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SAOS organized a free coffee tasting for the launch of the Coffeeman Taobao shop

On Saturday August the 31st, SAOS organized a free coffee tasting for the launch of the Coffeeman’s Taobao shop (http://coffeeman.taobao.saos.biz/).

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Thirty one people (including employees of the French Chamber of Commerce) went to enjoy free coffee and delicious little desserts especially made for the occasion by the Clare’s food restaurant: English scones, chocolate mousse, passion fruit mousse and “marbré”, were sold for 6RMB each. Espressos, americanos, macchiatos and lattes were made by the staff of the restaurant for the happiness of the guests as well as regular customers of Clare’s food.

 

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Coffeeman is a customer of the e-commerce service of SAOS (click here to know more about us). SAOS has created the shop on Taobao and the event was a way to promote the initiative. The goal of this event was to give the opportunity to people to discover the taste of the coffee from Coffeeman before buying it on e-commerce website. It is not easy to choose and buy coffee on Taobao or simply on internet, so people generally don’t want to buy new coffee as they don’t have the opportunity to taste it.

This tasting allowed people to try this new Colombian coffee and to enjoy a convivial moment in the lovely British restaurant Clare’s food  localized in Shenzhen (Luohu).

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The coffee offered for the event was a Colombia Arabica, with delicate citrus notes, silky mouth feel and refined with hints of cocoa. It is directly imported from Colombia by Coffeeman. A lot of nationalities were represented during this event: English, American, Chinese and French. All liked the taste of the coffee, despite the fact that the tasty notion can be different from a culture to another one,which is an assurance of the quality of the product.

WeChat—A New Way for SNS Marketing in China

WeChat (Chinese: 微信, Pinyin : Weixin, literally means Micro Message) is a newly fashionable mobile app in China owned by Tencent Holdings, the Chinese company has the largest worldwide community through QQ and is the third largest internet company in the world. Launched in January 2011, WeChat has already gained over 300 million users in 2 years (the last 100 million users were added in less than 4 months!), making it already a significant platform for e-marketing and SNS marketing in China.

Who are using WeChat? The dramatic increase of WeChat users is enhanced by the rapid growth of smartphone users in China—330 million in the end of February 2013 according to CNNIC (China Internet Network Information Center), close to the number of WeChat users.

From a research by Search Engine Journal, China’s young, affluent and urban young contribute to the majority of WeChat users. 76.1% of the users are aged from 22-35, mainly in big cities. As for their occupations, white collars rank the first at 24.2% with a trend more and more middle and low class young people joining in.

Main Functions of Wechat: WeChat provides social media networking via photo/video/article/message sharing, which forms shared streaming content feeds for convenient viewing, and location-based social networking plug-ins to chat with and be friend with other WeChat users.

– Live chat Chat with friends in a Live Chat session like Viber in Europe or USA, both text chat and voice chat are available. Moreover, video chat feature has been added recently. You can also select contacts to form a group and initiate group chat easily. wechat1

– Add friends & QR codes Friends can be added via searching or scanning a QR code. WeChat allows users to simply create a QR Code so as to let others to do a quick scan and become a follower. Adding public account with QR codes is one of the most popular ways for users to get information outside their friends circle, which is also a very interesting tool for marketers. Nowadays, many companies like Starbucks, Microsoft and AirAsia have registered their public account and use it for marketing campaigns. Thus, WeChat QR codes are very common in many marketing materials to encourage people to follow them on WeChat. wechat starbucks Starbucks WeChat QR code, scan it with your WeChat to find out more.

– Location-based plug-ins

  • Shake: Shake your phone to find people shaking their phones as well, then you can choose from the list of “people found” and “Send Greeting” to make friends.
  • Look Around: Use “Look Around” to find people using WeChat nearby, and select to “Send Greeting” to make friends. Only user with the “Look Around” function enabled can be found.
  • Drift Bottle: Throw & pick Drift Bottle. Select “Throw” to send out your voice or text message, and then wait to see who will pick up your bottle and reply. Select “Pick” to pick a drift bottle from the sea. You can reply to it or throw it back to the sea.

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– Moments See all the updates from your friends in the Moments, for it photo/video/article/message. Like or Comment on the moments, a simplified, easy to use Facebook sharing tool.

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With all these convenient and interesting functions for social networking, WeChat had soon become very popular in China, and keen marketers started to study marketing on Wechat. Yet, the real marketing practice on WeChat didn’t start until August 2012 when the WeChat Public Account platform was launched. On this platform, verified public accounts have more choices for marketing: – User management: You can manage the followers of your account and categorize them by different types. – Posting messages: You can edit the message that you’d like to share with your followers and select to post to all or to specific groups. There are the five types of messages: text, voice, picture, video and text+picture. Links are allowed to be added for further actions. – QR code: You can download the QR code of your public account and can put it on your website, other social media or marketing materials for increasing followers. (See also in the Add friends & QR codes section.)

