UK company, Hydra Mining Tools International, digs deep to exploit business opportunities in China.
Demand for coal soared during the Industrial Revolution in the 18th and 19th centuries, and even with the wide range of fuel sources available today, it still plays a vital role in the world’s primary energy mix. Coal provides 25 per cent of global primary energy needs and 40 per cent of the world’s electricity.
Hydra Mining Tools International, based in South Yorkshire in the UK, is a leading designer and manufacturer of deep coal mining equipment. Its shearer drums, which are used to carve out huge blocks of coal underground, are exported to 25 countries around the world.
“The UK coal industry has declined significantly in recent years, so overseas markets have become increasingly important to the survival of our business,” says Gordon McShannon, Chief Executive of Hydra Mining. “Currently, the UK extracts around 20 million tons of coal a year. In China, the market is one hundred times larger.”
Researching The Market
Having recognised China as a potential target, Hydra Mining needed to carry out more thorough research into the country’s market potential. So, they applied to UK Trade & Investment’s Export Marketing Research Scheme.
“We had used the Scheme with great success to research India,” says McShannon. “China was even more daunting and difficult, so we knew it was vital to get a thorough understanding of the marketplace. Our Indian experience taught us a lot and we were able to tap into a considerable amount of specialist knowledge and expertise, as well as using all of the contacts that we had at our disposal through UK Trade & Investment.”
The research revealed a vast potential marketplace, spread across the whole of China. One of the most surprising discoveries was how many opportunities there are in China to promote the latest technology in shearer drum design and the latest coal cutting systems.
“Our research showed that the vast majority of shearer drums used in China were based on technology and designs used in the UK 20 years ago,” says McShannon. “More mature markets tend to opt for costlier products that have increased productivity capability with improved health and safety features. But, in China cheapness is still the main driving factor.”
The company realised that in order to succeed long-term in this market, it would have to encourage the industry to embrace new technology. And, because the drums need to be replaced on a regular basis and engineers need to be available to refurbish worn out parts, it would simply not be possible to provide this level of service from the UK.
So, Hydra Mining teamed up with Taiyuan Mining Machinery Group, one of the largest longwall shearer manufacturers in China, based in Taiyuan City, Shanxi Province. The UK company supplies the expertise and raw materials needed to produce the drums, while the actual manufacturing process takes place in China.
Chinese customers approve of this mix of British technology and Chinese manufacturing and, to date, sales of components to China have reached £250,000. The company puts much of this success down to the way their research prepared them for the Chinese market.
“Without the Export Marketing Research Scheme we would still be just talking about conducting market research in China,” says McShannon. “It also helped us to learn about the differences in business culture between the UK and China. Our customers appreciate that we have taken the time to find out about local practices, like the custom of taking a nap after lunch, and that we are happy to accommodate them.”
The future of Hydra Mining in China looks promising.
“We need to continue to research the market to see how we can forge relationships with other Chinese manufacturers,” says McShannon. “In the long term, we hope to establish our own operation out in China. But our first priority is to establish a good reputation there and to generate demand for some of our more high-tech and, therefore, profitable products.”