WHY ARE MY EXPORT SALES SO LOW?

I’m exporting to 30 Countries, but…

by Diego Sala, Pre-market Specialist in Kha Group, Thailand

 

Based on a true story

4 years ago a well known European Company “opened” the market in South East Asia attending a fair in Bangkok.

Among dozens of contacts, after few months they got one “trial order” from an importer. Order amount was less than investment borne to attend the fair.

After six month from the trial order, the distributor had no repeated his order yet. The company sent the export manager on site. Client told him “I like your product, but I have no referent here. So, I prefer to buy locally, at cheaper price. I could spend more if I had a post sales and a local representative”.

The company fulfilled scattered and small orders fro next two years, until the board started considering the withdrawal from the market. But someone had the idea. They hired a part-time local representative (an expat from their same country) and instructed him to manage the client. The expat worked well, and clients became 2, then 3, then… The company decided to open a local office: the expat became the local manager, he installed a warehouse, and the company supplied a reasonable quantity of product to fulfill in short time local clients. Business grew up again, and the Company opened a branch. Sales boomed, and now the company is, one of the stronger in the area.

Many export managers are experiencing the first half of this story, facing a flat, not growing turnover in many countries. Furthermore, in last two years getting an order from a Fair is harder than winning a lottery. Why this happens? Let’s see possible reasons.

 

DISTRIBUTOR IS A CLIENT, NOT A PARTNER

Traditional distributors, paying us and importing your products, are just clients. They’re not engaged to us and not committed to our product if not through contract obligations that can be easily bypassed. Normally in a first phase they’re enthusiastic (specially if their investment is relevant). But, when they have to face first bottlenecks, they divert their attention toward something more profitable or easier.

 

WE HAVE NO VISION OF THE MARKET

We may have one or 10 clients/distributors in the market. It is like having  many arms, like goddess Kali. But we have no eyes. Do we know what are they doing, what’s their policy, how they communicate, how they promote your product? Do we know the segment of our consumers? Of course there’s one solution: make frequent visits and check with our own eyes. A big cost in terms of time and energy and the mission will disclose a partial truth, the one our distributor will like to show us

 

LOCALIZE OURSELF…

Let’s ignore the obvious geographical factor, and consider working days in Asia and Europe. If we put public holidays of two countries on a calendar, we’ll be surprised. 4 months are gone for holidays, unfortunately never matching. Working hours limit our opportunities to talk with someone, as every day we have a 3 hours time-window in the most favorable case. If we’re in the USA, no time-window for a chat. If our customer is Muslim (and we are not), working week is reduced to 4 days, 3,5 in some countries (where weekend starts on Thursday at noon).

With so low opportunities to create a strict relationship with our distributor, we’ll have scattered information on our product strength and weak points. Product localization is in the hands of the client, completely out of our control…

 

 

WHY OUR EXPORT DROPS DOWN?

Lets’ enlist a series of consequences of the consideration we’ve done so far;

1.       Our client is not engaged. Local distributor must be followed, pampered, motivated. If we have no time to do it or we can’t communicate correctly with him he will probably fall in the arms of someone more attractive. In 95% of cases our product is not unique and not “the best on the market”, even if we love it. There’s always a good alternative, often for a cheaper price.

2.       We and client are not aligned. Normally Asian businessmen are old-school people (until the replacement with younger generations will be enforced). They normally don’t like suppliers putting their nose into their business. They hardly accept advises, they never accept imposition. But, biggest problem, they will never say it. And we’ll never understand it until is too late.

3.       No follow up. Due to working days, time zone, language barriers, communication is extremely hard. Asian are not lovers of writing. If we see their communication, they use more emoticons than sentences. That’s because Asian languages are hard to write. But they will never tell you, and you won’t know how to handle it…

4.       Local Management training. This is a sour point in Asia. Their managers have good scholarship but little experience, since they start their activity around their 25s. Asian companies prefer to offer training programs to workers and assistants; management is normally left alone, at least in small/medium companies. That’s exactly the size of distribution companies. For this reason our referent manager will not have high capacity to find the “common ground” in relationship with us. In many cases even his linguistic skill will be limited. Don’t forget we are guest here, so they expect some efforts from us to lower the barriers. Most of time we (as western people) don’t have such capability.

5.       Our lack of vision: as above mentioned our vision is extremely partial and limited for geographical and cultural reasons. A clear vision allows us to understand what competition is doing and to see market trends. Good vision enhances our sales opportunities. How can we base our vision on few emails?

6.       Lack of motivation. We’re far. But that’s not the biggest issue. Nowadays markets are saturated. Nobody “needs” anything. If the distributor will not buy from us, he will buy from somebody else, he just need to “google” the right query to find the product next door… So, we need to motivate our client. In this obsolete model, the only way we have is by giving him more discount, more terms, more profit, by cutting ours. This is why, after our denial to his request for additional 5% discount, he stopped answering our emails.

 

CONCLUSION

 

Exporting is a hard job. Now that the market has gone “global” and that technology give opportunities to everybody, our relationship with distributor/client is pending on few cents of markup. We need to awaken from this numbness and give an added value to our product if we want to keep, engage, motivate, and bond the distributor to us. Is this added value in our product? In most of cases, not.
We are visiting fairs every month in Asia, and what we see is discouraging: dozens of European companies throwing away their money waiting for orders that, in the new scenario, will never come.

Merit of our company should come from service. One of most appreciated service is having a local branch, with warehouse and a company representative in the nearby. In the case of medical devices, as mere example, distributor expects the company to organize clinical meetings, product tests, and to have the product ready for sale (already registered in FDA and stored custom-clear). This is what we need to offer to defeat emerging countries’ competition. Any other strategy will lead to nothing but losing available market shares.

We are talking about investment and commitment towards the right direction. Nothing is for free.

Keep in touch!

Leave a Reply