available in:
 12 Apr 2013 08:00 -0400
 Daniel Sperling-Horowitz



Is your marketing plan optimized for successful brand development in the United States?



Suppliers are tired of B2B trade websites. Downright exhausted, and we don’t blame you.


Everywhere you look on the Internet, there seems to be a new B2B site. Since the rise of, the list has become excessive.


As a supplier it’s overwhelming.

It’s overwhelming to be bombarded by so many aggressive salesmen for these marketplaces. Day after day you are called, emailed, and visited at the office, a serious distraction to work responsibilities.


Once you have registered for more than one site, it’s overwhelming to manage all of these profiles. How you keep your company information and product catalog up-to-date across multiple sites is a wonder to us.


And what percentage of buyer inquiries are a complete waste of time? Overseas sales managers, sales engineers, and executives have enough difficulties growing the company during challenging global economic times. Now add in the never ending process of filtering inquiries all while trying to remain professional lest you mistake a legitimate prospective trading partner for a waste of your time.


What is a Destination Site?

Destination sites are single websites (or a family of websites) that aggregate supply from multiple vendors. All traditional B2B sites are destination sites. Destination sites with great reputation among buyers are excellent channels to develop your business. There are, however, several issues with destination sites.


Problems with destination sites.

The biggest problem with destination websites is the fact that the buyer must make a conscious decision and effort to visit the site. Further, the buyer must then find your profile. If your supplier profile is not prioritized with search rankings, or emailed to visitors based on prior search and inquiry behavior, then visitors will most likely not end up discovering your supplier profile.  


Most destination sites for international trade are not selective. There is an abundance of suppliers in each particular product category. The website operator is not making an effort to generate sales for your company, so much as they are playing a numbers game to generate the most revenue from supplier memberships in the aggregate.


This leads us to our final point; if the destination site has a bad reputation amongst international buyers, your company is guilty by association. Yes, that’s right. Many buy-side professionals, especially those who are sourcing experts, will not do business with suppliers listed on destination sites with poor reputations - at least not directly. If they do business with suppliers listed on these sites, chances are, the fact that you are listed on this site played little to no role in their decision making process.


What is a Dynamic Platform?

Dynamic trade platforms are single websites that are connected to multiple, targeted sales channels. Dynamic platforms offer suppliers the ability to target relevant buyers (consumers and businesses) across a mix of sales channels. To our knowledge there is only one dynamic platform for foreign suppliers selling into the United States, HDTS.


Benefits of dynamic platforms.

Manage your product catalog from one centralized location. Your product listings on our mix of sales channels is automatically updated.


Gain targeted access to a powerful mix of relevant sales channels. These channels include eCommerce marketplaces, branded loyalty programs of Fortune 500 corporations, flash deal sites, and resellers - online storefronts, retailers, and distributors.


This gives you the ultimate control over your downstream supply chain. Don’t want your brand associated with a certain channel? No problem. Want to prevent price erosion - selling below your minimum advertised pricing policy? Dynamic platforms have your back.


Since dynamic platforms extend all the way to the end consumer, they must also integrate with fulfillment solutions to ensure orders placed through various sales channels are fulfilled quickly and accurately. Just imagine the end customer’s feeling towards your brand when they receive their order - from inventory managed in the United States - within 2 days (ground shipping), with a personalized message thanking them for their business, promoting your brand, and incentivizing repeat business.


Finally, because dynamic platforms play an instrumental role in end customer experience through various channel partners, they must make sure that only the best suppliers can participate on their platform. This means, if selected, your company will not be buried beneath a sea of competitors.


If you’re looking to build your brand successfully in the United States - in a cost and time effective manner with ultimate control - it’s time you add a dynamic platform to your marketing plan.

Contact HDTS at [email protected] to get started.

comments powered by Disqus
available in:
 2 Apr 2013 08:00 -0400
 Daniel Sperling-Horowitz, Daniel Sugarman

Look around your house, look around your office. What percentage of products - furniture, fashion and accessories, electronics, housewares, appliances - do you think were made in China? Based on market data, chances are that number is close to 50%.


Now name one Chinese brand. Commence awkward silence. Do we hear crickets chirping?


Using Survata, a web-based market research service, we asked 1,500 Americans the following question; “Name the Chinese brands with which you are most familiar (list up to 5 brands).” The results were startling. 94% of Americans surveyed could not name one Chinese brand.


The 5 most frequently listed Chinese brands:


Brand / Company

% of Respondents




Consumer Electronics



Internet, Search



Telecom & Consumer Electronics



Home Appliances

Air China




The Ultimate Paradox

China is the world’s second largest economy and nearly 50% of all durable consumer goods purchased in the United States are made in China. How can it be that only 6% of Americans can name one Chinese brand?


Anyone who attended the 2013 Consumer Electronic Show knows that Chinese brands are trying to break out in the US. Hisense, ZTE, Huawei, Chonghong, K-Touch, and TCL were all present, however, many of these firms committed the 4 Fatal Mistakes of Trade Show Marketing.


Why is Chinese brand awareness so low among American consumers?

Besides the stereotypical ignorance which Americans are often (unfairly in this case) accused of, there are some very good reasons for such poor Chinese brand recognition.


Focus on China. It’s early in the development of Chinese brands. We understand this. Many Chinese companies are focused on establishing their brands – and perfecting their offerings – in the Chinese market, and therefore have not dedicated the resources necessary to enter the United States Market. The Chinese economy is growing significantly faster than the US economy, fueled by 4 times the number of addressable consumers. Brands that solidify their place in the Chinese domestic market stand to reap enormous rewards moving forward.


