Sourcing Overseas
An Overview of What to Except

By Jeff Lederer
Reprinted with permission from the May 2002 Issue of Identity Marketing

Now of course an argument can be made for any one or all combined-yet when it comes to the topic of sourcing products in Asia-the answer can be as mysterious as it can be crystal clear. Before even considering sourcing, it is important to point out an interesting industry dynamic regarding this topic.

There is one school of thought that there is a double standard in the promotional product industry, where it is "acceptable" for distributors to bypass a supplier to source a product, yet a supplier should not be working directly with an end-user.

One way to look at this is with the basic laws of supply and demand and to just accept the market for the way it exists today. A distributor has a need for a product or service and he should use all of his resources to satisfy his customer and make the most profit he or she can. Like any other change in life, one has to accept the dynamics of competition and survival of the fittest instead of focusing on why something may be unfair, unethical, inappropriate, or even why there is a shift in focus. That being said, it is also important to be aware of the issues and complexities involved with-in this case-sourcing products from another part of the world, such as Asia.

Sourcing custom products from Asia is easier today than it was a decade ago. But it does have certain nuances and certain levels of complexity, which takes many years and a lot of experience and focused efforts to fully understand. In most cases it comes down to relationships-just like most sales-related issues in the promotional product industry-and most others for that matter.

One of the first issues to be aware of is that sourcing custom products overseas is a different type of business (and industry) with its own protocols, culture, knowledge, and time constraints. If you don't recognize and get a handle on these differences, your attempt could cost you and your customer a lot of time and money.

In addition, there are many potential layers within potential Asian product sources and they all have different titles, but in many cases they can serve the same function.

Why is it necessary to know this? Many people think that just because they are in contact with "some Asian company" that they are going to benefit from sourcing a product on their own, save money and cut out a middle person. At times, however, there are layers upon layers of middle-players even within a particular country that one would never be aware of without years of experience.

Take for instance a scenario where a U.S. trading company, that works through an Asian trading company, that works through another trading company (possibly the Chinese Government) that, in turn then buys from the actual manufacturer. At any point in that process, one of the "traders" may say that it is "their" factory or "my cousin's" factory or "my brother's" factory. You may never really know...and in many cases some of the "trading companies" don't know for sure.

The significance of this lies with knowledge, trust, and, more importantly, the very real potential for communication breakdown between groups-or one language to another (including the hundreds of different Chinese language dialects).

Some examples of different entities in Asia include traders, importers, manufacturers, government trading companies, government factories, joint ventures, foreign invested enterprise (FIE), and wholly owned foreign subsidiaries (WOFS).

Culture-it is imperative to understand the culture. There is a difference between fair and unfair or feelings/honor being questioned or compromised. Last year a U.S. military surveillance plane collided with a Chinese fighter plane, which resulted in an emergency landing in China for the U.S. servicemen and the death of the Chinese pilot. The U.S. said that "we were in international waters" while the Chinese government questioned "why do you need to spy on us?" You see, two different arguments/feelings about the same issue, but neither party was willing to con- cede or see the others perspective for quite some time. The same is true in many cases, even when buying a product for promotion.

Put aside the culture and language barriers and look at the fact that many sources in Asia work with other markets throughout the world, each of which is structured very differently than the U.S. promotional product industry. Be it Europe where there is less of a distributor/supplier line of distinction, or premium un-imprinted items, or retail- each market channel has its own set of industry rules and ethics. For example, an Asian supplier may presume that the U.S. industry works the same as he does. He may therefore complicate or confuse an issue with an order. This can often be the result unless the best tried and true sources are being used.

Other important issues to consider: