Taking on the dragon?
Sourcing from China for the first time can be a daunting experience.
There are many cultural and language differences as well as huge differences in business mindsets. These combined issues can put you on the back foot from the start and put the supplier at a much more advantageous position.
This can easily negatively affect the result of your negotiations, both in terms of price and product quality.
Consider appointing an agent for you in China, who has local knowledge, experience and connections that can put you at an advantage over your new suppliers and your competition.
For a more detailed look at sourcing from China, take a look at some of our earlier articles, including:
Developing your products with existing Chinese manufacturers
I was in Xiamen in Fujian province earlier in the year and took a walk along the pedestrian shopping street before enjoying a rare stroll along the nearby beach. I am usually too busy to enjoy the city whenever I go there so this was a treat.
Fake Body Shop in Fujian, China
However on my walk of I came across this little beauty. It’s clearly an unlicensed Body Shop store. The products within appeared genuine and from Hong Kong but all signage and interior design was a cheap and poor imitation mock up of the real thing.
The service staff were all happy to tell me the products came from Hong Kong and in my opinion they looked like they did. While that should be enough to convince me I was about to buy the real thing, I’ve been in China too long to take it at face value. The simple fact of the matter is, if it is not being sold in a licensed store, there is simply no way to be sure.
Mainland China is certainly no stranger to fake stores and products. We have the now infamous fake Apple Stores in Kunming, the fake Toni & Guy Store in Beijing, and believe me I’ve inadvertently cut myself shaving on my fair share of fake Gillette razor blades bought in local shops! Our own customers at Enter the Panda have come to us with real concerns about the IPR of their China-made products.
The following is an article we wrote for Shanghai’s Settling Magazine about our experiences launching ETP in China. It was published in October 2011 and covered three pages of their ‘City Business Focus’ section.
Into the Unknown – Finding Our Feet in Beijing
Starting a new business anywhere is tough. Having the idea and motivation to get started is a big step, but as anyone who has attempted it will tell you, it takes time, persistence, stress and often luck. Starting a small business in China takes something else entirely.
Settling Magazine - Into the Unknown - Page 1
On Our Own
Coming from Ireland – though hardly a ‘nanny state’ – it’s fair to say I was coddled as I took my first steps into the world of business. Particularly during the boom years – before the Celtic Tiger became known as the Celtic Kitten – there were excellent tax incentives for small business owners and banks were ready and willing (perhaps overenthusiastically in hindsight) to offer loans to entrepreneurs. Today, fabulous organizations such as Enterprise Ireland still exist, helping young businesses network and develop trade and commerce.
I’m not sure what lessons learned in Ireland could have prepared me for trying to launch a business in Beijing. Certainly as a foreigner in this great city, there is no available support, no obvious guidelines and no clear information about setting up your business. You really have to dive in, head first and blindfolded, and figure out each problem as it hits you in the face.
Why are these financial services companies offering trading consultancy and trade fair assistance?
In Hong Kong and Asia, much like the rest of the world, the financial services market is very competitive. Recently there have been many new start-up companies in the wake of the global financial crisis pertaining to offer you the best wealth management and financial services. These companies are mainly made up of individuals with a rich financial or legal background with a wealth of knowledge in the finance industries.
Many of them were made redundant by banks and investment firms or got out while the going was good. With the increasing number of these firms it is difficult to know who to trust, who to listen to and who to avoid. When it comes to trade and manufacturing issues, its best to look to people within the industry to get a clearer understanding of what is needed.
I have noticed recently a spate of financial services firms advertising and promoting new services that relate to ‘trade fair assistance services’. Firms that offer finance company setup and tax efficiency services should be very knowledgeable in their own industry. When this crosses over to ‘trading assistance and trade fair assistance’, be very wary.
These two industries are very different and just because a financial consultancy company operates in a certain geographical area, this does not necessarily make them experienced and knowledgeable in other industries. This is especially true when talking about technical solutions to trading and manufacturing issues.
What is Trade fair assistance?
Deciding to get on a plane and fly to China to a trade show can be a daunting concept. Taking on the cultural barriers of some of the world’s largest annual fairs can seem impossible. This leads many to reach out to one of many companies claiming to offer Trade Fair Assistance, companies that claim to offer on the ground support for your visit.
Be warned! Many of these companies do not offer any real value or benefit to you. Remember these are international annual events catered for you, the customer.
Before handing over your money and trade secrets to any company, be sure of two things:
- Do you need Trade Fair Assistance?
- Are you being offered a service that matches your needs?
An opinion from a foreign trading company in China
We live in a small world these days. World markets rely on each other and what affects one country will invariably affect another. We have become so intertwined with who owes what to whom, and whose debt is held by whom to the point that the current looming European financial crisis has further unveiled the intricacy and co-dependency between Europe and China.
Europe is China’s largest trading partner. Europe has provided two decades of foreign investment, year-on-year solid bilateral trade and decades of technology exchange that has benefitted China’s rapid development. China has in turn provided Europe with the workforce and large scale production that has allowed businesses on both sides to grow and profit.
The present financial situation is almost entirely Europe’s fault, caused by poor fund management and reliance on a single young currency while member nations ignore policy and allow overspending. The mistakes made should be admitted and stricter rules enforced if they are to expect any further confidence in them and the Eurozone. Anyone considering aiding Europe needs to seek genuine assurances of change to the status quo before any assistance is to be offered.