History of Chervon Manufacturing
There’s a lot of confusion surrounding any Chinese manufacturing, and where there’s confusion, there’s also misconceptions. To clear up some of this, we visited Chervon, a very popular international power tool manufacturing company with manufacturing in Nanjing, China and Stuttgart, Germany and sales and marketing offices all over the US, Europe, Australia, Germany and China. We were afforded the opportunity to spend a couple days seeing their manufacturing facilities in Nanjing, China where we got a clearer picture of not only their capabilities, but Chervon’s particular style of running its international operations. We came back with a little bit more than just a history of Chervon manufacturing, we got a wider view of overseas OEM and ODM manufacturing as a whole, and a much more personal look at a company that’s trying to do it right—both in terms of process and also the environment. That’s a lot to swallow, and so we’ve got more than one article on the company and its processes. This article in particular will serve as an introduction of sorts to the company and what we’ve come to understand about this China-based international power tool manufacturer.
Shakespeare made famous the line “What’s in a name?” when he composed Romeo and Juliet, and indeed, that story centered around a conflicting tale of two cultures that were destined to collide. The name Chervon means Spring and The Mountain. The building itself demonstrates a sort of feng shui, and Ralph Johnson, a Chicago architect designed the current R&D building. After listening to company president Peter Pan discuss the meaning and passion of the company he created, he came up with the design.
The Chervon R&D building has many beautiful areas that all employees are allowed to enjoy (as opposed to just the senior staff and management). This include a full greened rooftop, a central pyramidical spire that culminates in a waterfall and terminates in an indoor fountain, and a running track and basketball court near the top floor.
History of Chervon Manufacturing in China
In Shanghai, most skyscrapers have been built in just the last 20 years—amazing given the vast number of them and the almost limitless skyline present in the city. Chervon itself was also built within the past 23 years and has experienced an almost similar level of explosive growth—in a sense mimicking the sudden and explosive growth experienced by the entire country. China’s real economy is more capitalist now than communist, and this is what allows for the vast manufacturing capabilities it possesses. In 1978, the Chinese leadership opened up the government and people to this new style of living, and it hasn’t looked back.
The people of China are now able to attend university and progress from one place to another. Peter’s first job was in a state-owned trading company, but when after about 5 years he realized the system wasn’t optimized for producing the best results and products that were up to the level of his aspirations for what could be. This being the case, Peter, Stephanie, and Joey (who is no longer with Chervon) left the state-owned company and formed their own company. Chervon itself was literally started with a dream, some borrowed money, and two hotel rooms. It all quickly grew from there.
Why Can’t We Do It This Way?
Asking the question “Why can’t we do it this way?”, describes a lot of the history of Chervon. By doing this repeatedly, the company was able to focus on doing the work of power tool manufacturing better and more efficiently. As China began building itself up from almost nothing, Chervon paralleled this in its own development. They grew little by little as a trading business (buying and selling components and products). After 3-4 years, however, they recognized that they needed to remove some of the bottlenecks by doing more of the processes on their own. Chervon was the first company to begin a quality control process. Until then, quality control (QC) consisted of asking “Is the machine running ? Good.” Chervon decided to do its own testing, and they invested in what was needed to test their tools. That led to them being able to learn how to locate problems, but they still had to rely on the factories to solve them. Shortly after this, they began to hire teams of people to focus on R&D and to design specific machines.
This growth from machine and component sourcing to problem solving led Chervon to manufacturing in 1997. Other companies thought it would be impossible for a parts sourcing company to delve into actually making its own products, but Chervon managed to maintain many of its current business relationships while manufacturing their own high end products.
This all occurred in the midst of a time when Chinese products were increasingly thought of as being “cheap” and certainly not known for quality. Again, step by step, Chervon grew their capabilities. In 2000, the company was making many of their own products and we’re doing it better than many other manufacturers. Chervon is now one of the top 10 manufacturers of power tools in the world, and their products are sold by over 30,000 stores in 65 countries. They manufacture products for several well-known manufacturing brands as well as their own house brands, EGO and Devon—not bad for a company that’s only been around since 1993.
