Resources Profile - Aussie

The great majority of Chinese factories are unaware of, or do not understand, Western Standards. This is compounded by little or no knowledge of the subject among most hopeful Western buyers / importers.
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Yet, nothing could be more important than proper Certification for the majority of products / buyers around these good forums.
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COMPULSORY STANDARDS
It is unlawful to import / distribute / resell most health and safety related products in any Western country unless the product is proven to comply with the Standards of the country of resale.

Each (main) country has its own Standard for each of literally thousands of products but particularly for each Health and Safety related product. The good news is that one set of common Standards, with a few minor exceptions, applies for all EU countries (and most EU Standards are the same as most other countries - except USA is mostly out of step with the rest of the world).


In a nutshell, compulsory Certification is necessary in every Western country for many thousands of products, including all mains power electrical products like household appliances and computers and their related cables, adaptors and power packs; and for all wireless products of which there are hundreds (including even Bluetooth type devices and mobile phones); and for all fire related items; and for all construction products of the safety type like goggles you mentioned including some building materials; plus for many auto spare parts; and etc etc ... the list goes on and on.

Other than specific minimum design Standards for each product you also find "general" standards or laws banning items like small toy objects which children might swallow.

Generally, Customs do not police Standards. This is the stuff of a dozen or so Government Departments in each Western country after you import and try to resell the prescribed products (leading to product recalls and prosecutions).

Importantly, lab testing is done on only one (or in some cases several) samples. It is your duty as Importer / Distributor to ensure that ongoing factory production runs are the same quality as the lab tested sample. This is particularly why companies, such as my own, hire professional quality control auditors to regularly inspect our factory suppliers and their QC systems. Regardless of obtaining correct certification and ensuring ongoing factory quality controls, we importers remain liable if somebody is injured or killed by a faulty product. That's because the law in every Western country regards the Importer / Distributor as effectively being the actual manufacturer.

Additionally, sale of certain uncertified products is a criminal offence in all Western countries.

APPROVED LABS

In Western law, only an "approved" laboratory may certify that products comply with Standards. These tests are very expensive (between $10,000 and some $100,000 depending on the product). Effectively, there are no "approved" labs in China (although one in SZ is now approved to test a limited range of products). Only certain labs are "approved" in law in order to avoid cheating and false paperwork.

Certification by an approved lab is compulsory for all prescribed products. The safety goggles you mention would cost around $10,000 to $15,000 to test before they can be lawfully sold in Western countries.

Broadly, products for resale in USA must be tested by an approved lab located within USA. Whereas (and, again speaking only broadly - meaning there are exceptions) you find other countries recognise each other's approved labs to the effect an EU approved lab is recognised by Australia and vice versa and etc etc among other non-USA countries.

So, broadly, you need two approved lab certifications for one product when thinking in global terms - one by a USA approved lab and the other by an EU or Australian (or etc) lab (notwithstanding the two lab tests in USA and EU may effectively be the same tests).

As I said, the above is just talking broadly. Each product needs to be individually researched for compliance laws in different countries. I am unaware of any freely available global "master list" for all products. Consequently, an import newbie is up for around 40 hours of hard swot to work out compliance laws for just one health and safety related product in just one country.

CHINESE FACTORIES

Effectively, Chinese factories / suppliers do not have the Certifications you require to resell their health and safety products in Western countries. Most say they do, but when you investigate you typically find they don't (and you then find they are not prepared to pay the big sums for Western lab certification to enable you to legally re-sell their product in your country).

Consequently, most Certifications are owned by the head Importers / Distributors of health and safety related products. For example, my company pays large sums to get Certifications in our own name and our lab certificates may not be used by other buyers / importers as a matter of law..

When Chinese factories tell you their product is certified, they generally mean one or some of their buyers hold certifications in their own name (which of course is useless to you).

In law, the Western importer cannot rely on ignorance of the law or on false declarations / certificates issued by a Chinese factory if prosecuted for selling uncertified product.

BANNED IMPORTS

The above Standards minefield is complicated by banned imports like lead (exceeding a certain percentage) in paint or like asbestos in brake pads and clutch linings on motor bikes and ATVs ... to name but two among hundreds of banned industrial materials.

