Archive | May 2013

Online Marketing Strategy for Your Venture on Chinese Market

As the number of people connected by Internet continues to grow at a phenomenal rate, the Internet has changed forever the way we communicate, and thus, the way we do business. In just a few years, Internet has consolidated being an essential marketing and advertising channel for businesses. In parallel, online shopping has become more and more popular, no matter in developed regions or the emerging markets.

In China, one of the biggest markets in the world with over 1.3 billion people, online business has been growing dramatically since the Internet set up in China in 1994. According to CNNIC (China Internet Network Information Center), China’s total Internet users have exceeded 564 million by the end of 2012: – 420 million of them are using mobile surfing online – 309 million of them are checking micro-blogging – 242 million of them go shopping online internet_user_group

Undoubtedly, online business is vital to any company wanting to venture on Chinese market.

Under this backdrop, now both local Chinese companies and foreign companies are putting more efforts on developing online marketing strategy in China. The question is which strategy is the best?

To put it simply, strategy is a combination of different tools that suits your business well. And there is no fixed mode of marketing. Because it changes so quickly! All strategies that can promote your business efficiently are best ones. Before worrying about the mess of strategies, let’s first take a look at the 3 most important online marketing tools you can use for your venture on Chinese market.

1. A Chinese website Certainly, a Chinese website is a must for any businesses plan to set their foot on the Chinese market. People make decisions upon the information they get. A Chinese website gives a company a home for its visitors to get necessary information about the products and services.

Don’t expect a Chinese visitor to understand an English site well no matter how good the English is. Yet making a Chinese website is far more than just translating your current website into Chinese. Localization is the key! Not only contents is important, but also the display of the contents and the layout of the whole site, taking care of the local culture and internet habits.

2. E-commerce platform With decades of development, China has fostered a group of mature B2C e-commerce platforms: Taobao, Tmall, JD, Paipai, and Dangdang etc. Among them, Taobao and Tmall operated by Alibaba Group are the most prominent ones with combined sales of $157 billion in 2012. And they created an amazing record to reach $3 billion —Yes, Billion— sales in a single day (November 11th 24-hour online shopfest). It’s a big market for all companies!

3. SNS Another significant trend for Chinese e-commerce market is the burgeoning of SNS (Social Networks). Networking has played an important role in the life of Chinese people ever since the nation was created. And SNS shapes it in a modern way. CNNIC reported that nearly 80% of Chinese netizens pay close attention to commercial information on social networking sites, and almost 40% of netizens will regard friends’ comments as references to help with their own shopping decisions. In addition, 37.2% of netizens will share their favorite items, brands and stores on SNS, and more than 25% of them would complain on SNS if they had bad shopping experience.

Partly due to the Internet restriction in China, the most popular social networking sites in China are local ones with concepts similar to western sites: Weibo, like Twitter, over 500 million users Renren, like Facebook, around 200 million users Wechat, like Viber, over 300 million users The data only is enough to make it clear that SNS is the area no B2C company could afford to ignore!

A shared feature of these 3 online marketing tools, they are all unique for Chinese market with strong implication of Chinese culture. Therefore, before you leaping into online marketing in Chinese market, it’s better for you to know more about Chinese culture and people, or choose a trusted and experienced partner like SAOS to help refine your strategy. Anyway, you should not think China and Chinese people with a stereotyped outdated view.

 

How Chinese Business Trust Each Other?

We all know business is about people. Heritage from the ancient age we choose to work with people we trust. Partnership or new venture is always found within family, friends, colleague (like myself and Fabien, my French co-founding partner in SAOS) and peer group. In sourcing, we tend to choose suppliers that we know the best and comfortable with, besides all the systematic process. The more we know, the more we can trust. However, in practical it is impossible to know every single Chinese supplier in a project. What we can do?

