U.S. companies and organizations have many reasons to feel optimistic in selling and marketing American-made products, services, technology, or know-how to Asia. I can cite 20 reasons with examples based on my own hands-on experience since 1980 in selling to the Chinese and other Asian markets.
The U.S. has numerous competitive advantages that allow us to export successfully to Asia. Here are the reasons why Asia buys American. 1.Quality and Reliability. Asian customers aspire to high-quality American-made products which they cannot find in their home markets. Since 1990, we have been selling a specialty machine part which no one in China can duplicate to high precision levels. Top customers in China will order our products because they want and need precision and reliability. For example, some of our products are used in power stations. If the power generation equipment fails due to poor quality parts, the power company will lose hundreds of thousands of dollars per day due to power failure. We are able to export our products to Asia despite the fact that our prices are higher than our competition in the world. 2.Western Buyers Specify Our Products. Not all Western companies that outsource their products to China or Asia can locate quality vendors there that can supply satisfactory parts and components. In these cases, the Western buyers (American, British, European, or Japanese) of the Chinese companies will specify that our parts be installed in the end products. Our specialty springs manufactured in the Philadelphia area make the new line of cordless window blinds possible. No one in China has yet duplicated our product in a satisfactory manner. 3. Unique Designs or Formulations. China imports American-made pharmaceutical products that they cannot produce at home. These specialty drugs or chemicals require tremendous, upfront investment in capital, research and development, and quality control standards which competitors in Asia cannot meet. 4. Product Durability. Some customers in Asia want durable products and they are willing to pay higher prices. A Western-made light bulb may last three times as long as a lower-cost, locally-made light bulb. 5. Innovative Packaging and Style. Asia is only behind the U.S. in the number of billionaires and millionaires. China has 117 billionaires, 875,000 millionaires and more than 32 million households with income exceeding $9,000 per year. These consumers want and appreciate good packaging and product styles. U.S. and Western designs appeal to them, such as The North Face sportswear and Nike footwear. 6. They Need Our Products for Their Export Business. We get orders all the times from our customers in China. They are making machinery that incorporates our parts and components for sell to the Middle East, Europe, Japan, and South America. By installing our parts and components, they make their customers gain confidence in their machine reliability. They can raise their selling price to boot. 7. Status. Asia is a thriving market for high-style luxury products. Tiffany and Cartier jewelry, IWC timepieces, and BMW cars are doing very well in China. Chinese people who make $100,000 or more in annual income are four (4) times more likely to buy luxury products than Americans. Tiffany & Co.’s website has two kinds of Chinese languages (“Simplified Chinese writing style” used in Mainland China and “Traditional Chinese” used in Taiwan and Hong Kong. Chinese people buy luxury goods for three reasons, namely, (a) to gain “face” showing that they have achieved material success, (b) to seek “guan-xi” (connections) so that they can curry favors from potential customers, and (c) to buy “ren qing (appeasement),” Chinese-style “closure,” to pacify and ingratiate relatives, business partners and buy friendship. 8. Shortage or Rarity. A number of years ago, Chinese wind turbines needed specialty bearings which were made by only a handful of Western companies. Such bearings were all imported, until Chinese domestic manufacturers learn how to replicate such bearings. The thing is true with Western red wines. The Chinese were not red wine drinkers until just a couple of years ago. Now, red wine is all the rage among the young, upwardly mobile generation. Western red wine labels are flocking into China. 9. Herd Mentality. Once you have established brand recognition for your product in China, certain customers will want to buy your products because they want to keep up with the “Joneses” of China. This is the same “no-one-gets-fired-buying-IBM” psychology. If they buy an established product, they feel that they don’t need to shoulder any responsibility. 10. Brand Monopoly. If your brand and your product design are unique, you dominate the market. Apple, Inc.’s iPhone, iPad, iMac, etc. are examples. 11. Perseverance and Good Timing. We started marketing our precision-engineered, specialty bearings for the rotating equipment market in China in 1984. For the first 16 years, we survived the marketplace and sales were steady but moderate. Since 2000, our sales have increased dramatically because of Chinese investment in the power generation market. Our long-term development strategy has worked out because of our perseverance. 12. Good Distribution Strategy. You can succeed if your company has an innovative distribution system. Amway, KFC and Pizza Hut are examples. You can find a KFC or Pizza Hut within half a mile of any location in Shanghai. 13. Good Track Record. If you can survive the formative years, you will have helped enough large and leading Asian companies to create new products and designs that have won them customers. Such a track record appeals to other, smaller Asian customers. 14. Specialization. The more highly specialized your service or design, the greater your chances of getting commission and winning contracts in Asia. Global accounting, construction and architectural firms use this strategy. 15. Leverage. U.S. information, database, and IT companies with a niche market have unique competitive advantages as they market their products and services in Asia. I used to market a scientific database to China that indexes thousands of leading scientific journals worldwide. Only our company has such a product because we invented it. China is now using our database to promote professors or raise their salary. Similarly, institutions such as SGS (which provides inspection services), UL (which provides testing and verification services) and The Wharton School (which grants MBA degrees) enjoy leverage that is unique. 16. From Low-Cost to Value-Added Production.A number of Chinese and Asian manufacturers have accumulated adequate financial capital over the past 25 years by exporting to the West. They now want to produce higher quality products or products which they design. To achieve this, they cannot try to use low-quality materials, components, and designs. American companies that have innovative and advanced products and services will find the Asian markets ready for them. 17. Rising wages. The wages in China have risen from 8 percent to 30 percent in cities along the coast of China. Companies need to improve their quality in order to stay competitive worldwide. U.S. manufacturers that make premium-quality parts will find a market there for their products. 18. Rising Value of the Chinese Yuan. This will help make American-made products cheaper and more competitive inside the Chinese market. 19. Security. Asia original equipment manufacturers generally buy from several Western suppliers in order to ensure that they are not “controlled” by any of their suppliers. This practice also allows them to increase their negotiating power. You can always sell your products if you stay in the game. 20. Good Customer Development Strategy. Many first time customers in Asia do not understand the advantages and benefits of American-made products or services. Often times, they provide too little information to enable the U.S. firm to quote or to help them. Untrained American staff or managers will give us thinking that these prospects are not serious. If they persevere and help the prospects realize their sincerity and goodwill, they’ll earn their trust and orders. In Asia, it is critical to make constant contact with your customers and prospects before, during and after a sale.
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About the Author
James Chan, Ph.D., teaches a special MBA-level course titled “Global Exporting: Asia Focus” at Villanova University’s School of Business. He is president of Asia Marketing and Management, a consultancy based in Philadelphia that advises U.S. firms in exporting American-made products and services to China and Asia. He is a member of the District Export Council, Philadelphia District, U.S. Department of Commerce. To view his detailed profile, go to: http://www.AsiaMarketingManagement.com. E-mail James Chan at: JamesChan@AsiaMarketingManagement.com
