Consumer Goods Technology
July/August 2001

by Kit Davis

CHINA, JAPAN, KOREA, TAIWAN - these and other Asian countries have been supplying American consumers with products for years.

Now it's our turn!

U.S. consumer goods companies are taking notice of new markets in the Far East, as commerce with Asia is reinvigorated via lower tariffs and more favorable import regulations. For example, China's import duties will likely plummet with its imminent membership in the World Trade Organization (WTO).

But logistics and fulfillment can be a hassle. Getting product from one place to another in Asia is considerably more complicated than in America. Hurdles include trade restrictions, customs red tape, substandard transportation networks, currency differences and state-owned enterprises, to name a few. As a result, the huge transportation providers - FedEx, UPS and others - are eyeing and entering the Asian logistics marketplace. And smaller firms are also making their moves. For example, the Asian-based fulfillment solutions provider ecLogistics Asia (www.eclasia.com) is streamlining the process of bringing high-quality American-made products to the Far East.

"We want to be a total supply-chain and logistics solution for North American companies entering the market in China, Hong Kong and Taiwan," says John Sclafani, vice president of North American sales at ecLogistics Asia (ecL). The company provides end-to-end fulfillment and logistics for American companies selling their products in Greater China. Services include IT infrastructure, call centers, fulfillment, transportation and over one million square feet of total warehousing space.

"We do nothing that's unique in the U.S., but by Asian standards, our services are extremely high quality," Sclafani reports.

ecL's focus is the B2B market because, as Sclafani explains, in Greater China, consumers may browse online, but shopping is a cultural pastime and people prefer shopping at a brick-and-mortar store.

Understanding the local culture when trying to sell in Asia can be essential for success, while having an American-based viewpoint can be a recipe for failure. "Some companies are too ethnocentric," Sclafani observes. For example, he recalls that when a U.S. company offered products priced in dollars via an English-speaking call center, its performance in Asia was dismal. But he notes that a different U.S. company succeeded in Greater China as a result of seeking product-mix advice from Asians, using a call center staffed with Chinese-language speakers and stocking products locally for faster delivery.

ecL offers the China-centric approach that CG companies need when attempting to penetrate Greater China markets.

ecL's Asian employees can help U.S. firms localize their brands and select which products are most likely to succeed in Greater China. ecL manages a 50-seat, 24 x 7 call center in Hong Kong that serves all of Greater China, and its call-center personnel speak local languages such as Mandarin and Cantonese. The call center uses the latest CRM solutions, including automated call distribution and voice-over IP technology.

For warehousing and inventory management, ecL operates an enormous facility in Hong Kong, where Webcam technology enables clients to view warehouse inventory online. It plans to expand soon into Shanghai, Beijing and Guangzhou. ecL will also fill orders, manage transportation and handle reverse logistics for its American CG clients. Additionally, ecL provides online reporting services, including Web-based, real-time information retrieval and inventory visibility.

ecL handles shipping within Asia, and Sclafani notes that ecL representatives are experienced in the nuances of Asian transportation. They know how to comply with Chinese regulations and how to get the sometimes difficult-to-obtain licenses required to move products in-land. In addition, ecL's local relationships enable the company to take advantage of the Greater China logistics infrastructure. In Hong Kong, ecL has its own fleet of trucks; in China and Taiwan, ecL outsources transportation. And for CG companies whose items are being made in Asia, ecL's services mean products need not travel round-trip to the U.S. and back to Greater China.

For cross-ocean shipping to Asia, ecL can provide assistance, but Sclafani points out that many U.S. companies have their own transportation providers and their own logistics group to manage the ocean-crossing process. He says that more and more companies are choosing air freight - especially for small, high-value items - over slower ocean-carrier delivery.

Asked about recent strains on U.S.-China relationships, Sclafani affirms, "The recent tensions will pass by. We do too much business with each other. Circumstances today are completely different from the old traditional Cold War situation."

Sclafani is confident that China holds great promise as a marketplace for American consumer goods, especially with the country's imminent entrance into the WTO. He notes that with WTO membership, tariffs that are as high as 65% for wines and 85% for jeans will fall to 15%. He concludes, "China, with its 1.1 billion people, is a market U.S. companies should consider."