Take a guess at how much money is just sitting around in Chinese vaults waiting for foreign sellers to claim it. If you said $1 billion, multiply by 2,000 and try again.
James Chan is dumbfounded that American companies have not caught on to this. Sellers here stick to the one half of the profit equation they have always used — buy widgets from a distributor in a place like China, where you can get them for half the price, then sell them in the market for the same price you always charged. But while American companies love to buy from China, few have tried selling to it. Even with $2 trillion lying in wait.
Chan, who owns the international marketing consulting firm Asia Marketing Management in Philadelphia (www.asiamarketingmanagement.com), will present “Export To China” on Friday, June 26, at 10:15 a.m. at Monmouth University in West Long Branch. Cost: $45. For information on the seminar’s content, contact Thomas.mottley@N0SPAM.mail.doc.gov1 or call 732-571-3641. For registration details E-mail sbaevents@N0SPAM.monmouth.edu2 or call 732-571-3636.
Born in Guangzhou, China, in 1949, Chan earned his bachelor’s in geography from the University of Hong Kong in 1970. He came to America in 1971 and earned a master’s in geography from the university of Chicago in 1973. He began his professional life as assistant professor of geography at Boston University in 1977, the year he earned his Ph.D. in the industrial and commercial geography of China from the University of Michigan, Ann Arbor. He was an associate professor of geography at the State University of New York at Cortland.
China opened to trade with the west in 1979. In 1981 Chan left teaching for a a career in marketing and promotions at Academic Press. This was at a time when China was dirt poor — so poor, in fact, that Chan remembers hearing stories of American parents trying to coax their children into finishing what was on their plates because “there are children starving in China who would love to have that food.”
But at Academic Press, Chan had an idea. He was in charge of selling technical textbooks to college libraries in the States, and it hit him that China had its own high-end colleges. So Chan convinced his bosses to let him market science and math books to the top 1,000 colleges in China. “I had to wait 11 months for the first check,” Chan says. “It was for $150,000 — U.S and prepaid. That meant guaranteed funds, no risk.”
Chinese universities became a valuable customer to Academic Press almost instantly. That $150,000 — which is about $300,000 adjusted for today’s money — came from a poor country looking to better itself, and it kept coming as Academic kept selling. Two years later Chan founded his consulting practice and started trying to alert American businesses to gold mine they have been ignoring.
“China is loaded,” he says. “Companies need to sell to China.”
Fat, lazy, and ignorant. The United States has grown accustomed to success. It led the world’s economies for decades by embracing consumerism and its buy-low, sell-high creed, and because of it, American companies got fat and happy by fueling American people’s bottomless appetite to consume.
But by feeding the American consumer U.S. companies lost sight of the world at large, Chan says. In their quest to increase profits by paying out less, American companies have ignored the fact that the country’s chief supplier is now 30 years older and 10,000 times richer than it was in 1979.
Part of it is arrogance, Chan says. People still think Chinese kids are waiting for American table scraps, and companies still think Asia is where you buy, not where you sell. They also think they are still on top. “That’s not always true anymore,” Chan says. America’s economy is not the envy of the world and its products and services are losing their hold on the brass ring. As our economy gasps and flops, Chan says, American companies finally are starting to realize that they need the rest of the world as a customer.
Get a ladder. “We only pick the low-lying fruit,” Chan says. “Nobody wants to put up a ladder to get the fruit 15 feet above the ground.”
There is a lot of fruit up there, but Chan is the first to admit that getting it is a lot of work. “Importing is easy,” he says. “Exporting is hard.” It requires a knowledge about your intended customer that takes much study and understanding of culture and buying habits. “Exporting is not for everyone,” he says. “Exporting is not brain surgery, but it is not for everyone.”
More than anything, Chan states repeatedly, successful exporting is all in the motivation. You simply have to want to do the work required to know your product and know why people on the other side of the world need it.
Monogamy. “Don’t sell your mother or your wife to the Chinese,” Chan says. “You can’t just sell everything.”
It is the biggest mistake Chan sees from companies that do want to export. China already has computers and cars and clothes. Nothing says the Chinese won’t buy yours, but you will hardly make a splash by throwing everything at the port of Hong Kong. Building a profitable exporting enterprise takes patience, time, and understanding. “Exporting is not like sleeping with everybody,” Chan says. “It’s like finding a spouse.” Unless you find the right one, you are destined for a messy break-up.
You also need to be one-of-a-kind. Remember, the Chinese know how to make cars, But they might not know how to build precision parts. They know how to operate factories — but they might not know how to implement industry-best practices. They can work computers, but they might not have optimum software for their business machines.
“You need to have something — products or services — that cannot be easily duplicated,” Chan says. “Then they won’t need you.”
The Chinese prefer blonds. So what, then, do the Chinese need? One answer is, they need blond hair.
The American toy market is worth billions in sales every year, and, true to the old formula, American companies often have their toys — like little blond dolls — built in China. But who in China has natural blond hair? Certainly not enough people to supply the required amounts of hair for making dolls. And, much to Chan’s surprise when he first learned of the market for blond hair from the States, you can’t just mix yellow dyes and soak dark hair in it. So Chinese toymakers buy flaxen locks by the ton.
Beyond shaven heads, China is desperate for high-tech products, Chan says. Particularly those that are in niche markets — such as precision auto parts — and are cutting-edge. Precision-engineered parts like springs, bearings, and “little things” are in high demand, as are quality pharmaceuticals.
“There are a lot of fake drugs in China,” Chan says. “Things that are not effective. There is a good market for genuine, real drugs.”
Unique services also have a ready market in China — legal, professional, psychological, and financial services, processes, systems, and procedures that are not easily duplicated. Say you write a book, Chan offers. If it is valuable to the Chinese, universities and businesses will gladly pay you to come to China to talk about it. It’s the same reason Chinese parents willingly shell out $50,000 a year to send their kids to American colleges, he says. The education at Wharton School of Business cannot be duplicated in China.
Starting. So how do you know if you have something the Chinese want to pay for? Sometimes they just come out and E-mail you. “If you are getting pre-paid E-mail orders from China and you haven’t advertised to them, that should tell you something,” Chan says.
It is not as far-fetched as one might think, he says. Chinese companies and executives routinely monitor American companies and products and they are willing to pay for what they can’t get at home.
But if your E-mail folder is not filling up with orders from China, try looking at who your customers are here. Remember, Chan realized that if American colleges bought text books, so did Chinese colleges. Companies here can start by evaluating what their products and services do for the domestic audience, then do a little leg work to see if that niche is being filled overseas.
We just need to stretch for the higher fruit. “It’s all about motivation,” Chan says. “It’s about paying attention.”