HK Chamber May 24 th 2012 Managing effective sales and distribution channels in China

Excellence in Management ™ HK Chamber May 24th 2012 Managing effective sales and distribution channels in China www.PTL-Group.com Zvi Shalgo - CEO, ...
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Excellence in Management ™

HK Chamber May 24th 2012 Managing effective sales and distribution channels in China www.PTL-Group.com

Zvi Shalgo - CEO, PTL Group

Chinese Domestic Market Forces • Multinationals and FIE’s tended to neglect the mid market and focus on top tier clients - no more! • The huge size of the mid market filled up with extremely competitive fast growing local companies • Government supported chosen entrepreneurs to leap forward and compete internationally (OCT 2007 17th Party Congress)

www.PTL-Group.com

Trends in the Chinese market

2011 FIEs 25%

SOEs 12%

DPEs 63%

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“Go-West” policy effect on market Geography

China's provinces: GDP per capita RMB, 2010

Source: Deutsche Bank Research www.PTL-Group.com

China's provinces: Real GDP growth % yoy 2010

From an Investment lead to consumption lead market • • • •

Significant cost increase Industries are pushed to second tier cities Fast growth of middle class purchasing power in 2nd tier cities Government benefits focus: low tech “OUT”, High-tech & innovation is “IN” • Local competition closing technology gaps and aiming to become global players Effective operations and investment in infrastructure has become a top priority in the race towards a competitive advantage

www.PTL-Group.com

What normally goes wrong during penetration to China?

What is your OFFERING to the END USER in China?

RMB price list

Local invoicing

Market image & brand awareness

Technical Features

lead time Payment terms

Market Penetration Most SMEs penetrate the Chinese market with…

one exclusive distributor!

The distributor “DILEMA” • Good distributors grow very fast serving the same captive market customers • Your product/brand becomes a small part of their portfolio fast

One product to many clients

Many products to a few “captive” clients

No special effort is done to market your brand to new potential clients!

Typical industrial sales cycle in China

Project Owner

Engineering / Design Company

Preferred Supplier / Distributor

Bundling with other Manufacturers

Successful market entry

Proactivity

Your own Sales Manager in China

Your own pre-sale / after-sale technical support

Development of parallel distribution channels is a must!

Branding

Price control

Independent logistics/assembly/ manufacturing infrastructure

Industrial Incubation • Fast set up of Manufacturing capabilities • Offering specific critical engineering and managerial added values • “open books” educational orientation • Welcoming flexible ranges of client’s managerial involvement • Outsourcing key support services • Relevant location

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Incubation Concepts Entity Registration

Raw Material Inbound Logistics

Engineering

HR Management

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Recruitment

Process

Localization

Gov’ Relations

Financial Management

Finished Goods w/h Project Management

Out Bound Logistics

Reporting

Critical considerations for incubation Transparency

• Learning curve in China Market

Technical Capabilities

• Specific Engineering know how & experience

IP Control

• Short Term/Long Term Potential competition

General Management Experience

• Real References

Location

• Management cost / Availability

Licenses

• Federal / Provincial / Local

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Taking Advantage of Chinese Gov’ funds • Identify local funds through local contacts • Find your investment leverage • Make higher officials commit to your project • Banks – pledging stock/orders, factoring AR

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Taking Advantage of Chinese Gov’ funds

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What Does PTL Group Do? Management Solutions Outsourcing Operations management for international companies developing their Sales and Distribution in China: logistics, warehousing, HR, finance, marketing

Industrial Projects

Business Recovery

Industrial turnkey project management in China: industrial incubator, Product localization projects

Operational audits, transformation and turnaround of underachieving subsidiaries in china

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Equity Partnerships Joint investments with international companies. BOD active participation. Operational significant cost and risk reduction.

Contact Us: Zvi Shalgo

Shanghai Head Office

Email: [email protected]

Room 301, 798 ZhaoJiaBang Rd.

Cell: +86 13801689447

Shanghai, 200030, P. R. China

Skype: zshalgo

Phone: +86 21 64453190, Fax: +86 21 64453191

Email: [email protected]

www. PTL-Group.com China • Israel • The Netherlands • Italy

www.PTL-Group.com