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AirAsia Wechat QRcode on its official site(left), Text+picture message of promotion info from AirAsia(right)

Everyone can register a public account, however you need 1000 followers to verify the account, not too difficult considering the huge potential number of users. Up to now, WeChat has over 30,000 verified accounts, in which the corporate account accounted for 70%

Though WeChat isn’t the passkey for all marketing, no one can deny that it is an effective SNS marketing tool to build your brand community and increase sales in China, the world’s most large and competitive markets. What’s more, WeChat isn’t stopping in China. The app is now available in English, Russian, Indonesian, Spanish, Portuguese, Thai, and Vietnamese. And popularity is soaring in other parts of Asia with WeChat top on Apple’s social network app in several Asian countries. It’s a good idea to tap into this for your business in China and Asia now.

 

 

By Cornelia Yan

The Chinese social media landscape

Social media are an importantWeChat—A New Way for SNS Marketing in China part of the Chinese life. They have 597 million users at the beginning of 2013. In China, 91% of the online population has an account on a social media site, as compared to 67% in the USA. 88% of Chinese social media users are active on one social network at least. This is the case for 67% of Americans only. Regarding to a 2013 study of “We are social”, the number of   social media’s users  in China today is almost the double of USA’s population. Social media is a huge phenomenon in a collectivist country as China. People like to share and being connected every times with their friends, in a much more emphasized manner than in western countries.

Because of the Chinese censure, called the “Great Firewall of China”, numerous of western social media are not allowed on the Chinese internet. To satisfy the Chinese consumer, the country has developed his own social media. Perfectly adapted to the local culture (which is totally different than the western ones), those social media are the most popular in China and most of them are owned by the local group Tencent Holdings.

In this article I will present the main Chinese social media: QQ, Qzone,  Weibo (Sina Weibo and Tencent Weibo), Renren, WeChat, Kaixin.

I.                 QQ: The Tencent’s chat.

 logo QQ

Launched in 1999, the first version of QQ was named “OICQ” (open ICQ, for reference to the previous instant messaging computer program ICQ owned by AOL). Because of a conflict with AOL for the brand’s name, the Tencent’s software was renamed “QQ” in 2000. “Q” is often use in Chinese as a translation of “cute”.
It is today the most famous social media in China, with 784 million users. Mostly of them are second tier cities teenagers.  This social media is accessible by computer or by phone. The phone version is more used for practical reasons.

QQ is a kind of MSN. Users can chat instantly, sharing mail correspondence or speak by videos with each-others. The service is free, but people can pay to obtain privileged memberships. This system is based on seven kinds of services illustrated by seven diamonds of different colours:

  • Red: QQ’ services Access (QQ show, personal avatar, clothes…)
  • Yellow: allows to personalize Qzone
  • Blue: access to basic games
  • Purple: access to famous games of Tencent
  • Pink: offers for QQpet, a game of pet farming, like a veterinary visit for free
  • Greenish: access to QQmusic
  • Black: access to DNF (game)
  • And a VIP diamond which allows to use the QQ version free of adds

QQ is also widely used in business even with foreigners have business in China.

II.               Qzone

 Q zone

Qzone is a kind of « My Space ». Owned by Tencent Holdings, this website allows the users to create their own page and to share their personal content, photos, videos and texts.

According to the go-globe.com, Qzone has 712 million users in 2013. To access Qzone, people must to be registered on QQ. It is the most popular platform for social sharing.

Users can listen and share music, write diaries and blogs, send photos to other members and make friends.

III.              Weibo: Sina Weibo and Tencent Weibo.

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Weibo means “microblogging” in Chinese. We can compare this social media as a mix between Facebook and Twitter. For example, users can write messages of 140 characters maximum, sharing photos and videos and sending messages to other users.

The landscape of Chinese social media owns two main weibo social media: Sina Weibo and Tencent Weibo.

  • Sina Weibo is used by 500 million people, mostly in big cities. Its multimedia function was created before the Twitter’s one.
  • Tencent Weibo, owned by Tencent, has 507 million users who live more in smaller cities that Sina Weibo’s. But like Qzone, Tencent Weibo attracts new customers thanks to its instant messaging base: QQ.

Even if less people use it, Sina Weibo has a very important and maybe the most influence on the Chinese society. It is a source of expression and of information. The limit of 140 characters has nothing to do with the limitation in western countries: with 140 Chinese characters, people can write short novels, named “Wei Xiao Shuo”(micro novels). This high capability relative to the content allows more the circulation and the exchange of opinions. As it is really difficult to control the information on social media, Chinese people trust more information they find on Weibo than on traditional media.

