Rather than complain about losing business to China, two Minnesota distributors are doing something about it by forming a joint venture to supply U.S. companies that have opened branches there.

In November, the Dygert Patton Seal and Fastener Ware Shanghai Co., Ltd. (DPSFW), opened a location in the Waigaoqiao Free Trade Zone in the Pudong district of Shanghai, China. DPSFW will also provide export services from China to supply U.S. customer needs.

The principal investor in DPSFW is American Supply in Asia (ASIA), a joint venture of Minnesota-based industrial distributors RT/Dygert International and Patton Industrial Products.

DPSFW will handle fluid seals and packings made from elastomeric and thermoplastic materials, and fasteners, electrical hardware, and fittings in both metal and plastic compounds.

DPSFW's capabilities include distribution and warehousing of industrial products, import of certain products into China, purchase of local commodities for resale in China, and potential export services to the United States and other markets. DPSFW's primary focus will be servicing the China operations of U.S.-headquartered companies.

Larry Goode, CEO of Dygert, said the idea began more than a year ago as he and his colleagues realized that more and more of their customers were either conducting business in China or were well on their way to doing so.

"A lot of this was dictated by a 600-pound gorilla of a customer that said they were going to take their business someplace else, and I decided I wasn't going to let them go without me," he said.

The "someplace else" was Asia, and Goode "expressed a desire...to continue to supply them parts in Asia," he recalled. "Fortunately, our relationship was such that they thought that made a lot of sense."

Another distributor, Patton, was serving the same customer and approached Goode to see if there was a way they could work together.

"We do the same processes and have many of the same buying patterns and value-added processes," Goode said. "The only difference was we handled different products. So it made sense for us to get together, particularly to share the expense of entering China."

Dygert handles the fluid sealing products and Patton provides custom-designed and engineered fasteners.

"I don't want to take credit where it isn't earned or due," he said, "but to my knowledge, we're the first doing this, certainly in our product segment. I haven't heard other industrial distributors going over there to do sales; I've heard some are over there to do sourcing, but not to do sales. But to my knowledge, if we're not the first, we're among the early beginners."