Keeping on the boil from Hong Kong to Isle of Man and back

WILD GEESE: Paul Hussey, CEO of Strix, makers of electric kettle controls

PAUL HUSSEY, who is chief executive of the Isle of Man-based Strix, the largest makers of electric kettle controls in the world, is a big believer in innovation and protecting your intellectual property as the route to success.

A Hong Kong resident for 13 years, Hussey is from Sutton, but was raised partially in Brussels, before receiving his B.Sc from Trinity. He went to Tokyo in 1989 for five years, where he worked with NEC through the Fás scheme, before joining Long Term Credit Bank there, one of its few foreign staff in Japan. In that time, he witnessed the Japanese economy go from simmering engine of Asian growth to stagnation.

“There was a senior executive at the bank who went from being chauffeur-driven to work to taking a taxi to taking the subway. I saw Japan go from absolute boom to bust and I’m sure people in Ireland went through a similar degradation of expectations.”

In 1994, Hussey went to do his MBA at Thunderbird – the American Graduate School of International Management. On graduating he joined Allied Signal, where he worked in the booming aerospace business until 2000, when he moved to Hong Kong to work on the company’s mergers and acquisitions business.

He went into private equity in the telecoms, media and technology sector for a while, but after hubris saw valuations collapse, he returned to Allied Signal, now owned by Honeywell, which was looking at its China and India business.

“The need for automation was growing. These companies in India and China had needs for electromechanical solutions, but there was a big difference between an easily forecast-able multinational company and a seat-of-the-pants indigenous business,” he says.

While everyone loved low-cost Chinese and Indian businesses, they did not love the fact that they were often low cost because of underdeveloped business practices. “Expectations were often unrealistic,” he adds.

In 2008, investors at Sitrix were on the lookout for a new chief executive comfortable with moving between Asia, where manufacturing took place, and Europe, specifically the Isle of Man, where RD and other aspects took place. Hussey’s task when appointed was to develop the non- kettle business from 3 per cent in 2009 to 26 per cent by 2013. Currently it’s at about 13 per cent.

“It’s all about revitalisation, how to extend our revenues beyond core competences,” he says. The company had €100 million in turnover last year, a rise of 18 per cent, and it should be slightly higher this year.

“The second half of 2011 is a challenge. You sense a hesitancy and a lack of confidence in key markets.”

One development that he hopes will help underline his ambitions for Strix, and highlights his belief in RD, is a unit for instantly boiling water.

“It gives you boiling water in two seconds. It has major industrial and medical applications, in aircraft or in vending machines.”

Although the product is only in development, he is prepared to discuss it as his intellectual property (IP) rights are protected. Protecting his IP is something for which Hussey is well known.

In 2008, he took the Zhejiang Jiatai Electrical Appliance Manufacture Co and Leqing FaDa Electrical Appliance Co to court for copying patented technology that could automatically switch off electric kettles after the water reaches boiling point.

Taking Chinese companies to court in China seems like a crazy decision. A survey by the US Chamber of Commerce showed that 15 per cent of respondents believe IP enforcement in China is “totally ineffective” and a further 55 per cent believe it is “ineffective”.

Most companies choose to put the theft of their IP down to experience, but there are signs that things are changing for the better. China’s membership of the World Trade Organisation since 2001 means it is being held answerable globally on IP issues. There is also growing awareness in China of the need to better protect IP.

“We will take action to protect our IPR and we jealously defend what is ours. We prosecuted them in the Beijing courts where we felt the case would be heard very well.

“We had to prove to the court that someone was offending and we needed a detailed analysis to show that. We had a well-organised case – that was the key. If you organise your case well and aim it at the courts, you stand a much better chance of winning.”

In January last year, Beijing Intermediate People’s Court ruled that Zhejiang Jiatai pay 7.1 million yuan (€760,000) in damages and Leqing Fada two million yuan (€220,000).

“It was a great win,” Hussey recalls. “The idea that the courts are automatically pro-China is disproved by these cases.

“It’s a victory for China’s membership of the WTO and it’s a power of good for China’s credibility on the world stage. The mantra is that there will be battles won and battles lost, but you have to win the war.”

Looking at Ireland, as a former banker, he finds the State’s plight deeply upsetting. “From 2000 on, I asked how could they lend multiples of income out of all whack with accepted practices?

“When I look at all the countries I lived in, how many times have we seen strong economies destroyed by greed associated with real estate?

“I saw it in California and Tokyo. Ireland suffered disproportionately, a combination of greed and incompetence at a regulatory level.

“You’ve got to have transparency and good governance and enough senior people around you to signal that something’s wrong. I pay bonuses on cash earnings, not future earnings. What happened in the US in the 1990s should have been learned in Ireland and homeowners will have to pay. I fear it could happen now in Beijing and Shanghai,” he says.

“However, the Irish workforce is strong. The danger is we get overwhelmed by despondency. Economies have amazing abilities to rebound. Look at Singapore, California and Hong Kong.

“Irish businesses have to get back to basics – high-quality creativity, RD, design and financial services. Focus on export markets. Irish companies have not sufficiently forward invested in Asian markets. The Irish economy needs to grow its way out of this problem.

“We are in Asia. For Asia, 85 per cent of what we make is integrated here and shipped worldwide. Two- thirds leaves China from our plant 20 minutes from Guangzhou and is shipped all around the world, primarily Europe. One-third of final product stays in China.

“When I was in college there was a lack of self-confidence, so what is impressive is the way Ireland became a poster story for how an economy can turn itself around.”

While he sees some more pain in the short term, he is confident Ireland can turn its economy around.