Entrepreneur at Full Throttle - FT article on Morgan in China

Jim James is recalling how he watched with some trepidation as a group of potential buyers put his very expensive inventory through its paces on a recent wintry afternoon. He holds the Morgan Motor Company’s only China import licence and, taking ad­vantage of an empty expanse of tarmac at a small airport near the Great Wall, his guests drove in tight circles at high speed in cars that retail for as much as Rmb2.7m ($440,000) after tax.

Tyres squealed. Rubber burned. But no damage was done, he says – unlike on other occasions when Chinese inspection and quarantine officials have crashed his cars while testing them. “That caused some difficulties because we then had to send the car back to the UK to be repaired,” says Mr James of one particularly bad inspection incident. “It was in a sort of no-man’s-land because we had already paid the taxes.” In his designer showroom at Beijing’s Workers Stadium, Mr James ticks through a catalogue of mishaps, big and small, with typical British understatement. “That cost us a lot of time and money but it was a hiccup,” he says of the inspectors’ accident. An entrepreneur in China cannot pause to reflect on what goes wrong, he says. “We’ve had leaky ceilings, we’ve had cars not starting, we’ve had cars disappearing. But if you think about those things you’d probably not want to get up and try every day.” The Morgan Motor Company, located in the Malvern Hills near the English-Welsh border, has been hand-building cars since 1909. Its 180 employees, many of them craftsmen, produce only about 500 four-wheel vehicles a year. Germany, the UK and France have traditionally been Morgan’s biggest markets, but China is catching up fast. As a marketing executive for AMS Neve, which makes music studio equipment, in the mid-1990s Mr James travelled to Asia regularly for trade shows and was inspired by the sheer energy he saw: “I sold the house and moved to Singapore.” There he established his own company, Eastwest Public Relations, before moving to Beijing in early 2006. Mr James was appointed as Morgan’s first general distributor in China in November 2011 – more or less by accident. Driving his own Morgan Roadster in Beijing, he was surprised by the enthusiastic reception it received. “The reaction was amazing,” he says. “So I rang Morgan and said where is your local dealership? They said there isn’t one . . . So I wrote them a business plan.” Twelve months and some 14 Chinese ministry approvals later, he began business in earnest, making Morgan and its accidental China rep rare exemplars of the entrepreneurial spirit that UK politicians hope British businessmen can bring to bear in emerging markets everywhere.

When London mayor Boris Johnson and George Osborne, chancellor of the exchequer, travelled together to Beijing in October, Mr James’s dealership was centre stage at an exhibition of British industry. The mayor lit up when he saw the Morgans, boasting to the press how fast they were. During their brief encounter, Mr Johnson and Mr James were a study in contrasts – the expatriate entrepreneur trim and neat, London’s mayor in his usual famous state of disarray.

To be representing British business alongside Marks and Spencer and Jaguar Land Rover was never the most likely outcome as Mr James pursued his new entrepreneurial venture. Securing the necessary government ap­provals to import and distribute cars was Mr James’s first challenge, especially as he was operating as a mom-and-pop outfit with his Chinese wife Erika Chen, a former IBM executive. “Some government officials didn’t believe an independent foreign entrepreneur could own an import lic­ence for a foreign car brand,” he says. “All the other , like Porsche or Bentley, they do it themselves. I had to meet with the Customs officers, show them my passport and company share certificates. They were still slightly bemused but at the end of the conversation they were like, ‘well done’.”

Throughout the process, Mr James kept an online blog – “Experiences of an entrepreneur in China” – that covered how he negotiated the bureaucra­t­ic approval process, including the wrangling that ensued after the inspectors’ expensive car crash.

“It’s essential to have someone you trust and is also bilingual,” he says – in his case, his wife. “None of the documentation was readily available online. Erika and I had to go to various offices around Beijing, and sit there, and take a number, and find out who it is you have to supply documents to. We make it sound streamlined because if you don’t think of it that way you couldn’t keep going” Paperwork finally in hand, Mr James then confronted a funding dilemma. Reluctantly, he had to sell his most valuable asset – his own Morgan car – to raise the money for his Beijing showroom. “We had a capital constraint,” he says. “My solution, not a pleasant one I have to tell you, was to surrender the car we brought in.” He points to a picture of it on the wall. That car was sold to a media executive. Other recent buyers of Morgan cars include a well-known singer and a not very well-known tailor from central China. Mr James’s capital constraint ex­tends to his advertising and marketing budget. He takes opportunities to display his cars at film premieres, air shows and other public events, and encourages people admiring the vehicles to post pictures of them on Weibo, China’s Twitter equivalent. While a government crackdown has damped Weibo’s popularity as venue for political discourse over the past year, Mr James says it remains invaluable as a marketing tool. Since January 2013, his Weibo following has grown to more than 1,200, helping to generate more than 20,000 unique visits to Morgan’s China website. “That’s without large budgets and by leveraging social media,” he says. “It is possible to build a brand here by using, if you like, guerrilla tactics.” While Mr James’s outlet handles sales in the capital, he has appointed sub-dealers in Chengdu and Qingdao, and is in talks with a potential representative in Shanghai. Some of his partners are leading car distribution companies in their own right. But for a business whose supply is constrained by its own meticulous man­u­facturing process, keeping ord­ers in check to avoid long backlogs and unhappy customers may not prove easy. Mr James met his 2013 sales target of 18 Morgans – a number he chose because it is lucky in Chinese – and expects to sell 30 this year. He also worries about how “British” his pitch should be. “To some degree, the Chinese perception of British brands can be old-fashioned or staid.” Instead, he hopes to associate the Morgan brand with “what might be a new Britain, almost like the Olympics Britain, more multicultural, a bit fresher, younger”. He is, after all, selling cars that look like antiques but can still do stunts on the tarmac.