This document discusses strategies for brands expanding into Asia-Pacific markets. It recommends using Hong Kong as a logistics hub due to its central location, shipping infrastructure, and duty-free status. A case study of ToyFoundry shows how using a Hong Kong warehouse helped them reach customers across Asia-Pacific more quickly and at lower shipping costs. Automating logistics through an API integration also improved their efficiency and control over inventory and order fulfillment.
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Reaching the Next Billion Buyers for Your Brand
1. Reaching the next billion buyers for your brand:
Overcoming the challenges of expanding into Asia-Pacific
Dimitri Onistsuk & Nate Gilmore
Shipwire, Inc.
1-888-SHIPWIRE www.shipwire.com
2. 1-888-SHIPWIRE 2185 Park Blvd. | Palo Alto, CA 94306
Table of Contents
A billion new buyers in reach: opportunities in Asia-Pacific
China
Australia
Japan
South Korea
The Hong Kong warehouse: the key to Asia-Pac
Case study: How ToyFoundry conquered Asia-Pac with Fruit Ninja
Your Hong Kong go-to-market strategy in five steps
Identify your customers
Register your business in China
Understand customs and import details
Establish sales channels
Ship to Hong Kong
Gaining access to Asia-Pac buyers: staging in Hong Kong
Product tips for Asia-Pac: internationalizing for your market
About Shipwire
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3. 1-888-SHIPWIRE 2185 Park Blvd. | Palo Alto, CA 94306 Page 3
The growth of the Asia-Pacific (Asia-Pac) region continues to supercharge
the global economy and with it, countless brands savvy enough to effectively
capture the benefits of this market.
The most successful brands can be either small or large, but what they have
in common is that they use the right tools to help them grow. One of the
most important tools in the new global brand’s arsenal is the ability to locate
its products closer to its customers. Unlike merchants who use a traditional
logistics network, brands looking to open Asia-Pac sales channels can enter
the market in an efficient and scalable way by building a relationship with a
third-party logistics partner in Hong Kong.
With the world’s busiest cargo airport and the largest container port in South
China, Hong Kong is a cost-effective fulfillment option for this part of the
world. In addition, Hong Kong is duty-free for most products and maintains a
pro-business climate in its taxation.
Staging in Hong Kong will save time and money because your company often
can avoid trans-Pacific shipping costs and respond nimbly to B2B and B2C
demands in the Asia-Pac market.
However, there are three important challenges to entering expanding into
Asia-Pac:
This white paper will address these challenges, and help demystify your
brand’s expansion into Asia-Pac markets.
$356 billion
The projected e-commerce
spend for Chinese
consumers in 2016
Getting your products to Hong Kong while keeping costs low
Using Hong Kong as a staging point for Asia-Pac customers
Localizing your products to make them sellable in Asia-Pac markets
Introduction
4. 1-888-SHIPWIRE 2185 Park Blvd. | Palo Alto, CA 94306 Page 4
Here’s a familiar image: eager consumers standing in queues, waiting for a store to
open so they can buy the latest “Harry Potter” book or the new generation iPod.
Each day, thousands of consumers in the Asia-Pacific region are subscribing
to Internet or mobile service, and they want products they can’t get in their
homeland, especially luxury goods.
Having an easily implemented logistics strategy that delivers merchandise to
businesses and consumers faster and more economically than ever before means
brands can now reach customers in markets that were traditionally out of reach.
Namely, growing brands now have the means to reach a $16 trillion GDP
Asia-Pac market eager for the best and the latest in channels ranging from
fashion to automobiles.
Chief among these markets is China, with a burgeoning middle class eagerly
embracing the concepts of a market economy.
Experts predict that China, already known as the world’s factory, will become the
world’s second-largest consumer market and the leading luxury market by 2015.
No matter where in the world your brand is headquartered, part of a growth
strategy for the next decade - and perhaps beyond - should be creating a
presence in Asia-Pacific.
Here’s a snapshot of some of the economies you can reach:
“Nothing is more
important in the
world today than
changes in China
that shape its future”
~ Kenneth Lieberthal
Director, John L. Thornton China Center
China
Residents of China want the brands they can’t get at home: apparel, the
latest in entertainment and especially luxury goods, such as designer names
in cosmetics, fashion and jewelry.
Reaching them through e-commerce channels is especially attractive because
the nation has more than 400 million Internet users – outdistancing the
United States and Japan, combined.
