Secret Shopper Buying From Your Chinese Factory, Loyalty Tests with Darren Whittaker – GFA177

Michael MicheliniBusiness, Manufacturing, Podcast1 Comment


Dragon Boat festival story – holiday Sunday, Monday, and Tuesday in Mainland China, just Tuesday in HK
My Son turned 3
Our newsletter, we spend a lot of time each week – get on the list at globalfromasia.com/subscribe

This week’s show we have Darren Whittaker, talking about amazing ways to manufacture and manage your suppliers in China. He has been through quite a bit and shares some of his experiences and well as tips and tactics on how to best source and manufacture from China.

Topics Covered in this Episode

  • Connector.

    Intro Darren

    We met at a Canton Fair in like, what, 2008 or so? Awesome to be in touch after all these years

  • Connector.

    How’d you get started with China sourcing?

    So you’re from New Zealand, and have been buying from Chinese factories for how long now?

  • Connector.

    What are the most common mistakes you see people making

    (probably so many!)

  • Connector.

    Protecting your IP

    What’s your strategy for protecting your product idea, design, brand, etc

  • Connector.

    Monitoring your factory

    You seem to have some unique ways of testing a factory’s loyalty, any insights here?

  • Connector.

    Is that fair to the factory?

    Some factory owners may be listening and thinking that isn’t fair, what would you say to them?

  • Connector.

    What to do if, they are selling to your secret shopper?

  • Connector.

    How often to test the factory’s loyalty?

  • Connector.

    Some examples of, good turnouts

  • Connector.

    Some examples of, exposed!

    (I’m thinking like “MTV boiling points”)

  • Connector.

    Examples of - them finding out it's you

    Has the factory ever figured out your secret shopping trick? IF not, what would you do if they did find out?

  • Connector.

    Having a plan B

    What if they are screwing you, what do you do – do you have a factory on the side? Makes me think of a marriage and having a girl on the side during a rocky relationship haha!

  • Connector.

    What about your services Darren

    Talk more about how you can help listeners and how they can reach you

  • Connector.

    And your GFA market service

    So you have a cool offer up on the new Global From Asia Market – you can help listeners to buy from these factories and see if they’ll sell you their IP products. Very cool, can you explain the service a bit – and we’ll link to it on the show notes.

People / Companies / Resources Mentioned in this Episode

Episode Length 32:36

Thanks Darren!

So many more shows coming up – so many I’m not even sure which order to put them in. We have content on China tech, on more exporting and product development. I’m so happy – and we get amazing reviews like this one below:

Great testimonial from a listener:
Hi Michael. My name is Narinda and i live in Australia. Looks like the global summit [correction: should be Cross Border Summit] was awesome. Its my dream to go to China and improve my Amazon business. I love your podcast so thank you heaps for that
==========

I’m also excited to say we have had amazing online workshop calls with our GFAVIP members – if you’re not sure what that is – it’s our private membership for people who really love what we are doing here and want to get more involved with us and connect as well as support the cause!

And Claire is doing amazing work talking to sponsors for the podcast, Cross Border Summit, and future events – if you are interested, please send her an email at [email protected]

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Podcast Transcription

“I’ve found that best way for prevention is to having leverage, one of the greatest benefits that I have, is I’m not sourcing from one company, I’m sourcing from multiple.”

Welcome to the Global From Asia podcast where the daunting process of running an international business is broken down into straight up actionable advice and now your host, Michael Michelini.

Mike: Alright, everybody. Global From Asia Episode 177. Let’s get Claire, what’s the URL for today’s show?

Claire: It’s globalfromasia.com/episode177.

Mike: Great! 177. Alright and so last week was my son’s 3 year birthday.

Claire: You just got to had a party last Saturday.

Mike: Yes. So, while the show is online, we already have a party. Like 20 sets of parents and kids in our apartment. It will be insanity. I was trying my best a bit to make a funny video blog for mikesblog.com. Yeah, I’m getting use to being a dad. It’s a transition. There’s also a holiday this weekend. Claire’s got to have a long weekend. Can you explain the holiday?

Claire: I think it’s Dragon Boat Festival. For guys who don’t know, I don’t really have like a clue but it’s a guy basically he got attracted by the emperor and people want to save him from like eat up by you know, like fishes so the rice to a river.

Mike: So, that’s because I know there’s Zhong Xi, right? It’s like big palm tree leaves with sticky rice.

Claire: Yeah. It’s called rice dumpling.

