How to choose a Trade Fair in China

This morning I received an email from an American, “Jake” living in Krygstan, a small Central Asia country bordering Kazakhstan and Uzbekistan . He and his wife have a business there selling women’s apparel. He has been buying product from China from a middleman there in Krygstan but he finds prices are too high and that he would be much better off going to China directly. I think he has the right idea. When I lived in China in the 1980s-90s the Silk Road was thriving. Whenever we would go to the wholesale markets in Shanghai we would see we would see traders from all over Central Asia including many of the Soviet Bloc countries (In those days the USSR was intact). And this is still the case today.

Jake told me he is going to Shanghai next month to attend a trade fair and that this will be his first time in China. He was asking me what advice I could give him. The name of the trade show he will be attending was not familiar to me and so my first piece of advice to him was that he should make sure he picks the right trade show, because there are a lot of shows in China, some good but many probably not worth attending. There are shows in China that are full of 3rd tier vendors, usually small cottage industry vendors, and these are probably not the kinds of vendors you want to deal with if you have a design driven product. Yet these shows are well-publicized and you can easily be led to believe you are attending one of the biggest shows in China. You show up in China to find a massive exhibition hall with just a couple hundred trade show booths and no foreign customers in sight. I have seen these shows many times. It is like seeing a watercolor exhibition in the Georgia Dome. So the first thing is to carefully research the fair you are thinking about attending. There are ways to research the fair, reading online reviews of trade fairs in China, asking about the fair in a Linked In Group specific to your industry, and sometimes just asking a handful of Alibaba vendors which shows they attend and see if the show you are interested comes up. It is also a good idea to call a local company that sources overseas and ask them which shows they attend. As long as you have a non-competitive product they should be perfectly willing to share their insights with you. A general rule is this, if you cannot find anyone who has been to the show you are thinking about attending, then don’t think about attending yourself.

I told Jake that he made a good decision to focus on Shanghai as Jiangsu Province, bordering Shanghai, is where so much textile production takes place. But he probably should have waited to attend Intertextile Shanghai, the biggest textile fair in China. The bigger and more established the show, the better vendors you will have a chance to meet, and the more likely it is that you are going to meet someone who can help you build your business. And this is the virtue of the Canton and Hong Kong sourcing fairs as well. These shows are well known in all corners of the world and although there are plenty of vendors you probably do not want to do business with, and although they may not be the best fairs if you have a high end product, you can usually find someone who can teach you a different way to look at your product and thereby help you grow your business.

In short going to a trade fair in China is a good first step. But research the show carefully and find the show that is best for your needs. Or as they say in China 量体裁衣. Cut the garment so that you can wear it.

Here are some more posts on Trade Fairs in China

Canton Fair 2012

Preparing for the Canton Fair

Don’t go unprepared to Trade Fairs in China

Canton Fair 2011

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Four Maxims that will help you succeed in China

Sometimes I have found that I come up with catch phrases when giving advice to people who want to source in China so I thought I would publish a few of these here today. They are easy to remember and reflect some valuable wisdom acquired over the past 25 years.

1.) The best way to work with a problem supplier is to avoid them altogether. I get emails from people all the time who are having problems with their suppliers and it usually comes out that the person did not really research the supplier fully before giving them an order. In many cases the supplier is just someone the person met on Alibaba or another internet site. I often think the best way to find a good supplier is to eliminate as many bad suppliers as you can. You do this by doing your Due Diligence (DD).

2.) Work with your vendor, not against them. Too often people who source in China have a mindset that their Chinese suppliers are there to serve them and that they (as the buyer) can dictate the terms of the relationship. Wrong. Mutual respect is the basis for any successful relationship in China and you have to show your vendors respect at all times. When you have problems don’t look for blame. Look for solutions (this reads like another good maxim in and of itself).

3.) When doing business in China you need to be patient. And when you think you cannot be patient any longer, you still have to be patient. Patience is the one virtue you need more than any other when you source in China. When you rush your orders, rush your vendors that is when problems happen. So give yourself plenty of time on your orders. And, more importantly, give your vendors time.

4.) Be Calm, Be Clear, Be Polite, Be There. I had a customer once who had a lot of experience in China, having sourced there for years, but she found that this rhyme really summed best what it takes to succeed in China so she printed it out and put it over her desk. If you are sourcing in China, you should do the same.

