How to avoid the Top 10 mistakes that cost people the most money Importing from China.
"Trans-Cultural and Trans-National Sourcing is not a game of chance. The more you understand and know about it before you begin spending your money, the better your prospects will be." Victor M. Claudio, CEO
Right now China is the number one trading partner to the United States. If you want the best source of goods for your business you come to China. If you want the best service for your business you hire an expert. Right? Does your secretary balance your books? Is that person an accountant, or bookkeeper? If not, what makes that person an expert or qualifies them to handle your books? Think about it, on top of everything else your assistant handles for you, is that the best person who has the greatest amount of undivided attention to focus on your companies books (company accounts, accounts payable, accounts receivable etc.) or have we just identified the need for one dedicated solution? How easy is it for one tiny unbalanced account to cause a major disruption to the everyday flow of normal business? How many hours reconciling? How much time is lost? How frustrated does that get you? How vulnerable are you books to inefficiency? That's why you pay an expert to take care of that; someone with the right experience who is knowledgeable and is focused only on that, so your business can continue to operate smoothly and focus on its core business functions? One solution that completely eliminates all related challenges.
If the books that represent the health of your business's life in them, are that vulnerable and have the capacity to create major delays to critical business systems then why would you trust sourcing the goods you import, the goods you need to stay competitive, the goods that generate the revenue to balance your books to anyone who is not an expert?
Having experts on your team that support everything your business does is what great leaders in business always do. "The team with the best players wins." Jack Welch
After reading the top 10 reasons that cost people the most money importing and exporting you will see how procurement outsourcing is the only solution that eliminates all challenges.
10. Immature Global Trade Concepts
o Suppliers lack an effective Global Trade Model. As a result, they lack the understanding necessary to navigate the Global Trade environment.
One solution is to find suppliers who have experience trading on a global level. Simple right? Yes, but if you consider the due diligence process it could take weeks or what is more realistic is months to locate a reputable supplier before you even enter the market place and purchase anything. If you understand that in business time = money then the longer it takes to get to market the faster your profit margin shrinks. It must also be true then if you can discover a way to eliminate the lengthy due diligence process and you will generate revenue faster!
9. Dealing incorrectly with Culture
o Buyers and Suppliers have the tendency to deal with each other, unknowingly, in a way that hinders business because they don't understand the other's culture.
The lesson is this: The simplest breakdown in communication can cost a company thousands. Once upon a time a client came to me because he wanted to import from China. Because of his previous experience he was very skeptical, and rightly so, as you learn what happened to him realize he thought because he was an accomplished businessman, and competitive entrepreneur he confessed to me that he swore to himself he can't lose and he can "make it happen". Well what did happen was this. You see this client was interested in plastic liners. When he got an unbelievable price from a supplier in China he jumped all over it convinced that he would crush the competition. He wanted plastic liners 40x48x16 in inches. What he received was 40x48x16 in millimeters. When he spoke to the factory they apologized but reminded him of when he confirmed their quote it was written in black and white. Because he didn't understand the culture he couldn't tell if he was being taken advantage of or if he just made a mistake.
You can avoid that costly mistake by making sure you are dealing with a company that is an expert, where you can feel you are being understood clearly.
8. Using the wrong sales approach.
o Most Suppliers are focused on reducing their price to undermine the competition's quote and later expect to recover the loss by subterfuge.
They say "every man has a price, what's your price?" Suppliers are known to "buy into" a market with prices so low they can't be refused in order to build your dependency on them and then in a flash raise their prices un-expectantly (yes, even if you have a contract). Another more common tactic of the many tactics is this; once they have your commitment unexpected shipping delays happen, incurring a higher cost like demurrage fees. Who do you think pays for all of that? The supplier? Guess again..........you pay the fees raising your grand total cost of goods to sometimes higher than you would have paid domestically. Play the game the right way,
The price you pay can ultimately cost you more than money; you have to get the real China price because the suppliers in China know if they have someone who just wants the lowest price they have a person who can easily be manipulated.