Mike: I’ll try to pitch it on podcast show notes. It’s a big green, big leaf, big pyramid triangle shape with sticky rice inside and a piece of meat in the middle and they are everywhere in China. And eggs, too. I usually noticed the meaty thing inside but if you guys are in China or in the Chinatown near you, go get a Zhong Xi on Tuesday if you are here at the time of the show. Also, just a little plug for our newsletter we have a weekly newsletter, Claire and I, team effort share also, we have a big group of us that we put together on weekly newsletter, not just about bunch of ads or promoting our stuff. We put is valuable information about Asia and China business. Cause every Thursday 9pm, you could check out glboalfromasia.com/subscribe and Claire has been helping me getting some interesting news about being a popstar in China and stuff. We try to keep it fun and interesting. What do you think? Do you like the newsletter, Claire?

Claire: Yeah. Last week, like a food and used, I found that it’s gonna big quite interesting cultural. It’s kind of like a popstar, India popstar. How to become like a celebrity in China and get lots of like fame and money and I find people click on that link.

Mike: Yeah. With just a little bit tackle of. We work really hard adding is much valuable information in there. If you like the show and like what we do. Make sure you also in our newsletter. It’s every week Thursdays at 9pm globalfromasia.com/subscribe. Okay, and now for this week’s show, we have Darren Whittaker and he was in town for the Canton Fair. I met him in Canton Fair in 2008. He’s import export trader. And based in Melbourne Australia come back and forth between China and Australia, multiple times per year doing import and export. He shares some interesting stories and also offers a new service. We have on our marketplace which is Secret Shopper. We’ll tell you guys and learn about Darren and that’s it. There’s actually lot of people Australia doing business with China. I know Chris Thomas was on our GFA VIP member’s call this past week. And I got to connect him with Darren and some others. Also making great connection everybody. Let’s tune in to the show with Darren and me.

Mike: Okay. Thank you, everybody for tuning in at Global From Asia podcast. We have special guest, one of my first friends I met at a trade show, Darren Whittaker. Thanks for being here, Darren.

Darren: Thanks, Mike. Thanks for having me.

Mike: So, we are in your hotel here in Shenzhen and I think the first time we met in Shenzhen. You come here quite often, you’re from Melbourne Australia and you do sourcing services, may be quick overview what you’re doing?

Darren: Yeah, that’s right. I’m in China for 5 to 6 times a year. The primary business is global sourcing. Sourcing products and partners for other businesses primarily from Asia into Australia but also the other direction and a little bit into Europe and US.

Mike: Very cool. And we met in summer 2008 maybe I think that was 2008 in Guangzhou Canton Fair randomly.

Darren: I believe so.

Mike: It’s cool. That was in Guangzhou, we somehow keep in touch, changing of social media and everything but we kept in touch. So yeah, you based over in Melbourne. How far does it like? I got so down there. It’s not on my list.

Darren: That’s about 9 and half hours. Direct to Hong Kong.

Mike: At least it’s direct. How do you get into this whole sourcing game?

Darren: It did evolved. Direct path but I’m on study international, tried back in Australia and quite some years ago managing a company importing products into Australia and then I discuss this idea with a guy I knew who was interested in styling a business. Worked for him for couple of years and I decide to go travelling and came back on my online.

Mike: Very cool. So how long ago was that?

Darren: When I met you, I believe that was first trip to Canton Fest. 9 years now.

Mike: Yeah, with then. Very cool. And so you’ve been doing this longer than I am. I got out from sourcing, it’s a challenge. It’s often underestimated I think, right? I think people think there’s Alibaba or global forces or trade shows and it’s a very, there’s very so much to it to, maybe I was the same mistake or pointers that you can give people.

Darren: It is very hard work, it’s been 9 years of whining and I think if you stop whining you let yourself so. It’s very hands on you have to be on top of it all. It’s great to be outsource some elements of it. But it depending on the stage of business that you’re at. Or what you’re trying to achieve and how stand in your product is, how much customization there is. And how similar age order is, depends on how much contact or physical contact you made with the suppliers. And also, the distribution channel. Also, understanding the requirement of your customers and understanding the capabilities of the factories.

Mike: Okay, and then I think sometimes underestimating or overestimate, right? Like oversimplified. I’ve learned, maybe it’s the culture or the languages just being extra clear about, what you need and not making assumptions. I guess it’s true anywhere in business. Especially with international business and you know, making buying decisions.