That number is expected to reach 650 million in a few short years as the
government’s telecommunications improvements reach into the more rural provinces.
The payoff: Chinese consumers will spend about $356 billion online by
2016. The growing middle class, a mostly urban population that will have an
Market opportunities in Asia-Pac
5. 1-888-SHIPWIRE 2185 Park Blvd. | Palo Alto, CA 94306 Page 5
average disposable income of about $3,000, will drive most of the spending. Other
projections have average disposal income reaching $8,000 within a decade.
The Boston Consulting Group calls China the “E-commerce superpower” of
the next decade, and perhaps beyond.
Purchasing habits, online payment options and reliance on opinions by other
consumers are some of the notable differences in the Chinese market.
Online shopping portal Taobao.com sells everything from appliances to rail
tickets and has heavily shaped Chinese digital buying habits. It accounted
for about 80 percent of Chinese e-commerce volume in 2010. The web site
is part of the Alibaba Group, which includes B2B giant Alibaba.com and the
nation’s largest online payment processor, AliPay.
Because Taobao does not allow search
engines to index its products, consumers are
less likely to use search in the typical sense
and more often go directly to Taobao.
But if you are going to look at China, the
Alibaba Group should be a touchstone,
whether you are considering B2B or B2C.
Amazon, which can be a more familiar
first step in e-commerce, is also a force in
China’s digital purchasing world. It entered
the market by acquiring Joyo.com and
relaunching it as Amazon China.
Top e-commerce
marketplaces
in China:
Tmall.com
360buy.com
Suning.com
Amazon.cn
Yihaodian
Australia
Probably the most familiar country for North American exporters and
e-commerce enterprises because of its United Kingdom-influenced culture,
Australia has a dynamic economy.
Comparable to major North American and western European economies,
Australia lags in Internet use and digital purchases, but is catching up, and
that’s good news for startups and established SMBs looking to get a foothold
in Asia-Pac. Australians are accustomed to ordering imports and paying for
shipping. They’re even patient about waiting for delivery.
“[China’s] consumer
market has the
potential to account
for a disproportionate
and significant
share of growth for
the world’s leading
consumer-oriented
companies in the
coming years.”
~Deloitte Research
6. 1-888-SHIPWIRE 2185 Park Blvd. | Palo Alto, CA 94306 Page 6
In 2010, Australian consumers spent about $12
billion online, and consulting firm Frost & Sullivan
says 40 percent of it was offshore.
PriceWaterhouseCoopers projects online
spending to nearly double, to $22 billion, by 2015
and says one of the key reasons is supply chain
improvements that result in more cost-effective
and timely delivery.
Although it may seem surprising, Australia
remains a less mature market, and although it is catching up, that’s good
news for U.S. entrepreneurs looking to expand into the region without having
to grapple with market goliaths in Japan, China or Korea.
Top e-commerce
marketplaces
in Australia:
Graysonline.com
ebay.com.au
Japan
Although still a tradition-laden economy, Japan
is beginning to feel the push for change from
younger workers more interested in technology
and worldwide commerce.
This island nation registered about $45 billion in
e-commerce transactions in 2010, with beauty
products capturing record market shares.
Japan was the fastest-growing economy of the
G-7 nations in 2010, but experienced a setback in
2011 because of a devastating earthquake.
Nevertheless, Japan remains a regional leader in e-commerce sales, and
Forrester Research sees online sales growing from $64 billion in 2012 to nearly
$98 billion by 2016.
Korea
Like Japan, South Korea is a mature B2C e-commerce economy. South
Koreans are online shoppers. The web site ecommercezen.com reports that in
2010, 99 percent of residents with Internet access bought something online.
That’s the highest penetration rate in the world.
Slightly more than one in four web users surveyed by Nielsen in 2010 said
they spent up to 25 percent of their income on digital purchases.
$98 billion
in e-commerce sales to
be made by Japanese
consumers by 2016
Top e-commerce
marketplaces
in Japan:
Rakuten.co.jp
Amazon.jp
Nissen.jp
7. 1-888-SHIPWIRE 2185 Park Blvd. | Palo Alto, CA 94306 Page 7
Another encouraging factor for B2B and B2C
sales: South Korea is trying to boost imports
as it struggles to improve its balance of
payments against heavy exports.
