0:05 What are the options to obtain to implement initial market entry?
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What are the options to obtain to implement initial market entry?
I think there are a number of options, from our point of view as an advisory firm, we always want to know the capacity if the company, in terms of their recourses to be able to sustain that option, and coming back to the first part of the series, definition of success. Because you have to look at it in terms of, first of all the accounting point of view, how much volume of product is a realistic expectation over the first year, the second year and the third year, and what is the margin in that product and what is the variable you can assign to support your China marketing process. So in this modern world obviously, and I know that the embassy has looked at this extensively in another series, one of your options is in fact e-commerce through JD.com or depending on what you are selling there are specialist sites for industrial manufacturing. There is Alibaba’s Taobao if you are consumer product oriented. So there are a number of options and I think you have to spend some time thinking about how you can sell certain types of products on the internet, before setting up your own e-commerce platform even in Canada, with Chinese language, more and more people have credit cards and DHL and Fedex do a good job. So it depends on what you are selling and who you are selling to. Web presence, even in your homepage in Canada with a couple of pages in Chinese so people understand who you are, and spending some time on social media, and obviously getting some ads onto Baidu or Google to promote your product can be quite valuable even if you are not selling on the internet because you are building some sort of awareness and brand within your core competency of your client base or the sector that you are focusing on. Traditionally, people have not looked at the internet as something that is viable but the customs processes relatively poor as the foreign exchange process is liberalizing as we all know, so the ability for consumers and companies to pay for something using internet, if you are not inventory even in China where they can pay in RMB, is still a positive area of focus for certain types of company, especially people that are more focused on the consumer side or very specialized small component.
Second option obviously is to find a partner, whether it is a distribution partner, systems integrator, a manufacturing partner whether it would be foreign in Chinese who is using your component, who takes on the primary responsibility of integrating it so you can develop a certain presence in the market while you look at your long term strategy and your vested strategy. So finding those partners, including distributors, with caution though, one problem with the distributor partner generally, is that they are usually responsive to a market, they are not into the expensive part of the business, which is the marketing, and brand development and sales process, the very competent servicing, so you may have to support that process with your own resources on top of it. We have one client who is in the medical space, and they have very good distributor relationships with all hospitals. The client is vesting in staff with our support and building the awareness and understanding of their product. It is a U.S. based company, they are also responding in a way to opportunities in the market that we have identified, and they are going on a strategic plan because their long term interest is brand development, so then those two processes can be bifurcated with you, the exporter, taking on the branding process and the distributor taking on the fulfillment and payment process. So I think there are a lot of options in that area, as I said there are also foreign companies, people like Jepsons Jardines depending on the size and type of your product that do this well and who might be worth talking to, because they know the space, and they may or may not be interested in taking on you product. And there are trading companies, state owned and private companies that do brand development marketing and sales and distribution. So I think that there are a number of options. In certain cases we advise companies to basically define the value of your product from a technology transfer point of view, and say we are going to enter into a license agreement with a key condition being ....