Darren: Oh, absolutely! We would have the, I’m sure you’ve seen some of this, whether be through German engineering or Chinese, I know the data display factory in China, that fulfill a large order for Mercedes Benz in Germany, that was basically 2 hands showing the how LA status display like a TV that shows the process of the person on the, and they can just look at that for 8 hours a day. Twisting about or whatever might be and I had this displays brought throughout the factories. And that is what China supplier told me. So, that’s obviously a great tool for them in regards to quality control but not many businesses have discovered that can justify by fulfilling, fitting a factory with how they display with this sort of video on loop showing.

Mike: That’s crazy.

Darren: I had to do it. I’ll be glad if we can do that but the budget to do that job was obviously, I rent a lot of project and not Facebook.

Mike: Here is a nail. Here is a hammer. This is how you put a nail into a piece of wood. I repeat. It sound obvious but I’ve learned. I’m still learning even you know in office worker or anything. It’s never too clear, I think, right?

Darren: Absolutely! Edward, we’re talking 9 and half hours fly away to going fix the problem. So it’s, you could imagine the people how in NASA would feel sending some astronauts in the moon. You can’t say an engineering and mechanic and doctor and everyone out there. It’s same here that the information has to be very clear and concise and simplified as much as possible. This obviously, otherwise you can do providing samples is always a good way and we’re lucky that we have the benefits of technology such as videos Skype and furthers, being on email ad and what else to do in this type of business a hundred years ago is completely different.

Mike: Yeah, technology definitely help into. So, I think the first step is finding or sourcing the product but also, you do consulting services which is like a separate thing but also other services people should consider. Could you give us some ideas of some of this services?

Darren: Yeah. Look, I talk to primary business that I source and factories I do and diligence in choosing the right factory, consolidate shipments, we have one project that I’m working for a moment, few things and supplies. And we consolidate in a factory in Shenzhen, we assemble and package and ship. I handle all that, all the shipping documents and the freight. Basically my customer in Australia. I charge them in Australian dollars, including all the taxes and not to worry on exchange rates or the importation details. That’s like what I said the core business. Also, working on the elements of consulting for various customers. A good example is a developer in Australia employed as services to investigate whether work with them, sourcing then building materials directly from China as the price through buying through say like a builder who then buy off individual contractors mostly likely pay the discount right off plumbing or hardware store.

Mike: Okay. So, it’s like pricing and ship to decision making.

Darren: Yeah and obviously, risking out this is a big thing to this guys. That was obviously one of the factors of the consulting you need to follow.

Mike: Just pop in my head, one of my friends just get into business of buying house containers. They basically buy these house boxes, they ship from China in containers. Stack them up and they make a house, something like that.

Darren: Yeah, a modular housing.

Mike: That’s pretty wild. And I think that’s pride of biggest fear of China or outsource. Outsourcing really right way send it oversea or send it outside of your core team. What are some strategies you think for protecting yourself?

Darren: There’s 2 phases to this. I believe, one is the prevention and the other one is look, its very very difficult to, obviously need to have all it, I pay in place and documentation. It’s a lot easy doing import. This protection in the market they selling, as supposed the one you buy in whether be John or elsewhere. You can have an agreement with factories in Asia. But the, from not too much from personal experience, from what I understand, is that very difficult for Western companies to have success in the Chinese court room. So, I found the best way for prevention is to having leverage, one of the greatest benefits that I have is I’m not sourcing for my own company, just for one company, I’m sourcing for multiple. So it’s, great benefit to me, to have multiple supplies purchasing through the one factory. Where if a factory want to say do the wrong thing, breach the agreement for product. We can remove product A from product B from the factory. And there’s a great consequences for them when you just sourcing as one company through one supplier. You have to look into other ways of having leverage. So, the greatest asset that you can have is having protection in your market from a legal standpoint. If let’s say in Australia, for example I have a product and someone else brings the same product, it breaches the IP, the importer is responsible from the legal sense, same if the product is defective and this is another reason with my primary product to business is appealing to my customers is that if I have a product that comes in defective, there is legal implications, so this insurance, the responsibility lies on the actual importer the product. So, I’m set up to handle this sort of risk and through insurance and obviously due diligence with the quality control within Asia.

Mike: Got it. Some examples of things that go smoothly. Maybe you done this almost 10 years. Some like good cases, like a typical flow of the new sourcing project to the end, you know.

Darren: Nothing same every (laughing).

Mike: I like that answer.

