As executive director of the World Trade Center Cleveland, David Yen counsels local business owners on opportunities in foreign markets and offers access to foreign distributors and suppliers.
Between 1998 and 2004, Yen says, imports from China and Hong Kong to the United States increased 152 percent; during that same period, imports to the Cleveland Customs District — Ohio, plus areas of Kentucky and Indiana — increased 169 percent.
“There is tremendous price pressure in the United States,” Yen says. “Consumers, retailers and manufacturers are always seeking a better price. Now with the availability of global suppliers, there’s always somebody who can probably come in at a lower price.
“So the pressure from the customer’s side requires companies to be sourcing from overseas, and consequently, we see the huge rise in the amount of imports from China.”
Drawing on his experience working with local companies that import products from China, Yen shares these tips for doing business overseas.
* Be patient and clear. When dealing with foreign manufacturers, it’s important to remember that English is not the mother language for the vast majority of people.
“You have to sometimes repeat things and phrase them in different ways and ask to make sure people understand exactly what you want,” he says. “That’s why you have to be patient, because things may take longer.”
* Get educated about the culture. Because the manufacturer ultimately becomes a business partner, Yen encourages American business owners to consider how the manufacturer thinks within the cultural context.
A local executive was having difficulty getting an answer from a Chinese manufacturer and asked for Yen’s help.
“The approach that they had taken was confrontational, and confrontation doesn’t work with the Chinese,” he says. “It was an embarrassment to the person that received it, and therefore, they were not going to get a reply. … You need to understand the parties, the cultural context and the way that they do business in order to accomplish your objectives.”
* Plan for the worst-case scenario and be pleasantly surprised when things work out. This type of planning minimizes risk and assures that objectives are accomplished. Yen suggests asking yourself these questions: What happens if the quality doesn’t meet the company’s standards? What happens if the goods aren’t delivered on time? What happens if there is an interruption in the flow of goods – for example, port strikes – that has nothing to do with the supplier?
* Get the right partners for this transaction. Hire a good customs house broker, banker and attorney — all of whom are familiar with international transactions – and identify a good supplier.
Yen says many domestic companies get unsolicited offers from suppliers via the Internet and place an order, only to find that they know nothing about the factory and have no assurances about the deal.
“You should have very specific criteria for what makes them a good supplier. Make sure you visit them and develop a relationship with the objective that it’s going to be a long-term relationship, because that is culturally what the Chinese would want,” he says.
“You might also want to consider having somebody assigned to be your representative on site to make sure that the products are the right quality before they leave the factory, that they’re going to be delivered on time, the packaging meets your requirements before (the products) leave China and that everything is ship-shape.”
* Know what the broker can offer. “They all have a range of services,” Yen says. “The more you know, the less you pay because the fewer services that you need them to provide.” HOW TO REACH:
World Trade Center Cleveland, (216) 363-2600 or www.wtccleveland.org
