The Affiliate Blueprint: Sourcing Products from China | AWasia 2017


Hello everyone, my name is Mark Hong and
wow, good crowd here. Good to see you guys, I’m very excited to be here, so I want to
give you a little quick introduction about myself. I’ve been
doing the import-export for business since 1990. First starting out working with a
lot of Fortune 500 companies. Companies like Timberland, Walmart
and things like that, and I picked up some experience from there. I also grew up in a family where my
great-grandfather was one of the biggest importers from Taiwan and from China.
So I grew a lot in the environment that I knew I wanted to do import-export
business. Now having said that, any one of you ever had a family
business and you thought you can do things better? I was like that. So
I thought hey, this thing is easy. I went out and did it on my own
and I failed miserably. So what I want to do today is really share with you my
experiences and then help you with understanding a little bit better.
I don’t have a lot of time today but help you get a little bit of
foundation to start importing products from China. So at the end of the session
I will give you an email address and you can just email me and I’ll
send you the slides in case I cannot cover everything here. So a quick
question, how many of you here have already been importing from China?
Raise of hands. Dropshipping? Okay, perfect. Now
let’s talk about the pros and cons of importing from China. Why do
you want to import from China? I know that a lot of you who raised your hands here,
that you want to import from China because you’ve probably done some dropshipping and you want
to increase your profit. If you have a brand building
that’s gonna be super important, that you import directly from the manufacturer.
In fact if you are doing dropshipping and then you switch to
importing directly from manufacturer, you’ll probably end up paying
25 / 30% less, so that’s a pretty nice chunk of change
for your business, you can put that into marketing, you can do a whole
whole lot of other things, plus if you start importing directly,
you cut down your lead time. One of the biggest
challenges for a lot of dropshippers is that it takes too long to dropship
from China. So if you import directly, take it to a warehouse in the state,
you can do it instantly. Order comes in, ship out next day, same
day if you want, that cuts your lead time down, a lot of happy customers.
Most products are made in China, so China is one of the
biggest manufacturing facility in the world. You have all kinds of different R&D resources and it can be
extremely profitable, but if you’ve never done it before, it could be a little bit
overwhelming. However China, everything is
made in China, even you know Apple, JBL, Samsonite, you name it. Any kind of
product, so the question is whether your business is ready to take it to
China. So let’s talk about some of the cons. The language
barrier obviously, the cultural differences, there’s timezone, so if you’re in
the States, in Europe, then they are 8 to 12, 16 hours ahead of you,
so it could be a little bit difficult to work with.
And the Chinese laws are different compared to the Western
law. So you gotta know a little bit about that and then the long distance.
So when is China right for you? What stage of business are you in?
So how many people here are doing over 7 figures a year?
Raise your hand. Okay got it. 6 figures? Okay great, so if you
are doing six figures or more then yeah, China could be
perfect for you, obviously depending on your industry right, but if
you’re just starting up and you’re doing say less than a million dollars,
one of the thing that you can do is work with a few other companies.
Network, that’s why an event like this is so important,
because then you will meet some people, you will gather some friends, and you can all import together
and there won’t be a lot of competition, as long as you lay out
the rules ahead of you. So if you’re a small business startup that’s
something that you can do and if you are mid-sized, doing seven figures
and whatnot, you are able to do that on your own, that’s perfect. We
won’t cover large companies right now, which is a totally different animal.
So now a challenge for a lot of small businesses. How do I vet suppliers?
What about the larger MOQ’s? The time, how long until they can
deliver, how about legal protection. We’re gonna go over
that right now and something important for you to know is that a lot
of scammers out there are really looking for the small businesses
because first of all, for small business startups they are the most vulnerable
group of people for scammers because they have limited
experience, there’s really no safety net, so if something happens,
you won’t really pursue any type of legal action, you don’t have any kind
of legal representative and that’s difficult and it’s just a huge amount of people who are in a small business.
