Selling without Bribing in China
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Hi!
Many
Multi-National Companies in China are making news for
the wrong reasons recently.
First, it was global pharmaceutical giant, GSK, which
was under investigation for widespead bribery, and even
had a number of key management staff being arrested, or
barred from leaving the country.
Sanofi Aventis
and
Eli Lilly were under investigation next.
Across the ocean,
JP Morgan was being investigated for
hiring the offspring of high-ranking officials in their
China operations.
Given such high-profile
investigations (and arrests), it seems like it won't be
"business as usual" in China any longer. In fact,
it had been a common assumption that one needs to
"grease the wheels" and develop guanxi in China,
if you really want to make it big in China. But
can you actually sell a lot of products and make lots of
money in China WITHOUT bribing?
Hence, this
month's topics:
-
Selling without
Bribing in China; and
-
Beware of Event
Organisers that could Fleece You in China
This issue's
main article is on "Selling without Bribing in
China", and how some sales people (even from
foreign companies) bribe their way to meet their sales
targets, while other sales people win over their
customers without any bribing.
In brief:
To read the rest of this newsletter, pls.
click here (http://www.psycheselling.com/page4.html).
Selling without Bribing in China
by c.j. Ng
Charlie thought he had his client in his hands.
He had fully grasped his client's situation. His
client, the Purchasing Manager, was in his late-20's,
just had a house and a baby, AND his salary is awfully
low. Charlie thought that a person in such a
situation would need or at least like to have some cash
to upkeep family expenses. No, in fact Charlie
knew his client will need money.
Since
Charlie worked for a foreign company in China, he would
not be able to bribe his client.
However, Charlie had it all planned out. His
company provides products to distributors at a much
lower discounted price, than compared to the prices that
end customers get if they were to buy directly.
Hence, there's enough margins from the distributor to
fork out from the price differential and bribe the
customer. In fact, Charlie worked with a couple of
"distributors" whose roles were NOT to grow the market
for Charlie's employer, BUT whose sole purpose was to
"help foreign companies do the things that these
companies weren't allowed to".
Charlie knew that if he were to give his client enough
money, that will be the key differentiator in a highly
competitive industry. He knew this customer "is in
the bag". He had the "guanxi"
so to speak.
Unfortunately for Charlie, when the client eventually
bought from someone else and not from Charlie.
Thinking that the competitor might have given more money
than he did, Charlie tried to ask his client if what he
"offered" was too low.
The client politely told Charlie that the competitor did
not offer any bribes at all. The reason they won
the bid was because they paid more attention to the
client's company's needs, and not his personal financial
situation. The client thanked Charlie for his
"thoughtfulness", and told Charlie to keep in touch.
A few months later, a whistleblower exposed Charlie's
"under the table" practices, and both Charlie and his
distributor were arrested. Charlie's boss was not
spared either. He was fines, and promptly fired
from his job for not safeguarding the reputation and
integrity of the company.
Can You Sell without Bribing in China?
If you were to ask a corrupt
sales person why he bribes his customers, chances are
the answers could be:
-
Because everybody is doing it;
-
Because every customer asks for it; and
-
If we don't do it, we will lose the business
However, there
are some companies who are very strict with their
policies and corporate governance, and ensure their
staff do not have any opportunity to bribe their
customers.
For these
companies, it was found that:
-
Even if their sales
people DON'T bribe their customers, they can
still win sales;
-
These companies sell
to both foreign and Chinese companies, and they
are still able to win sales from all kinds of
companies WITHOUT bribing; and
-
While having no bribes
(or even gifts) may make the sales process
tougher, such obstacles can still be
overcome and generate sales!
Some explanations could
be:
-
While some customers
could be corrupted and expect some kind of
kick-backs, most of them would put their boss's
interests BEFORE their own personal interests.
That is, the acceptance of a bribe must be made
ONLY if their boss's/ management's requirements
have been met FIRST. Hence, if you don't
bribe but could meet your customers'
expectations when your corrupt competitors
couldn't, you can still get the sale;
-
Some customers also
have very strict anti-corruption practices, and
will buy from those who are just as strict;
-
Some buyers are
concerned that if they were to be seen as
corrupt and accepting kick-backs, it might hurt
their future career advancement; etc.
In other words,
you CAN
sell without bribing in China. While you may
not sell and make as much money if you don't bribe
as compared to if you were to bribe, there will
always be risks of getting caught and severely
punished.
It is also interesting to
observe that:
-
If a sales person
started work in a company where bribing is
condoned, that sales person will be compelled to
believe he could not sell without bribing; AND
-
If a sales person
started work in a company where bribing and
other types of corruption is NOT condoned, that
sales person will look into the different ways
of selling without bribing the customer!
Making Sure Your Sales Force Does NOT Bribe
There are various aspects that companies will have to
address to make sure that their sales people come clean
with their sales strategies. These are:
-
Systems and policies;
-
Values and behavioural
standards
-
When setting the right systems and policies, companies
will have to:
-
Ensure
there are no loopholes that corrupted sales people,
distributors or customers could capitalise on; and
-
Review
existing sales and channel sales policies to make
sure the system is not being exploited
Sales people will need
to be briefed, trained or even indoctrinated on the do's
and don'ts of the business, not just what to and what
not to do, but also why they need to adhere to strict
regulations.
Finally, it's not simply enough to enforce company
policies. Sales people will need to be equipped
with the skills to handle some customers' kick-back
requests, hopefully with the possibility of closing the
sale remaining intact.