Especially attractive to SMBs in the United
States is the free trade agreement that took
effect in 2012. Clearly, opportunities in B2B
and B2C services abound in the Asia-Pac-
Oceania region. The key is identifying the
best markets for your company and having
a logistics base that can serve them in the
most cost-efficient way.
Korea’s e-commerce giant, Gmarket, was acquired in 2009 by Ebay and
strengthened by its merger with Ebay’s Internet Auction Company.
$16 trillion in gross domestic product
in Asia-Pac markets
Top e-commerce
marketplaces in Korea:
Ebay
Gmarket
11st.co.kr
Shopping.naver.com
Tesco/Homeplus
E-commerce sales projections
(in billions USD)
Compound Annual Growth Rate
(CAGR) per year
2012
$16.8 $26.4
+12%
SOUTH
KOREA
$63.9 $97.6
JAPAN +12%
$23.2 $35.4
AUSTRALIA +11%
2016
$169.4 $356.1
CHINA +25%
8. 1-888-SHIPWIRE 2185 Park Blvd. | Palo Alto, CA 94306 Page 8
Knowing the Asia-Pac market is about $16 trillion (GDP) makes for a strong
incentive to expand there. The important question becomes how to reach
these buyers.
Shipping directly from your warehouses might be an effective market test.
But let’s get beyond tentative solutions and explore strategies that leverage
using a key location in the Asia-Pac region to fulfill orders.
Here are a few advantages of having a logistics presence in Hong Kong:
Location
Reach the world’s fastest-growing
luxury products market in China
Seven major business hubs in the
same time zone, with four others in a
different zone by only one hour
Link to China’s largest manufacturing
region, the Pearl River Delta, which
is just north of Hong Kong and
includes the major cities of Shenzhen,
Guangzhou and Dongguan
Half the world’s population is within
five air hours
Shipping options
More than 100 shipping lines
Third-largest container port in the world
World’s busiest cargo airport
Ship to Europe using next-day air service
Easily accessed roads for moving goods
to nearby markets
Streamline supply chain
Works for B2B, B2C or e-commerce
Ship faster and easier throughout Asia-Pac
Substantially improve shipping time
to Australia
Use Hong Kong as primary warehouse
or as a staging area
Avoid most customs difficulties
Company merchandise is processed
quickly and correctly
Your logistics partner coordinates with
brokers and shippers
Increase margins
Hong Kong is duty-free for most products
Favorable trade alliances with major
manufacturing and importing nations
Advantages of a Hong Kong warehouse
A Hong Kong warehouse means
countless options for getting
products to your customers
Available for
shipping to
international
customers
Resupply
distributors
Ship to your
warehouse
in the US or
elsewhere
Quickly transported to a
Hong Kong warehouse
Manufactured overseas
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Making logistics part of your success
As the manufacturer and distributor for leading digital brands - including
Halfbrick Studios, the creator of the massively popular Fruit Ninja game
- ToyFoundry needed a reliable shipping and logistics partner to fulfill the
demand of its Asia-Pac customers.
When a game developer approaches ToyFoundry, they typically have a large
audience playing their game and creating a demand for physical products:
t-shirts, stuffed toys, phone cases, and more. ToyFoundry’s team helps these
game developers monetize and convert their digital brand into a physical
one, and using an outsourced fulfillment partner lets them leverage global
distribution that is usually reserved for the largest of firms.
ToyFoundry sets up the necessary business identities in strategic locations
to take care of sales taxes and imports, manages enterprise web hosting,
and handles 24/7 customer support in multiple languages (nearly one-third
of Fruit Ninja’s customers are based in China, making this a necessary
ingredient for growth). For shipping and logistics, however, ToyFoundry uses
a warehouse and an outsourced order fulfillment partner to ensure that
products are located close to their Asian and Australian customers and are
readily available when needed.
In order to continue on their growth trajectory, however, ToyFoundry faced
several challenges:
1. Reaching buyers globally, especially in Asia-Pac
2. Bringing products to market faster
3. Automating logistics and saving on shipping
Reaching buyers globally
ToyFoundry’s market reach spans the globe, and setting up staging in
multiple locations was important to satisfy demand wherever it came from.
