MGT Engineering makes stylish three-wheelers for use in outdoor advertising. (Photo: MGT... [+]
British entrepreneur Chris Trees begins an interview by recalling how a conversation several years ago with a potential investor in his tricycle business didn’t go well. “I made a presentation of the tricycle and all of the logical reasons why it should be successful. Then, one of the questions asked was: ‘What would you do if somebody copied your cycle?’ I said, ‘I’d be delighted, because that’d be a sign that my design was successful and that they can proliferate it at least for the foreseeable future.'”
Oops. “Wrong answer,” Trees laughs with regret. “I should have said: ‘I’ll take all of the necessary steps to put in place the protection of intellectual property and above all the protection of the angel investor’s money to make sure that he gets a valuable return,’ and not: ‘You lost your investment but the consolation prize is that this product is super popular, everyone in China is thinking of buying one instead of buying a car, and so we’ve really achieved our objective. But unfortunately you’ve lost your money.’”
What Trees lacks in financial tact he makes up for in earnestness and passion. He is trying to overcome limited capital and red tape in China to expand sales of his line of environmentally friendly, large-sized tricycles for use in outdoor advertising. His Shanghai-based business, MGT Engineering, produced 50 vehicles for export last year, and will exceed that in the first half of this year. Though Shanghai’s population of more than 20 million is larger than many individual nations and the city frequently suffers from heavy pollution, local regulations have made it tough to crack the local market. Three unlicensed MGT tricycles were confiscated (though later returned) by police last year.
Trees, now 56, arrived in Shanghai in February 2007 with his French wife Florence Trees at a good time: Brisk growth in consumer spending was turning the country into one of the world’s biggest advertising markets. Trees had worked in Paris for global outdoor advertising leader JCDecaux for nearly a decade, and was dispatched to become the company’s technical director in China. “Both of my kids had just left home and were attending university, and it was a very good time for me to come,” he said.
Trees from the start was impressed with the local interest in manufacturing, especially compared with “the UK where manufacturing is something that we don’t need to get our hands dirty with.” China’s enthusiasm, he believes, comes in part from the entrepreneural culture that has flourished in the country’s post-Mao era. “People are interested and excited about manufacturing because it’s relatively new,” Trees said. “When you come across a company in China that’s existed for five years, it’s like a well-established, long term business. Whereas in Europe, you certainly wouldn’t brag about being a company that’s been around for five years or more. You might if it existed for 100 years, or 70 years.”
Trees left JCDecaux by the end of 2007, and sought to tap his network of contacts and sell advertising-related equipment on his own. “That was the plan. It was never my passion, which was to develop a really cool tricycle” that would be environmentally friendly and displace some of the growing number of cars on China’s roads, he said. Locally made three-wheelers are widely used in China outside of first- and second-tier cities, but the technology used by many is dated.
Sensing opportunity, the Trees couple in December 2007 founded MGT Engineering (the MGT stands for Metropolitan Green Technologies). Chris handles product development, and Florence runs sales. Over time, their vehicles have become more technically advanced and the design has become more elegant, especially after MGT started to use bamboo for the frames and seats in order to give the tricycle “a luxury aspect that Chinese tricycles do not have,” Trees explained.
Though the China market may ultimately be big, Shanghai is off-limits because the government years ago stopped issuing licenses for tricycles. “They felt the tricycle was inappropriate to modern transport needs,” Trees said, noting the local market has been tougher to penetrate than originally hoped. With a contract manufacturer in the Shanghai area lined up to produce his vehicles, MGT is now focusing on overseas business. Beyond its growing international order book this year, it is also in talks with Mainstreet Pedicabs of the U.S. about expanding in the big American market. Trees also sees good potential in northern Europe. MGT’s tricycles sell from the factory from $3,000 to $6,500 each depending on the model.
In the long run, Trees still hopes that the China market will eventually pay off for him. MGT has gotten good local press, and teamed up with domestic organizations such as the Shanghai-based Good Earth Project to promote sustainability. “The next generation that is now going through universities could be the generation that will see that the cool thing is to be doing something for the future and sustainable development,” Trees said. In the meantime, it’s a good thing MGT has those orders from already tuned-in overseas buyers to keep its business growing.
-- Follow me on Twitter @rflannerychina