Darren: As long as my customers believe it’s been really smooth and easy process, that’s great for me, that means I’ve done my job. Obviously, I don’t mind telling some of the problems after it happen. I don’t need to stress, so that I can focus on selling that product, or to consuming the product, or doing what they do with it to my money. There are the product they business, but look, after time it can take say, 3 to 4 transactions with the factory before they really turning out a product with minimal effort from our point. So it’s great when we get to that stage. There is obviously still elements of maintaining the quality control. And this also quite often that these variations of the products say we have to. But once we have good relationship, the factory understands that we’re in it long term, we got some growth. It’s a lot easier that the factories are lot receptives. I can understand where it can we difficult for our suppliers supplying small commodity value or small amount of product to help us a lot of phase on the product, same for big projects so, for example, I might be forced to jump on a plane flying for Shenzen an order that could under a 1,000 dollars to make sure the quality is right and the timing is right to fulfill the lot of order properly.

Mike: Okay, so let’s say you never made a mistake, what some mistake you’ve seen people make or is there a hit in camera like you’re saying, the clients don’t have to see all the behind the scenes, emergencies, but what are some of these kind of scary stories?

Darren: Oh, the biggest and the obvious one is to be honest business they say a lot of customer’s try this but before they use my service. Simply you can find something in Alibaba, place an order the think will be. You know, like sometimes we’ll be and they asking good supplies out there. You may not be communicating well enough, and the products not arrive well. The rule of thumb if someone brings a container, a lot of product for the business, you need 4 trips to China. You need one to go to the phase. You also may contact factories of Alibaba’s and different marketplaces. You need to visit 5, 6, 7 of these factories if you are serious about on a long term relationship and sourcing this product. So once you gone that, then you must likely engage say 3 of them to depending on the product. You might need a market tool to one of them, might not turn out what you want to be, sorry, to may not turn out what you wanted to be. Then you have to go to the next pointing loan. Then once you approved the samples it’s not a case of we can place an order, we don’t have to come back again and place the order, you have to come back and do, make sure the shipment is correct. If the tooling cause 4 weeks, you’re not got to most likely sit around and let you business run, you have to come back so that’s where the services a business slack myself that they coming over to servicing the multiple customers at the the same time. Of the issues maybe not coming over to services shipment. The first shipment are right and it’s fantastic. It’s everything you order. Everything you wanted and you place re-order in 6 months. This could put you in other traps. It could be a wet season and the product doesn’t respond well to moisture. It could be a holiday sometimes. We’ve always found it’s the people style and finish their assembly line without at the interruption of the holiday, in the middle of production. Because the work you can go away come back a couple of weeks later, could be different person and got to be inconsistencies in the product. That person may be in a different mental state or different head spice when they return from their holidays. And other relationship status might, their outlook in life is completely different. So these are little intricacies that are quite important. Obviously depends on nature of the product and the process is involved in the production of the product. But it’s certainly, they are all small things that need to be consider.

Mike: Great! So, let’s go into keeping your factories and check. Yeah, like sometimes you wonder if you know they’re loyal, is a word or their, you have this secret product, your most important IP and want to make sure you are keeping it to yourself. How do you monitor the factory or maybe understand more what’s going on behind the scenes?

Darren: I’m glad you ask. My, I recently took an opportunity with the new product that you come out with the Global From Asia.

Mike : Global From Asia marketplace.

Darren: That’s right. But what, basically towards the platform that you’re offering where the service can be, but anyone purchasing from whatever top manufacturer it may be. In Asia, my company could do this servicing of approaching your supplies to see if they are willing to part with you product or breach the agreement in such respects. So, it’s more of a health check relationship check with your current supplier. Basically to find the devil’s advocate if they add doing the right thing. It’s also they could be legitimate, factory is taking this part or it could be the way the way that you communicating with the factory that might not have a clear understanding of your relationship and this will give you an understanding and give you direction on how to handle in the future.

Mike: True. So, a little bit of background story, the first of the answer, listeners about the marketplace launch here at Global From Asia. I talked to Darren and he thought, the idea to like secret shopper. So, we’re working on that now and the idea is you have your secret product that they’re not supposed to show yourself to anybody and you could have in there test their loyalty by trying to find out if they sell your product.

Darre : Yeah, absolutely! It could also be associated with the IP that you have. If you’ve given clear instructions to that IP may not be the exact product that you’re purchasing from them, but still producing the IP that you want, whether they’ll be happy going to the market that you’re not currently servicing but you still not happy for it to go.