While it could easily fulfill its European and American orders, shipping to
customers in China, Korea, and Australia was more difficult. ToyFoundry, itself
based in Hong Kong, knows the value of lower shipping in winning customers:
shipping to Australia is often very expensive. This is why ToyFoundry decided
on using a facility in Hong Kong. “The Australian customer is used to buying
online and expecting higher shipping costs, but Hong Kong is close enough
that they receive their products quickly and cheaply,” said Verstege. “The
Australian customer is important to us, and so is the Chinese, Korean, and
Case study: How ToyFoundry conquered
Asia-Pac with Fruit Ninja
10. 1-888-SHIPWIRE 2185 Park Blvd. | Palo Alto, CA 94306 Page 10
Japanese customer. Now that we stage in Hong Kong we can reach all these
markets, as well as our customers in Europe and the Americas.”
Whereas orders sent from the U.S. to Australia can take weeks to arrive,
ToyFoundry’s shipments from Hong Kong arrive faster and cost less.
Bringing products to market faster
Another advantage of a flexible supply chain is having a fast time-to-market,
which allows testing prototype products and accepting preorders
without suffering the holdups that can be typical for a shipment undergoing
customs inspection.
“It allows us to accept preorders and know that we’re not going to have any
hold ups,” says ToyFoundry’s co-founder Mark Verstege. “One of the issues
with customs is that while they do x-ray scans and inspections at port, what
you were hoping would take a week can end up taking two or three weeks.
Hong Kong as a staging platform means that we can ship product out on
the water, but in the meantime we can hold some reserve stock in Hong
Kong so that we can start releasing those pre-orders to customers quicker.
Ultimately we’re going to still push products to where the customers are to
take advantage of cheaper shipping and quicker delivery, but for preorders
the delivery time isn’t an issue. What is important is getting it out the door
as quickly as possible once manufacturing is complete.”
Automating logistics and saving on shipping
ToyFoundry manages manufacturing and selling for its customers, but uses
a partner to handle the shipping, warehousing and logistics of the products.
This very vital part of the process is large enough in scope that relying on a
partner yields significant benefits. According to Verstege, picking the right
partner is vital: “We are always going to need to distribute stock and we need
to rely on our partner for this. Having this means ToyFoundry can concentrate on
everything else. That’s the biggest benefit: knowing that we can give our partner
that problem – shipping and distribution – and we know they’ll get it right.”
Being able to integrate warehouse operations into sales operations is now
also possible with application programming interfaces (APIs). This sort of
integration allows controlling inventory management and shipping from a
software layer, which improves efficiency and provides a level of control that
previously did not exist. For ToyFoundry, this means being able to manage
inventory in four warehouses on three continents from a single dashboard
in a browser. The orders that come in to their customers’ online stores are
routed directly to warehouse operations and can be fulfilled with a single
click. And when a product refill is needed in one of the warehouses, the
orders for that region can be fulfilled from elsewhere so there is never a
break in fulfillment.
Learn more about
ToyFoundry at
www.toyfoundry.com
11. 1-888-SHIPWIRE 2185 Park Blvd. | Palo Alto, CA 94306 Page 11
Getting into Hong Kong quickly and efficiently
Whether your market is B2B or B2C, you need buyers, sales channels, customs
and import details, an honest assessment of your market competition, and
a marketing strategy for the Asia-Pac region that may differ from North
American or European approaches.
While there are many requirements that vary from company to company,
here are five indispensible steps to getting your product from manufacturer
to warehouse in a cost-effective way:
Identify your customers
With $16 trillion GDP throughout the Asia-Pacific region in 2010, it isn’t
possible to reach every buyer at once.
For startups or those new to the Asia-Pac region, targeting B2B or B2C customers
in specific countries or areas is probably a more cost-effective approach.
You may know your target buyer in the Americas or Europe, but it is
important to do your due diligence on the Asia-Pac buyer and the market
subsets. The good news is that although cultures, customs and preferences
vary widely, there is a strong chance your brand is already selling
internationally.
Examining your order history to find out which international markets already
purchase your products can give you insights into where your brand is already
validated by consumers.
You’ll collect information with each sale and start to understand potential
market peculiarities.
Networking through trade shows where representatives of targeted countries
are present and searching the Internet for Asia-Pac companies looking to
source products are simple but effective options for startups.
Register your business in China
While Hong Kong is officially part of China, it maintains a degree of independence
as one of two Special Administrative Regions. Nearby Macau is the other.
This special status makes Hong Kong a business-friendly environment
that welcomes new companies and makes it easy and efficient to register.
Bloomberg ranked Hong Kong as the best place to do business because of its
free-market policies and low corporate taxes.
