Here are 5 tips to help importers in international business
• Get the right introductions.
Being introduced to the same outsourced partners you already know is a classic Asian way of doing business. Introductions are valuable because the Malaysians now know someone else is in the mix — watching, monitoring and, if necessary, keeping everyone honest. The higher the introducer’s status, the fewer problems you’ll encounter.
• Use legal enforcement on your brokers.
There’s very little you can do in Malaysia if a Malaysian factory decides to rip you off. Seeing your product knocked off or finding factory overruns selling in Malaysia is a part of doing business overseas. However, if these products head for the U.S. market, legal protection can help. Reps or middlemen can place funds into U.S. banks as guarantees, payments can be delayed, and trademark and copyright protection is available.
• Use a pilot project to test the relationship.
The Chinese say “a small boat turns back faster.” A few pilot projects work the bugs out of your processes and communications. And in doing so, if you learn that the Malaysian factory is incapable of producing, say, $10,000 worth of your product, then why would you give them more production?
• Keep some aspect of production to yourself.
An overseas firm could manufacture most of the lounge chair in one place — but you should have part of the process done elsewhere. Perhaps it’s the back of the chair, a coating on it, or branding, art and logos. Can the legs be made in one place, the back in another and the cushions in a third?
• Make it someone else’s problem.
These strategies are about controlling the manufacturing and, thus, spending a great deal of time and money.
Is it possible to hire a U.S. firm, give it your specifications and have it deal with these headaches? Can an importer pull up with a truckload of lounge chairs and be paid only after you’ve opened the box and inspected the contents?
Your cost per chair increases, but the real cost is in not understanding your production. If that doesn’t matter in your case, why bother?
A firm needs to commit to it or forget it when it comes to offshoring manufacturing. And be sure to analyze the costs of each.