Customs do police this area and broadly have power to require lab testing of suspect products at your expense before release of the goods to the importer which can be hugely expensive (massive storage fees for goods in Customs Bonded Warehouses is a racket before you even consider lab test costs). A host of other Government Departments lay in wait in case your banned imports slips through Customs.

PRODUCT WARRANTY AND LIABILITY

Compounding the compulsory certification and banned import issues is the great mass of consumer protection law in every Western country which makes the Importer / Distributor liable for both product warranty and liability to damages arising from injury or death.

Your own insurance policy never covers liability to uncertified products where the law compels certification.

BUSINESS OPPORTUNITY

Actual Standards for specific products can be purchased on the web (typically costing $40 to $150 per product type). SAI Global is agent to sell copies of Australian Standards. Others sell USA and EU Standards.

Consequent upon laws for compulsory product certification and compulsory liability to consumers for faulty product, the world of making real money from importing is really all about getting your act together to comply with the law. Endless opportunity to make serious profit exists in every Western country for those with the capital and tenacity to do things properly.

For one tiny example, you have a thousand or so Chinese factories making pretty good power tools for trades people, but these factories do not have certifications for their products in EU and USA. Spend some money and a up to a year getting the compliance paperwork in place (including a system to handle warranty claims) ... hey presto ... you are suddenly a serious contender to sell certified stuff direct to tradespeople for much less price than usual shop price while turning a good profit. Back of envelope formula for certified stuff which sells in the Wal-Mart's of this world is 400% to 500% mark up over Chinese ex factory price. So, something which costs say $99 at Wal-Mart actually costs about $20 to $25 at the Chinese factory doorstep.

For your mentioned safety goggles, first find yourself a very reliable factory and then pay to get the tests done by an approved lab in the West (for most countries, you then use that lab certificate to apply to respective Governments for proper certification). This process may take 6 to 12 months but is usually a solid investment of capital as few competitors have the compulsory certifications.

Opportunity to properly certify thousands of presently uncertified Chinese products is endless. Serious professional and qualified tradespeople will not touch the seemingly cheap stuff on the likes of EBay because they know it is uncertified. Nor will bricks and mortar retailers buy uncertified product from you.

The necessity for certification of all health and safety related products (together with the need to establish a product warranty system) is why you find mainly specialised Importers / Distributors dealing in these products.

If you are a tiny business just starting out with no capital, grab a couple of investors and get some good products certified ... that's how you make serious profit from importing. I could tell you of literally hundreds of opportunities going begging for which I don't have time to consider adding to my company's lines. For example, a Photo Electric smoke alarm costs no less than $10 to $15 retail in USA. But. top quality stuff can be bought ex-factory in China for $2.30. Spend $100k to get UL lab certification in USA for these smoke alarms and you are sitting on a million dollar per year profit gold mine. As I said, that's just one of hundreds of potential high profit products for importers willing to properly do business.

The above legal considerations are the tip of reasons why importing any of the thousands of health and safety related products does not work for typical small buyers.

Take care friends.

Marketing and Business Planning

Chapters in this Article:
1. Nine out of ten new businesses go broke
2. "Marketing" and "Selling" - and the difference between the two
3. A Marketing Budget is essential
4. Financial Modelling
5. The Business Plan
6. Work Diary
7. Summary of essential planning tools

1. NINE OUT OF TEN NEW BUSINESSES GO BROKE

First a little reality check.

Nail a sign above your desk saying "9 out of 10 new businesses go broke in the first 12 months".

It's a statistical fact that around 85% of all new business start-ups in the Western world (save for old Europe) go broke in the first 12 months. That's for every sort of business, not just import-export. I am not colouring the subject - those are the hard cold facts.

If I had to pick just one key reason for that awful statistic, I would boil it down to living on hope rather than living on reality.

Were do I find reality?

It's all about putting precise marketing and business plans on paper. It's about bouncing your written plans off experienced people. Not "yes" people like friends and family. Bounce the plans off hard nosed business people who've made the grade - people who failed and came back and then failed and came back again. People who at the end of the day were successful.

Say to a successful business person "Here's a business plan. Pretend you paid me $5,000 to write it for you. What do you think?"

You won't find a better way to avoid going broke than that method.

