Kevin Johnson has worked with a Chinese manufacturer since the late 1990s.

Kevin Johnson, co-owner of Elope Inc. in Colorado Springs, has a partnership with a Chinese factory that makes the company’s costume hats, sunglasses and other accessories.
When Johnson initially considered China as a place to manufacture, he had no connections, but he did speak the language.
“And in 1995, when we first started, that was a huge benefit,” he said. “Now, nearly every factory has at least one person who speaks English. Things have definitely changed over there.”
Johnson traveled to China, visiting several factories before settling on one — a small, government-owned factory that had seven managers and was run inefficiently.
“It was about one, maybe two, months away from bankruptcy,” Johnson said. “And we started talking to them — within two years, most of the managers were gone and the remaining guy was asked to buy the factory from the government.”
That’s when Johnson entered into a “handshake agreement” with his Chinese partner. If the factory only manufactured his products, he’d make sure they got the lion’s share of his business.
The plan worked. Four years later, Elope loaned the Chinese manufacturer enough money to buy land and build a state-of-the-art facility, with dormitory rooms and cafeterias.
“We approached this in a very different way,” Johnson said. “Not very many companies our size do business like we do in China. And we focused on smaller factories, because if you’re their main — or only — customer, they’ll really listen to what you have to say, what you want them to do.”
Mark Durand, a professor of international business at Regis University, said few companies rely on handshake partnerships, particularly in a country with a complex legal system like China’s.
“It’s all about risk assessment,” Durand said. “This company is obviously comfortable with the risk. And, to be honest, if there is a problem, it could be more expensive to pursue it through the Chinese legal system than to just accept the loss.”
Johnson admits that Elope’s partnership with the Chinese factory is unique, but said that the two groups rely on each other’s success — one reason he recommends staying with a smaller factory.
“We aren’t partners in any way on paper,” he said. “But we work so closely together that we know the success of our corporation depends on him, and he knows his success depends on us. The symbiosis is very real.”
And that reliance on each other means that the factory provides better quality.
“He knows that he can’t switch out thread for cheaper thread that will rip,” Johnson said. “That’ll affect our business — we’re very well known for our quality — and it will affect his business in turn. With the companies like Hasbro and Mattel — they work with many factories and pit them against each other to get the cheapest price.”
Amy.Gillentine@csbj.com