Mike: Agreed, that’s something I’ve learned. Kind of like the hard way. Listeners, they think, like American and they’re like we’re not just, they make assumption that you only care about the US market or Australia, Europe even in China or definitely they don’t care about China because they. Sometimes they might not be clear in the contract but you could also test like you could have the secret shopper service to buy in other markets, as if that matters.

Darren: Yeah, that’s right. And doesn’t necessarily have to be. I pay related or related it could be cross checking mechanism also. I getting the right cross, if you go to negotiate, we can look at ways, you can get the cost lower without compromising the quality or if there’s any other ways we could improve your relationship or improve your understanding of the position that you supply.

Mike: So, definitely I think it’s worth well. Got to be tedious, you can’t just ask I don’t know if I told you the story. Maybe I did. I was at the cross border summit and one of the male attendees was curious about the detail one of the female attendees and he asked me if I could discreetly find out what her nationality was. He’s not Chinese or you know, he was trying to figure out. I guess he was curious. He asked me can you smartly find out and then I said I was organizing this event, so he would ask somebody else and he told her to be careful about asking but he just directly went to the girl and said the guys over there what your nationality. You gotta be careful, right? If you’ve got to, use someone to test this relationship.

Darren: Yes, absolutely. We would go through a process with the prospective customer that is looking to check the factory to work which information is sensitive. Obviously, we go through the whole process and the factory make sure is never aware why we are approaching them, we’re a company approaching is a genuine business that does source, a significant matter of product through China, so it’s not really difficult to supply that they might be sub-con orders from the inquires.

Mike: Make sense and like established buyer account and established business and not some random profile photo new account. So, let’s say if they found out they failed the test, what do you think we should do?

Darren: I think it depends very much on age individual scenarios. Some of the scenario maybe is simple misunderstanding and maybe rectified by basically lying the cats on the table and discussing the factory and explaining why. And that it may be much more sinister and if you have tooling and molds of the factory, it may simply require you to go on a plane and go pick up with tools and take it somewhere else. It’s a very much depends on the scenario, but the benefit is because of the discreet you can have the element of surprise and you can be strategic and prepared for whatever repercussions that make.

Mike: Got it. So I just thought of it. We’ll make a short URL for the short service full page but globalfromasia.com/secretshopper so people can type that in when the show’s online and go to the service they can read about your offer. This is cool. So, of course, there’s this new Global From Asia service that you advertise but how about your normal, your company, how people can find you? I mean, thank you so much for sharing today, what’s your, basically people can find you and your business?

Darren: Yeah, the best way through our website it’s ngsdirect.com as in the company name is Network Global Solutions and thanks for having me.

Mike: No problem, Darren. Thank you for coming up. We’ll put this all up in show notes as always everybody to put the episode number. So, thanks for tuning in.

Mike: Thank you so much, Darren. It was great to catch up with you again in person. I know we chatted a lot online before you come and each times. So, it’s almost 10 years since I met him at the Canton Fair in 2008. Time is just really flying by. And Claire and I, we’re just looking at new shows we have to offer you guys. We have amazing guests, amazing content to share, to most difficult to choose who to put up for next week’s show. But we have amazing guest already, I don’t know, I don’t want really surprise, so next Tuesday. We also have really cool testimonials we got on Facebook from our listener. Our Facebook page Global From Asia. We have our own Facebook page, too. It’s Amazing testimonial, I’ll read it off, everybody goes. Hi Michael my name is Narinda and I live in Australia looks like the Global From Asia Cross Border Summit was awesome. It’s my dream to go to China and improve my Amazon business. I love your podcast. So thank you keeps for that. Alright Narinda, thank you so much for listening, we really appreciate all of you guys for choosing to download our mp3 and listen and Claire and I have been getting a lot of request from companies that want to sponsor the show so we put together some packages. Claire, do you want to talk about some of our sponsorship?

Claire: Yeah, sure. You all know sponsorship opportunities for the show as well as Global Cross Border Summit. If you are want to support the show and if your business in Asia. And I think those area really great way to improve your business. so you can reach out by email us at [email protected]

Mike: Great! Thank you. She’s been talking about on a great few companies and that’s all we have for this week. Thanks again for listening. We have tons going through the whole summer. We don’t take any holidays here on the show. So, enjoy your Zhong Xi. Make sure you go in. I haven’t buy my 711 here on the street. They are selling even at 711 here in China. So, enjoy and have a great rest of the week. Bye, bye.

Claire: Bye, bye.

To get more info, on running international business, please visit our website at www.globalfromAsia.com that’s www.globalfromAsia.com. Also, be sure to subscribe to our iTunes feed. Thanks for tuning in.