The company’s slogan is “Better tools. Better world.” It looks like they’re on their way.
Chervon OEM and ODM Manufacturing
Throughout the history of Chervon, the company has done plenty of OEM manufacturing, but they also do quite a lot of ODM manufacturing as well, including manufacturing for popular brands sold in Lowe’s, The Home Depot, and Menards. While all this goes on, Chervon is keen to make their own brands and, particularly, to sell their own products to Chinese people in their own country—this is how the Devon line of tools came about, for example.
OEM vs ODM Manufacturing – What’s the Difference?
To understand the difference between OEM and ODM manufacturing you need to understand who’s calling the shots on design. An OEM brings a finished design and collaborates on the engineering. They determine all design and product specifications. The brand then buys it from the OEM manufacturer and sells it to the market themselves. An ODM manufacturer actually builds a product for another company or brand and does so using their design specifications. Another way to look at it is that an OEM manufacturer shops around an already excellent product, and an ODM manufacturer more or less serves as the workhorse to bring a product idea to life for another company. Being an OEM and ODM manufacturing partner requires a lot of attention to detail and a very specific set of skills that will make or break a company.
Moving Into the OPE Market with the EGO Brand
The level of manufacturing Chervon engages in is commensurate with Bosch, Makita, and Milwaukee—and indeed, they’ve made tools for some of those companies at one point or another as an OEM manufacturer. Tool manufacturing in China is a 1.2 billion dollar market, and the OPE (outdoor power equipment) sector is dominated by the European and American markets.
This is where Chervon has really stepped up its game in the past few years. The company has quickly gained recognition in business to business markets, but has now turned its sights on name recognition in the consumer market. Three years ago Chervon acquired Flex, a German power tool company, and in 2014 they debuted the EGO 56V cordless OPE line of tools and a strong move into outdoor power equipment in general.
The EGO name and brand stands for the move into OPE which is driven by engines and connecting those to applications for lawn mowers and handheld OPE power tools. As Chervon looked for growth areas, they recognized OPE had different manufactures that weren’t making use of some of the strengths and advantages found in the cordless power tool industry. When Chervon, the largest ODM manufacturer in the power tool industry took a look at the OPE market, they saw a great opportunity. More than just the financial and manufacturing opportunities, Chervon saw an opportunity to bring about some of the environmental advantages cordless OPE technology would offer to the world in general.
The EGO brand was really Chervon’s big move into a self-branded suite of power tools. While other companies express an interest in replacing corded tools, Peter truly believes lithium-ion is capable, one day, of almost entirely replacing the gasoline engine. Based on how well their new EGO 15-inch string trimmer and EGO self propelled lawnmower are doing, it looks like tools once thought to require gas are well on their way to becoming battery-driven mainstream solutions.
Chervon and the Environment
The R&D building where we began our time at Chervon, is a complete green roof building. When Peter saw China move from poverty to wealth he also saw the country begin to generate massive pollution. This lack of balance bothered him, and drove him to take the more difficult route that might require more money and effort. The Chervon R&D building is an environmental wonder, and a lot of what is being done is more for the long term benefit and good towards the environment than short term cost savings—or even the visible effects it produces. The green roof, for example, cannot really be seen from the ground unless you catch it at just the right angle. Chervon feels that the production of oxygen and long term energy savings was still well worth the effort. Many of the plants across the entire facility come from Germany, so they are expensive—but only from a one time investment perspective. Over the long haul there is savings in heat reflection which saves energy in the summer and also warms the building in the winter.
As our first stop in a multifaceted journey through the Chervon power tool manufacturing and design campuses, it was a nice start. Stay tuned for additional articles that will detail more of our experiences with this company’s Chinese manufacturing facilities and methodologies for creating new and innovative power tools for the entire world.