Between Chinese, there is a traditional answer – the chamber of commerce (in Chinese, 商會). Unlike today’s professional organisation, most chambers of commerce were founded in personal level. Few businessmen who have business relationship (as customer, supplier, etc), or in some case competitors, came together and founded a social union – Chamber. As you know well, Chinese business, especially ancient Chinese business, is heavily relationship based. The members within the same chamber would trust each other better as `insider` and prefer to choose other members for cooperation. In certain extreme case, outsiders are not allowed to do business with members of some local chambers unless they are trusted and become a member. Chamber of commerce plays an important role in the shaping of Chinese business environment and even the whole society.

The personal relationship based network (Chamber of commerce) works extremely well. New members are joined normally by personal reference of an existing member. The ‘face’ concept makes sure a member recommend only people he/she trust and can bring value to the chamber or industry as a whole. The new members would also value their social status and the creditability it brings from being a member of the chamber and therefore unlikely to misconduct. The system works to lower business risk between each member.

Businessman from the same industry, or called competitors, found a chamber for different reason – to leverage their influence. Many times in the Chinese history the chamber are organized and powerful enough to negotiate (or corrupt) for their benefit with the government. One good example is the salt industry in the old time.

Nowadays, thanks to Alibaba.com and Taobao, which are the largest online shopping marketplace in China, the e-commerce is flourishing in this country. The growth of the industry puts even stronger demand than ever with creditability from both personal and business level. In the right time and right place, a group of smart and success online business people from different cities and industry found their ‘online chamber of commerce’. Self-initiated, the online chamber of commerce organized in a way similar to their ancestor – membership by personal reference, credit based, and aimed to benefit themselves by grouping and leveraging.

Early May this year, I was invited by Alibaba.com to speak about how social media strategy benefits Chinese manufacturer and to let buyers understand them better. I have the opportunity to meet the leader of each chamber in person and get to know how they organized, their common challenge and more importantly, networking for my sourcing business SAOS. I, as an experienced sourcing professional and a Chinese, personal relationship, or commonly called ‘guanxi’, is the most reliable point to trust on top of our professional sourcing process. As part of the personal reference system, I am also happy to introduce people or business contributes to the core value of the chambers. I enjoy this way of doing business.

Trust

Ben Chu, Founder of SAOS

Hot Electronic from HK show spring 2013

As an electronic lover and a guy who works in China sourcing for many years, I am a regular visitor to these major electronics show in my fellow city. There is a major one in WanChai exhibition center “HongKong Electronic Show” and another one “China Sourcing Fair” in the airport. Both feature electronics and by intention they show in the same period of time.

As always tons of visitors and always smart to register in advance to simplify the entry process.

electronic show

Some product I found interesting and would like to share some of them here.

– PC controlled gun

gun

A gun that controlled by PC and shot annoying customer passed-by  Said the Android and IOS version is coming.

– Glass display technology:

video on glass

Showing movie and touch screen interface on glass! Innovative idea for outdoor advertising and vending machine.

– Wifi SD card

wifi sd card

Share pictures directly from your SLR camera. No card reader needed anymore…

– Flash drive that take data directly from Iphone

flash drive for iphone

Physical way of sharing! Work well especially when network is not available.

– Phone projector

iphone projector

Killer to those mobile projector products. Good solution when meeting customer.

Some trends I can see for Spring show 2013:

– Less tablet, eventually! – Still tons of iphone accessories and power bank, from low end with just a colored injection plastic to high end branded fashion style iphone case. Seems still a big business. – Less 3D TV. However no 4K TV shown..well, I don’t normally expect to see anything cut edge from Hong Kong show. – Good balance between product and service industry. On the 3rd floor there is a big area for service industry to promote.

Every year SAOS visits different trade fairs in the region on behalf of our clients and will report on interesting items. If you are interested to 1st hand fair report, interesting items, product trends..etc, don’t forget to follow us on our social media.

