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The Chinese Ten Commandments

The Chinese Ten Commandments. By Paul O’Brien Ex CEO Easiyo. Summary:. No contracts Saving face CoD , NZ$, TT Rebates Just one city. Consumer research Multiple distributors Make premium On line important NZ Inc. necessary. No Contracts. They won’t honour them.

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The Chinese Ten Commandments

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  1. The Chinese Ten Commandments By Paul O’Brien Ex CEO Easiyo

  2. Summary: • No contracts • Saving face • CoD, NZ$, TT • Rebates • Just one city • Consumer research • Multiple distributors • Make premium • On line important • NZ Inc. necessary

  3. No Contracts • They won’t honour them. • The negotiation starts when the contract is signed!! • Contracts my be valid for that day….not in a few months • Almost impossible to enforce • Threaten Government investigation if swindled • MoU more useful “ you do this, we do that”

  4. Saving Face • Don’t believe anythingfrom China, especially docs/certs • Family take precedence way before Kiwi businessman • Relationships are important, but still family first • Lies are not really lies, just saving face • Protocol and etiquette still important, let them save face

  5. Cash in Advance • NZ $ transactions preferred over RMB • TT better than L/C. • Never give credit…..the Chinese don't. • If they can’t afford to pay up front be careful

  6. Retro Rebates • Give retrospective rebates instead of discounts, say 5% • Link them to marketing spend • Watch receipts closely ( get them translated ) • OK to give rebate in stock, say 7.5% to 10% • When visiting the distributor, check on their marketing spend and go to their warehouse. • Always visit retailers when in market.

  7. Just One City • Just one city is big enough eg Wuxi, Nanjing, Tianjin, Shenzhen, Qingdao, Hangzhou, Dalian. • Many cities over 10 million people • Tier 2 and 3 have great spending potential • The further away from Beijing the more affluent • Distributors are mostly regional focused

  8. Consumer Research • Consumer research very important(this is not NZ) • Route to market critical • Sensory testing may be needed if F&B • Packaging changes may be needed • Do quant and qualitative ideally • Tier 2 & 3 cities too

  9. Multiple Distributors • Get multiple distributors with some exclusivity, NOT ONE DISTRIBUTOR. • Many will ask for whole China exclusive • Beijing and Shanghai are just so different • Keep the relationships competitive • Promote the best ones, stop supplying the worst ones • Review 6 monthly

  10. Make Premium • Make your product or service PREMIUM ‘We are expensive!’ • Chinese love showing off brands ( conspicuous consumption) eg phones, cars, handbags, clothes etc • The most expensive product in a sector is desired • Don’t discount, better to rebate later

  11. On Line • On line can be better than retail egTaobao • Get flagship on line mall • Courier transportation is cheap and efficient • Watch web site stealing and non approved sites • Blogging sites can be inexpensive PR • Auckland University IB Dept. can help

  12. NZ Inc. • NZ Inc. is critical particularly F&B • Build it around your USP. • Use NZT&E where possible, eg video links, photo’s • Subsidise distributor trips back to NZ to breathe culture • Offer trips as incentives, part of the rebate.

  13. Conclusion • Thanks for attending. • If you get stuck in China call me. • Paul O’Brien phone 027 591 7061 • Questions/ comments??

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