Running a cross-border business: logistics, operations and finances
Mike Michelini is the host and founder of Global From Asia. Started in October 2013, Global From Asia is a blog and community to help internet business owners and executives learn about business in Asia and China. Global From Asia provides tips and services for Hong Kong incorporation, banking, running a trading company, and China import-export tips. Since, they have also expanded into cross border business between China or Asia and the world.
Running a cross-border business
What do you think is the biggest challenge that businesses are facing when they try to go international and run their own cross-border business from China?
Banking has become a huge problem. In Hong Kong and China, it seems like it’s getting harder to get account approval even for marketplaces such as Amazon; gatekeepers are making it more difficult for people to do business.
If you’re talking about mainland China specifically, language and culture is totally different. There’s such a huge difference of ways to do business in China from the rest of the world.
In addition to offering low prices, what other strategies can businesses use to gain competitive advantages when selling abroad?
I always think competing on price is dangerous. Amazon and a lot of the marketplaces try to simply commoditize the sellers and make them compete on price but I think some ways you could differentiate would be bundling your product with smaller accessories, maybe even introducing a subscription model for your business.
Product businesses should invest in educating their customers through blogs and eBooks by having their own training materials. I always try to tell people to diversify their business model. Maybe your core business is selling products online but you could also add in training, membership, books, or bundles that you could sell in a package.
What is the most important thing that you think business should make sure of in terms of cross-border logistics?
I’ve noticed that there’s quite a wide range of differences in services of logistics companies. Are you going to be warehousing in China and shipping or are you going to send everything to, say, Amazon FBA? It’s about knowing what the requirements are, what your order volumes are, and what your expectations are with the service provider.
In the process of finding a trustworthy provider, do you think a company needs to personally travel to China or are there services that help with the process?
From my own experience when I was still US based, it was challenging because the bigger logistics companies are so busy and I was not a big enough client for them. Sometimes smaller companies didn’t have the manpower or the systems to communicate promptly to me.
That being said, a lot of times there are companies in the US and abroad that do events and trade shows so you can also meet them in your home countries as well. For this reason, I think you don’t necessarily need to come to China or Asia.
What are your opinions on running a cross-border business remotely? Do you have any insights or tips?
Of course it’s the dream to run your business from anywhere. I’ve been focusing more on the export side of things. Getting started might be hard: to find the factory and your logistics partners, and get your company set up. But actually, the corporate stuff is getting more and more online.
I think it’s helpful if you meet the factory. Once you get your supply chain and your operations setup, it’s totally possible to travel around, live anywhere, and work online to build your eCommerce cross border business.
A skill people should work on is to have good network anywhere with your team and your partners. There are more and more technologies that help with this such as Slack and Asana tasks. It takes a little bit more work upfront but once you get these systems and processes in place, it really sets you free.
Importing into China is a bit harder. For one, it’s a harder market to get into. A lot of Chinese websites want you to be physically in China to log into them. For banking, a lot of times you still have to go physically to the bank and you still need physical stamps and chops. If you sell on Taobao and Tmall, you might not have to go in person but there are still more requirements for the sales process to meet face to face in China versus overseas.
Financial services for cross-border businesses
How have cross border payments traditionally worked for foreign companies that conduct business in Asia?
Traditionally, it still is a lot of bank wires. In 2005 when I was still in New York City working on Wall Street, I was doing my first cross-border payment to Hong Kong from my New Jersey bank account. I had to go to the bank in person and fill out the forms. Everybody was nervous. The banker was like, “are you sure you want to do this? The money can’t come back. Do you know who this company is?”
In the past, there were times when the bank would freeze my account, simply because the transaction came from a Chinese or Hong Kong IP address. However, things have changed and recently, there have been more and more cross-border payment systems such as Amazon FBA for people to receive money, along with virtual banks in Europe and the US.
How has your experience been with Neat? How does Neat help you and your customers run international businesses from China and Hong Kong?
I’m a huge fan of Neat. I met Neat’s founders in their early days and I’m so happy that they were working on something like this. It has answered a lot of the questions that our readers and eCommerce clients have had.
The alternative that Neat offers, just makes sense. I’ve tried some online banks in Hong Kong, but the websites are just very hard to use or just not secure, unfortunately. The process is slow and customer service isn’t great. Neat has been really keeping up, with its Stripe and PayPal integrations as well. Neat is doing what my readers and clients want: allowing people to not worry so much and spend hours in the bank branch, but focus on growing their business.
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