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The day 40,000 people visited McDonalds in Beijing

I saw the other day that McDonalds has opened its 2000th restaurant in China. To think that there are now 2000 Golden Arches in China because when I first lived in China there was one, in Shenzhen. The first McDonalds outside of Shenzhen opened in China in Beijing in 1992 and I was fortunate enough to have been there.

I remember a few things about that first visit to McDonalds in April,1992, namely how crowded it was (according to McDonalds there were 40,000 customers on that first day),  the line of people taking snapshots of the Ronald McDonald statue outside the restaurant and how I had to summon my courage to eat a Big Mac with cheese because the person behind the register could not comprehend a special request to make a Big Mac without cheese. After explaining to him that I did not like cheese I looked behind me at the great wall of people waiting to order and decided that I had better dispense with the special request lest it bottleneck production and create a major incident in what was billed as the largest McDonalds in the world. .

Thinking back to my first time at McDonalds in China I can remember how in those early years of Deng Xiao Ping’s reforms about the only two American foods you could find in stores, not counting the ubiquitous Coca Cola which had been in China since the 1930s, were Tang and Nescafe instant coffee. The popularity of Tang in China was hard to fathom since it had not been popular in the US in 20 years. I can only speculate that someone in the Nixon entourage had brought over a jar back in 1972, ( maybe someone in the State Dept thought it sounded Chinese as in Tang Dynasty ?) and the Chinese were hooked from then on. Who knows.

In those days then there was a buzz in the foreign community anytime an American brand was spotted in Shanghai, whether that was a short-lived Sees candy store on Jin Jiang Lu or a box of Ortega Taco Shells that somehow had found its way into the Soviet era grocery store on the corner of Wulumuqi and Hua Shan Lu. There was a randomness to it all that was exciting.

Beginning about 1992 or 1993 western style supermarkets started to sprout up all over Shanghai. They were big but did not offer much variety meaning you might find an entire aisle dedicated to one brand of hot sauce. The locals were slow to accept the supermarkets because they were more expensive than the local markets, did not except grain coupons and there was a tendency to distrust anything new. Imagine a local Chinese shopper in those days trying to figure out what a jar of Skippy was. I remember vividly how big but how eerily silent and empty the supermarkets were in those early days. You wondered if they would catch on.

If you really had to have that box of Pop Tarts or some Gray Poupon then there was the Wellcome Store, the Shanghai ex-pat equivalent of the Army PX, located in Shanghai’s most well-known ex-pat compound, the Portman ( now the Ritz Carleton Shanghai). But everything was expensive in this store so we did not go there but on the most special occasions or maybe after we had had a bad “China Day” and just needed a cup of Swiss Miss hot chocolate to keep our China life in perspective.

Nowadays when you go to Shanghai you can find anything everywhere. Whenever I go to Shanghai and pass by a bakery I like to recall those Sundays when I would get up early and embark on a two hour journey via bike, ferry and bus to the middle the old French Concession. There was a bakery there and they had a rare commodity that I was after. It was called bread.

Happy Thanksgiving

How to win in China

http://www.theeastasiaco.com

I got an email from a customer today. He was very happy with some samples I had sent him recently. We had requested samples from about 4-5 vendors over the past 4 months and although some vendors did not pass muster, one did. This is a design driven product and my customer has high standards. He wrote: “I just received the hats today and they look great! Even better than our originals.” I am sure he is very excited because the search for a new vendor has taken some time. My client’s first vendor kept raising prices on him and there were some quality issues with his last order. 10,000 hats he had to repair himself. That is when he came to me.

So it looks like we have found a new vendor. But it is far too early to celebrate. So much work still needs to be done. The first step should be to send someone up to inspect the vendor’s facility. Vendor visits are invaluable because until you actually see a vendor’s factory you have no idea who you are dealing with. Vendor visits also tell the vendor you are serious about doing business with them. They appreciate the visits and it is an opportunity for you to reinforce your quality standards and tell the vendor how you do business. Then you have to get the order to the vendor which means you first need the order yourself ( my client is in discussions with his customers but still does not have a hard order). It is important here not to wait too long can because if you do then things can change quickly. A vendor that was hungry for orders in Nov. 2012 may not be hungry for orders in April 2013. And who is to say that the vendor will not raise their costs after they get a first order, what happened with another client of mine as I detailed in a previous blog post. In the event the vendor does raise costs we have to find other vendors, something I am now working on.

In short there is just so much work to be done yet. Still if you find a vendor who can make a quality product and meet your target costs you should see yourself as going into the locker room at halftime with the lead. But don’t lose sight that there is still an entire half to play. How you manage your vendor in the second half will determine the outcome of your business.

