German-Chinese entrepreneur Martin Pos: Remote leadership

The pandemic was a much greater challenge for the entrepreneur who grew up in Austria than for most other CEOs worldwide. Suddenly Pos, who spends a lot of time in Bayreuth, was denied access to the corporate headquarters in Shanghai and the plants in China.

Worse still is that his people are in permanent crisis mode and are showing signs of wear and tear, Pos complains. The lockdowns in Shanghai and the uncertainty about the economic situation are affecting people. The entrepreneur is also worried about the future viability of his company.

Because the best ideas come to people when they are sitting together – and not in the home office.

Read the full interview with the Goodbaby boss here:

Mr. Pos, you run a Chinese group from Bayreuth. This is unusual even in normal times. In view of the corona pandemic, that sounds downright adventurous, doesn’t it?
Not at all. At Goodbaby, we are used to working decentrally, and our organization is geared towards this.

China has almost completely sealed itself off from the rest of the world since the pandemic began. When was the last time you were at the headquarters in Shanghai?
That was in February three years ago, for the Chinese New Year. I haven’t flown there since then because I don’t feel like quarantining for four weeks. I used to go there every three months.

Haven’t you ever considered moving to Shanghai?
No, that would not make sense. I can offer the greatest added value from Bayreuth. You see, at Goodbaby, two entrepreneurs have teamed up: Chairman Song

… the founder of the baby and children’s outfitter Goodbaby and major shareholder …
… lives in Shanghai. I am also a shareholder and live in Europe, where we have an important location with Cybex. Everyone can support the local people. I’m also located in the middle between Asia and America, which is ideal.

You haven’t missed the personal contact in the long time?
Yes, of course. I am certainly one of the few CEOs in Asia who regularly walks through production. That’s not the norm there. My first path in China always led to the factory and not to my colleagues on the board. After all, we employ 10,000 people in the factories in China. I talked to the people at the punching machine or in the sewing room. I firmly believe that it makes people proud when the boss comes to see them.

Logistics as a nightmare for Goodbaby

So you don’t have contact with the base?
That’s the way it is. I like to pat people on the back as I walk through the halls. But I also like listening to it. The fact that I have to do without all of this is not good, but not dramatic. The problems in the supply chains are much worse at the moment.

What worries you most?
The logistics are a nightmare. Container prices have increased almost tenfold. And transport times have doubled. As a result, we have a month’s supply of goods more than two or three years ago on the water. That’s a huge drain on cash flow.

You sound annoyed.
Yes, because we can hardly plan seriously anymore. If there are lockdowns in Shanghai again, then the drama will start all over again. It is simply completely unpredictable when the goods will be available. But of course we are not the only ones to have this problem, the whole world suffers from it.

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Just as Corona seemed manageable, the Ukraine war began. The next slap in the neck for you?
Yes of course. We were hopeful because the order situation is great. But when the madman freaked out in Moscow, the supply chains got messed up again. We transported a great deal from China by rail through Russia.

The train connection from China to Central Europe was considered promising, wasn’t it?
Yes, the trains were a good alternative. First, they are sustainable. And second, ten days faster than the ships. About ten percent of our goods came to Europe via this route. Of course, now no one sends anything about Russia. This exacerbates the situation, because it means that the capacities on the freighters are even tighter. It’s now working to some extent in China. For this, container giants are stacked up in front of the ports of Rotterdam and Hamburg. It’s like a traffic jam on the freeway. You get in very quickly, but it takes time for it to dissipate.

Can you deliver reliably?
We have a record high order backlog, but we cannot cover 20 to 30 percent of the demand. Hopefully that will change in August and September.

2000 people signed up voluntarily

How badly did the harsh Covid measures in Shanghai hit you?
Seven of our nine plants worldwide are in China. The goods are shipped via Shanghai, where we had an extremely difficult situation for four weeks. We continued to produce some of it, but didn’t get anything out of it – like many others. Now it’s working again. But let’s see what happens tomorrow.