Buy vs. Build. Well-capitalized Chinese firms that have entered the US and international markets frequently elect to acquire Western companies with a pre-existing footprint - market share and brand recognition – rather than pursue organic growth which is seen as slow and uncertain. For Chinese management that may not have a firm grasp of the nuances of American consumer preference and effective market development strategy, pursuing growth through acquisition is a logical and commendable choice. This method became gained further appeal when the 2008 global economic crisis presented many acquisition targets at wonderful valuations.


Well-known acquisitions include Lenovo’s takeover of IBM’s PC business in 2005, and Geely’s acquisition of Volvo from Ford in 2010.


Poor US Market Development Strategy and Execution. When entering the US market there are many nuances that Chinese companies need to consider. These nuances range from consumer preference and expectations (design, functionality and pricing), communication, and identification of relevant sales channels. Of the surprisingly low number of companies that enter the US market we see a common theme of poor strategy and execution that does not properly consider the aforementioned nuances.


Why should Chinese companies develop brands and enter the US market?

According to the United States Bureau of Economic Analysis, consumer spending on durable goods is expected to reach $1.26 Trillion in 2013, while per capita disposable income is $38,000. This alone is reason enough to seriously consider US market entrance.


A more ominous reason looms. The costs of doing business in China are rising, and putting enormous pressure on manufacturers to remain profitable. Labor wages and real estate are rising at 15-20% year-over-year. Commodity prices have inflated substantially since the global economic crisis, and - due to strong growth in demand from emerging markets - it doesn’t look like there will be a material reversal of this trend.


Since contract manufacturers provide a commoditized service, brand owners frequently migrate production to the lowest price bidder. Mega contract manufacturers like Hon Hai Precision Industry (Foxconn) are able to achieve economies of scale and invest in highly efficient production equipment, further increasing competitive challenges.


Brands make a disproportionate amount of the profit. Consumers pay a premium for brands. A case study is the relationship between Apple and Hon Hai Precision Industry. Hon Hai Precision Industry provides contract manufacturing services for Apple and other major electronics brands. Each of these companies are leaders in their respective industries. From 2007 to 2012, Foxconn’s profit margin has been in steady decline ranging from 3.7% to 0.9%. During this same timeframe, Apple’s profit margin has strengthened from 18.7% to 32.8% (25.35% as of year end 2012).



In our recent INSIGHTS article, Brand or Die, we make the case that OEM is like a dangerous drug that the Chinese economy is addicted to, which will have deadly consequences for unbranded contract manufacturers.


At HDTS, we see a more strategic reason to enter the US market. That is, to gain US consumer validation which will ultimately assist with your domestic (China) market development. By introducing your product and brand to the US market and establishing a close feedback dialogue with your early adopters, you will gain valuable feedback that will help enhance your product offering. International success and an improved product offering will amplify your credibility and appeal among target consumers in China. We call this the multiplicative effect of US-Sino market development.


Chinese Brands To Look Out For

So which are the Chinese consumer product brands to take note of? Here’s our list of major Chinese brands that you can expect to see a lot more of moving forward. Many will become household names. 

Company / Brand





Belle International



Electric Vehicles, Lighting, Energy Storage


Personal Care & Home Appliances


Home Appliances, Consumer Electronics


Consumer Electronics


Telecom, Consumer Electronics


Consumer Electronics, Home Appliances


Consumer Electronics

Li Ning



Consumer Electronics

Little Swan

Home Appliances


Home Appliances




Consumer Electronics


Consumer Electronics




Consumer Electronics


Consumer Electronics


Telecom, Consumer Electronics


Survey results, at a glance:

  • 1,403 of 1,500 respondents (94%) were unable to name a Chinese brand.

  • 9 of 1,500 respondents (0.6%) were able to name 5 Chinese brands.

  • 10% of men can identify at least one Chinese brand vs 4% of women.

  • Awareness of Chinese brands increases monotonically with age bracket: 4.7% for 13-17 year, 4.9% for 18-22 years, 5.4% for 23-29 years, 6.0% for 30-39 years, 11.5% for 40+ years.

  • The most frequently listed Chinese brands were: Lenovo (38 respondents), Baidu (18), Huawei (16), Haier (13), and Air China (13).

  • 63% of respondents that could name one brand named Lenovo.

  • 4% of respondents named a Chinese consumer brand, 0.8% can named 2, .07% can name 5

  • Among the brands frequently listed by respondents asked to name Chinese brands were a number of Japanese, Korean, and American companies: Toyota (28 respondents, Japan); Sony (22, Japan); Honda (19, Japan); Samsung (18, Korea); and Nike (14, USA).


As a control, we asked 500 Americans to “Name the Japanese brands with which you are most familiar (list up to 5 brands).”

  • 293 of 500 respondents (59%) were unable to name a Japanese brand.

  • 37 of 500 respondents (7%) were able to name 5 Japanese brands.

  • Gender: 60% female, 40% male
  • Age: 17% 13-17yrs, 24% 18-22yrs, 20% 23-29yrs, 14% 30-30yrs, 25% 40+ yrs
  • 48.5% of men can identify at least one Japanese brand vs 36.8% of women


About this survey

This survey was commissioned by HDTS and conducted by Survata, a web-based market research service. Responses were normalized by a Survata analyst to standardize spellings and semantics. Brands were mapped to the country of the corporate headquarters using Wikipedia and the brand's website. Survey participants were 55% female and 45% male. The age distribution was 15% 13-17 years, 26% 18-22 years, 20% 23-29 years, 15% 30-39 years, 24% 40+ years.