IV.             WeChat: Tencent

 wechat

WeChat is a mobile application which is very successful in China based on same concept as Viber. 300 million people use this micro-messaging app in 2013 in the whole world. 260 million of them are Chinese people; 40 million are from other countries.

Wechat is a big success as you can see. And analysts are convinced it will be used by 100 million people more in 2013. As a foreigner living in China I can say WeChat is a big discovery and a very useful tool to keep in touch with my family and my friends around the world. I totally understand why WeChat is the favourite way for Chinese people to stay in touch with each other. This application is free, we can chat everywhere, both writing and speaking, it works for every Smartphone from every countries. There are a lot of funny applications and emoticons. It can be used to share pictures and short texts, like on Twitter.

An application allows us to see what happen around our place, which people are connected. It is a very efficient marketing tool, as you can see more deeply in this article.

V.               Renren

renren

This social media is a kind of Facebook. Indeed, it offers similar appearance and functions than the famous American social media. Created by students in 2005, it was called Xiaonei (means in the campus in Chinese) before.  It was recalled Renren. “Ren” means “person” in Chinese. So “Renren” means “everybody”. This social media had 172 million users at the beginning of 2013, mainly students and teenagers.

VI.             Kaixin 001

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Kaixin (“happy” in Chinese) is a kind of Facebook too. Kaixin 001 has 113 million users.

The difference between Kaixin and Renren is that Kaixin’s targets and main users are white-collar workers. Thus the audience is older than Renren’s.

VII.            Conclusion

In many aspects, Chinese social media landscape is an adaptation of the western one. They answer to the same basic needs of people and adapt the platform, options, apps to the particularities of the Chinese users and culture. Those adaptations to the Chinese culture are necessary, as eBay learnt with its failure in China and the incredible success of Taobao, its local competitor (to know more about this topic, click here).

Social media in China is particularly important for companies. According to a McKinsey Institute study “High influence: China’s social medias boom” (January 2013), Chinese people are mere likely buying a product if it is mentioned on social media and purchasing it if it is recommended by a friend or if it has a good reputation on social medias. In a country where traditional sources of information are controlled by the government, people trust more the opinion of other users in social media. Moreover, as China is a collectivist country, people naturally like to be connected and value the other’s opinion, even more than western countries. As a phenomenon, 91% of Chinese people of this study’s respondents said they visited a social media site in the previous six month, compared to 30% in Japan, 67% in United States and 70% in South Korea.

Social media are a vital source of information in China, and having a good reputation on it is a vital criterion for brand and companies. Social media influent a lot on the customer’s buying decision. That is why each company must take care of its reputation and marketing on social media if it wants keep doing business in this country.

By Leïla Hatoum


Scam Check—Protect Your Business from Being Scammed

Scamming could happen whenever buyers go to B2B platform and look for new suppliers. One common way of scamming is when the seller asks for deposit and disappears after the buyer pays. As a matter of fact, it is not always avoidable to pay in advance when you are a new customer to the supplier. What you could do is to pay enough attention to avoid it. And how to avoid being scammed? There are many ways to avoid being scammed and is quite easy to find those tips online. Yet it’d better to use a professional agent to help you as in some cases the scamming is really complicated and is very hard for a non-experienced customer to identify. scam alert1

Unfortunately, we received a SOS recently from a buyer who seemed trapped. The buyer was urgently looking for plastic materials. He found a Chinese supplier online with B2B platforms like Alibaba, quoted and selected. He paid deposit as requested by the Chinese supplier. As the story goes, the supplier suddenly changed its terms and conditions and he couldn’t contact this supplier again after he transferred the money.

The buyer contacted SAOS via our Linkedin, as a local professional services provider. He emailed us the situation, provided all the contacts and information for our support to clarify the case.

It was too late already, but we tried our best to check. As due diligence services, we normally do:

–  Call the contacts: Ask questions to understand if they are really in that business (e.g. this time we planed to ask advices on various plastic grades and material recommendation). Scammers have low chance to demonstrate real knowledge on subject matter and will avoid answering.

Also we ask about the client case, what he understands and how he is planning to arrange the delivery. A real supplier will be able to provide more details and genuine information.

–  Check custom data: We use official sources like Panjiva, a custom data provider, to see if the supplier has been doing export business and had real transactions. If records are existed, then we consider low chance of scamming.

–  Observations: We look into their official address, website, domain name, and see if they are wired. It is subjective, I agree, however that is exactly what we call experience.

For this time, what more than regular procedure is that we work with our alliance, the Wuhan Online Chamber of Commerce. The potential scammer has their address in Wuhan and claims to be a local company there. It makes full sense that we ask if our friends in the Chamber know about them.

