Do you want to sell to Asia? Would you like to purchase from Asia for your business? If you are interested in buying and/or selling from and/or to Asia, and East Asia in particular, then this post is for you.
As a brief introduction, however, I can’t really put it any better than the beginning of the Wikipedia page (https://en.wikipedia.org/wiki/Economy_of_East_Asia): “The economy of East Asia is one of the most successful regional economies of the world. It is home of some of the world’s largest and most prosperous economies : China, Japan, Hong Kong, Taiwan and South Korea.” The World Bank has also stated that East Asia remains one of the main growth drivers of the world economy (http://www.worldbank.org/en/region/eap/publication/east-asia-pacific-economic-update), and it is expected to continue with a growth rate of 6-7%, even amidst the downturn everywhere else in the world.
How does this help you if you want to sell to Asia? The fact is that, despite the fact that these companies are 10,000 miles away, are a different culture and have different laws, and yes, speak a different language, don’t need to be deterrents.
Thanks to the growth in the region, many businesses in East Asia are looking for partners abroad and for ways to expand. Anything from a full time business partner, to a joint venture, to a client or even just a presence on a local chamber of commerce can be attractive to these businesses. And these aren’t Fortune 500 businesses: The big businesses, with the famous names, already have partners. However, the small and medium sized companies are the ones that can have huge potential for you.
So, what steps do you need to take?
- Get your name out there. This is always a first step. Mainly because you never know. The idea of a business partner/client/vendor/contact in North America, Europe, etc. is always interesting. Most of East Asia as a region has been undergoing a lot of growth, even in the midst of the global downturn, and many people have a keen eye for a potential partner. And getting your name out there can just be a question of writing up a press release, or just a translation of your brochure or About Us page, and posting it in various Linkedin groups, bulletin boards, or just emailing them out to prospectives.One of the first places to consider, especially if you buy and sell durable goods, is Alibaba.com. This is the Ebay/Amazon of China, and, increasingly, of Asia and the business world. Get an account here and become familiar with how it works. This, in itself, can help with many first contacts.
- Take advantage of the language situation. Let’s face it. Businesses in East Asia know that business is going well and that their goods are in demand, as well as access to their markets. So it pays to try to stand out. English is still the lingua franca for business in East Asia, even with China’s general rise. But if you can show your prospective a catalog, or a brochure or informational packet that is written in their own language, this can go a long way in standing out and building more of a rapport. Remember, they probably have employees who speak English, but the decision maker might not, and being able to read what you are looking for directly might help him/her take more time to consider you than others. This doesn’t mean you need an interpreter, or someone to translate all your communication (although if you have access to those you may as well make use of them). But just having a translation of that first piece of communication can be enough to get your foot in the door.
- Don’t be naive. Unfortunately, with great opportunity comes great potential for bad apples. And yes, the bad apples are few and far between, but as usual they manage to ruin everything for the rest of us. In other words, be kind and trustful, but make sure your downside is covered. The three most common strategies for this are:a) Start small. Once you can establish trust via a few small business deals you can gradually build the business up. Be alert for sudden huge increases in orders or things of that nature, since they may not bode well.b) If you must start big for one reason or another, divide the payments into three. Obviously this is if you are selling to them (and getting paid by them). Make sure your first two payments cover your fixed costs. The way this works is you can ask for your first payment early on or up front. The second will take place at some point in the middle, and the third will usually be upon delivery, which is when problems can occur. Just make sure the first two payments cover your costs, though, and your downside should be covered. You can even tell your counterpart that the price can go down once you’ve established a relationship. If, on the other hand, you are buying from them, negotiate to pay most, if not all, of what you owe upon delivery.c) Use an escrow service. If you can find an escrow service that both you and the counterpart trust completely, then feel free to use them. This is often much easier said than done, however.
- If things progress well, you may want to visit them in person.To be clear, a personal trip to Asia is by no means a requirement for selling or buying from Asia, but if it is in the cards, why not? This can also present a tremendous opportunity, because this business partner can become your contact in that part of the world. Some of you may have heard of the chinese word “guanxi”, which, loosely translated, means relationship. Guanxi has always been an important concept of doing business in China, Taiwan and Hong Kong, but other parts of Asia have their versions as well. And if you have a contact who does business with you and whom you can trust, they can be great leads to other clients and prospectives (just let them understand they will always be your most important contact).