Step 1:
Identify your customers
(pg.11)
Step 2:
Register your business in China
(pg.11)
Step 3:
Understand customs and
import details
(pg.12)
Step 4:
Establish sales channels
(pg.13)
Step 5:
Ship to Hong Kong
(pg.13)
Your Hong Kong strategy
Your go-to-market strategy in five steps
12. 1-888-SHIPWIRE 2185 Park Blvd. | Palo Alto, CA 94306 Page 12
In addition, shares of a company registered in Hong Kong can be 100 percent
foreign-owned. Registering your business as a Limited Liability Corporation
generally is considered an effective option for most companies and can be set
up in seven to 10 business days.
LLCs in Hong Kong enjoy preferential trading terms with China and premier
access to markets across a wide range of service sectors.
Foreign-owned companies and LLCs must register with the Inland Revenue
Department within one month of the incorporation date, regardless of
whether the business is operational at that point.
Understand customs and import details
Getting accurate information on taxes and fees for merchandise and having
the correct documentation are keys to success.
In order to avoid costly delays, you can start with a few small shipments to
make sure you have a good understanding of your target market’s taxes, fees,
and the customs processing standards for your product. Sending a master
carton via parcel instead of a full container will ensure that if there is a
customs issue, it won’t become cripplingly expensive.
Having an understanding of taxes and fees is important for calculating your
selling price, and will help you avoid the surprises you would get if you were
to focus your business plan only on product price. For example, products
manufactured on the mainland and shipped to Hong Kong are duty-free.
But products entering China from Hong Kong may encounter tariffs, thus
increasing your costs.
It is best to ask an expert, such as a freight forwarder or customs broker, about
import taxes and duties; they keep up with the latest changes. You’ll be talking
with them anyway about transportation costs.
Categorizing your product is a complex task and a broker can help you be
certain your company doesn’t pay more tariff than necessary.
“Hong Kong is a
gateway to China.
It has competitive
tax rates and that
makes it one of the
natural choices
for companies to
set up their Asian
headquarters.”
~Tomo Kinoshita
Deputy head of Asia economics
research at Nomura Holdings
Learn more about registration and licensing requirements in
Hong Kong: shipwire.com/hongkong
Learn more about shipping in bulk to Hong Kong:
shipwire.com/hongkong
13. 1-888-SHIPWIRE 2185 Park Blvd. | Palo Alto, CA 94306 Page 13
Establish sales channels
Whether your merchandise is hard goods, machinery, textiles or luxury items,
your company’s growth strategy might include local distributorships, agents or
retail outlets for your product, depending on its nature and how sales are closed.
Many companies, whether B2B or B2C, can open sales channels quickly with
local-language web sites.
Some of the top marketplaces in Asia-Pac were listed in the first, but those
are not the only ways to get your product to customers. There are three
important channels you can exploit when staging in Hong Kong: direct-to-consumer
shipping in Asia-Pac, sending in bulk to other strategic warehouse
locations, and resupplying distributors. These channels are elaborated on in
the following chapter.
Fast and efficient delivery will be a prime ingredient of a brand’s success, and
shipping from the United States or western Europe will cause unnecessary
expense and delays.
Just a word about payment processing: Try to work with recognized
processors, especially those within the countries to which you are selling.
Debit cards and account debitors, such as PayPal, are more common than credit
cards in much of Asia-Pac, and especially in China. AliPay, an arm of the giant
Alibaba Group, handles about 50 percent of the e-commerce transitions in China.
Ship to Hong Kong
Once you have completed the previous steps, you can send your products
to Hong Kong by either shipping a smaller batch of merchandise or a larger
container, depending on whether you testing your products in a new market
or meeting the demand of existing customers. Typically your options include
printing a shipping label to stick on your package, requesting a carrier pickup,
picking up from port or overseas, or arranging it yourself. Your fulfillment
partner will be there to help with this process.
With any of these options, ensuring receiving guidelines are met will get
your products ready to be shipped with fewer snags. Generally, first you must
define the products you are shipping, which entails sending a list of products
one by one, or using a spreadsheet, to your fulfillment partner. You can also
include special instructions for breaking down inventory or labeling at this
stage. Once your shipping method is confirmed, it is ready to be picked up
and sent on its way to its new location in Hong Kong.
Find detailed guidelines for sending products to your warehouses
at: shipwire.com/hongkong
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Importance of using Hong Kong
for staging
Staging in Hong Kong puts you
oceans closer to your new markets.