About HDTS

When it comes to durable goods, the consumer has many choices. Positioning your brand effectively is the key to brand recognition and long term value creation. At HD Trade Services (HDTS), we combine local market expertise and distribution technology to empower leading consumer product companies to profitably and quickly gain brand recognition and market share in foreign markets by targeting relevant consumers and sales channels. Our core focus is helping industry leading Chinese brands with United States market development.


 21 Mar 2013 15:57 -0400
 HDTS Media Admin


HDTS catches up with Hisense at the 2013 Consumer Electronics Show. From the world’s largest LED TV (110”) to some impressive and powerful tablets scheduled to ship later this year, Hisense is emerging as a Chinese brand with major international potential. Remarkable design, functionality and quality. Hisense has the complete product line and everything it takes to be a contender.

available in:
 19 Mar 2013 08:00 -0400
 Daniel Sperling-Horowitz

Chinese manufacturers face a frightening reality; develop a brand strategy, or die.


At HDTS, we work with many Chinese consumer products suppliers who are entirely focused on unbranded services. Frankly, this scares us. As thought leaders, we feel an immense responsibility to speak up - loudly - and let Chinese OEM and ODM contract manufacturers know that, if they do not quickly begin implementing a brand strategy, they will not survive.


In this report we will explain why this situation holds true and how Chinese suppliers can take action to ensure their success and longevity.


Rising input costs.

The costs of doing business in China are rising, and putting enormous pressure on manufacturers to remain profitable. Labor wages and real estate are rising at 15-20% year-over-year. Commodity prices have inflated substantially since the global economic crisis, and - due to strong growth in demand from emerging markets - it doesn’t look like there will be a material reversal of this trend.


Changing US consumer behavior.

Although consumer confidence in the United States is slowly rising, the engine that once powered strong demand for goods manufactured in China is sputtering. Rising living costs, stagnant wages, continued high unemployment, and job insecurity have changed the spending habits of US consumers who are now more cost conscious. Add in downward pricing pressures from eCommerce giants like, and it makes sense that retail price inflation for most goods has not kept pace with the underlying rise in manufacturing costs.


This means there is less margin or profit available for manufacturers, retailers and brands. But who loses?  


When margins contract, contract manufacturers lose, every time.

Since OEM and ODM manufacturers provide a commoditized service, brand owners frequently migrate production to the lowest price bidder. Mega contract manufacturers like Hon Hai Precision Industry (Foxconn) are able to achieve economies of scale and invest in highly efficient production equipment, further increasing competitive challenges.


Understanding the value chain.

Brands make a disproportionate amount of the profit. Consumers pay a premium for brands. A case study is the relationship between Apple and Hon Hai Precision Industry. Hon Hai Precision Industry provides contract manufacturing services for Apple and other major electronics brands. Each of these companies are leaders in their respective industries. From 2007 to 2012, Foxconn’s profit margin has been in steady decline ranging from 3.7% to 0.9%. During this same timeframe, Apple’s profit margin has strengthened from 18.7% to 32.8% (25.35% as of year  end 2012).



We understand that Apple’s uncommon success and massive scale has allowed it to negotiate very favorable contracts with Foxconn. This notion simply demonstrates that contract manufacturers are at the mercy of the brand holder.


The value is where the customer experience is, downstream.

Apple is a prime example of just how important it is to be involved with downstream business. Apple’s supply chain extends to retail, which allows it to capture substantially greater value than electronics hardware companies that rely on resellers which include wholesale distributors and retailers. Controlling retail also means Apple can control the end customer’s experience. It’s hard to think of many other companies that control the end customer’s experience better than Apple. Creating an excellent customer experience is what builds repeat customers who quickly become advocates for your brand. We will discuss the importance of customer experience more in later publications.


Why not build a brand?

There are many reasons why contract manufacturers will avoid marketing products under their own brand. First and foremost, launching a brand as a contract manufacturer conflicts with the interests of OEM clients. One way to mitigate this conflict of interest is to start by launching a brand and product line that’s focused on a different product category and therefore does not infringe on the client’s intellectual property in terms of design, engineering and brand identity. Another way to mitigate this conflict of interest is to register a separate company and appoint separate management. If you begin competing directly with your client, the proper thing to do would be to notify your client of the potential conflict of interest and encourage open communication to resolve the conflict with professionalism and courtesy.


At HDTS, ethical business practice is a foremost priority. So as long as you are taking the necessary precautions; we encourage you to not let potential conflict of interest discourage you from doing what is best for your company, employees, and shareholders.


Another reason why contract manufacturers choose not to brand is because they perceive branding  to be expensive, distracting, and outside of their core competencies. This used to be a valid set of concerns, but not anymore. The rise of technology combined with the right local market expertise has dramatically reduced the cost - in both money and time - of brand development, while dramatically increasing the probability of success for new brands.


HDTS is pioneering this brand development renaissance and we are proud to offer select Chinese suppliers access to our multi-channel distribution platform. For more information, visit our website.


No one ever said it would be easy.

It’s not easy to build a brand. Even with the aforementioned advancements in brand development technology and strategy, the success of a brand still rests on the supplier’s underlying capability, culture, passion, creativity and ability to dedicate its people to the mission and plan for successful brand development.


Brand or die.


 12 Mar 2013 08:00 -0400
 Daniel Sperling-Horowitz is an incredibly powerful service for small businesses and entreprenuers looking to cost effectively source quality products. The allure of Alibaba’s International Marketplace is quite apparent; millions of suppliers, millions of products, and highly competitive prices. I’ve spoken with several entrepreneurs who have used to launch their brands. The success stories are absolutely amazing and inspiring. But for every success story, there seems to be a handful of horror stories that have seriously harmed’s reputation. All you need to read is this article about the resignation of the company’s CEO and COO to understand the risks of using the service. 