So it’s really easy for them to really go through that list. They
can skim Person A, go to B/C/D and on and on and on. Now business is booming
for this scammers. So learn to protect yourself and if
you’re smaller, mid-sized business, you have some consistent sales and you’re
doing great well that’s fantastic, then you have
a proven market, then you are able to bring in customers, then you can
order right away. So that challenge then will become finding the
right supplier that will give you the right profitability and getting
consistent supply, getting consistent quality and then hopefully you don’t want to manage to many different suppliers, because that by
yourself is a lot of work. So you want to establish good relationship with 1, 2, top 3 suppliers and from there, you can build all your products
and it just really systemise it, make it more efficient and save
yourself a lot of time. When you are ready to buy from China,
make sure that you always audit your supplier. It’s very different when you do
dropshipping. $10, $5, $1, whatever you are buying versus
when you are sending in a $5,000, $10,000 purchase order, before you do that
you want to make sure that supplier is not gonna run off with your money.
So be very careful, I always advise my clients who spend a few
hundred dollars, do a supplier audit, make sure that you can take
care of the quality and that they will be able to sign the
bilingual contract, because in China the court of law, they
really don’t recognise any type of English documentation. So what you want
to do is make sure that you have a bilingual contract and then the
minimum order quantity is important as well. Alright, there are three key important factors to your success. I work
with a lot of clients and the first thing that I talk to them about is
really pay attention to price, but not only price because everybody pays attention
to price right? The first thing they do is Supplier A is giving me $10,
how much can you give me? But that’s a big mistake,
because that’s when you get scammed. Someone will come in and cut you off and
say, hey I’ll do it for $8 and you get all excited, you send the money and
bang the supplier disappears or takes forever to deliver.
So you cannot take price as your only consideration. There is
also product quality and the delivery. Now a good supplier,
when you squeeze them too hard, what will happen?
They’ll try to cut the quality and then you will create customer complaints.
So be very smart and make sure that you
don’t end up having bad suppliers, because you are just too concerned about
pricing and this is one of the hardest parts. I mean a lot of
my students they say, yeah I understand this, and then what happens is
afterwards, whenever you talk to them, the first thing they’ll ask you is price. But yeah, you just have to consistently
remind yourself and work on all three. You want to think in terms of
cost, your cost of your product, your selling price, cost of
your acquisition, which includes the cost of your product, your shipping, your duty,
your local delivery. Do the math ahead of time and make sure
that it’s good quality, so you don’t get return, replacement and bad customer rap. Customer service, if you
have to hire a lot of customer reps, that’s gonna be a very high cost for you
as well. So make sure you focus on that and you can reduce your
returns, save yourself a lot of time, get repeat customers, which is always
important because you want to save your marketing cost and nothing
will save you more than having a good product. So make sure that
you have great quality and with the delivery, you want to cut your lead
time. Make sure that you have very consistent delivery, so you
can lower your inventory costs. You don’t want to store thousand and thousands of
pieces. Ideally what you want to do is order a small batch but order consistently, not only will that save you money, but will also make sure
that you are constantly going back and forth with your supplier, and with that
they remember you and there will always work with you. So
make sure you plan ahead, keep track of your delivery time, get products
made and delivered. It’s really, I say half of work, but a lot of time people
tell me it’s 80% of work. Yes, it takes a little bit of time, a little bit
of research but you want to make sure right? Most of you here are company owners, so you want to make sure that you do focus on this part.
The marketing is all fun and everything, I love doing that myself, but you
want to make sure that everything on the back, or rather the backbone
of your business is your product. So you want to make sure that
you plan ahead of time, spend a little time researching everything, hire the
right team, the right people and that will make your business thrive.
