Sales Rep Hired Gun - PowerPoint
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Selling to Asian OEMs Ed Benjamin Why Asian OEMs? Most LEV manufacturing is now done in Asia due to several factors: 1. The large markets for electric bikes in China, Japan, and soon India have created economies of scale on all component parts and production. 2. Low wages combined with good technical skills in vehicle assembly, electrical components, batteries and motors expertise. 3. Excellent manufacturing infrastructure, and process is available. 4. Most components are made in Asia. 5. Most Western LEV product is made in Asia. Opportunities at Asian OEMs Production of LEVs in China in 2008 should exceed 22 million pieces. China, SE Asia, South Asia, Japan, and the Island nations NEED Light Electric Vehicles. China is the “factory floor” for this type product for the world. Asian companies are, often, very professional and interested in long term win / win relationships. Challenges in Working With Asian OEMs. • Communications often a problem, for language, time of day, and cultural reasons. • Business practices are different. Assumptions are usually wrong. Cultural issues are sources of trouble – often. • Fraud and near fraudulent practices are common. • IP is at risk, copies are rampant. • Quality issues are normal. Perception of quality is different between cultures. • There is no practical resort to legal recourse. • Easy to create a poor relationship, or to have a good relationship deteriorate. • Sales approach must be different! How to… Identify an appropriate customer, develop a relationship that will result in an opportunity to sell inside a profitable relationship. Here is some insight… Identify Potential Customers in Several Ways… What Markets can you serve especially well? What companies serve those markets? Who are the bosses of those companies and what are their needs and priorities? Who are the designers and product managers at those companies? Where and how is the competition affecting your list of potential customers? Boil the List Down to Individuals You Need to Meet Once you have a list of the people you need to meet…. You need an introduction… Introductions are not a simple matter. In many Asian cultures, to introduce someone is to also take some responsibility for that person’s actions, honesty, etc. How to Get Introduced • Work your existing relationships, or hire someone with existing relationships to work your way into your list. Usually, you know someone who knows someone who can introduce you (if they choose to do so). • Be famous, give speeches, go to many events. You will meet many people. • Cold calling does not, usually, work. At all. Send Important People • It is normal to hear an Asian say he wants to know the boss of a supplier before he will do business. The real boss, not the hired gun or the salesman. • Hired staff change jobs, salesmen and sales mangers have limited authority. • If the relationship will be truly big and successful, then a decades long relationship will be needed between the real bosses of both companies. • This is not easy for busy bosses on different continents. Nor is it happy news for sales teams. But it is reality to the Asians. • A VP who is long term, and does have the authority, and is a significant share holder can substitute. Friendship and Mutual Self Interest are More Powerful Than Contracts! • Create a relationship where you both benefit from each other’s success. • Become and be friends. • Help each other, really, and on several levels. (Help his kids get into a US University, host his relatives when they visit Las Vegas, etc.) • The difficult times are the true test of the relationship, and the time when it is most important. Making Friends in Another Culture is Not Simple • Everyone that wishes you to give them money, or help them make money will assure you that they are your friend. • Just getting drunk together does not mean that you are friends. • Trust must be developed. And tested, and shown to be real. • A good fight, successfully resolved, is a good test of the relationship. But keep them few and seldom. Be Prepared – “I’ll get back to you on that” can be end of chance. Some points to consider: 1. Does the product fit the legal requirements of your target customer? 2. What will be required to make it fit? (or to homologate it?) 3. Does this product already exist in the market? 4. Is it an infringement of someone else’s IP? How to explain your IP? 5. Is it large enough, strong enough? 6. Is the fit and finish acceptable to your customers? 7. Is the reliability adequate? 8. What warranty can be offered? 9. What is the standard packaging? 10. How would warranty be serviced? 11. Is the product sold to others in their market? 12. What agreements can or cannot be made to limit sales of this product to others in your market? 13. How honest and reliable is this customer? 14. How can you demonstrate your own honesty and reliability? 15. How much quantity and what schedule of purchases will work for both parites? 