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One senses that Asia is ready to move into the future and leave the past behind. However, the past also shapes the future in a very unique, Asian way.
That means looking straight forward is both motto and theme for a new young generation living between Tokyo, Beijing and Jakarta. Cultural sites representing Asia´s past from Cambodia to Sri Lanka are proudly restored and mark the departure into the future.
Interview Sebastian Maling, China, by Ramona
„Never sign a contract blindly“
Purchasing in Asia is an investment that can be profitable for your business. However, outsourcing over thousands of kilometers also ships with a bunch of risks that can lead into financial disaster. "A long-term relationship with business partners is key to success in Asia", says founder and procurement specialist Sebastian Maling (Dakoko.com). Supporting medium-sized companies on their way from Europe to the Middle Kingdom, Maling knows the Asian retail market. What makes procurement in China profitable? What are the biggest problems European companies encounter when outsourcing their business in Asia?
Mr. Maling, when should medium-sized companies consider switching production from Europe to Asia?
It depends on the purchasing volume. Although production in China may save money in terms of material or production, it may not be profitable for every business purpose. Procurement in China involves additional cost factors like transportation, customs, quality assurance.
Also, you will lose your brand by relocating production to Asia. Generally, procurement in China is profitable from 50 000 Euro upwards and worthwile in segments like accessoires and NoName-products, eg scarfs, belts or bags.
Which are the first steps I have to take when outsourcing my business to China?
If you invest over such a long distance, it is important for you to get a picture of what is happening on location. Attending local fairs is a quick way to establish personal contacts with producers and suppliers.
Consider visiting one, better two manufacturing shops before making a deal. Also, you should do some in-depth research to get information about legal requirements, such as EU-directives, textile identification etc.
What are the biggest difficulties European enterprises encounter when purchasing in Asia?
In the first instance, you take the financial risk. The distance between Europe and Asia makes it difficult to control what happens on location. If the delivery differs from the agreed product you might have a hard time to get your money back.
Secondly, you take a legal risk: ignorance is no excuse. If you enter the market uninformed and do not follow legal import and export regulations, you can lose time and money. Thirdly, you take the delivery risk.
Transporting products from Asia to Europe is time consuming and may bring you into difficult situations if you have to deliver on time and the production chain stops for some reason. In case you have to place new orders on short notice, you should consider to produce somewhere "around the corner", eg Eastern Europe or Turkey.
Today, getting numbers and Adresses is easy- one klick on Alibaba.com and I have got a bunch of contacts. Seperating the wheat from the chaff, however, is challenging. How can I identify high-quality suppliers or producers in China?
To a certain extent finding a reliable, business partner in Asia means trial and error. Generally the situation is this: never sign a contract blindly without having met your business partner personally. In Asia, personal relationships have a strong impact on business relations. Contrary to European habits, Asian people mix up their business and personal life, for example by inviting associates to family dinner. Since Asian business people measure their associates in terms of relationship, visiting your business partner is a key factor of success.
How am I able to establish relationships with Asian business partners in the long run?
Build up a relationship by visiting your partner. Important: never tie yourself down too early. It is advantageous to keep an alternative producer or supplier at hand, in case you won‘t bring off the deal for some reason. Also, you should clearly communicate that there are alternative producers at call, which will increase your current market value. After having visited your business partner for the first time you should keep on travelling in order to consolidate the relationship, organize and control the infrastructure on location and brief your staff in terms of quality assurance.
Thank you very much for your time.
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