The Wuhan Online Chamber of Commerce, having about 100 of members, is one of the most active and organized group of the exporting industry. I was there last week in Wuhan for a speech regarding buyer behavior as a guest speaker. Learning about this case, the Chamber took serious action to check if anyone knew about this company and the person who named in registration. The case also concerned the local office of Alibaba and their head of the Mid-west China business Mr. Zheng Lei, who took immediate action even it was not their responsibility. He checked their local database on the information of the company and found that the same reg. person used to register different business in other province. That information made the case more suspicious. Both Wuhan Chamber of Commerce and Alibaba are involved since they are dedicated for a clean and safe business environment of the local industry. scam check

As a result, unfortunately, we believe the chance that the buyer is scammed is high:

–  The scammer website contains only English, which is not common for most Chinese companies based on our long sourcing history dealing with local Chinese companies. This gives a feeling that they are only interest to dealing with (or, scam with) foreign business.

–  They are existed in Panjiva as well, but with no transaction history.

–  We called all the phone numbers available and none of them successfully took us to any contact person. However, after several times of calling, we finally reached the project contact to pick up the phone. When we asked about the case, the girl on the phone said she knew nothing and hung up the phone. From the above observations, we believe the buyer is not just meeting a non-responsive supplier. He has been scammed, losing 30% of its advanced payment.

What can he do? Honestly, not much. He can call the police (in Chinese) and ask them to help handle it. However, in practice, it will be very difficult to deal oversea with this kind of crime. Some lawyers could eventually deal with this case. Still, I really want to stress on the fact that preventive measure should be taken to avoid scamming situations. Obviously, if the buyer had turned to SAOS or other professional agents to help check before the deposit, this suffering would have been prevented.

If you are not sure about your new Chinese supplier and you need to pay certain deposit to them beforehand, better to check before you do. SAOS offers a simple and small, yet professional and effective service called “Scam-Alert”, and our aim is to prevent you from being scammed. With all the checking via our local channels and even some official ways (e.g. Access the Chinese government database), we will provide you with our risk indicator index and accordingly, reduce your risk of being scammed.

Why Taobao Succeeds in China Unlike eBay?

China has the largest online population in the world: 538 million users by the end of 2012, versus 141 million in the USA. internet users Want to know more about Chinese e-market, click here

The Chinese e-market is huge today, and this evolution was predictable from years. That is why eBay chose to begin the leader of this market in 2002 by investing US$ 30 million in EachNet, a Chinese online auction founded in 1999. But the American giant eBay failed in China.

On the contrary, the local competitor, Taobao that was created in 2003 had and still has a big success in China. Even more, Taobao is the biggest e-tailing platform in the world today.

Taobao is an e-tailing platform created by Alibaba group in 2003, one year after the coming of eBay on the Chinese market. The managers of the American e-tailing platform considered that this Chinese version of eBay was not a danger for the company. But obviously, they were wrong. In March 2002, after doing a joint-venture with EachNet.com, eBay had about 80% of the e-commerce market for $30 Million and 33% of shares. In May 2003, Taobao went online. At the end of 2006, eBay cut its losses and shut its website because of Taobao’s success. Today, Taobao is the global leader of e-commerce with 80% of the Chinese market shares.   

Why Taobao has achieved commercial success and not eBay?

This is the “going first going fast” American e-tailing giant’s strategy that made it lose its Chinese bet. In fact, the ethnocentric management of eBay has not allowed it to adapt its services and logistic to the new target culture: the Chinese one.

Chinese culture is very different than occidental ones, than American’s in this case. Then, consumers’ expectations and needs are different too. While eBay didn’t want or think to adapt its strategy, Taobao is perfectly adapted to the local culture. You could tell me “of course, it is a Chinese platform!” and you would be right. Let’s have a look on the Taobao’s particularities that allow it to win the war against eBay for the e-commerce in China.

• The platform’s design To compete with eBay, Jack Ma (Taobao founder) has decided to give a strong local identity to Taobao.  Many aspect of the platform’s design are concerned.

First, every member of the administration team had to choose a nickname, and all of them are “from fictional characters from Jin Yong’s famous kung fu novels” (Sun Tongyu, Taobao’s president). The message transmitted through the famous Chinese kung fu writer’s reference is clear: Taobao is a Chinese platform. This message is important because Chinese people are very nationalist. They are proud to be Chinese and as China is a collectivist country, this kind of identification is stronger than identifying themselves as individuals. That is why Taobao’s manager chose to give a strong Chinese culture reference to the platform. Another reason for this is to ensure consumers their understanding of their behaviours and needs. The second thing is choosing nickname is giving an informal attitude, which is the key to allow people to feel welcoming and being a member of a community.

Secondly, Taobao’scolors are red and orange, which symbolize festivity and prosperity in Chinese culture, a very positive message for online customers. Symbolic is very important to doing business in China unlike in the occidental world.