We took a business from doing $2 million a year,
and in four years to $35 million. Marketing, everything the same, but
the only difference is we really improved on the quality of the
product and not just a product, it’s the packaging, it’s the
presentation of the product, your copies, you’re technical writing,
brochure, everything. Make sure it looks good. I can’t tell
you how many times I have a customer write to us and say oh wow, I love your product,
when I open it, this feels like a really good product. So
make sure you take care of every detail of your product and you’ll be
able to charge 30%, 40%, 50% higher than your competitor. So very important. Where are the suppliers? Now, Alibaba,
I know a lot of people have some experience with Alibaba, Aliexpress and
whatnot but remember that’s only a directory and so you make sure that you
do all your due diligence, have the contract signed before you send them
any money. Pay attention to that. So different sites, AliExpress, MadeInChina.com, DHGate JD.com, GlobalSources, they’re all
great, you have great suppliers there but you also have a lot of bad suppliers.
So be very careful when you are working with that. Additionally,
this is something that a lot of people don’t like to do nowadays, especially since we are all online marketers now, but trade shows, even local trade shows or
domestic trade shows that you’ll find if you in the US or in Europe, Germany.
Well now in a lot of places you have local trade shows and a lot of
international suppliers who will go to this. I suggest that everyone do attend these trade shows, just like
this conference, you’ll meet them face to face and you’ll usually get a lot more done then doing it online,
and you don’t have to spend a lot of time and money travelling to China because they will come to you.
So source out, find out where are the local events and attend
them, talk to the suppliers there, it will save you a lot of money and a
lot of time. Now remember, when you are negotiating with the supplier, all
your suppliers want to make some money, they have employees, they have a
assembly line and they have to rent to pay, so you know make sure that you
don’t squeeze them too hard. Make sure you leave them a little bit of room
so they can earn some money and they’ll be very happy working with you. What I
like to do is upfront, when I’m testing a product, as long as there is
enough profit margin or even if I’m gonna have to lose a little bit of money
just to test a product, I’ll do it. As long as that supplier supplies me
with a good quality product and then I get good customer feedback. So I don’t
usually negotiate and say, hey you know give me some huge discount but
what I do is I actually always make it a habit to get 3 to 5 different
quotations, and this is something I learned from all the Fortune 500
companies. It’s built in to the standard operating procedure that you
always must get multiple quotations, and I will just take out
the top one and the bottom one and work with the ones in the
middle, and usually you will come up with something pretty reasonable. I’ll just let them call
whatever they want and as long as it’s something I can work with,
I’ll let it go. After that, once I start working with
them, then I can go back to them. Now you see what we can do, let’s talk
about pricing. Now you have a little better rapport, a little bit of a
relationship built and that will always get you a whole lot more.
Whether it is payment term, or whether it is doing something
extra on the packaging, why not. So make sure that you do that and
very important that you want to make sure that they have the ability to
rework, and this is one of the reason why you want to work directly with the
manufacturer because if something goes wrong, they can take
back all the products, replenish, send you a new batch
or rework on the product and make sure that you are able to deliver high,
premium quality to your customers. Very important and this is
something that people don’t talk about, the ability to rework will make and
break your import business. So when your negotiate make sure you be
professional, you create a win-win situation, don’t nickel and dime your supplier, be a very straight shooter, tell them
directly what’s on your mind and so on. Be very decisive, a lot of
people take too much time and they lose patience, the supplier loses patience.
They get maybe dozens of emails, phone calls, every single day and
they really don’t have a lot of patience, especially the good ones.
So make sure you decide very quickly alright. And looks like we
don’t have a lot of time to cover everything but very quickly,
due diligence, make sure that you audit them, re-audit them annually, check out their inventory control, quality manual
and or you want to hire an experienced team to do it, okay.
And make sure that you have some binding contracts and
if you have a large order above $10,000 make sure that all the specification,
everything else is included. Usually you’ll have to pay
30% upfront, but like I said, once you start having that
relationship, then you can negotiate for more. A lot of my suppliers now, they
don’t ask me for any type of deposit, they just wait and then tell me,
alright your product is ready, wire the money.
And that’s where you want to get it will save you a lot of cash. So looks like I’m gonna be out of time,
make sure that you send me an email and I will send you all my slides right here. Just send me the email to
[email protected] and thank you very much for your time
and it’s great being here and I look forward to hearing from you,
thank you.

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