16. Are there alternative suppliers? 17. Who will register marks, create owner’s manual, attend to warning labels, etc.? 18. What is your price? Shipping cost? Taxes or duties? 19. How will you handle sticker shock or other price objections? Account Reps Do the Work, Get Good Ones! • Once the bosses have opened the doors, the daily work will fall to the lower level staff. • That staff must be able to resolve problems and get things done across cultural, time zone, and geographic barriers. • Long term people, with language and cross cultural skills are necessary. • Culture is OFTEN a source of conflict and problems. Do not underestimate this. Bosses Agree, but Staff Finds Problems… • It is normal for the big bosses to easily come to an agreement – in principle – on the big picture. It is also normal for the account rep, or technical staff to find many, many issues that must be worked through. Often seemingly in violation of the agreement between the big bosses. Asians expect this. To them a “handshake” or a contract is the start of a process to get to a working agreement. They know and expect the details (including price) to be worked out at a lower level, and probably with some pain. Be Cautious About Money • Extending credit may be necessary. • Extending credit may be dangerous. How you handle this issue can be critical. Really knowing your partner / customer is vital. And…which currency you use and what plans you (mutually) have for currency fluctuations are important issues. Technical Support • You can expect that your customer will not be as sophisticated as you hope on technical issues. However, they may surprise you. • Your technical support rep is as important a person as your account rep. And they need similar expertise in communication, cultural issues, and language. • Your tech rep will probably spend long periods living in Asia. They need to be ready for this. Engineering Communications • There are always mis communications on engineering issues. • Translators that are expert on the issues and vocabulary of the LEV business are needed. • Working with the same software (usually Solidworks) is necessary. • Thoughtful awareness of major differences in the background, education and skill sets of Chinese and Western engineers is necessary. • A cautious, everything has a backup, test it and test it again, approach is needed. Have the Ability to Diagnose and Test in House and in the Field • There will be quality and technical problems. • You will need the ability to identify, describe, and communicate each way the issues and necessary changes. • Be ready to make changes. Resistance on this point is usually not in your best interest. Warranties • A warranty, which must include details on how it will be executed…is louder than words. • Expect the Asian company to pay close attention to your warranty promises and how you handle them. Be Sure What The Customer Ordered Is What They Get! • Be at the customer at the time your goods are received. Be ready to react to mistakes or misunderstandings quickly and clearly. • Get their reps to be at your plant during assembly and testing of their goods. Be sure what goes into the box and into the container is what they wanted. • Language, tact, and determination will be tested during these events. • Handling them correctly will save you enormous money, time, and trouble. What is “Qualifying a Customer”? A prospective customer should be examined for: 1. Communications capability. Do they understand you? Do you understand them? What backup or third party do you have to rely on? 2. Product Development Resources – can they develop the product? 3. Sales Capability – can they sell the prodcut. 4. Business practices. Are they honest and consistent? Are you both on the same page about the myriad details of business relationships? Do they pay their bills? 5. Do they need you? Can you satisfy their needs for predictable volumes? 6. Can you resolve problems together? Unqualified Customer • There are customers who want to buy, but will fail in the market. Or fail with you. Don’t make the deal. Back out in a way that leaves the door open. Chinese Electric Bike OEMs as an Example • More than 360 “manufacturers”. • Most are actually “kit assemblers” of product made by others. • Only a few have true manufacturing capabilities – maybe 40- 50. • Of those, only a handful 10-12 want or need export business at this time. • Of those, only 2-3 have good English skills in their top management, and a history of good quality and good business practices. • Of those, most are very busy and have customers in the most desirable markets. • What seemed to be a generous supply of prospects boils down to a handful. What About Trading Companies? • A trading company’s role is to be a communication conduit and a trouble shooter. • If they are doing their job, they are worth the extra cost they create. • Most trading companies do not have the skills necessary to be effective in LEV business.