Small misunderstandings can kill the biggest deal

If you are a parts manufacturer, what is your reaction to someone who arrives at your factory, or meets you at a tradeshow, and who doesn’t know what he wants? He has no parts lists, no drawings, no technical specifications. He wants your catalogues and price lists. We all know how we treat these people: We think they are amateurs. Politely as possible, we’ll send them away.

As China takes the next step up the value chain, going from largely OEM sales to sales to wholesalers and trading companies, we have reason to change how we treat a customer. A factory representative of a large auto manufacturer will know exactly what he wants. He will come armed with data and specifications. The buyer of a European or American wholesaler or large retail chain on the other hand is used to the supplier telling him what the supplier can do for the wholesaler. The wholesaler wants to know what you can offer him. He may look like a technical amateur to us. He doesn’t know how to build the part – he expects you that you know it. But he holds the key to an important market. If you want to deal with him, then you must act less like a manufacturer and more like a merchant who displays his wares and shows them in the best light.

There is something I call the Great Wall of Communication between Chinese manufacturers and Western customers.

Western customers come to China, and ask: “What do you have?”

At which the Chinese manufacturer answers: “What do you want?”

After some more exchanges of “what do you have” and “what do you want,” both parties part in frustration. Another day, and another possibly prosperous business contact have gone to waste.

We hear the same complaints from our European trading partners. If they are visited by a representative who cannot show his full complement of offerings, who asks for a list of the wholesaler’s fast movers and promises to – mei wen ti - come back soon and offer all these fast movers at great prices, the representative will be shown the door as quickly and as politely as in the example above.

If you don’t have a go-between, here are some pointers to avoid misunderstandings: 

1.)    Have a company brochure. It doesn’t have to be much, 4 or 8 pages are usually enough. Show examples of what you have and what you can do. Try to avoid pictures of your factory. According to an old rule, “only show a picture of your factory if you want to sell it.” More important: Have the bochure properly translated into English. Use a native English speaker to do the translation. A badly translated brochure makes a bad first impression. Make sure the translator understands the technical jargon.

2.)    Add current, valid copies of your certifications, such as ISO QS 9000, TS16949, or VDA QMS to your brochure. Showing pictures of outdated certifications can be counter-productive.

3.)    Provide electronic data of your product in a universally readable format. Anybody can read and use Excel. Give as much information as possible, especially cross references of parts number to OEM numbers, or numbers used by major manufacturers. If the product needs an E-Mark, list the E-Mark number. Avoid handing out a specialized database or fancy electronic presentation, it will usually go unused.

4.)    Keep an always updated set of the data on-line on your website.

The proper use of electronic data cannot be overemphasized. In Europe, the parts trade is for all intents and purposes paperless. Nobody has the time or patience to use paper catalogues. Manufacturers and wholesalers have their products on a central database, such as Tecdoc or Teccat. One of the biggest complaints we hear is that there is no Chinese equivalent to Tecdoc or Teccat, which would make sourcing and selling much easier.

In Europe, the “what do you have” question is quickly answered. The on-line database systems tell a customer instantly who has what. This is what the customer is used to and this is what he expects. Marketing is the art of fulfilling expectations. If we market to a customer in Europe, we need to fulfill the expectations of a European customer.

Don’t expect that the European wholesale customer understands the regulatory intricacies. If the product needs to be E-marked, you need to know everything about the E-Mark rules. If the product is sold as a private label product under the name of the wholesale customer, the name of the wholesale customer must be entered in the E-Mark certification. If the customer demands engineering changes that run contrary to your E-Mark filings, then you must either amend the filings or instruct the customer that the changes cannot be made without putting the E-Mark in jeopardy. To protect the customer and your business, the customer’s trademark should be registered in China.  There are European warranty and product liability issues your customer and you need to be aware of and comply with. 

While on the topic of filings and certifications: It is a good idea to get into the habit of preparing all your technical drawings in Chinese and English. Usually, all that is needed is a data box template that can be prepared in both languages. The actual measurements and data are the same. This will come in really handy when you deliver a few hundred items to your customer and you need to supply several hundreds of drawings and documents.

There is another matter to understand: Currencies. European customers usually want to be quoted in Euros, just as American customers want to have their prices in dollars. Chinese companies are quite adept in doing both. The U.S. dollar is for all intents frozen against the RMB, and the Euro is also relatively stable against the RMB (albeit with some degree of volatility.) But what needs to be understood is that only 16 countries of the 27 member states of the EU have adopted the Euro as their currency. Some currencies, such as the Czech Koruna, or the Polish Zloty have depreciated a lot again the Euro. Sometimes, it is better to do business with the non-Euro countries in U.S. dollars. Ask.

Last thing to improve communications: Put someone in charge of International Sales who speaks your customers’ language: English. English is the European business language, but be aware that your customers in Germany, France, Italy etc. may not be totally fluent in English. Don’t pair them with a junior hire who doesn’t understand the business and who cannot make decisions.

Next week: What to sell and what not to sell to Europe.

About the author: Bertel Schmitt, Gasgoo's columnist, is CEO of Hong Kong based parts sourcing company Sinamotive. Before founding Sinamotive, with the assistance of U.S. venture capital, Mr. Schmitt was a marketing consultant to Volkswagen AG.