The Boston-based company, which boasts a major office in Ottawa along with strong presences in the Asian metropolis, San Diego and Hertfordshire in the U.K., knows a thing or two about locating far-flung outposts abroad.
But while in its startup phase several years ago, after selling a line of products to a Japanese customer, something went wrong.
"At the time we were a very immature company – we didn't have a quality director," explains Mr. Kovacic, SiGe's Ottawa-based director of research and development.
The customer, a contract manufacturer, couldn't get the product to work. They weren't particularly happy about it. Phone calls were made. Words were exchanged.
"So we pressed a fellow to go over there, and that fellow turned out to be me," he smiles. "And I had to face quite a hard grilling by the Japanese customers as to what the heck was going on with our product.
"It took me forever to figure out the cultural nuances, and what should have taken a day took about four or five days."
But Mr. Kovacic says that since the company parked a one-person subsidiary office – now an outpost that's grown to around 25 employees – in the incubator-style Hong Kong Science Park facility, dealing with the cultural nuances of eastern Asia hasn't been as much of an issue for SiGe.
Being in the electronics manufacturing business, many of SiGe's customers have large factory operations in mainland China and, to a lesser extent, Hong Kong. Mr. Kovacic says establishing a "beachhead" from which to attack that burgeoning Chinese market -– currently in a massive build-out phase within various sectors including transportation, wireless, information and communications technology, clean tech and, of course, electronics manufacturing – was vital for SiGe's growth strategy.
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Both say Hong Kong's Western traditions, thanks to its history as a Crown colony and British dependent territory of the U.K., make the acclimatization process for North American workers less intense. The tradition of British Common Law also allows for a recognizable business environment in an exotic latitude, with familiar regulations for companies.
"It's four hours to all of Asia's key markets – so if you're thinking about logistics and your supply chain within Asia, it's a good place to locate," says Hong Kong-Canada Business Association president Flavia Leung.
She says several large Canadian companies such as Research in Motion Ltd., Roots Canada and International, Manulife and even an outpost of the Province of Alberta – through a business development office, meant to drum up leads for companies in that province – have located in the city.
Indeed, when it comes down to it, "The reality is you've gotta be where the customers are," adds Portland, Oregon-based John Brewer, SiGe's vice-president of corporate and director of business development.
The company makes radio frequency solutions and modules to provide Wi-Fi links and GPS links within various products. "That's where the boxes are being constructed, and that's where our customers are buying and using our products, and ultimately shipping finished boxes," says Mr. Brewer.
OCRI's Mike Darch agrees that Hong Kong is a desirable location, though the executive director for global marketing cautions that other major business centres in China – such as Beijing, Shanghai and Shenzhen – are becoming increasingly market-savvy when it comes to east-west relations. Over the decade or so since China took control of Hong Kong, "(mainland Chinese cities) have become more oriented to global business than they were a few years ago," he says.
I had to face quite a hard grilling by the Japanese customers as to what the heck was going on with our product. - Steve Kovacic
He adds that the protection of intellectual property, often a concern for North American companies within mainland China, is also relatively strong in Hong Kong.
But the city, also a hub of global finance, has been hit hard by the worldwide recession. Its GDP declined year-over-year by 3.8 per cent in the second quarter of 2009, and shrunk 7.8 per cent in the first quarter. According to Hong Kong's Census and Statistics Department, total exports from Hong Kong decreased 18.4 per cent year-over-year in July and domestic imports dropped 39.1 per cent.
Still, Mr. Darch says the opportunities presented by the Asian and Chinese markets make the city an attractive spot to set up shop. "If you have a partner in Hong Kong, you have a bridge to that (culture)," he says.
"Essentially, the U.S. is (already) built out. But China is still emerging," adds Mr. Darch. "They're still putting networks in, right now."
But maybe the most important ingredient for success, according to the folks from SiGe, once a company has landed a lease for Hong Kong office space? That's easy: local connections, and a handful of people on the ground you know you can trust.
"We compete with large, publicly-traded companies in that market, and we're a fraction of their size," says Mr. Brewer. "And it's because of our people on the ground why so much of everything we've done works."