So what is
Last year I attended’s Sourcing Fever event in Manhattan, where I had the opportunity to speak with Michael Lee, the company’s Director of Business Development and Marketing. Here’s Michael’s answer; “ is like for finding suppliers. We’re a platform to help buyers find suppliers, but like any relationship, we can’t guarantee it will be a success.” Not the most encouraging response, but I certainly appreciated his honesty.

We like to call a destination website. This means, it is a single place where international businesses and consumers (AliExpress) can go to discover suppliers and products. 

This begs the question; What isn’t isn’t a place where you can source products free of the risks of scam, order inaccuracy and quality uncertainty. According to’s 2011 annual report, there were 2.24 million storefronts on the International Marketplace (32% year-over-year growth). When you’re talking about such a massive supplier base, there are guaranteed to be some bad apples. But what percentage of storefronts are worth avoiding? The answer is unclear. If anyone can reliably estimate this, please share it with us. Here’s a link to’s banned paid members.

Is it the business model? generates the lion share of its revenue from Gold Suppliers on their platform. These “Gold Suppliers” pay upwards of $2,900/year for trustworthiness, I mean premium search rankings and company profile. As a result of’s historical leniency in approving questionable Gold Suppliers, the platform has suffered an erosion of buyer confidence and the value of the Gold Supplier status has diminished. It should come as no surprise that the number of paying suppliers dropped 10% in 2011.

Buyer confidence is a sacred thing. 
A friend of mine, Jeff Grass, CEO of BuySafe, the first e-commerce guarantor, taught me about the importance of buyer confidence. It’s very simple; when buyers are confident with the supplier, they make purchase decisions faster, and in higher dollar value. Due to’s unhealthy reliance on suppliers as a means for monetization, buyer confidence was undoubtedly compromised. Jeff made a great point; without buyer confidence, a marketplace cannot function. Buyer confidence is, therefore, a sacred thing.

Back to the drawing board.
 One thing is for sure; is working incredibly hard to repair its tarnished image. Earlier this year, the company delisted its publicly traded shares from Hong Kong’s Hang Seng stock exchange to repair its business model and focus on supplier quality and buyer experience. I have to commend the company for their innovations on this front over the past two years. To protect buyers, the company launched several initiatives. First, AliExpress provides buyers with small sample size orders. Next, Escrow was released to provide a safer payment method. Then, Assurance Plus was introduced, albeit in limited capacity, to refund buyers when goods received are not as described when purchased. Finally, Inspection Service was launched to provide a rolodex of approved Alibaba-compliant quality assurance firms.

The million dollar question. 
Is it too little too late? I personally don’t think so, it’s still early and has a massive lead with 27+ million registered international users. Further, the company, especially Jack Ma - a true visionary - deserves a great deal of credit for the incredible opportunity it has created for small businesses and entrepreneurs the world over. Especially those leading China’s rise to dominance. 

What are your thoughts?

 11 Mar 2013 08:00 -0400
 HDTS Media Admin


While US consumers may not be familiar with ZTE, the company is swiftly climbing up the ranks as the world’s 4th largest smartphone manufacturer. Grand S, the company’s flagship smartphone, will bring ZTE into the spotlight of American and International consumer electronics. 


Launched at the 2013 International Consumer Electronics Show to rave reviews, Grand S represents a remarkable advancement in the smartphone category. We were shocked by the design, slimmer than most 4G devices. Watch our exclusive interview with Joey Jia, EVP, Sales for ZTE USA. 


Specifications include 5” Full HD Display (1080P), Quad Core 1.7GHz Processor, 2GB RAM, 13MP Camera, 4G LTE, Android 4.0. Windows 8 expected later in the year.

 7 Mar 2013 08:00 -0500
 HDTS Media Admin


HDTS caught up with companies from Zhongguancun at the 2013 Consumer Electronics Show. Known internationally as “Z-Park”, the technology hub is located in northwest Beijing and considered by many to be the Silicon Valley of China. Thousands of companies - from startups to giants including Lenovo - call Z-Park home. We profiled three companies who exhibited at the 2013 Consumer Electronics Show as part of the 2nd annual Zhongguancun delegation.




 5 Mar 2013 08:00 -0500
 Daniel Sperling-Horowitz

23 months ago I was watching Bloomberg TV - on a short list of my favorite channels - when I encountered the fresh perspective of a man named Shaun Rein. Rein, Founder and Managing Director of Shanghi-based China Market Research Group, was brought on the March 2011 show to field questions about bearish outlooks on China from several Western thought leaders including famed hedge fund investor Jim Chanos.

Having spent over 3 months in China the previous year, during which I met extensively with business owners, real estate developers, and government officials, I felt fairly informed about China’s economic development. While visiting cities such as Shenzhen, Dongguan, Guangzhou, Beijing and Tianjin, I couldn’t help but believe the real estate sector was overheated in a manner that, if not properly addressed, would comprise China’s socioeconomic stability and continued economic growth trajectory. A jungle of cranes and skyscrapers as far as the eye can see (which admittedly, in many cities blanketed by a thick and ominous fog, is not necessarily too far), and vacant, speculatively held properties exceeding $3,000 per sq. meter were enough red flags to catch my attention.

But Rein made a compelling case as to why China, facing 10-20% wage and commodity inflation, and guided by prudent economic stewardship, was not threatened by a looming collapse of its real estate market. I wasn’t yet convinced, but I was listening. (Video: Bloomberg TV)


A few weeks later, while surfing the web, I stumbled upon a CNBC article titled “Why Best Buy Failed In China”, written by who other than Shaun Rein. This guy was popping up all over the place, and for good reason, his uncommon insider’s perspective was, arguably, more thoughtful than any other expert on China.