How was the situation at your Shanghai plant during the lockdown?
We had 2,000 people permanently on the factory premises for weeks. They locked themselves in there voluntarily and produced – only we couldn’t send the things.

Did you have contact with the local people?
I spoke to them several times a day. At least I was able to provide psychological support.

Did the long lockdown surprise you?
We had already expected that there would be some lockdowns in China. But no one saw it coming that the state was going through its zero-Covid policy so harshly.

The next beating will definitely come

Is the worst over now?
Who knows. We have been running permanent crisis management for three years now. Our people who take care of the many sources of fire are under constant stress. The signs of wear are now clearly noticeable. What bothers me the most is the mental stress.

That doesn’t sound particularly optimistic.

We had our board meeting the other day and I said to the people: Tomorrow the next Watschn is coming, get ready for it.

The West and China seem to be growing further apart. How do you perceive that?

To be honest, I don’t have much to do with politics. Rather, I believe in people’s common sense – even if I was wrong about Putin.

Your company, like any other, is dependent on the political framework!
Of course, but we are not in the spotlight like other industries. Sure, there were punitive tariffs under President Trump. However, baby items were quickly excluded. Even the craziest politician knows not to touch families. Therefore, we are largely free from political influences.

For real? China is interfering massively in the economy.
Our factories in China are supported by the local authorities because nobody locally needs unemployment – and the tax payments are also important. In the meantime, we are also seeing that the quarantine times are being significantly reduced.

Don’t you fear that your business will collapse if the US and China continue to split?
We have a global supply chain, not everything comes from China. We manufacture in the USA, in Ohio, and in Mexico. We will also continue to diversify. It is about limiting political risks and currency fluctuations.

The next work would then have to be created in Europe, right?
If you want a global supply chain, a factory in Europe makes sense. But I don’t want to talk about it just yet with a view to the competitors. In any case, our German brand Cybex, with sales of half a billion dollars, is now large enough to justify production in the region.

The prices have already increased three times

Raw materials and energy are becoming massively more expensive. What is in store for parents now when they buy new strollers and baby seats?
We’ve raised prices three times in the last two years. Now we would basically have to increase it again. But first we try to keep the prices stable and thereby gain market share. Our profitability is suffering at the moment, that’s for sure.

By how much would it actually be necessary to raise prices?
Our buyers are young parents who have a family to support. We have a responsibility for them. Therefore, as the world market leader, we are first looking for clever solutions on how we can operate more economically. With clever solutions, for example in packaging. But of course, we will not be able to avoid price increases in the future. Because we need a lot of plastic, steel and aluminum. Of course, electricity prices also have an impact.

After all, you should be less affected by the lack of chips, right?
Well, you’ve probably heard of our “Anoris”, the first baby seat with an airbag. This is the safest seat ever. There are chips in there, of course, just like in our electrically powered prams. But we have covered ourselves well.

In such turbulent times, do people buy a child seat for 750 euros?
We’re seeing a massive surge in interest, especially since the recent ADAC test. The “Anoris” was rated better than any other baby seat ever before. That was only possible thanks to the airbag.

“I hate the home office”

The baby seat with an airbag was a project you worked on for over a decade. What’s next?
Seriously, we’re going in a direction nobody’s thinking of. We want to remain unpredictable and surprise people. That’s my philosophy. But to do that, we all have to finally come together again. I am a social advocate and believe in spontaneous social creativity.

What do you mean by that?
I hate the home office. Because you can’t plan great moments. Instead, you have to create opportunities to discuss ideas. We used to be much more agile, so we often developed good thoughts after a bottle or two of wine in the evening. This is how the baby seat with airbag came about. But I hate whining even more than the home office. The situation is as it is now.

Do you now plan to travel to China again?
Yes, it will start soon. Now only a few days in quarantine are required. I can take it.

Mr. Pos, thank you very much for the interview.

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