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)
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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
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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
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