Over the next few months, and a few articles later, I reached out to Shaun to thank him for his research-driven insights on the China market, and pick his brain about related topics. Shaun was gracious, responsive and genuinely interested in helping out fellow entrepreneurs entrenched in the international trade space.

In November 2011, Shaun reached out personally to inform me of the forthcoming release of his highly acclaimed book; The End of Cheap China: Economic and Cultural Trends that Will Disrupt the World. Pleased to receive this news, I quickly secured my preorder on Amazon.


In the Spring of 2012 I had the opportunity to meet Shaun at a Midtown Manhattan book signing and networking event. The venue was packed with successful China-focused intellectuals and businessmen from America, China, Korea, Russia and Africa, among other places. Equipped with a seemingly endless supply of anecdotes and market facts, Shaun captivated his audience, especially those less familiar with his enlightened thoughts. Sidetracked by the responsibilities of growing HD Trade Services, I was not able to write a review, until now.


Chapter 1: Chinese Billionaires Outnumber American Ones

Much to the contrary of conventional Western thought, Chinese businessmen are savvy and sophisticated. The most successful businesses in China are focused on building great brands, not copying Western intellectual property and business models. Further, Having experienced the depths of despair firsthand, economic momentum has created a palpable optimism looking into the future.


Top Chinese companies have already successfully navigated treacherous domestic competition, the gradual process of brand recognition, and rising input costs, making them fit to compete on a global scale. For this reason, Rein cautions Western executives to beware of aggressive, fast moving, well capitalized Chinese companies which pose an underestimated competitive threat to established brands. 


Not only has the day arrived when many Chinese firms offer products that are as good as Western goods, but many compete head to head on quality and innovation.


Aided by rising nationalism, Chinese consumers will commonly select domestic brands of products believed to be of equal quality, even if they are more expensive. Domestic dairy company Mengniu - whose amazing Beijing plant I visited in January 2010 - prices its offerings at a premium to foreign brands as a way to establish the perception of superior quality among consumers. This is especially important in the dairy industry given rampant cases of tainted milk. 


Rein asserts that Baidu, for example, accused of being a clone of Google, is actually a higher performing search engine for Chinese text, optimized to the preferences and nuances of the Chinese internet user. It doesn’t hurt, of course, that the Chinese government has greater confidence in domestic owned technology firms to responsively censor according to party mandates.


In the 1990s, fewer than 10% of Western brands were profitable in China. Many became discouraged by consumers they thought would never value brands. This naive outlook did not consider that Chinese consumers in the 1990s had wholly different aspirations and needs than Western consumers. Today, as per capita income has quadrupled, over 80% of Western brands are profitable in China. Those that have patiently positioned their branding according to the evolving aspirations of Chinese consumers, have been rewarded handsomely. And it’s only the beginning. 


Chapter 2: Cheap Chinese Labor? Not Anymore.

The resultant of diminishing labor supply is a marked increase in manufacturing wages. In many manufacturing provinces we’ve seen year-over-year increases in excess of 20% for the past three years. This causal relationship is known as the Lewisian turning point


Rising labor rates and the appreciation of the renminbi (Chinese currency) have made Chinese exports less appealing. Rein contends that factory owners engaged in export must shift their attention to the Chinese domestic market where consumer industries are experiencing double digit growth. 


Finally, Rein points out that higher paying jobs are the key to avoiding widening income gaps, the classic downfall of emerging economies such as Mexico. 


Chapter 3: Stability Is The Key To Happiness

While the Chinese haven’t forgotten about the tremendous pain and suffering of the Cultural Revolution, a stable society and consistently improving quality of life brought about by economic reform has certainly contributed to generational happiness and contentment with the Chinese Government.


The focus of the Chinese Government is on maintaining this consistently improving quality of life for all of its people. To achieve this, the central government is investing heavily in welfare programs and infrastructure development, and combatting corruption within local government. The central government is concerned about controlling and reducing episodes of social unrest. Given complexities of globalization and advancements in technology, this is easier said than done. Free speech - although valued - that threatens stability is therefore not accepted. 


On the topic of free speech, Rein reminds us that the Chinese are not afraid to speak out against corruption in public and on internet forums. Over the past several years, censorship of leading international websites for news and social content has actually diminished noticeably. 


Somewhat unrelated; Rein shares an interesting reminder that older Chinese are less receptive to brands and have not participated as equitably in the nations newfound wealth. Therefore, their Children are often responsible for purchase decisions. When selling products for use by older Chinese people, your best bet is to market to their 30-40 year old children. 


Chapter 4: The Modern Chinese Woman

Much has been reported about China’s one child per family policy which resulted in a disproportionate ratio of males to females. Not long ago, the strength of males was needed, on farms and construction projects, to support their families. Today, in many socioeconomic respects, women have achieved parity with men. Women now account for more than half of income, and there are more women in universities than men. In many families, women are the main breadwinners, while their husbands are commonly vacating unskilled factory positions to care for children. 


Understanding women’s role in Chinese society is critical to the success of Western brands. Take, for example, the fact that women account for 55% of spending in the now $15.6 Billion luxury goods market. Women born from the mid 80s to date are raised as “princesses,” pampered and told that the sky is the limit. As a result, many women are becoming entrepreneurs; according to Forbes, 7 of the world’s 14 self-made women billionaires are Chinese. Women are spending freely, even on credit, with the expectation that wages and opportunities for substantial wealth creation are certain to grow. This is a potentially dangerous mindset can lead to a credit bubble. 