You trim delivery expenses, and
customers get products faster.
If you are manufacturing in China,
the Hong Kong logistics arrangement
is equally beneficial because you cut
shipping costs on deliveries from your
factory partners and have the product
at hand to fill Asia-Pac orders.
There are several benefits to using
Hong Kong as a staging point for
merchandise. For one, it allows
you to consolidate your supply
chain, making it a lot more flexible.
Traditionally, sales had to wait until
products have been transported
to a port from the manufacturer,
sailed across the ocean, put through
customs, and finally delivered to a
local warehouse. In some cases these
products are shipped right back
overseas, thereby keeping costs high.
With staging in Hong Kong, however,
products are available immediately
for shipment to customers, retailers,
or distributors.
Staging in Hong Kong also
shortens your time-to-market. Your
merchandise will cost you money
while it sits for up to five days in an
air cargo container. For sea-going
containers, your product could be
out of reach for up to 25 days – 20
days at sea from China to Long
Beach, CA, and another three to
five days to clear U.S. Customs and
be transported to your warehouse.
Having inventory in Hong Kong, on
the other hand, eliminates lengthy
delays and your product is available
to ship to buyers in days, not weeks.
By using Hong Kong as your logistics
center for shipments from China or
as a staging area to fulfill orders from
B2B and B2C clients in the Asia-Pac
region, you add value by decreasing
the time your product is in transit
and its associated cost.
Even if it makes sense to transship
merchandise to your U.S. or U.K.
warehouses, consolidating some of
it in Hong Kong should remain an
attractive fulfillment option for Asia-
Pac customers.
If you are manufacturing in China,
as many companies are, it is also
easier to get your product to Hong
Kong than practically anywhere else
in the world.
Taking advantage of
Hong Kong tariffs
With its British-influenced economic,
financial and legal system, Hong
Kong business operations are akin to
those in the U.S. and U.K. Bloomberg
recently named it the world’s best
place to do business. Among the
factors used in evaluating Hong
Kong’s business climate were the cost
of moving goods and taxation.
Learn more about registration
and licensing requirements in
Hong Kong:
shipwire.com/hongkong
“Now that we stage
in Hong Kong, we
can reach all these
markets and sell to
our customers in
Australia, China,
Japan and Korea.”
~Mark Verstege
ToyFoundry co-founder and CEO
Staging in Hong Kong: reaching customers in Asia-Pac
15. 1-888-SHIPWIRE 2185 Park Blvd. | Palo Alto, CA 94306 Page 15
Because there is no tax or excise
duty on exports, company margins
expand. A corporate income tax
of 16.5 percent also makes it an
attractive hub for a company’s
Asia-Pac operations, which likely
influences the 3,700 foreign
companies that have established
offices or regional headquarters
there.
Only four product classifications
are not tax-free - liquor, tobacco,
hydrocarbon oils and methanol - as
well as motor vehicles for use on the
road, which carry a registration tax.
As you would expect, importers and
exporters still must pay declaration
fees and file appropriate paperwork.
But the Hong Kong administrative
system is streamlined, so the process
is not expensive or time consuming.
Three effective ways of reaching
customers from Hong Kong
From your new staging location in
Hong Kong you now have control
of your product much sooner than
before. This, combined with the
ability to break down inventory lots,
gives you several options for reaching
customers:
1. Direct-to-consumer shipping in
Asia-Pac. Send products directly
to your customers. Once you have
control of the inventory in Hong Kong
you can fulfill orders to customers
throughout Asia-Pac. Less product
movement means lower inventory
carrying costs, lower prices and faster
delivery times.
You can also fulfill time-sensitive
orders in other markets. Having a
Hong Kong warehouse that is fully
integrated with your e-commerce
platform or other sales tool means
that if you have a product that is
trendy, you can be sure to satisfy
demand when it’s peaking.
2. Send in bulk to other warehouse
locations and sell while the product
is in transit. You can use the
warehouse to send a large shipment
to other fulfillment locations in the
Europe, North America, or even to
your own warehouse anywhere in
the world. With this you can satisfy
the demand of customers in other
markets. An added benefit is that
your Hong Kong inventory will be
validated and available for pre-sale
in your e-commerce platform or
other marketplace. Once the product
arrives at the new location, the sold
inventory is turned and shipped.