By Ben Chu SAOS CEO

Chinese Diaosi- A Special Group to Bring New Business Opportunities

Since GDP growth fall to 7.8%, Chinese economy seems not good this time (Chinese economy is still quite good under the global economic background). Affected by the economic environment, the Chinese luxury consumption dropped substantially, which is a big headache for businessmen. At the same time, the strengthening of the pressure of public opinion and the increase of anti-corruption efforts, and lead to many officials’ sacked. So the high-end menswear and high-end watch market begins to become deserted (better give some data support on this). It is more and more difficult to earn rich man’s money, so whom should we turn to? The answer is surprisingly: Diaosi. This word originally was used to describe underprivileged people who lacked many of the societal gifts that one must possess (good appearance, family background, a promising career or high social status). A survey released on April 1 indicates that China’s “Diaosi population” has reached 526 million, which accounts for 40% of the country’s population.

diaosi

ds_chart1Programmer and journalists are the most self-identity of Diaosi, just less then 10%’s civil servant regard themselves as Diaosi.

ds_chart2Most post-80s generation recognize Diaosi, the rate up to over 80%.

ds_chart3

ds_chart4

ds_chart5In consumption concept, Diaosi have high pursuit on quality and fashion, while for necessities of life, it is less than 10%. So what is the greatest need of Diaosi

ds_chart6

ds_chart7Obviously, Diaosi are homebodies. they like to get on-line in the evening,especially like playing online games, so social networking is the largest shortcomings of Diaosi and the largest demand. Survey shows, only one in three of male Diaosi players has a girlfriend, but Diaosi’s age is most concentrated in 20 to 30 years old, it is time to fall in love. Thus, social contact is the greatest need of Diaosi.

Conclusion: Diaosi have gradually formed a unique consumer groups. They have strong spending power and rational consumption idea. It is outmoded to pursue “top grade” products. Accord with Diaosi, parity, creative ideas may become the mainstream of the future consumption, which will inevitably bring new business opportunities.

 

Alibaba Hottest Research on Global Buyer Concerns When Sourcing from China

I am glad that somebody do this – hot result from a direct research of global buyer concerns when sourcing from China manufacturers.

Result is expected, but again and again seller tends to ignore the voice of customer. I wish I was wrong but I would believe the result will be similar 5 more years later. Why don’t we take a look – what’s wrong?

– First thing I am quite surprise to see is that facility does not draw attention to big buyers. It is not much in line with my own experience. In a famous US household hardware Fortune 500 we used to suffer from insufficient production capacity. It sounds uncommon for most Chinese supplier as it is not too difficult for factory to increase number of labor or to work overtime. However, don’t forget a serious buyer is looking for stable, trained & qualified capacity, not by heavily stressed workforce nor new fresh workers. Also professional buyer looks for plant with automation and efficiency facility.

It is always nice to see a big and highly automated facility. However if you are not a large scale manufacturer, don’t be frustrated. A small but well layout factory with engineered workflow and clean, 5S based workshop could also impress a professional buyer.

– Then I don’t see “commitment”. Think about this – A supplier quote a nice price and win the contract, but after 2 deliveries supplier find that he make a lost by his wrong costing calculation. He then tells his customer he cannot continues with this price and have to increase. Buyers hate this. This is one of the worst mistake to make and seller will really risk himself never see this customer again.

– I strongly agree that “understanding buyer needs” should be on the top of the list. Sales tend to speak than listen. In my sourcing career most of the sales post aggressive character in term of communication. They speak up for their product, their facility, their business model, mostly presentable and talented. They just failed to listen. In SAOS (the sourcing company I am running), every project we write a very detail RFQ package including all the background of the end user, application, business outlook and forecast..etc. However, we believe that most of the potential suppliers do not read even though we present it in Chinese. Communication is two way and the problem could come from another direction. Amateur buyer make assumption based on his/her background, culture, impression..etc. Most common mistake is to assume supplier merely interest to know about the project/order, but not the business. In fact, the more you help your supplier understand you, the better opportunity to match a right partner.