When marketing to young women, understand that, because many were and are still pampered by their families, they are less mature. For this reason, they are more likely to purchase things that are “cute” - think Hello Kitty - than “sexy.” 


Snoopy-branded clothing is one of the hottest selling brands for twenty-something Chinese women…Barbie, by contrast, shut its $37 million store two years after opening. 


When marketing fashion apparel, use a mix of Western and Asian models. Western models convey brand prestige, while Asian models show how styles look on similar body types. 


Chapter 5: Why Chinese Consider Kentucky Fried Chicken Healthful

Most Chinese, especially food and medical industry professionals, have lost faith in the safety of Chinese food. Oddly, many Chinese consider KFC to be a healthy option. You would think so too after seeing countless reports of local restaurants using reclaimed oil from sewers to cook food! The Chinese trust Western restaurants would never cut corners, and so they are willing to spend a premium to ensure their food is untainted. 


The stories in this chapter are horrifying and captivating.


Chapter 6: Understanding Corruption In China

There are three levels of government; central, provincial, and municipal. Provincial and municipal government are riddled with corruption. This has been a source of civic unrest. The central government often executes corrupt officials to set an example, but Rein suggests the problem is more deeply rooted in the divergent interests of local governments, and the nature of single party government.


When doing business in China, make sure you get approval from local and central governments.


Chapter 7: China’s Real Estate Sector

Many Chinese do not trust the accounting of publicly traded companies, so we see a disproportionate amount of wealth being invested in real estate. To avoid speculative investing and control the residential real estate market, which has more than tripled in the past decade, provincial governments have set limits on the number of properties the wealthy can purchase and implemented mandates for up to 50% down payment.


In order to support its growing economy, China needs to continue to invest in infrastructure projects such as low income housing, bridges, tunnels, subway, high-speed rail, and airports. 


Chapter 8: Chinese Neo-Colonialism In Africa And The End of American Hegemony

China holds about $3.3 trillion in US foreign exchange reserves. To avoid over-exposure to an instable US Dollar, and ensure access to natural resources critical to the country’s uninhibited economic growth, China has invested significantly in assets around the world. Countries receiving Chinese foreign investment include Canada, Australia, Iraq, Afghanistan, Sudan and several other African nations. China, irrespective of political and religious allegiances, is looking out for its economic interests. 


On this note, China does not concern itself imperialistically with the political affairs of the countries in which it invests. Rein uses the term Soft Power to describe the Chinese approach to spreading its growing influence. Notwithstanding this concept, China is consistently criticized by Western governments at odds China’s economic partners such as Venezuela and Iran.


At the corporate level, Rein encourages us to embrace Chinese acquisitions of Western companies as opportunities to deliver high returns to stakeholders, and grow employment. Unlike Japanese firms, Chinese companies typically keep Western management in place and often invest to achieve faster growth, resulting in much-needed American job creation.


The average Chinese tourist spend $7,000 dollars per trip to the US. As China’s 350 million person middle class begins to travel, Western nations must invest in conveniences (such as accepting China UnionPay bank cards) to enhance the experience for these tourists and optimize profits.


Chapter 9: China’s Educational Sector

Arguably, the biggest problem faced by multinational companies operating in China is recruiting and retaining labor. Rein attributes this to a weak talent pool bred by an education system that overemphasizes rote memory, lacks world class curricula, career path flexibility, and infrastructure to support annual graduating classes of more than 6 million. What’s more, only 30% of high school graduates continue to college, compared with 70% in the US. 

The vast majority of China’s wealthiest families are obtaining foreign passports as a means to send their children abroad for schooling. 


As China matures, the education system will remain under great pressure to reform. The long term stability of China rests largely on major improvements in this sector. 


Chapter 10: What The End Of Cheap China Means For The Rest Of The World

Rein equates China to a teenage superpower.


…displaying glimpses of future genius, but unable to maintain a consistent level of power.” This characterization is fitting, as China’s rapid ascent during a period in which much of the developed economies remain stagnant, has placed the country in a position tremendous power and responsibility.


Global stability is key to economic growth. While the US continues to serve as the world’s police, it is likely that China will continue to focus on improving the welfare of its people through major investments in infrastructure and education. The globalization of commerce, and interdependency of nations provides a compelling support for global stability.



The End Of Cheap China is a wonderfully insightful portrait of where China has been, the state of current affairs (and the underlying reasons), what the future holds, and how to position your company to ride the transformative wave that is China’s burgeoning economy. Driven by primary market insights and well over a decade of personal exposure to China’s economic and social ascent, and institutions; Shaun Rein provides a well organized, riveting, and informed account on China along with priceless actionable insights for business and government. 


The one thing missing from this book is the role eCommerce will play on the proliferation of Chinese domestic consumption and international trade. We will follow up with our view on eCommerce - domestic and international, B2B and B2C - and the central role we believe it will play on the continued economic growth of China and international companies that implement a culturally sensitive winning strategy.


I hope the Chinese Government does not censor our website for sharing Shaun Reins insights!


INSIGHTS at a glance:

  • 27 - the age of the average home buyer (32 in America)
  • 7 of the world’s 14 self-made women billionaires are Chinese
  • More than 50% of income is earned by women
  • $7.8 Trillion GDP
  • 1.344 Billion people
  • 350 million middle class consumers
  • Women like cute not sexy
  • When marketing clothing, use a mix of Western and Asian models
  • Guanxi (circle of trust) is overemphasized by Westerners
  • The average Chinese tourist spend $7,000 dollars per trip to the US
 4 Mar 2013 08:00 -0500
 Dan Sugarman

Hardware Renaissance

Recently a number of factors have made starting up a hardware company much more possible. An investor/mentor of ours, Paul Graham, recently coined the term 'Hardware Renaissance' in an essay where he outlines why we may be seeing an influx of hardware companies in the very near future. He mentions that hardware performs very well on platforms like Kickstarter and Indiegogo. These websites can prove a market before any real manufacturing. While investors may be slow to move on new trends, they still clamor at the opportunity to bet on a company that already has millions of dollars in sales with only a prototype.