3. Resupply distributors. You can use
your Hong Kong location as a staging
point to send products in bulk to
retailers or distributors anywhere in
the world. With the option to break
down inventory, you can send smaller
shipments to retailers, or drop ship
your product.
Launching your own platform
If you plan to sell through your
own web platform, most experts
recommend a portal aimed
specifically at your target consumers.
That means designing pages that
reflect that country’s viewing
preferences and contain content
written specifically for the page.
Don’t make the mistake of using
a translation program on your
American or European pages.
Nothing detracts from a portal’s
credibility more than syntax errors.
By all means, include social media
links and allow for commenting on
the pages. Chinese shoppers, for
example, “are quite possibly the
most social in the world during the
shopping process,” according to the
Boston Consulting Group.
You should focus on selling a few
products at first, with pages designed
specifically for your core buyers.
This will help validate your product
and will let you know of any issues
without large capital investments.
Retail environment
If you are looking for a more
conventional retail sales
channel, partnerships, distributor
arrangements or relationships with
jobbers are options.
Some countries, such as Japan, require
distributor arrangements for certain
products, so get a clear understanding
of the country’s commerce
arrangements before you begin.
For China, trade experts suggest forming
relationships with multiple agents due
to the country’s size and diversity.
Most experts also suggest visiting
China, both to assess opportunities
and to meet personally with
16. 1-888-SHIPWIRE 2185 Park Blvd. | Palo Alto, CA 94306 Page 16
potential partners. Chinese
companies and entrepreneurs put a
high value on personal meetings.
In a B2B environment, it is advisable
to have skilled sales people. Even if
you are selling a technical product,
use experienced sales people, not
engineers, for business development.
Target CEOs and purchasing
managers and keep the engineers
in reserve to answer the technical
questions as they develop.
Expect to conclude mutually
beneficial business arrangements,
but don’t look for a higher than
average margin.
In some instances, governments
of Asia-Pac nations require a
distributorship arrangement. For
example, Japan requires local
distributors for apparel. Think about
your margins when establishing
relationships with distributors and
look at your overall marketing,
distribution and logistics strategy
to see if you can achieve savings to
cover the cost of a distributorship
arrangement.
Looking to future channels for
Asia-Pac logistics
Staging your products in Hong Kong,
for import or export, is an excellent
start on your Asia-Pac logistics. But it
always is the last mile that impacts
margins, and the Asia-Pac region is
no different.
While the price of moving goods
from one place to another is
relatively high in China - logistics
represent about 20 percent of
China’s GDP versus only 10 percent
in the U.S. and 14 percent in Japan
- the steady efforts to improve the
situation will benefit brands that are
now entering the Asia-Pac market.
The Chinese government is working to
better freight transportation in major
cities and has designated nine cities
as regional logistics centers. It has
announced huge investments in air,
road and rail logistics as part of its Five
Year Plan. It has eased tax burdens on
the logistics industry, and experts are
hoping the evolution will continue.
It is unlikely that you would want to
create your own delivery system, so
forging alliances with retailers who
will inventory your product or accept
shipping for consumer pickup are not
only possible options but attractive
choices to fulfill consumer demand.
Recognize ultimately that your strategy
for moving into Asia-Pac should be
based on a clear cultural understanding
of your market, sound economics, solid
sales projections, thorough reporting
on your potential targets and a view
toward building relationships.
Once you have used these steps
for strategic evaluation, you are
more than likely to identify revenue
opportunities that you can afford
because of the economies you have
achieved by using Hong Kong as your
logistics base.
“It is a pressing
need for the
government to
adopt new measures
to boost the
logistics industry.”
~He Liming
Chairman of China Federation of
Logistics and Purchasing
17. 1-888-SHIPWIRE 2185 Park Blvd. | Palo Alto, CA 94306 Page 17
Your logistics are in place. Your
marketing and distribution alliances
are sound. Now, let’s look at the last
steps to entering the Asia-Pac markets.
Your brand more than likely is new
to consumers. You’ll achieve traction
over time with sound marketing, but
you want a product that pays its
way from the time it hits web sites
and store shelves. Familiarity is your
currency in the marketplace.
Look at your in-country competitors:
how do they display and package
their product; what do the labels look
like and what information do they
contain? Do your competitors sell on
quality or price?
Language and culture
Marketing in a foreign language
requires an investment in research
and linguistics.