Moreover, Taobao’s website is well charged with a lot of information everywhere. Life in China is like that: a lot of people, information and signs everywhere, no empty space mostly of the time. It’s a noisy, collective, moving and colourful environment. That is why Taobao’s design is reflecting this environment: it is what Chinese people are accustomed to.  Zhang Yu, vice president in charge of C2C marketplace operations at Taobao, explains: “Chinese consumers like busy web designs with strong colours. Westerners prefer sparse sites like Google’s, but Chinese customers want their website to be noisy, with lots of links”. taobao-homepage-aug-2009 Taobao homepage with red and orangecolors and filled info

Overall, the design is adapted to the Chinese spirit. As Porter Erisman (the vice president of International Corporate Affairs) said,Taobao’s “design was much more usable for Chinese eyes [than eBay’s]. It reflected how Chinese shoppers think. Even some small details, such as including a men’s navigation tab and a women’s navigation tab, made the navigation more suitable to Chinese online shoppers. It was like being in a Chinese department store”. It is not in the occidental culture to create one separated navigation tab for men and women at all, even if differences of men and women thinks have been proved.

• The trust One eBay’s error was to ignore the importance of the trust in the Chinese culture. For American and occidental people in general the main motivation to buy a good it’s the price. Of course they need trusting the seller, as each people from any culture in the world, but the trust in China is much more than that. Paul Ingram, professor at the Columbia Business school specialized in social network explains:

In the West, we tend to reserve trust from the hurt (affect-based trust) for family and friends and trust from the head (cognition-based trust) for business partners. We see emotional concerns in business as unprofessional. But in China, affect- and cognition-based trusts are highly intertwined, even in business. It is important that business partners have an affective bond. Few Chinese business relationships develop without socio-emotional exchanges such as sharing meals, gifts and socializing with each other’s family.

That is why Taobao provides many aspects to facilitate confidence among sellers and buyers.

– The main one is AliWangWang, the Alibaba’s chat. Its function is to allow sellers and buyers to communicate. This tool has 2 main advantages. The first one is that Taobao proposes mostly fixed prices and only few auctions (on the contrary of eBay). It means that people can negotiate prices with sellers. It is interesting financially, but more than that, the bargaining is a part of the trust building between seller and buyer in Chinese culture. The second advantage is that people can directly ask their questions about the product to the seller or asking for assistance. aliwangwang AliWangWang interface

– Taobao sellers have to use their national identity card and their bank account to do their registration on the site. 

– A rating system of both sellers and buyers allows people to know who is trustable or not without taking the time to speak with the person. eBay offers a rating system for sellers only, but it is not enough in China. Moreover, in a collectivist society people like sharing and it is human trusting a person who has a good reputation. Thus, both buyers and sellers have to build and maintain a good reputation being honest if they want keep selling or buying on Taobao. taobao-seller-panel Rating info of a registered user

– Alipay, lauched in 2004 is an escrow service of Taobao. The buyer put the money on Alipay which inform the seller the money was given. Then, the seller send the item to the buyer, and only when the buyer tells the good is received, Alipay allows the seller taking the money. This service can be used for free.

– Another trusting idea is people can pay as they receive their item, mainly by cash on delivery. Indeed, the most usual way of payment in China is cash, and cash on delivery is like checking goods before buying, in retail shops. One more time, we can see that Taobao is perfectly adapted to the Chinese culture.

• Fees Listing and transactions are free of charge on Taobao. It is not the case on eBay.

In conclusion, we can say Taobao bested eBay for 3 reasons:

o It is perfectly adapted to the Chinese culture. It is a Chinese eBay especially made for Chinese consumers and consumers like to be considered.

o It provides very good services with low risks for online shopping.

o It is free.

Leïla Hatoum, SAOS Marketing manager & business developer.

Fix Cost Sourcing Service—Does it make sense that your China sourcing agents charge by percentage of your spend?

Fix cost sourcing is a type of sourcing service that performs purely as a service provider to buyer and is on 100% benefit to the buyer who is paying for the service. Unlike the most common commission-based sourcing service, fix cost sourcing service is a suitable outsourcing strategy for mission critical projects that expect to result in a list of fair, non-biased comparison on supplier competitiveness in a new supply market.

paid sourcing

 

 

It is fairly easy to find a sourcing company in China – try it yourself by asking for this in a LinkedIn group and you will have quite some people raise their hand for the work. Most common charging structure from them is to take a % from your purchase amount in a fixed period of time, say, the first year or so. Most of them could give you a list of suppliers easily, even for free in some cases. Assuming you pick one who asked for a reasonable % that you agree with, the agent will do their sourcing work by their process (assuming you pick one who has a clearly presented process), and eventually lead to a supplier that you can work with. Some of them could follow up the negotiation process or even new product industrialization process. Eventually he or she will either get payment from you or your supplier, or both. Case closed.

