By Wu Yi & Tom LaVenture
AAP staff writers
MINNEAPOLIS (December 1, 2010) – Shean Ferrell, a managing partner of Pellegrene, Ferrell and Associates, shared his real-life experience working with Chinese manufacturers to affordably bring his product ideas to market. Ferrell was a guest presenter at the December monthly breakfast networking event of US China Business Connections at Dunwoody College, where he spoke on the topic, “U.S. Retail and China Manufacturing: How to operate a lean company to drive maximum sales and profitability.”
More than 60 people attended the event and learned from Ferrell that he came out of the U.S. Air Force a successful manager and with all the confidence in the world to start his own business. However, he said it was only good fortune that when his first business failed he had only invested a lot of time and not money into the project.
Then, he slowly developed an idea that eventually became a consulting group on brand and product development, manufacturing and sales for manufacturers and retailers.
PF&A is now a leading manufacture, marketing and sales firm the of consumer electronics, appliances, apparel and textile products worldwide. Ferrell said partnering with Chinese manufacturers helps cut a lot of expensive R&D and mock-up engineering costs that can be so cost-prohibitive in the U.S. that it can delete the profit margin. It is all an internal component of manufacturers looking for your business in China, he added.
Ferrell outlined a meticulous process that he said requires a sense of awareness about how to move the idea through a process of networking and product review to determine needs for improvement or change. Once an idea can be developed into a business formula then determine the appropriate partners and manufacturers.
Ferrell said a large cause of failure in the U.S. is management setting up too many staff and too much overhead before the product ever gets started. He said most of the work could be done on your own and with a few dedicated partners. It requires “due diligence” with following up to ensure what needs to be done today does not wait for tomorrow.
China offers ready-made resources that allow you to minimize corporate overhead. He said there are talent pools readily available and waiting for business, with factory and character evaluations to prove past performance.
A Chinese manufacturer can produce a CAD example that could be a project stopping pre-engineering cost in the U.S. The factories can actually help improve existing designs, he added.
The quality assurance reduces the risk of hazardous materials or design flaws and testing prior to new product launches. He said using on order manufacturing avoids mass production without demand that is another costly habit that amounts to big failure if the product doesn’t move.
Depending on the business structure, whether import, domestic or an free carrier (FCA), he said why take the unnecessary risks when its possible to take an order and have it produced and shipped as needed?
Social media is also a big part of contemporary international manufacturing. He encouraged people to get to know how to utilizes sites like Linkedin to discover inside connections when you are looking for a job or new business opportunities. He said Alibaba.com offers lists of quality manufacturers, suppliers, exporters, importers, buyers, wholesalers, products and trade leads.
He said IX web hosting offers affordable websites and domains. Large files that are too big for emails are a big concern when the distant end doesn’t understand FTP transfer protocols, and sites like FZ make sending huge files possible for little or nothing.
He said Skype eliminates expensive communications costs by talking over the internet. Google Earth allows a mapping and in many cases a photo of the factories you are scouting.
One question following the presentation had to do with regulations and laws, and what is the future of US and China business.
“Incredibly optimistic,” he replied. “China is opened up to opportunities in factories, and there is not enough deals to support the factories.”
The attendants had a variety of backgrounds and professions. Some had vast experience in China while others were there to learn.
Bill Bennet, owner and vice president of Worldview Food Products, said the UCBC events are a good way to exchange knowledge and to network with people. He said the Chinese economy is creating wealth that will be eager to buy western goods and the people that can market effectively to the right sectors will have an advantage.
“China’s next step is to domestic market,” said Bennet.
Nick Carmichael, the U.S. based Business Development Manager for Tractus in Asia, said as a consultant he came here to find people who want to do business in China. He said China has peculiar issues from its boom including overbuilding its factories. He said a company is wise to get good advice before looking at the wealth of opportunities because there are risks that can be avoided.
“The next 10 years will be to sell products in China or Asia,” said Carmichael. “The last 10 years was about exporting.”