When the Chinese Mainland started to open up in the late 1970s, Melchers was among the first companies to reenter the country. But, as Bjoern Lindner, Managing Director at the storied German firm, explained, the ties were never completely severed, even during the tremendous turmoil of the 20th century.
“We never really left China,” he said. Officially, Melchers retreated on two occasions – during World War I and when Mao took control. All of Melchers’ assets were confiscated.
“But still, all of the network and all of the guanxi remained with the influential people in China,” Lindner said. “And China still needed machines to run the factories, they still needed spare parts, they still needed an export market for the products that they produced.” So Melchers continued to provide these services from Hong Kong.
The company was founded in Bremen in 1806, and began trading with a focus on North America. The Hong Kong branch opened in 1866, followed by offices in Shanghai and other Mainland cities. Since then, Asia has been a major part of Melchers’ business.
“Basically we cover almost all of Asia from Sri Lanka, Myanmar and Cambodia up to South Korea,” Lindner explained. Japan and India are the exceptions.
Melchers was an early entrant into Myanmar, in 1994, a reflection perhaps of the company’s confidence in tackling challenging markets. But as Lindner noted, this is where their expertise lies – finding ways to enable transactions between different parties.
“If the environment is complex or challenging, this is where we can give a helping hand. If life was too easy then nobody would need us.”
Local and long term
One of the core concepts of Melchers is that in all their locations they operate as local companies with local management.
“We don’t get a Monday morning call from our headquarters telling us what to do. We are trusted to be in these markets, and always for the long run.”
This long-term view is also a key part of the company’s modus operandi. Although Lindner is relatively new, having joined the company two years ago, many of his colleagues have been with Melchers for 20 or even 30 years.
“We don’t do the shifting between offices like some other companies do – three years here, three years there,” he said. “Because we feel that your strength is the network you have. So the longer you stay in one market, the better your network is to do business.”
The company is focused on a number of core, but unconnected, sectors, as Lindner explained: “We have industrial products – which means equipment, materials, spare parts, chemicals. We do sourcing, and we provide services in these areas, plus we do luxury products.”
It is particularly strong in assisting the mittelstand – Germany’s small and medium-sized enterprises – find export markets for their industrial products. For these businesses, Melchers provides services, whether it is selling their products directly, finding a suitable location for a production base, or dealing with after-sales service.
As the global trading environment has evolved, Melchers has adapted and is now focused on services.
“We don’t see ourselves as a typical trading company,” Lindner said. “It’s not like we buy one container full of stuff on the left side and try to sell it on the right side, and make a typical trading profit in between. We are more of a service provider and business enabler.”
More than 200 years after Anton Friedrich Carl Melchers founded the business, a number of family members are still involved. These include Managing Partner Nicolas Helms, who is a shareholder, and two more who are based in Asia, but are not shareholders.
Today, Melchers operates on a managed partner model. “This means that every partner which we have on board needs to buy into the company – you cannot get the shares from your dad.”
Lindner credits the company’s survival to its willingness to adapt even after catastrophic events such as the confiscation of all its Mainland property.
“All the assets were gone,” he explained. “We had huge assets in China – we were the first Coca-Cola filler, we had our own mineral water, which is still one of the most famous water brands in China, we had our own shipping lines in China on the Yangtze river.”
But the company recovered, helped by having outsiders join the board and cultivating an entrepreneurial approach. A prudent attitude has also helped Melchers weather many storms.
“The company is not known for big changes,” Lindner said. “You will not see us making major acquisitions in areas where we are not yet established. We see ourselves being somewhat prudent and conservative in approaching new areas.”
Melchers’ recent growth has come by acquiring other companies, in Germany and in Asia. It also welcomes opportunities for new partnership models.
“The company is always open to entrepreneurs coming to us, and new business ideas, setting up companies together, and growing business together – that is what we see will be happening more in the future.”
Hong Kong base
In Asia, the Chinese Mainland is the biggest market for Melchers. So, why is it important to be based in Hong Kong?
“That is always the big question. I have to admit, most of my business is in China. So there is always the question of what do you need Hong Kong for?” he said. But the companies that Melchers works with appreciate the Hong Kong base, because of “the usual buzzwords” – free flow of capital, free access to information and Hong Kong’s legal system.
Lindner first came to Hong Kong in 1996. After nine years he went back to Europe and did an MBA, returning to Hong Kong in 2009. He worked in fields including telecoms and the garment sector, and this diverse background was a key attraction for Melchers when they were looking for someone to head the Hong Kong office.
And for Lindner, a selling point of the role is that he spends a lot of time on site, meeting customers and suppliers. And he also enjoys the hands-off approach from head office.
“What I personally appreciate a lot within Melchers is the trust level. We are very independent on site here, we are not micromanaged.”
And unlike some other companies he has worked for where it was “death by powerpoint,” Melchers operates on a very efficient model where if you need an important decision you can expect a response from Germany by the next day.
Melchers is not just a long-established company in Hong Kong, it is also a very long-time member of the Chamber, having joined in 1869. And being an active part of the local business community is as important now as ever.
“Our business structure is that we are a local company – we are a German company but we are a local company here in Hong Kong. We want to help each other,” Lindner said. The Chamber offers the opportunity to meet like-minded people and to explore new concepts, such as the Greater Bay Area initiative.
“The Greater Bay Area will be a huge change for Hong Kong and where I see the Chamber can help me as a member, but also where I can help other members within the Chamber.”
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