Spend what you must to get the
expertise, because all other marketing
steps are nothing more than costly
errors in the last mile if you don’t have
this solid understanding of language
and culture.
Think about the General Motors
debacle when it introduced the Chevy
Nova to Mexico. In Spanish, “No Va”
means “You are not.” A success in
Mexico, this Chevy was not.
The old admonition “Watch your
language” is most appropriate when
marketing in a foreign country.
Hugely important Chinese language
symbols used in marketing include
“golden”, “hundred”, and “happy.”
Don’t get silly or obvious with them,
but if you can make any of the ideas
fit, it’s worth the effort. Coke altered
its Chinese name to include the
symbol for happiness.
On the other hand, appliance and
electronics retailer Best Buy missed
the mark when it started retailing
in China through its own Best Buy-named
stores.
It used a U.S. approach on the sales
floor – lacking the personalized
interaction expected by Chinese
middle-class consumers -- and chose
a store name that translated as
“Good bargain after thinking it over.”
Not exactly a motivating message
and one that was certain to kill
impulse buys.
Draw on your own experience with
foreign names and products.
Consider times when you
have walked past items in the
“International Section” of your local
and stopped because the brand
was familiar – even if the language
wasn’t – or the package photo gave
you information about the product.
Image and language help create the
emotional experiences that drive
sales and build consumer loyalty. But
taking your American or European
sign or slogan and translating it
directly into another language is not
always the best idea.
You might look to some of your
new local distributors for guidance
with the language and culture or
turn to local linguistic authorities
at colleges or embassies for help
in getting the message right.
Outsourcing platforms that have
skilled cultural linguists also could be
a possible option to help you craft
the appropriate language and label
for your product.
Some companies, such as Lipton,
use a combination of language and
image to tell their product story.
An icon about product use might be
an option, but be certain the icon
cannot be misinterpreted.
Global management consultant
Accenture polled urban residents to
learn about purchase motivators. The
company concluded that a brand’s
image of community contribution
and how it fits with a buyer’s personal
values were the strongest purchase
incentives –
even beyond price.
Legal compliance
Meeting a country’s standards for
packaging and labeling guidelines is
crucial. Many countries require the
country of origin on the label. Failing
to meet guidelines could result in
Internationalizing your product for the Asia-Pac marketplace
Learn about how savvy retailers
and manufacturers respond
to the unique preferences of
Chinese consumers:
shipwire.com/hongkong
18. 1-888-SHIPWIRE 2185 Park Blvd. | Palo Alto, CA 94306 Page 18
seizure and fines, so make sure your
compliance is absolute.
Japan, for example, requires a
minimum of 8-point type for all label
characters. If the product contains
an allergen – designated by the
government as wheat, buckwheat,
egg, milk, peanuts, shrimp and crab
– the label must say even if only a
derivative was used in creating the
final product.
South Korea requires safety testing
on false eyelashes and says that
imported alcoholic beverages must
list all information in Korean. As
of 2012, South Korea has new
paperwork requirements for U.S.
companies seeking preferential
duties under the U.S. - Korea Fair
Trade Act.
Australia has mandatory safety
standards for everything from
baby bath toys and elastic luggage
straps to textiles and vehicle jacks.
Save time and money by doing the
research first.
Packaging and environmental
considerations
As you frame a branding and
distribution strategy for Asia-Pac
nations, it is a good time to think
about the packaging, from a size
standpoint.
The trend in China and Japan is
toward smaller and more convenient
packaging. This is especially true with
non-food products.
Because Japanese homes are more
compact, slimmer packaging is
preferred over large or bulky products.
In some cases, pet food products
that come in 35 grams at their
smallest in France are available in 10-
gram packages in Japan. Mary Kay,
the cosmetics company, reported
having to shrink its packaging
in China to meet consumer
expectations there.
Another reason for smaller packaging
is the disposal costs that can impact
your margin. In some countries,
such as Japan, manufacturers
and importers are responsible for
the costs of collecting, sorting,
transporting and recycling packaging
materials. This makes packaging an
important aspect not only of your
marketing, but also of your cost-savings
strategy.
See a list of resources
for legal and packaging
compliance for Asia-Pac
countries here:
shipwire.com/hongkong
In Japan,
manufacturers
and distributors
are responsible for
recycling costs
20. 1-888-SHIPWIRE 2185 Park Blvd. | Palo Alto, CA 94306 Page 20
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