Sound good? True, but only in some cases. Let’s see more scenarios. Let’s say, you have a half millions sourcing project that critically requires having a shortlist of capable suppliers within 1 month or even few weeks. You know China is a good source for the product but you do not have any experience nor network locally to perform the task. As a new project you do not have all the necessary product and technical knowledge and you would like to work with a supplier that knows your product and industry well enough. Your business unit and product marketing folks need to launch the project on target quality, price and most importantly, on schedule, so as to compete in the market. Strong pressure that you just could not afford to waste time nor rely on an agency who is not committed.

You go to internet, list your request, someone raise their hand for the job. You discuss with them for your requirement and tell them how important it is to meet the target. You get a firm “YES” confirmation from one of your agent. The agent start to source and discuss with potential suppliers. Unfortunately your target is tough and not all suppliers interested to your RFQ due to the difficulty and complexity of your questions. Your agent come back to you, with the bad news of the progress, and an even worse news that he/she want to quit the project due to the complexity and uncertainty to meet the target result and earn his commission. Of course you are upset. You disagree, you yell, but it doesn’t help anything. The agent just disappeared. In most cases, I am not sure the agent will even consider there was something wrong. He didn’t get paid nor contracted. It is just a casual relationship without any official commitment.

Yet with a professional sourcing service provider like SAOS, this shall not happen. We will have project analysis before they make a commitment and will charge only when the project is completed as you expected. An official contract will also be signed for the insurance of your interest.

And What about cost of the sourcing service? From my understanding most agent charge between 3 to 8% (I understand a famous HK based sourcing company run by American charge as much as 7 to 11%!). Let’s assume you go for price and take an agency charge for 2% only. In your half million project you will pay 10K USD to your agent. In our fix cost based sourcing service, we charge by man hour in most cases and for a single product family sourcing we seldom go higher than this figure – not even close. Price is purely based on the complexity of the project and doesn’t matter how big or small of your business and project. fix cost sourcing

When I started to think about how my China sourcing company SAOS should charge on a sourcing service I was quite surprise to see that people in this industry is actually charging to a % of the total purchase amount. As a matter of fact, the sourcing effort required to do a good job for a smaller project should not be too different from a high volume project. The difference, if any, should be in the term of product development and industrialization process, which is naturally a post-sourcing process after you identify and contract with your supplier.

Think deeper, if my paid is related to the total amount of spending, will I make more profit if a supplier with higher cost is selected? Will this pay system discourage me from recommending low cost suppliers?? System Error!

I believe that sourcing service should be a non-risk taking, consulting+ operation based business process. Unlike trading, which aims to take advantage of an unbalance point of a market and take risk for higher profit, sourcing should be purely professional service. Charging by consulting fee and/or man-hour effort makes more sense to us. That is what we are doing today and our customer is comfortable to our relationship as we do.

Ben Chu, SAOS Founder

Free coffee tasting August the 31st in Shenzhen (Luohu)

New label

Free tasting of high quality Colombian coffee !

Saturday August the 31st – From 1pm to 5pm

Organized by  SAOS  your Asian Partner, to celebrate the launch of Coffeeman’s Taobao shop.

Take the time to share a convivial moment  and enjoy the taste of an elegant coffee  for free!

The coffee offered is a Colombia Arabica, with delicates citrus notes, silky mouth feel and refined with hints of cocoa. It is directly imported from Colombia by Coffeeman®. 

Join us to the Clare’s food restaurant:

  • Luohu (green) line, stop “Grand Theater”
  • Adress:

Shop C101-3, World Finance Center

4003 Shen Nan East Road

Shenzhen (Luohu)

dégustation 2

(Click to make the image bigger)

Contact: leila@saos.biz

Why suppliers don’t respond to sourcing requests?

From our experience, when looking for new Chinese suppliers in a sourcing project, most of them don’t respond our enquiries, or respond very late and can either compromise the project, or delay it significantly.

What could be the reasons and how to increase that answering rate?

In this article, we will explain the process in SAOS and where come from this situation that every people doing business in China had to manage.

I. The sourcing process of SAOS

Usually, we start a sourcing project with a long list of suppliers. On client’s request, we identify a significant list of manufacturers, and eventually traders who can make the requested product. For new suppliers (not in SAOS database), we use B2B platforms like Alibaba, Global Sources, Made-in-China and other sources like customs data, social networks and search engines. When a potential supplier has been spotted, he is recorded and contacted for a first pass check.

So we start to contact the suppliers by email. In this round, we can get nearly 10%-20% email reply.

After that, if the supplier doesn’t respond, we call him by phone. A direct contact is general more efficient; the relation is less impersonal than emails, and our request is also less likely be considered as a spam or as a spy.

II. Why the answering rate is as low as 10-20% by mail? Can it be more efficient?

There are two cases.

First: the supplier has not received the email: • Some email addresses are invalid • They do not use that email often • The contact information on their website is not correct • Our email goes to spam directly according to their email setting. Some suppliers receive a lot of emails every day and they do not want to receive email with many attachments. Another explanation would be the email is too big.

