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IN DEPTH: SMALL BUSINESS
From the January 7, 2005 print edition

Opportunities for success and failure in Asia

  (Online source: http://portland.bizjournals.com/portland/stories/2005/01/10/focus3.html)

Asia is home to two of the World's fastest growing economies: China and India, each with more than 1 billion in population. Asia, however, is much more than either of these countries with large trading partners like Japan, Korea, Taiwan and increasingly Southeast Asia (home to over 500 million) continuing to develop their economies and trade possibilities. Additionally, many of the trade barriers such as high import tariffs are disappearing or being greatly reduced throughout the region. Asia is currently the site of the World's most active Free Trade Agreement environment with Thailand and Singapore both noted for their recent rapid progress in this area and now with China a significant player in the field as well.
Portland and the Northwest economically have come through very tough times. Managers have had to look long and hard at all costs and to develop creative ways to stay competitive. Despite this and the fact that Oregon and Washington State are closer to Asia than is most of the nation, many Northwest companies, especially small companies, have not taken advantage as fully as larger firms of the lower sourcing potential that Asia can offer.

Although our firm only counsels companies to look and to move jobs off shore as a last resort, often times some functions must be moved if the company is to continue to compete effectively and if jobs are to be saved here. It is with this thought that many managers and business owners approach us and in which we try to help them through our free website at www.business-in-asia.com and through our for fee consulting business.

Companies considering sourcing in Asia for the first time should heed the following advice.

Do your homework. Internet sites can help you learn more about Asia and about sourcing opportunities.

Sourcing, like any other skill, is something that is possible for all but it may be more cost-effective for you to hire someone to do the initial research as they may do this more often, have greater contacts and experience and be able to give you a more comprehensive report to work with. Therefore think about whether this is something you feel comfortable with doing and have the time to accomplish.

Sourcing need not be expensive but does involve effort, so be prepared to invest the time or pay accordingly. We and many other sourcing specialists can provide a simple sourcing report with a list of 5 or 6 potential qualified companies for well under $2,000. For this you should get company names and contact information, information on the number of employees, years in business, list of previous sales and much other relevant information.

Using a trade consultant, just as using an attorney or other professional, should follow a well thought-out process. First, you need to consider what you want to accomplish. Second, if you are going to consider hiring someone to assist you, take the time to complete a written scope of work -- this need not be long, one page or so is sufficient -- as to what you want to accomplish, what issues are most important to you and how broad or how narrow you want to make your search (for example, only Chinese companies, all Asian companies, only companies in a certain region, etc.)

Talk to more than one sourcing specialist. For the relationship to work, trust and a good professional and personal relationship greatly simplifies communication and increases the chances of success. Your consultant should be willing to sign a non-disclosure agreement with you in advance of any talks and to discuss your requirements in an initial consultation, then give you a written quotation noting what work is to be performed, the time period, fee, terms of payment, governing law and other critical elements of the agreement.

All consultants aren't created equal. Get the right tool for the job. Any honest firm doing sourcing or market research work in Asia should be able to tell you where they have worked in the past, to give you references and to note areas where they have had success.

No firm is equally good throughout the region. Our firm for example has had excellent results in Thailand, Vietnam and parts of China, but will be the first to tell you that we are weak in Indonesia, the Philippines and Japan.

Even in China, no firm is equally good throughout such a large country. In the south of China, Portland companies like eBI have experience, connections and have had much success. In the north of China, other names locally would come to mind. Also, some companies are good in a particular sub sector, for example, our company has had good results in injection plastic molds and items, leather and textiles, jewelry and stamped metal items but has done little work in oil and gas, chemicals, microprocessors or high-tech manufacturing.

Use your sourcing specialist wisely. Generally the more time involved for your sourcing specialist, the more he or she will charge. Think clearly in advance whether you need help with just the initial targeting of companies or something more.

Lastly don't underestimate yourself. Last year, thousands of companies sourced products in Asia for the first time. Most of them will tell you it was a challenging but mind-opening experience. You can do this.

Christopher W. Runckel is president of Runckel & Associates, a Portland-based international business consulting firm focused on Asia. He can be reached at (503) 244-4551 or at crunckel@business-in-asia.com.

© 2005 American City Business Journals Inc.
 
(Online source: http://portland.bizjournals.com/portland/stories/2005/01/10/focus3.html)



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