Bottom line ... get rid of "hope". Work on "reality" and you're looking good.

2. 'MARKETING AND SELLING - AND THE DIFFERENCE BETWEEN THE TWO

"Marketing" is not "Sales". It's critical to know the difference.

Broadly, Marketing creates the atmosphere to make it easy for sales to happen. Marketing consists things like:

Marketing Strategy: your product must be aimed at consumers in one only of the Mass Market, Mid-Market or High End (only one product in the entire history of marketing has ever succeeded in all three of those consumer areas). Aiming your product at all three in a shotgun approach confuses consumers resulting in your business going broke.

Target Market: strategy includes identifying a specific group of consumers (age bracket, etc) within your one Mass, Mid or High End market area. The better we identify our target group, the easier it is to make sales.

Research your competitors - "know your enemy".

Point of Difference or Unique Selling Proposition (USP) as it is sometimes called. Why should a customer walk past my competitors to come to me?

Writing our marketing material: brochures, adverts, websites, etc, all precisely pitched to our Target Market.

Developing our brand names and good reputation ('Image'). Chasing free editorial.

Devising tactics to turn first time buyers into repeat customers.

And, the list goes on and on ... marketing is anything that creates atmosphere to make it easier for sales to happen.

In my book, the most critical of all above is your Point of Difference or USP.

"Sales" obviously is getting out and writing the orders ... tough disciplined work. This involves skills like "closing" the sale - very different skills to Marketing.

A marketer is a creative person, a law unto himself, a person with few boundaries, a person who lives inside the head of your customer, a person who dreams and creates at any/all hours of day and night, a person who can send normal disciplined people crazy.

For a marketer, the thrill of the chase is creating original thinking / products - original ideas that work, ideas that nobody else thought about. Top marketers are some of the world's highest paid professional people.

A salesperson, unlike a marketer, is a well disciplined person who works within a tight set of conventional rules to get the sales orders. A salesperson is motivated by the thrill of closing a deal and the attendant cash bonus. You drive a good sales person crazy when you don't give him/her sound marketing back up.

Good sales people do not make good marketers and vice versa ... Selling and Marketing are very separate disciplines involving very different ways of thinking.

While actual selling is a tough game, I rank it third in terms of toughness behind Marketing (by far the most difficult of any business activity) and then Administration. Get the marketing right and sales near automatically follow.

3. A MARKETING BUDGET IS ESSENTIAL

Chaos occurs when (particularly) a mid-size business instructs its salespeople to do the marketing. It's happening in most mid-size Chinese manufacturing companies today. It's sending both Chinese salespeople and potential Western buyers crazy - the clear lack of defined Mission, Image and professional Marketing Material is causing chaos between staff salespeople and potential buyers. The same happens in Western countries when a business owner tries to be both seller and marketer.

Mum and Dad shop-front small business happily gets away with no marketer because these businesses thrive mostly on word-of-mouth where customers themselves do most of the marketing. They sensibly get marketing help for things like Glossies and Image.

Too many small biz websites don't work because they are designed / written by a good owner or salesperson instead of by a marketer. The salesperson sees the world from his/her viewpoint whereas a marketer sees only what the potential buyer sees. In particular, owners like to start by talking about themselves - the very last thing a potential buyer wants to hear in opening paragraphs.

Unless you have extraordinary talents, you cannot be both a Seller and a Marketer.

No matter what your business, you will likely not succeed unless you pay money for outside marketing help even in some small way.

4. FINANCIAL MODELLING

In order to prepare a Business Plan we must have basic financial modeling skills.

The many different costs in the whole activity chain of buying something out of say China for resale in your own country must be punched into a financial model on your computer. Typical software lets you automatically calculate % costs etc and see the bottom line projected profit. Change any line item and the bottom line profit automatically changes. Such software and the skill to use it is essential in even the most tiny trading business.

About 5 hours of your time spent learning the basics of financial modelling, on something like Excel, is essential. Without those skills, you're back in the "nine out of ten go broke" league.

5. THE BUSINESS PLAN

A Business Plan can be written anyway you want it. These four compartments work for both tiny and large business:

Mission Statement
Objectives
Milestones
Budgets

MISSION STATEMENT, in my book, is one precise single sentence stuck in the brain, like "I shall be the leading supplier of Widgets for the mass market in my State".

