You’re all set! You’ve got your bags packed, your tickets and hotel booked, a translator arranged, the right team assembled and you know where you’re going and who you’ll be meeting with. So what do you do when you get there?
First, what are your expectations and the expectations of your stakeholders? Are you banking on out-of-this-world success? Prices at less than half your current costs and professional factories that are efficient, wired and fluent in English? Let me tell you right now, yes, everything is possible. But possible doesn’t mean probable. If you want wired and fluent with international standards you are going to pay for it—just like you would at home. If you want lower prices, be prepared for much more legwork to get the quality you expect. So try to understand your international market and adjust expectations accordingly. If you are buying commodities the prices in China are going to be about the same as in the West. The Chinese advantage is cheap and abundant labor and if your product is not labor intensive it may not be much, if any, cheaper than your home country after you figure in international shipping.
A good way to balance expectations is to look at a production limitations triangle. Each of the three corners represent an individual aspect of production: quality product, fast turn around times and low prices. The reality is you can have any two of the three—but never all three. Know this ahead of time and understand that even with an abundance of cheap labor there are still limitations to your factory’s production and pricing capabilities.
Here’s a story we were told first hand: last year, a large independent company in the US decided they could and should go to Asia on their own. This company has doubled their revenue every year for the past 10 years; they know their business and their industry well. They sent their top buyer to two shows in Hong Kong and China. They made appointments with factories before they left, they did pre-show research and worked the floors for 5 days. The results? The COO explained to us: “we were very disappointed with the results.” He said that they didn’t get what they were expecting after the reports of the “great shows” their buyer attended. They found what they wanted at the show but could never make it work out after the show. Ultimately, they never placed a single order from leads and contacts made on their trip to Asia and they ended up behind the eight ball with some big clients.
What did they do wrong? Nothing, other than expecting business to be the same in Asia as it is in the US. They prepared, they researched, and they went to the right shows and even sent the right people. But they also assumed that regardless of where they went, business would be business. They mistakenly thought they could get the same price as the “locals” and manage production after the show with phone, fax and email. Despite all the fine preparation they forgot that they “look different” and the factories knew that they couldn’t do QA or step in and fix the “little things” from 3,000 miles away.
So what are the correct expectations? Understand going in that tradeshows are just that—shows. Just like in the US you’ll see a lot of fluff. You may get lucky. But typically, tradeshows are great for only two things: buying off the shelf products and initial options for making relationships for future manufacturing. Trade shows only give you a best case scenario, a sales pitch. At a trade show you can’t see the factory, you can’t talk with a factory’s other clients, you can’t know if samples and production are going to match, you won’t know what it’s like to communicate details or resolve problems. It’s a show, so know what you are getting into from the get go.
If you are a buyer attending the right show you will literally be at a buffet. Many buyers come to China 1-4 times a year and complete their entire procurement requirements for the season or year. But if this your first show, don’t let your eyes get bigger than you stomach. Sample as much as you can before you commit to one factory. Talk with other buyers at the show and even at the same booths that you are sourcing from. Again, spending time up front in research will save you hours, dollars and headaches down the line.
If you are looking for custom manufacturing, the trade show is just the start of the process, not the end. So lower your expectations for quick riches right off the bat. While tradeshows can provide you with hundreds of options, qualifying those options before you make financial commitments is crucial. Come to the show prepared with a “qualifications” worksheet—a list of minimum qualification that a factory has to have to even be considered. Be specific, be clear and be patient. And be prepared to spend significant time after the show is over to sort through, question and investigate each factory that you pre-qualify.
One note on being “foreign” in China. You stand out. Not only do you look different you are expected to be different—e.g. you are expected to have more money than time. The more time you can spend on negotiations the better your prices will be. A couple hundred dollars in fees to push your flight back is totally worth thousands of dollars in savings on production costs.
Being prepare will help you make the best use of your time. So what’s the best way to spend your time for the few days while you are at the show? First, take some time each morning and map out where you’ are going, who will cover which halls and which companies you’ll talk to first. Prioritize your needs and outline your best chances for success. An hour spent planning could save you an entire day walking the wrong hall. Remember, you spent thousands of dollars to come here, and you only have this one shot to get it right.
Next, after you know where you are going it’s time to decide who to talk to. If you have some recommendations follow up on those. If you have previous appointments, make sure to schedule those in. If you are going in blind bring your list of minimum qualifications. As you sit down with each factory, even those recommended to you by others, use your minimum standards to decide immediately if they meet your needs. Don’t spend more time than you need to eliminate factories that don’t meet your needs.
(Side note on time: shows typically last for 7 hours a day; 3 days at a show means you’ve only got 21 hours to find what you need. That may seem like a lot at first, but if you spend 1 hour each with 6 factories, and 30 minutes with another 30 your whole trip is used up! And that assumes that you will be at the show from open to close and it doesn’t include any time to talk with associates, rest your feet, eat lunch, go to the bathroom, browse booths or even move through the huge venues.)
Here are some suggested questions to ask those you meet as you start to talk with them about your projects:
- Are they the actual factory or a trading company? (Press this issues as it will be important to effective communications, QC and pricing later on.)
- Is the person you are talking with at the fair going to be at the factory after the fair?
- Is there someone that speaks English at the factory (not just someone that reads and writes English, but someone you can actually talk to if there is a problem)?
- Who is going to talk with the engineer regarding the specifics of your project? Can you talk with him/her yourself?
- What experience do they have with outside QA?
- Do they have an export license?
- Have they worked with clients in your country/industry before?
- Will they give you any client testimonials?
- Will they give you regular reports on production including photos?
- What kinds of international certifications/training to they have (i.e. ISO, RoHS, Wal Mart, Disney, etc.)?
An often overlooked resource at tradeshows is the other buyers. While you are at the show, don’t be afraid to talk with them. A group of buyers sharing notes on different factories can not only save time but money as well. Buyers from other countries may not be your competitors and so would not be threatened by your questions. And there’s a “bond” that takes place when you meet someone from you home country while you’re abroad. Use these connections to your advantage. Besides, connections you make with other buyers may turn into business opportunities in the future.
No matter who you meet, supplier, buyer or friend, make sure that you take notes on the spot! Don’t wait until lunchtime or dinner time—by then you may have 50 new business cards. Be as specific as possible—“guy with the cool booth,” or “great price, go back later” is not enough. If they are important enough to talk with and get a card from (remember, you only have 21 hours) then you should record what was said and what your impressions were as soon as you can.
By the way, if you don’t know already you’ll learn as soon as you hit the ground, that the economies of several small countries in Asia are supported entirely by the printing of business cards. Maybe that’s a slight exaggeration but don’t underestimate the importance of business cards in your initial interactions. You can easily go through a couple hundred cards in just a few days in China. So (again) be prepared. Print them on nice paper with good ink. Hand them over with two hands and comment positively on the ones you receive in return. Get a couple of cards from each booth and staple one to your page of notes to keep them together.
After the notes are collated, the dinners are digested, the introductions forgotten and the crowds have gone home it’s time to follow up on your orders and/or decide which factory you’ll be working with on your custom projects. Luckily you have another long flight home to start to sort out the project priorities and evaluate all the leads that you collected. Settle in, make sure your batteries are charged up, order up some extra drinks from the flight attendant and get started on the critical analysis. For some practical ideas on how to make the next part of your international production process successful, see SRI’s article on trade-show follow-up. Good luck!