Second: the supplier neglects our email: • Our email greetings is “Dear supplier”, some suppliers may consider it is an advertising mail, so they will discard it. This is the reason provided by about 30% of the suppliers when we check with them. • We send 5 attachments to suppliers for inquiry, each file is very long. Suppliers feel there are too many content for them to read. They think a normal inquiry are just contain the product description, quantity, where is the target market and so on. Some of them are no interested by filling the RFI/RFQ, they are too busy to consider a new request, even when more than 10 million yearly pieces are considered. • Error searching. It happens that the supplier information on Internet is misleading and he is actually not doing the products we are searching. • Technical limits: Sometimes the product is hard for the suppliers to manufacture, they do not have enough capacity to make such products, and they are not interested to extent their business, yes it happens!!! • Because of poor English ability, some suppliers cannot understand our clients’ product description and other attached files well. They think our information is too complicate for them. We experience this situation even with suppliers having exporting already for many years. • Trust issue. Because of first contact, some suppliers may think we are spying on them. Or they have met some companies doing sourcing project like us, as the result was negative, they try to avoid working with this business model.

There are various ways to improve that sourcing step, like phone call (in Chinese preferably), use another email not seen as spam, find another contact, used instant messages from Alibaba, Wechat, Skype or QQ. With our experience in sourcing activities we apply various solutions to increase the hit rate and meet our customers’ expectations.

An Example of A Simple Factory Highlight Report from SAOS

A few words from a factory visit make customer feel comfortable.  We know this well and every visit we write something we observed for internal discussion and/or to report customer.  Below is a fresh example from our yesterday’s visit to a plastic injection molder company for a bowl and cookie stamp project.

Here is the brief output:

Factory general overview: Good processes in place, clean and well maintained, assessed by BV (quality based). However this is more a low end supplier (so low cost) with old injection machines. Workload was very low during the visit, about 30%. They have a second factory, which we also visited, but totally empty factory (no worker).

Financial situation: They informed an EBIT of 10%, which I would barely believe assuming the current workload, including lot of empty space. I think this company is declining and financial assessment would be needed.

– Social audit: They didn’t check carefully enough our social requirements, they will read it again and confirm their acceptance.

– The color printing process on requested products 3 and 4 is thermal printing and happens to work only on flat surfaces. So doesn’t work for 3 and 4 which are not flat and they didn’t realize that before. Besides, the process is subcontracted, because their injection capability is quite basic.

– Alternatively, products 3 and 4 can be done in Melamine, but will be subcontracted anyway (trading process).

– AQL: They were not sure about the meaning of this standard even that they work for Japanese suppliers, but they are confident they can achieve it, based on samples approved by end customer. Some more focus will be needed on the inspection process during first batch.

– Samples request, 2 options: Either using real samples, so cost will be the mould cost + sample cost (very expensive), or just the shape in a different material and cost will be about 100€ each (handmade).

DSC_0401

Factory workshop

By Ben Chu, SAOS CEO

Le marché du e-commerce en Chine

I.                Taobao, une success story

La Chine possède le plus grand nombre d’internautes au monde : 538 millions d’utilisateurs fin 2012, contre 141 millions aux Etats-Unis.

                       internet users world

La vente en ligne a généré en Chine 190 milliards de dollars en 2012. L’industrie de la vente en ligne a augmenté de 120% entre 2003 et 2012, c’est-à-dire depuis l’année de création du plus grand site de vente en ligne non seulement en Chine, mais aussi au monde : Taobao (« trouver un trésor » en chinois).

Taobao est détenu par le groupe Alibaba, le géant incontesté leader du e-commerce chinois.  Le principal objectif de Taobao est de favoriser un système de e-commerce complet pour assurer une bonne expérience à ses utilisateurs.

Et pour ce faire, Taobao répond aux attentes et aux besoins spécifiques des consommateurs chinois, contrairement au géant américain eBay. La stratégie d’implantation de ce dernier a été de transposer le système américain pour le marché chinois, ce qui lui a coûté un échec cuisant.

Les attentes des consommateurs chinois de e-commerce sont très différentes de celles des occidentaux. Pour les chinois par exemple, la confiance entre vendeur et acheteur est très importante. C’est pourquoi ils peuvent communiquer via “AliWangWang”, le chat d’Alibaba, et que Taobao propose en majorité des prix fixes (qui peuvent être négociés via le chat) et seulement quelques ventes aux enchères (contrairement à eBay). Les ventes aux enchères sont un moyen individualiste de vendre ou d’acheter, ce qui en fait une méthode inappropriée dans la culture chinoise, de fondement collectiviste.