Mission clarity and precision makes all future decisions much easier. Any issue at hand either fits the Mission or it doesn't. For example, the above Mission says "mass market" so product quality is hardly an issue - all that really matters in the mass market is price. Having a clear simple Mission statement eliminates time wasting thoughts. A generalised Mission of "I am going into the import business" is a recipe for doom.

Importantly, our sub-conscious mind does wonderful things when we have a clear long term goal. Our subconscious automatically keeps us on track - guides us along the shortest path to our goal. In absence of a clear simple goal we tend to wander in a criss-cross path covering maybe 10 times more area than necessary. Little is more powerful than our subconscious mind at work on our goal - it ticks away while we are asleep at work or at play. Know your clear goal and your subconscious will somehow make you get there ... just keep the Mission words simple.

OBJECTIVES is the general master plan to achieve the Mission. It's the steps to reach the top of the ladder. It's a spreadsheet of number of years / product variations / geography or whatever as necessary to achieve the Mission. Like, year 1 = $x sales at Timbuktu / other. Year 2 = $x at Whatchama. Timing to complete each objective is important. But, go easy on objectives for the first year where just achieving break-even is a prize.

We periodically review /adjust/change our Objectives according to actual found conditions from year to year, but our Mission itself never changes. Our Objectives should consume no more than one page - a sort of general 3 or 5 year plan if you like.

MILESTONES - the same as those mileage stones you whiz by on the side of a highway journey. Each marks one mile of a journey. This is short term detailed planning for the first year ahead.

Go to the year one Objective. Compile a list of the various elements of marketing, finances, etc necessary to reach that year one objective. Each one of these elements is a Milestone - one step closer to the end of the journey. Research / work out / write down what must be done to get past each Milestone while noting the costs.

BUDGETS. Year one Budget now automatically falls into place - each budget sub-heading is one of those Milestones. We see these milestones whizzing by once we get the business up and going.

6. WORK DIARY

Executing our Business Plan is near impossible without a full and proper work diary.

The only thing I have ever seen in common between top self-made successful people is that each runs a superior diary system for staying organised. I have noticed that things like education, background and IQ seem to have nothing to do with breaking through to top echelon level of business success.

However, I have never seen a single top echelon self-made person who does not run a superior diary system for staying organised.

A proper diary system results in a permanently clear mind free of those nagging "What did I forget" sort of feelings. It frees the mind to deal with real business in a very organised way.

The way to start a diary system is to empty the head of every specific thing to do that is on the mind. Scatter these items through the diary days, weeks and months ahead. Things like phone calls to be made, physical things to day both in the office and outside. Particular things to ask particular people. Then, whenever something comes to mind that must be done, just write it in the diary - both personal and business matters. After a week or so this becomes an auto habit without second thought. The head becomes completely empty of "What must I do" stuff.

Importantly, a good diary must also contain promises made by others to get back in touch. For example, in a phone discussion today, the other person promises to ring back with info in a day or day. Immediately go a few days ahead in the diary and note the persons name in the phone call section on the diary page. Denote the difference between calls expected from others and calls you must make by using simple little symbols. Business life, to a great extent, relies on promises made by others. These promises must be tracked / followed up.

Critically, each diary page must be closed off each day. Transfer things not done today to future days and then slash a line through the page. That way, it's impossible to ever forget to do anything or forget to chase people who made promises to you.

7. THE ESSENTIALS

If I had to start a new business limited to the most basic tools, I would select in this priority (all essential for even the most tiny business):

- Clear Mission statement
- Proper Work Diary
- Budget and Financing
- Point of Difference or USP (why a consumer should walk past my competitor and come to me).
- Repeat Customers (devising tactics to turn first time customers into repeat customers because a repeat customer is pure gold).
- Corporate or Brand Image (today's consumers buy "image" they do not buy "product" - your product is image, image is your product).

Never blame your sales people if you are not getting sales - the fault likely lies in half-baked or non-existent marketing. Your marketing must create the atmosphere to make it easy for sales to happen. That done, your sales people (or your website) can then bring loads of money home for you to count.
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I trust my experience at the coal face may help somebody in some small way.