Dr. Ecommerce Home


Ask Dr. Ecommerce a question

Q&A Alert
Latest Questions
Archives 2001
Archives 2000
Archives 1999
FAQ
Legal questions
European Institutions
Nat'l & local government
Technologies
Marketing & Selling
Definitions and Philosophy
How do I do it?
Money
General e-commerce

eThesis home
Universities and schools
eThesis best links

About Dr. Ecommerce
Discussion lists
In the news
Dr. Ecommerce speaks out

Board of experts
Legal guide
Statistics

14 Nov 2000, USA

Dear Doctor

How are manufacturers handling channels conflict, especially in Asian countries?

In the US, it is very much accepted now, but what are the good considerations a manufacturer with many partners (distributors, resellers and sales reps) should take before considering setting up in Asia: China, Korea, India, HK, Australia, New Zealand, Philippines, Malaysia, Thailand, Taiwan, Singapore, Japan, Indonesia?

Look forward hearing from you

cheers

Glen

Dear Glen:

In my experience with Chinese run business (note the Chinese essentially run business in all the countries you mention aside from Japan, Australia and New Zealand), the key is relationships. Indeed, among the older generation of Chinese businesspeople, relationships are considered more important than traditional contracts. However, a lot of the new generation of Chinese businesspeople are doing MBA courses in America and their approach to business is much more western, although relationships are still important.

Hence, it is critical that you don't simply sign contracts with your Asian channel partners, but that you visit them, go drinking with them and sing loudly and out of tune with them at Karaoke bars. And, frankly, a night on the town with your channel partners is probably a lot more fun than an afternoon at the negotiating table!

Australians and New Zealanders, however, have a much more American approach to business, although they certainly aren't adverse to having a good time with their business partners!

I asked marketing wizard Ryan Minor of Allaire Corp for his input and he adds:

"I spoke to one of my contacts, who has spent most of the last 10 years, in Japan about this, and here were some of his observations that might be relevant:

Proper introductions are a must to establish a relationship. The first question in Japan is apparently, "Were you referred by a trusted party?"

My contact also verified that, at least in Japan, relationships are becoming more cut-throat and that there is no guarantee that you won't be dumped when a better deal comes along.

Relationships are less of an issue in the high-tech field; the concern there is the quality and stature of the vendor and product, which they equate with sale-ability. Testimonials and reputation can help certain vendors get into channel arrangements without proper introductions.

I have seen that a lot of U.S. companies give their Japanese channel partners considerable amounts of freedom, largely due to the difficulties in navigating and servicing the Japanese market. U.S. companies also look at the reputation of the prospective channel partner and feel more comfortable going with a global "name" company such as Mitsubishi."

I also put your question to international marketing consultant Michael Richter for his thoughts and he sums up:

"1. just go ahead in New Zealand and Australia as you would in the US and;
2. in 'real Asian countries' stick to one 'entry point/general
responsible/partner' and build up together with your partner the network needed, oriented at the needs of the US-manufacturer and the acceptance in that specific country."

Good luck,

Dr. Ecommerce