 

De plus, les clients ont la possibilité de payer à la livraison, en liquide et après avoir vérifié la qualité de la marchandise, comme ils l’auraient fait dans une boutique traditionnelle en Chine. Ce mode de paiement est aussi adapté à la culture chinoise, dans laquelle le paiement par cash est la norme. Par example, la population chinoise de Paris est la cible de nombreux vols à l’arrachée. C’est en effet un trait culturel pour les chinois de transporter beaucoup de liquide sur eux.

 

Le design de l’’interface de Taobao est  aussi adaptée aux consommateurs chinois. Les couleurs du site sont le rouge et l’orange, des couleurs qui symbolisent les festivités et la prospérité dans la culture chinoise. C’est un message très positif pour les consommateurs, et est important de prendre en compte dans une stratégie marketing en Chine. D’une façon générale, la symbolique est très importante dans le comportement du consommateur chinois, contrairement au consommateur occidental.

 

Enfin, Taobao propose une inscription gratuite ainsi qu’un très bon service client, opérationnel 24 heures sur 24.

Sa parfaite adaptation au marché chinois explique son énorme succès.

 

Aujourd’hui, Taobao représente:

  • 80% du marché C2C en ligne
  • 500 millions d’utilisateurs
  • 60 million de visiteurs réguliers par jour
  • 800 million de produits
  • Presque 100 milliards de dollars de ventes
  • Un des 20 sites les plus visités au monde. Le onzième en avril 2013, selon le site de classement de trafic internet Alexa.

 

 

Qui consomme sur Taobao?

 

taobao's customers

 

La catégorie la plus importante des utilisateurs de Taobao est celle de 25-35 ans. Ils recherchent de plus en plus à acheter des produits high-tech et passent beaucoup de temps à  comparer les prix sur internet.

 

 

Taobao: une opportunité à saisir.

 

Taobao est un outil très efficace pour les petites et moyennes entreprises qui veulent se lancer sur le marché chinois:

  • L’investissement est minime: une entreprise peut créer sa présence en ligne gratuitement
  • Puisqu’il est le plus gros site de vente en ligne en Chine, Taobao permet une grande visibilité sur le marché chinois de la vente en ligne
  • Selon une étude de l’institut Mckingsey, la vente en ligne va continuer à prendre de l’importance en Chine: elle devrait représenter 650 milliards de dollars en 2020

 

  • Taobao permet de vendre dans des petites villes (quelques millions d’habitants), qui ne disposent ni de bons réseaux de distribution, ni d’un grand choix de produits.

 

 

  1. II.          Tmall, une question de confiance

 

Tmall est une extension de Taobao. Ce site est spécialisé dans le commerce B2C en ligne, et est aussi visible via le site de Taobao.

Contrairement à Taobao qui a la réputation de proposer tout ce que les gens veulent au prix le plus intéressant, Tmall propose des produits de marque. Le prix n’est pas l’argument marketing de Tmall. Ce sont plutôt la confiance du consommateur dans les produits proposés sur le site et la protection des marques contre la contrefaçon.

Les consommateurs sont certains de ne pas acheter des articles contrefaits et font de ce fait confiance aux boutiques en ligne présentes sur le site. Ainsi, Tmall permet aux marques de contrôler leur image et leur réputation.

 

L’opportunité Tmall

 

Ouvrir une boutique sur Tmall est très intéressant pour plusieurs raisons:

  • Tmall représente 50% du marché B2C en ligne aujourd’hui, alors qu’il n’a été créé qu’en 2008
  • Le commerce B2C en ligne a augmenté de 130% entre 2010 et 2012
  • Les clients sont protégés de la contrefaçon
  • Les acheteurs vont plus facilement sur les boutiques Tmall, car ils sont en confiance

ecommerce chinois shop 1

 

ecommerce chinois shop 2

 

Mais ouvrir une boutique sur Tmall reste un investissement quelque peu compliqué pour les entreprises étrangères. C’est pourquoi l’ouverture d’une boutique en ligne sur ce site est conseillée pour les entreprises souhaitant s’installer sur le marché chinois sur le long terme.

 

En effet, pour ouvrir une boutique en ligne sur Tmall il faut:

  • Avoir son entreprise enregistrée en Chine
  • Avoir sa marque enregistrée en Chine
  • Passer un examen en ligne, organisé par Tmall, afin de vérifier si les règles du site sont bien comprises
  • Présenter des documents officiels
  • Payer 160000 RMB (environ 3000 USD) en tant que dépôt de sécurité.

 

Ces deux sites de vente en ligne sont donc adressés à des budgets différents, pour des entreprises qui utilisent leur marque comme un argument marketing et pour celles qui proposent des prix attractifs pour leurs produits. La vente en ligne en Chine est un marché en plein essor et une opportunité très intéressante, qu’il serait dommage de ne pas la saisir.

 

Par Leïla Hatoum

 

 

 

 

 

 

 

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