Responsiveness rank number 2 for reason. “Slow boat to China” the old American say and seem valid still. Few months ago in a LCD sourcing project we launched for our client, RFQ was sent to 80 suppliers, and only 20 suppliers could come back their answer within 2 weeks. About 10 mores suppliers reply to us after 3 weeks, claiming they were busy and didn’t read our email until recently…bababa. No supplier acknowledge when receive our RFQ. Responsiveness was unsatisfied. To maintain a good response rate for our client, we have to call the shortlisted one by one to make sure they understand the requirement and will take part in the RFQ bidding process. While most sellers complaining they don’t get customer response and has difficulty to look for serious customer, my experience shows the same challenge, but on the buyer side. What would be good practice for seller is to always acknowledge a request immediate. It doesn’t matter you have an answer for your customer already or not. It does matter to show you care your customer’s business.

Communication skill ranks the last. This is an encouraging finding coz it seems true that China supplier has been focusing on their English training and put as a career priority. Also, big customer tends to have a Chinese office with local sourcing professional to support and ease the communication. As a result you see they are least concern on this area compare to middle or small players.

– Last thing. Price, although it ranked second when buyer considering supplier, it is much less important than understanding buyer correctly. Also, the bigger the buyer the less sensitive to price. Very often I see factory sales promote themselves the “cheapest price of all”. I hope this research result could have chance their mind.

So I try to summarize points to be concerned:

– Facility does matter to big customer. If you are small, try to be organized and look efficient.

– Understanding customer needs generate trust. It won’t happen overnight but is a continuous process. Read again and again customer’s email and make a serious response.

– However, before you could come up with a serious response, make sure you acknowledge your customer immediate when you see their emails. A simple reply could be good enough.

– Although your customer keeps saying they want cheapest price, there is something more important than price. It is even less sensitive for big buyer as long as you could provide right product/service at the right time.

By Ben Chu SAOS CEO

Research result on buyer concerns when it comes sourcing from Chi

naalibaba research

7 Steps to Make Your Sample Management Easier

Managing samples is a pervasive need for every sourcing and trade company. Due to a less variety and quantity with product types than those shipping to warehouses, small companies are unlikely to have an electronic system to manage all the messy samples, instead, manual labor is required in these cases. Reliably tracking these samples as they make their way throughout the buying process is difficult yet absolutely necessary.

Nevertheless, many mistakes may occur and can lead to delayed product rollouts—or may even result in a product never making it to market. So how to improve efficiency as well as lower the chance of errors is worth discussing.

Based on experiences, I would suggest taking the following 7 steps to make your sample management easy:

Firstly, 4 steps for preparation work before suppliers actually send out samples, including:

1. Confirm with suppliers about the final samples, photo them if necessary.

Make sure if it’s ok for you. (If the sample is not a final customized one, for the sake of comparison, kindly ask suppliers to attach a note with differences between the current one and requested one.) Have you ever encountered a situation like this: You receive a package without knowing who sent it, just a factory address maybe, not even a company name, samples are not marked either. It’s more common to receive packages with faded name & address on it, and you’ll need to track it according to the pictures in your emails for example, which would be very bothersome and time-consuming.

However, we can develop a habit which is to inform suppliers to attach a piece of paper or product category with notes: product name, label number, company names etc. to avoid this situation and for future tracking.

2. Confirm courier and payer

3. To be more organized, make a sample tracker sheet, including supplier name, label number (make it simple and easy to remember), delivery date, courier/waybill number/charges, sample qty, notes,etc.

Secondly, when you receive sample packages, first thing is to LABEL THEM.

1. As more and more samples are coming, your office might soon become nothing but chaos, filled with packaging papers, boxes… So to avoid this, try to get one done at a time. You can label a sample with its label number using a post-it. Then quickly fill out the sample tracker each time you receive a new package before you moving to the next one.

2. Don’t forget to keep all the invoices.

3. In some cases, you will have to photo those samples, and put them in a sample pics folder, file name can be correspondingly to sample label number.

4. Storage: try to wrap up your samples the way they are packed. And stick a label outside the package so you can track down easily in the future.

A simple and easy practice will make your customer’s life much easier!

By Marissa Lam

Outsourcing in China: Implementing CSR for business sustainability

1)      Why CSR is important?

CSR (Corporate Social Responsibility) is closely related to ethic in doing business with dedicated involvement by taking action for integrating economic, social and environmental imperatives into the activities. Typical examples are donations, CO2 reduction, but also innovations like medicine when promoting global health improvement. Refer to Canadian government information example as CSR guidance.