Forgive the football analogy but this is Super Bowl Weekend. Enjoy the game !

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Is China quality really that bad ?

http://www.theeastasiaco.com

I was reading the business headlines today and see that Toyota is recalling over 1 millon cars because of problems with the windshield wipers and air bags. And it seems to me that this is not the first time that the Japanese auto-maker has had to make significant recalls because of faulty manufacturing or design. The Toyota recall this morning comes on the heels of the Boeing 787 Dreamliner fiasco where faulty design on the part of Boeing and/or a Japanese battery maker, Yuasa, has resulted in the grounding of these jets worldwide. Reading all of this, I am asking myself this morning if it is not a little unfair that Chinese products have such a bad reputation in the world?

In 2007 University of Manitoba researchers released a study which covered 2 decades of toy recalls in the US. They found that the majority of recalls resulted from faulty product design on the part of the US companies and not from shoddy manufacturing in China. This is a well-known and respected study but of course your average importer or consumer is not aware of it. Consumers simply read the headlines about this recall or that recall and immediately blame the Chinese.

And then I think to some of my projects over the years. I remember a company that was doing a dresser for a major US retailer but both product development and the retail buyer forgot to put drawer stops in the design so all the drawers were falling out. It was comical but dangerous as well. Or the ceramics company whose mugs were showing up with severe pocks on the base because the design required that the mugs were placed on a special rack when firing. Or the basket company that insisted on a special burgundy color lacquer only to discover then that mold was more visible on the baskets. The stories are endless.

Make no mistake about it, there is a lot of bad product coming out of China, flawed design or not, and I have certainly had my share of Chinese product breakdowns. And as my post yesterday made clear, it is essential that you inspect an order being shipped from China. But a lot of good product comes out of China too. How about all the toys, appliances, exercise equipment etc. that is “Made in China” and is perfectly safe and functional? Just as we do not suspend judgment about Japanese ingenuity and technical prowess when there is an auto recall, maybe we should be as understanding with China when we read about a toy recall.

Just a thought.

Canton Fair 2011

Haste makes waste – and it is costly when doing business in China

I often receive inquiries from both existing and prospective customers about having a product made in China. Last week the tone in one of the emails I received was urgent,  “ We really need to find a vendor immediately and ship ASAP no later than March 2012.”  Unfortunately it is just not that easy, especially if you have yet to identify a vendor to work with. Finding good vendors in China takes time – at least three or four months and sometimes as much as a year. There are just so many bad vendors to wade through that you simply have to do your DD- including a challenging sample order – or you risk losing thousands of dollars in bad product and having to turn away important customers back home. 

You will also increase your costs if you approach vendors – new and old vendors both – with a sense of urgency.  If a vendor knows you need a product ASAP they will charge you a premium for it. Your first costs then will go up, sometimes dramatically. Vendors  are also more inclined to take short-cuts if they sense their customer is desperate– because you need the product quickly they know you might be willing to accept something that is not exactly to specification and they can therefore get by with using cheaper materials or skipping costly production steps altogether. I have seen this happen many times.  The root cause more often than not:  overseas buyers are rushing their vendors for their orders.   

The best way of approaching samples and/or production is to thoroughly evaluate your company’s situation, and know well what your needs are before approaching vendors with lead-time requests ( you would be surprised how many companies don’t do this but just assume they can get anything made in China and delivered when they want).  Ask your vendor when they feel they can deliver the product to you at the QTYs you have specified and if that is around your request date, you may be able to work with them, getting them to move the date up a week or two without seeming desperate. If the delivery date the vendor has given you is much further out than what you have in mind, don’t force the issue with the vendor but go back to your customer and see if they are flexible about delivery dates.  I have learned that it is better to disappoint retail stores over the short term – with perhaps longer lead times – than over the long term – delivering product to them that they cannot sell to their customers .  Another way of looking at it is that it is perfectly acceptable if your company has a reputation among its customers as being a “little slow on delivery.”   If your company, on the other hand,  is synonomous with bad quality,  you will be looking for new customers.

Finally, I would add that vendors in China today do not like to have lead-times dictated to them by customers. Not only are they no longer desperate for orders in many cases but China vendors – like everyone in China -are keenly aware of China’s history of domination by foreign powers and dictating to your vendors what to do can ring with unfriendly overtones.  

As I always say,  work with your vendors, not against them