to understand the culture.

We keep hearing about the Trade War and Tech Race between the US and China. What are your thoughts about it? Given the unknowns, how do you plan to pivot?

You need to have a strategy to protect your intellectual property, adhere to trade compliance and be prepared to take the political risks inherent in doing business outside your home country. Always remember that global trade is an important source of growth, and risks can be mitigated but not eliminated. Like everything else, look carefully at the risks and rewards.

Can you please give us your favorite “Life Lesson Quote”? Can you share how that was relevant to you in your life?

“You can never know enough about your business” — especially in China.

You are a person of great influence. If you could inspire a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. :-)

A movement of understanding each other one person at a time. Make a new friend every day.

Thank you so much for these amazing insights. This was truly uplifting.