2)      Does your company need to be Social Responsible?

More than a trend, during the last 10 years, it has become a mandatory part of the business for big corporations. Small and Medium size Enterprises should consider integrating CSR in their global strategy for the following reasons:

  1. CSR brings personal satisfaction of contributing to a better world.
  2. CSR is a way to differentiate from your competitors to your customers, no matter they are corporations (B2B) or consumers (B2C). Its marketing value has been strongly used by many Multi-National Companies (MNC) during the last decade. The direct effect is branding and enhanced company image, the side effect is significant sales increase.
  3. CSR encourages money saving and manufacturing performance improvement. Typically, a production yield increase leads to higher efficiency, less power consumption and eco-friendly direction.
  4. Because everyone wants to work for the good guys, dedicated CSR policy is a customer and employee engagement. A high reputation company can not only attract talents but also have them involved in the actions and company branding promotion.

In a nutshell, CSR allows your company to be more innovative, productive, competitive in a sustainable industry.

3)      The ways to CSR implementation in China

Many companies have difficulties to perceive a clear positive strategy while outsourcing in China, often seen from western countries as job killer. However, within a global economy, low cost manufacturing is necessary and socially important. There are many actions that can be put into practice while getting benefit for your business.

Some of the CSR contributions companies can implement with support of a local service provider are:

  1. Being ethical: Build the business on fair trade, through supplier relationship for long term development. Processes must be defined to avoid bribery and to promote impartial results for decision making and performance improvements. Only an independent service provider can provide high value analysis and transparency on all actions, when they are paid on service based and not on a percentage of good costs.
  2. No middle man: Removing the middle man is clearly one aspect to be promoted by a local services provider. Without the middle man, more margins are allocated to both customer and supplier, moving to an obvious win-win trade. With supplier having a higher margin, it has the ability to adjust the quality level and social capability according to your requirements. The service provider’s responsibility is to shape direct relationship with your suppliers by acting as a facilitator.
  3. Take actions: Many companies don’t necessarily know what is possible to do and the potential ways they can develop their social responsibility in China. Of course, basic activities like SA8000 social audit are a first step to ensure, no children are employed and working conditions are acceptable. Likewise, many other ways exist when you have a sturdy visibility on your suppliers and their specific cultural behaviors.
  4. Chinese oriented CSR: When selling in China, western companies should be concerned by how CSR is understood in a country for which collectivism is prevalent. Again, a local service provider is competent in advising the right applicable strategy in relation to the marketing and branding activity.
  5. Donations: There are almost limitless options in China for charity. Best practices are to align your investment with your core values by building a seamless and sustainable integration. A typical example is supporting social and intellectual development of your suppliers’ workers, enhancing both suppliers and workers values.
  6. Import Safe: How to ensure all imported goods are compliant with the destination regulation without investing in a team of specialists to control all documents and data? Assuming the expanding demand of such services, thanks to ever growing regulations complexity, it is now possible to optimize your compliance costs with offshore resources.

The first step? You must define what CSR means to your company and how you want it to be recognized from stakeholders.

4)      Not convinced?

There are famous examples where you don’t want to see your company name, like Nike (http://tinyurl.com/cqbre2u). CSR is not a way to clean the company’s bad behaviors, the benefit lies on doing the right thing for a sustainable business and for the planet. This is why it is very important to define your CSR strategy based on your corporate values.

One famous positive example is GE Ecomagination: http://www.ecomagination.com/

5)      SAOS, your local partner on CSR

At SAOS, we believe in CSR core values and the associated long term benefit. Not only we built our business to be socially responsible, but we believe that it can help our customers to develop their brand image worldwide by sharing those values. Because SAOS is based on Western and Chinese integrated management, we have this unique positioning on the market to deeply understand our customers’ requirements and transpose them to a Chinese environment to get the most of it.

Shape your CSR awareness in China with SAOS, now!

Fabien Gaussorgues SAOS General Manager

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