Mexican Connection
By Charmaine N. Clarke
At a time when most people in his hometown of Leon, in central Mexico - "The Shoe Capital of the World” - viewed China as a threat, an adversary in the battle for the vital U.S. market, Juan Martínez (CEIBS MBA 2002) saw China as a business opportunity. In fact, Martínez has built a business on the basis of changing the mindset of suppliers in Mexico and beyond, encouraging them to quit fearing China’s growth and begin benefiting from it.
"Their opinion is changing; little by little people in Mexico are less afraid of China and more willing to do business here. But it’s a process, and some people are still really scared,” he says.
For Martínez, 31, working in China was a childhood ambition that spurred him to jump at the chance to come to Asia with his former employer, then led him to enroll at CEIBS and launch a company. In 2001, his bosses at electronics manufacturer Sanmina-SCI offered a short-term contract in Kunshan, Jiangsu Province as a way to lure him back after he had resigned as head of one of their Mexico-based DELL projects. When his six-month contract as the company’s DELL project leader in China ended, Martínez was ready to pursue his China dream. He enrolled at CEIBS with the 2002 incoming class and began setting up his company while still a student, placing shipment orders from Mexican leather suppliers via laptop between classes.
Now in its fourth year, Solis Holdings Import & Export Limited (Solhix) focuses on three areas: importing Mexican products for Chinese manufacturers (mainly leather goods and other raw materials), facilitating Chinese investment into Mexico, and sourcing China-made goods for customers in Spanish-speaking countries. The company prides itself on its “insider” knowledge of both the Chinese and Mexican markets, and on linking buyers and sellers through its growing international network.
In the last four years, Solhix has grown from a staff of two to 22. Its operations are now spread across offices in Mexico where it has three employees, Guangzhou (five), and the main office in Shanghai (14). In recent years, the company has shifted its focus so that, today, 60 percent of its revenue comes from exporting Chinese goods, while attracting investment to Mexico and selling Mexican products now together account for 40 percent. In fact, Solhix’ sales from exporting goods from China grew by 20 percent in 2007. The original plan was for all three segments to be equally weighted. Today, Martínez seeks to grow both sides of the business. During 2007, the company has started importing leather directly in order to sell it to Chinese manufacturers without import rights, a move that Martínez expects will soon result in growing import revenues.
Martínez says being an early entrant in the industry helped the company to establish its foothold. Starting out four years ago as a newcomer to China with no collateral, finding the funding to start a business venture was difficult. Martínez turned to family and friends to raise the US$150,000 he needed to register Solhix in Ningbo’s free trade zone. The company was formed as a joint venture with CEIBS MBA 2002 classmate “Snoopy” Wen Zhuo Fu. (Wen has since left the company, amicably, to focus on producing leather outsoles in Dongguan City). Originally, the pair focused on selling Mexican-made leather to Chinese manufacturers. Martínez says the early days after the company’s birth were filled with late nights at the office, followed by sleepless nights at home when his thoughts still focused on work. The first months required numerous, costly trips across China - to areas such as Guangdong and Anhui - to select the right suppliers. The new company also faced serious challenges in finding and keeping competent staff and in building its customer base from scratch. “At the beginning we had no sales,” remembers Martínez. "People will not buy from you until you prove that you are reputable and reliable. It’s not an immediate process.”
Today, despite operating in what Martínez describes as a “ferociously competitive” China market in which Solhix battles for turf with not only Mexican rivals but companies from around the globe, the company has been doubling its profits annually since its second year in operation. Over the next five years, Martínez plans to continue outperforming China’s economic growth-rate by doubling his profits yearly. By that time, he plans to open another office in Mexico, and to expand operations in China, possibly moving into the nation’s underdeveloped west.
Another goal is to enter the leather and shoe retailing sectors rather than sourcing for importers. Martínez expects to expand the company’s customer base in 2008 through this diversification, plus efforts to carefully analyze revenue streams and focus on the most lucrative operations. Recently, Solhix’ exports have expanded from shoe-making materials to now include different types of hard goods and fashion accessories such as jewelry, bags, shoes and belts. Fashion goods are now emerging as the company’s hottest selling items.
After four years of building up his business - in an environment in which 80 percent of startups fail - Martínez says he has hit upon the right ingredients for success. The keys to survival, he says, are the “three Ps”: people, patience and perseverance. His winning team includes Martínez’s younger brother Fernando, his wife Diana Zhou, and former CEIBS classmate Winny Wu, the company’s Sourcing Manager.
Looking ahead, Martínez’s long-term goal is to make Solhix the trade channel for China and Spanish-speaking countries. “This is my aim, my long-term goal, and we will get there,” he says. “Solhix is going to succeed because we have the market knowledge plus the experience and we are committed to success.”
Juan Germán Martínez (CEIBS MBA 2002)
Hometown: Leon, Mexico
Title: Director, Solhis Holdings IMP & EXP Ltd
Company launch date: 2003
Business focus: Sourcing goods in China for Spanish-speaking customers; facilitating investment from Mexico into China; selling Mexican leather and other commodities in China.
Business size: Offices in Shanghai and Guangdong; Mexico. 22 employees.
Goal for 2008: Consolidating existing product lines, expanding customer base.