I've had a successful Kickstarter campaign, I've won right?

There are a number of factors that lead to a successful Kickstarter campaign. I am not going to go into any of them besides that having a kick ass prototype certainly helps. Most of the hardware companies that have performed very well have done so for a reason, they have an awesome prototype and the world wants it bad. It is important to look at how the top companies have performed afterwards.




This image is from a CNN Money report titled Why 84% of Kickstarter's top projects shipped late. The problem is that creating a great prototype and bringing it to market are two very different processes. I wonder what would happen to the reputation of KIckstarter and the implication on future campaigns should the % of late shipping products does not decrease.


What we have learned 

Our friends who build hardware have asked us for advice on how to source components and manufacture products. It actually shouldn't have surprised us but most of these hardware teams would love to keep focusing on making a great product and not on the nuances of sourcing, manufacturing, assembly, logistics, customs clearance, fulfillment and distribution. Sourcing great products is not easy, especially on websites like Alibaba where you have no trust in the suppliers you are dealing with. This trend made us take a hard look internally and this is what we found:

  1. We build tablet based Quality Control software and have partnerships that give us access to hundreds of QC specialists on the ground in China.
  2. We already sorted through the crap; we have relationships with premium suppliers in major production regions.
  3. We are already integrated into the supply chain.
  4. We are building a vetted B2B marketplace with multiple sales channels.

Our New Goal : Assist hardware startups bring their product to market

Pretty simple. We are excited to be working with some of the best new hardware companies to help with all the nitty gritty of shipping products on time. We are even more excited that we can now provide a fulfillment solution that hits over 50% of the US population in 1 day and over 98% in 2 day ground shipping.  While our marketplace is still in beta, we are also already putting select products in front of millions of consumers and businesses as a part of offers programs. In fact, we buy these products at wholesale quantities and then we handle the rest.


If you have had a successful campaign, you probably know the feeling

"In the first 24 hours, everyone is happy and slapping your hand," says Oculus CEO Brendan Iribe. "And 48 hours later, the reality sets in. There's a bit of fear: We're going to have to make all of these."

It is important to ask yourself:

  1. Do we really have the expertise in sourcing, manufacturing, quality control, logistics and fulfillment?
  2. Do we really want to spend our time worrying about the nuances of bringing a product to market?
  3. Is E-commerce driven from our SEO marketing strategy for our website enough to hit our sales projections?
  4. Do we want to build a multi-channel distribution strategy from scratch on our own?
  5. Would we rather spend our time focused on building a great product and iterating?

Chances are, you need a partner you can rely on.


Email us at [email protected]


 1 Mar 2013 08:00 -0500
 Bob Klunk

When bringing your product to market, you need someone you can trust to protect and promote your brand through the eCommerce and retail channel. A trusted partner will have facilities that are modern and secure and located near hubs for major carriers with the technology, physical network, and caring service to delight your customer. A good fulfillment partner will provide an information interface so that you and anyone you choose can have real-time visibility to inventory and the status of orders. 

With product positioned in a third party warehouse, your product is safe, secure, and deployed near your customers. Orders can often be shipped same or next day and arrive at your customer’s door within one or two days using low cost ground shipping. You brand and logo will be featured on all documentation which includes a personalized thank you note with your customer’s name. Promotional materials may be printed on demand at the time of order to draw attention to your brand and products and compel repeat purchasing. You customers will begin to associate your brand with great service and pleasant experience.

There are also advantages to aggregating export shipments. In order to keep costs down, it’s better to ship full containers, but that requires more operating capital and puts more inventory at risk. By combining your shipments with other suppliers, a third party can lower allow you to ship smaller quantities more often. A fulfillment partner provides a place for your goods to be shipped and stored, but remains available for sale to any customer through any authorized channel.

The long term success of your business rests on your ability to earn brand loyalty. You have the opportunity to build your brand on a controlled and scalable supply chain foundation that will ensure the greatest customer experience. In this age of omni-channel commerce, 3rd Party Fulfillment provides a powerful competitive advantage that must not be ignored.

Bob Klunk is Managing Director of DMI Fulfillment, an HDTS Fulfillment partner.

available in:
 30 Jan 2013 08:00 -0500
 Daniel Sperling-Horowitz & Leo Liu

It is our belief that premium Chinese suppliers do not receive the attention from western consumers and buyers that they deserve. This under-appreciation is hurting the growth of small and large Chinese companies without discrimination. But western consumer acceptance is not to blame.

In this article we will expose the 4 Fatal Trade Show Marketing Mistakes that prevent 99.9% of Chinese suppliers from achieving their true potential. Finally, we will provide you with the opportunity to begin implementing our winning solution.

The definition of insanity is doing the same thing repeatedly and expecting a different result. Yet, year after year we witness hundreds of Chinese companies making the same mistakes and achieving the same unfortunate results. Due to rising material and labor costs, relative inflexibility with US pricing, and fierce competition for Chinese domestic consumers fixated on price, OEM manufacturers must aggressively enter international markets or risk destruction. For these reasons, it’s difficult for us to watch as millions of hard-earned dollars are thrown away at international trade shows.

