One Client's Story

In working with companies in various industries as consultants, we had a client who had been selling into China from the U.S. for over 5 years. They had sold primarily to the subsidiaries of U.S. companies, but had met major Chinese clients at international trade shows and had made some sales into that market as well. In the last couple of years they had identified various distributors who had expressed an interest in carrying their line of equipment.

Over the course of several trips to China they had met with these distributors, and even travelled with them to visit major plants. They were close to signing with one company when they had second thoughts and called us. We talked to them about their IP fears, we provided market research on the size and structure of their industry in China and we counseled them on how to proceed. During those conversations they received communication from the potential distributor — Hey, we have made a sale! They wanted product shipped to them ASAP.

A sale? To whom? At what price? Based on what contract? The client was floored — nothing had been agreed upon, how could the agent have taken orders. So the U.S. manager sent back an email — "we can't ship you the goods, we haven't decided what models to sell, how we are going to price them, or if we want to develop a modified line for China." Sorry, but no go …

The Chinese agent was furious — they had already taken money from their customer, and how could they now go back and refuse the order? The U.S. was furious — they hadn't signed anything, how could the Chinese have acted like this? Cultural difference surely. So we went to meet with the Chinese agent to mediate this problem. And in the end, the U.S. company did ship the product over for them to sell, helped the distributor save face, and then agreed that until further notice there would be no more sales.

While at the agent’s office we made our own notes, they were located in a building that housed 90% government companies. They had room for about 5 sales people in the office, and didn't have any other locations outside of this one in Beijing. After calming the manager down we asked what they had done in market research, how they planned on moving this equipment into the market. His answer? They didn't know, and didn't intend to do any work on that until the agreement was signed.

Our conclusion — based on our research this equipment was a repeat visit sale. The sales cycle required someone to be in the plants monthly, to demonstrate the equipment to various levels of management and then to spend significant time after the sale establishing the maintenance program. And then back monthly for replacement parts and to sell additional equipment. Its not a big ticket, capital budget type of sale. Its more of a "tool" type of sale process. And the distributor wasn't set up for that (didn't have the sales force or the geographic depth). Being in an office building heavy with government companies told us that they were used to the old school sales process — where they would meet with the managing government bureau who would instruct the plants under them to buy X number of machines. As this industry was being privatized that model was eroding. But there was no evidence that the distributor had recognized or adapted to these changes.

SOLUTION:

They decided to set up their own office, and as we ushered them through the process from selecting attorneys and interviewing staff — and during the setup the idea of "My China Sales Team" came to us. A little late for this client…but just in time for you!

Marketing Study

With every client we start with an in depth Marketing Study.

First we want to understand your company and the products you have. Then we want to understand your market in China; the industry, the competition, the customers, and the support system (trade shows, industry magazines, etc).

Based on this research, we look to position you in the market. We take a look at price considerations, distribution, a timeline, etc. We work with you to estimate the revenue and costs based on the options we have identified.

Through our research we come up with contacts, experts, names and numbers that will assist us (you) in moving forward with the sales plan. The cost and length of time it takes to complete the study varies widely, depending on your industry, product type, and how much history you already have in China.