At last, a business the Chinese can't dominate.

At last, a business the Chinese can't dominate.

At last, a business the Chinese can't dominate.

Moneybox
Commentary about business and finance.
Sept. 21 2005 3:50 PM

Attack of the Tentacle Lady!

At last, a business the Chinese can't dominate.

DÜSSELDORF, Germany—You don't have to go to China to see how much of the U.S. manufacturing base has relocated to the Middle Kingdom. On a trip to Germany with a group of journalists, I spent a few hours at the Messe Düsseldorf, a massive trade and convention center on the banks of the Rhine. (Trade fairs in European river cities have been essential to East-West commerce since the Middle Ages.)

To see just how far things have come—and how far they have yet to go—I visited Hall 16. The massive space was entirely filled with row upon row of booths manned by Chinese sales reps. They were hawking Chinese-made vacuum cleaners and power tools, fans and air conditioners, masking tape and panini presses, drill bits and tape measures, shovels and irons, clocks and coffee makers, juicers, and blow-dryers.

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What was just as remarkable as the goods on display was the incompetent salesmanship that accompanied them. Here is a piece of good news for America: The Chinese can make anything, but they still need us to teach them how to sell it.

American trade shows are universally glitzy affairs, even (and especially) at the shows where the products are the most boring and pedestrian. High-end trade shows like the Consumer Electronics Show or the Detroit Auto Show feature hot spokesmodels waxing rhapsodic about products and rent-a-celebrities. The manufacturers' sales reps are always pros—smooth-talking, impeccably dressed, generally good-looking men and women whose patter is polished to the same sheen as their loafers and heels. Anyone who expresses the slightest interest in the product is met with a sincere, firm handshake, a demand for a business card, and contact information. And they won't let you move on without a heap of sales literature.

But my experience in Hall 16 of the Messe Düsseldorf was quite different than anything I've experienced at a U.S. trade show. I stopped at the booth of the Ningbo Herine Electric Appliance Co. Ltd., a 10-year-old company based in coastal Zhejian province, whose blender, equipped with an American-style plug, caught my eye.

The two men staffing the booth greeted me with all the enthusiasm of Dick Cheney at a MoveOn.org rally. They didn't rise to greet me. No inquiry was made as to my name and business. I helped myself to the brochure and asked how much it would cost for 1,000 blenders.

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Their English was only marginally better than my nonexistent Chinese. (Bad on me, yes. But then again, I'm not in the business of selling goods for the U.S. market.) The younger man remained rooted to his seat, focused intently on his cup of coffee. The older man took his cigarette out from between his teeth, which were the color of a nice dark flan, and blew smoke in my general direction. I couldn't understand whether he was saying eight, 18, or 80, and so finally we reverted to what the Phoenicians must have done millennia ago when they plied the Mediterranean. I scribbled down numbers on a tablet and asked him to circle the right answer. It was $8 apiece.

The man and woman at a booth selling novelty products were somewhat more solicitous—perhaps too much so. Their main product was a ball with a bunch of tentacles springing from it, a battery-powered head-scratcher/massager. We sat down and took turns getting our heads rubbed. Between the whirring, I could hear the woman speak of how the product "is reaching your acupuncture pressure points and increasing blood flow." It was tingling and oddly pleasant for a bit. But after a while, I got a head rush and began to feel slightly dizzy, like when I drank Slurpees too fast as a kid. I looked up to see the lady grabbing the belt of one of my traveling companions and attempting to jam a vibrating back-massager into the small of his back.

Now, one shouldn't expect that Chinese sales and marketing practices would be as advanced as their manufacturing techniques. Manufacturing is a matter of applying labor and processes to raw materials, over and over again. A culture of successful manufacturing can be engineered from the top down. That's one reason many countries without a tradition of market economics, like China, have been able to master manufacturing relatively quickly.

But marketing and sales are different disciplines. They involve persuasion and suggestion rather than command. It's not always enough simply to have a product of adequate quality available at a low price. Salespeople have to offer potential customers a reason to choose their product over the rival products available in the marketplace. China has an ancient merchant culture, but communism seems to have damaged its service economy. The blender salesmen behaved like indifferent bureaucrats. The tentacle team misread its customers in another way. Slipping a cold piece of metal into somebody's pants is generally not a winning sales tactic.

The United States has lost its manufacturing edge to China. But we still have a massive competitive advantage in sales and marketing, no matter what the cost differential between the two countries. The United States, after all, is where modern advertising, marketing, and brands were invented. And that is precisely why smart Chinese companies are interested in buying U.S. companies. Lenovo didn't want IBM's personal-computer business for its manufacturing processes. The Chinese computer market wanted the unit for its American management, its strength in finance, marketing, and sales.

Today, companies from wealthier countries outsource production to China to compete effectively in a global market. But we may increasingly find that Chinese companies have to outsource sales, public relations, and advertising back to us.