7. Resistance to external advice.
o This is one of the biggest challenges. Suppliers tend to keep the real details of their production operations to themselves and customers don't know the real reason for problems that surface.
Major catastrophes always strike but humans are always resilient over the circumstances and press on. In business it is no different, we handle so many "mini catastrophes" on a daily basis it helps us avoid the huge one. We can't act with out the right information, as long as we have the right information we can make the necessary decisions that are the best response to unexpected events.
Staying informed, having tracking capabilities over your product at every step in the process, and having the name of a person to talk to that knows what is happening in your business relieves you from living in the fear of the unknown.
6. Awkward or Poor Customer relationships.
o Suppliers tend to focus only on their Buyer's product, ignoring the other aspects of their customers supply chain elements, where small changes can have big repercussions.
"A team is only as good as its weakest link" we have all heard before. When that link causes you to lose money who do you blame? It always gets back to the supplier some how.
With so many moving parts without the central nervous system your body couldn't function. There needs to be one who is looking over your assets at every step in the supply chain.
5. Misunderstanding of the internet.
o Suppliers are skeptical about the role the Internet can play in the Supply Chain so they cannot take advantage of the Internet's many benefits.
The internet keeps us connected to instant on demand information that empowers our business efficiency. The lack of this effective tool limits a businesses resource.
When you combine "In-country" tactical sourcing with the internet you have an unstoppable business partnership.
4. Little or no international exposure.
o Due to the high costs for effective international exposure, Buyers and Suppliers seldom make an effort or the investment required to be "discovered" even though they are competent.
There are so many good companies here in America that don't want to grow, but need to give their customers the best value because somebody else will.
If you can tap into global scale resources without bearing the cost then you will have achieved something truly amazing called partnership leverage. Leveraging the work others have done in order to receive a boost to the work your doing.
3. Mistrust in the Market Place
o Buyers and Suppliers are plagued with the scams of a few bad people, in addition, they are thought to be uncooperative when affording little or no communication after a Purchase Order is placed.
Transparency eliminates confusion, a simple track and trace solution is vital to effective trade because without it, your just waiting for your ship to come in (punt intended) instead of having a presence over your goods while they are being made, while they are being delivered to the ship, as they make their way across the ocean all the way to the end and safely into your hands.
2. Inefficient Financial Transaction Implementation
o Buyers pay high payment related costs for wire transfers and letters of credit in addition to redundant bank fees because of inefficient procedures and misunderstanding.
Do you want to know what the five scariest you can say to a business owner are? "The wire never got there" there is that one and then there is its older cousin, older because it has six words "the wire was the wrong amount". These mistakes always eat away at someone's bottom line. No one ever wants it eating away at theirs.
In this case a solution that takes complete control over the payment process, and insures on time delivery guarantees the bottom line stays healthy because we save time, and we save money.
1. Lacking the tools for success
o Most Buyers and Suppliers are not prepared with effective and the efficient Tools of the Trade needed to take advantage of global supply opportunities.
The number one answer always sounds simple, but requires the greatest attention to detail and effort to maintain. Softwares can't make the challenging decisions that takes critical thinking thinking to achieve. One person can't be in multiple locations, facilitating several processes at once without the bottom line feeling the pinch.
Through advances in technology the world of importing and exporting has been changed forever if your not capitalizing on those breakthroughs either your competitors will or you will be driven out of the marketplace by the Mega Corporations (thanks Wal-Mart).
All the experts agree, when you are committed to driving down costs and increasing the value in your supply chain Procurement Outsourcing is the one solution that offers multiple cost effective strategies to move you faster towards your goals.
Having an Instant Procurement Outsourcing solution delivers all of that to you at light speed, while at the same time easily conforms to your natural business processes. If it provides a seamless transition and cost free integration there is then created a healthier more efficient business environment that is completely user friendly.
Tactical sourcing and having in-country experts on the ground guarantees your procurement outsourcing solution has the freedom and flexibility to change as business demands change. In business the lack of real time information can cause costly errors. With out that kind of freedom your supply chain can quickly become restricted and lose the flow necessary to stay ahead of schedule and deliver results on budget.