The 4 Fatal Mistakes Chinese companies make when exhibiting at international trade shows:

1. Not showing profound respect for english language and western marketing culture.

Although we see this more often with smaller Chinese companies, it is surprisingly common for multi-billion dollar Chinese companies to staff trade shows with company officials and representatives who cannot speak English proficiently. We also see marketing material (signs, displays, brochures) that contain many grammatical mistakes.

In today’s competitive environment the consumer has more selection and power than ever before. Any friction the consumer encounters will dramatically reduce the likelihood that that consumer will become enchanted by your product and brand. As a result, that consumer is not likely to share your products and brand in a positive light with their network of influence. Forget not that trade shows are heavily attended by technology evangelists or “early adopters” who we will refer to as “influencers.” Enchanting these influencers is the secret to mass adoption of your products.

Staffing your trade show exhibit with English speaking models is not enough, in fact, it can be a major source of frustration. Many attendees will not bother to speak with trade show models because they know very little about your products, services, and company. Trade show models should never be used to compensate for a lack of english proficiency. Models, if utilized, must be well trained and actively engaging attendees passing by the exhibit. They should not be standing by, passively, partially engaged with your product or speaking with one another. They should be walking the periphery encouraging visitors to visit your company’s exhibit.

We recommend companies think about the trade show attendee’s experience and poor reflection on their brand that this avoidable mistake surely causes.

When there are unnecessary communication barriers, the attendee thinks:

  • “If it is this difficult to communicate with their delegate, I cannot imagine what it must be like to communicate with the entire company!”
  • “If they do not have proficient English speakers, I cannot imagine they are an organized and successful company!”

The lesson here is that Western consumers will not even bother to look at your products and learn more about your company if they are not impressed by your display and the attention you are receiving from other attendees.


2. Not sharing your company’s story.

Storytelling is used to communicate practices and values that shape one’s identity. Since prehistoric times, stories have been used to establish the foundations of community. Stories are passed from person to person and generation to generation. We have observed a significant trend whereby storytelling is used in marketing to communicate brand identity and establish customer loyalty. After all, a basic human need is the need to be entertained.

Believe it or not, the average consumer is exposed to more than 3,000 advertisements per day. Today, it is more difficult than ever to capture the consumer’s attention. Companies that tell a compelling and authentic story are more likely to succeed in gaining consumer attention. Without a memorable story, your brand and products are forgotten. Authentic stories also have a tendency to increase credibility, thereby breaking down barriers of culture and consumer apprehension.

A great example of a story would be that of Haier. Haier America’s websitecorporate brochure andcorporate video contain wonderful information about the company’s development, mission and values.  These resources are excellent for consumer education, provide an excellent understanding of who Haier is as a company, and certainly build trust and credibility.

A poor example of a story would be that of TCL. When an American consumer visits TCL’s USA website, they have to scroll down to the bottom of the website and click About Us. The link takes the visitor to a webpage with the following information:

About TTE Technology
With its US headquarters in Corona, California, TTE Technology, Inc. designs and markets televisions in the United States under the TCL brand name. TTE Technology and TCL Corporation are subsidiaries of TCL Multimedia Technology Holdings Limited, one of world’s largest consumer electronics manufacturers specializing in the development of high-quality televisions and other leading technology products. Headquartered in China, TCL Multimedia operates a global network of research centers, manufacturing facilities, and sales offices.

USA Headquarters
TTE Technology, Inc.
555 S. Promenade Ave.
Suite 103
Corona, CA 92879
Ph: 877-300-8837

Who is TTE? This is inconsistent and confusing! This is far from a story, and we would expect very few visitors to establish an emotional connection to TCL’s brand after reading this page. This feels empty. 

3. Not showing uniqueness and creativity.

Western consumers have very short attention spans. At this year’s Consumer Electronics Show in Las Vegas, USA, there were more than 3,500 exhibitors and 150,000 attendees. Distractions are abundant. There is a fierce competition for attention.

Many companies will never have the multimillion dollar marketing budgets of Huawei and Haier, so they must be smarter and more creative in order to obtain high return on investment (ROI) for their marketing campaigns. Guerrilla Marketing is a form of marketing we study and practice extensively for our clients. It is defined as a low-cost advertising strategy using unconventional means. 

Our favorite example of Guerrilla Marketing is the story of In 1999, the founder of convinced the city of Halfway, Oregon, USA to change its name to, Oregon, USA for one year in exchange for $100,000 and 20 computers! The strategy was tremendously successful, attracting national press attention and ultimately led to the company’s 2001 acquisition by eBay.

The lesson here is to be creative. Attract attention or you will be irrelevant.

4. Not identifying a clear target consumer and action plan.

At the 2013 Consumer Electronics Show in Las Vegas, we asked senior management of over 50 Chinese companies ranging from startups to Fortune 500 global enterprises the following question; what is your goal for the trade show and what is your strategy for selling in America and internationally? 

The answers were startling and went along the lines of;

Well, we just want to sell our products. We don’t really know very much about the [American and international] consumer. We are looking for a trusted partner to help us with this.

We are impressed by how candid these executive were. We believe this admission is a very productive cry for help. But the cries will not be answered unless you can catch the attention of the right American and international partners.


Please remember that your product rarely sells itself. Taking action and correcting these mistakes will place your company on strong foundations to compete and win internationally. 


At HD Trade Services, we actively leverage our marketing expertise and network of influence to create sales and business development opportunities for your company. We have designed a powerful international marketing solution specifically for premium Chinese suppliers. Our combination of local market expertise, and world class technology empowers you to target relevant consumers and take control of your brand and your supply chain. 

© 2012 HD Trade Services, Inc. All Rights Reserved.
Version 1.5.9