Sales people will also need to evaluate:
-
Can I reject a customer if he is corrupt beyond
redemption?;
-
-
And The Biggest
Obstacle IS... ...
As you can see from the
above ways to stamp out bribery in selling aren't that
difficult to implement. Yet, many companies are
still struggling to ensure that their sales processes
are clean.
So what's the challenge?
In a word: Will. In other words, does the senior
management of the company have the will to make sure
things are done the right way.
Some issues bothering senior managers may include:
-
If we turn away those corrupted customers, can we
still meet our growth targets? Will we then
lose out market share to our competitors?; and
-
If we were to rein in our top sales people and
distributors, will they leave the company and thus
crippling the company's sales results?
However, one aspect that senior managers need to
consider is this: if you were to under-perform in your
sales targets and market share as a result of selling
without bribing, the worst case scenario is that you
will just lose your job.
On the other hand, if you were to achieve sales targets
by condoning corrupt practices, you may lose your
freedom, your entire career and your dignity. It's
something worth considering since there are now some
high-profile whistle blowing in recent months. It
may be high time to at least tighten the screws so your
sales force come clean with you.
Need help in
ensuring a sales force that does not need to
bribe in order to sell in China? Simply e-mail
info@directions-consulting.com or
call +86-136 7190 2505 or Skype:
cydj001 and arrange to buy me a mocha. All
information shall be kept in confidence.
Power Breakfast Hour:
12 Sep 2013
Selling without Bribing in China
-
Why bribing in selling in China is rampant, and how
sales people can learn to say "no", and still win
the sale;
-
How the bribing is being
conducted, and how companies can take steps to stop
such practices; and
-
How to overcome the challenges that senior managers
face when ensuring a clean sales force in China.
VENUE: Crowne Plaza Shanghai • 400 Panyu
Road (near Fahuazhen Road) • 上海银星皇冠酒店 •
番禺路 400 号 （靠法华镇路）
DATE: Thursday, 12 Sep 2013
TIME: 08:00 a.m. - 10:00 a.m.
PRICE: RMB 200 ONLY!
To make this a more conducive
discussion, we are expecting a small
group of about 15 people only. The room
can only take in 18, so please register
early to avoid disappointments. Please
e-mail your registrations to
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Pls. check out our web sites
www.directions-consulting.com
and
www.psycheselling.com/page4.html for
more inspiration.
Tips for Managers:
Beware of Event Organisers that could Fleece You in China
Christel Lee
China Print is predominantly comparable to drupa and, over the years, it has
warranted substantial market attention. However, those who have been watching
would notice a steady decline in numbers. The current market situation has
not made things better.
Organisers claimed on the show website that they
expected to attract 180,000 visitors. This number
certainly is massive, however being present on-site it
felt otherwise. Booths were spotted empty in spite
of company signs erected, while visitor numbers were
significantly lower by the tail end of the third day.
The
Good
It would be fair to say China Print has not quite lost its touch as an
international exhibition. The crowd had sprinkles of visitors from India,
Thailand, maybe Indonesia. For some, it was a big source of economically-priced
equipment – think 'bargain centre'.
For those with business acumen, China Print was an extension of their profit
margins. Renowned digital press manufacturer MGI Digital clocked a sale each
day. This was the US firm's maiden exposure at China Print. Raymond Pena Jr.
commented that for his company's first attempt at Asia, the response has been
beyond expectations.
The show was also a big showcase for manroland after the last couple of
turbulent years. Ever since Langley Holdings' takeover and overhaul of
management, the team has enjoyed some relief. manroland sold at least four
machines at China Print as at its second day.
By the fourth day of the event KBA had sold over 21 machines as had Founder
Electronics, one of the Republic's most famous digital players. The
Beijing-based company, which debuted its latest digital presses, was swarmed by
local interest.
Goss International known for its newspaper web presses' dominant market
presence targeted three markets: newspapers, books and semi-commercial
publications with the Magnum Compact. According to Eric Bell, Goss International
marketing director, this combination of automation technologies makes the Magnum
Compact press ideal for producing run lengths from as low as 500 copies through
to 250,000+.
 "Today's
cost pressures on printed media mean that printers of every size and variety
need to streamline production, reduce overheads, and keep their presses running
round-the-clock," commented Bell.
Heidelberg AG and Hewlett Packard booths seemed to be the spots where most
visitors congregated.
The Bad, and...
One appalling feature was the usage of 'tents' on site! It was said many
exhibitors were given the impression their booths would be erected within the
concrete building of the exhibition centre. However, three big tents were
erected to serve as floor space. Ventilation was powered by generators with
inflatable plastic tubes hanging below the roof.
Some exhibitors successfully masked the presence of others with big walls
creating a false impression as the end of the hall, effectively resulting in
loss of visibility at the show. Those who got the short-end of the stick could
only lament they were "placed at the wrong booth"
What made matters worse was the fact that many exhibitors housed in tents
were told to dismantle on the fourth day of the exhibition for security reasons.
Those in exhibition buildings were told electricity supply would be terminated
at 11am on the last day of the exhibition.
Organisers should have exercised more consideration before deploying marshals
to send visitors out approaching 5 pm. Being asked to leave in the middle of a
customer negotiation was a common complaint.
This could lead to a potential uproar accompanied with losses if those asked
to leave by marshals happened to be big customers on the verge of a
million-dollar deal, although not much hope was pinned on getting compensation
from the organiser. It is, however, assumed much damage has warranted a price
reduction on space for the next exhibition in order to attract those
already-bitten.
The
Controversial
A big international player surprisingly had a much smaller booth! This
company was known to invest in super large floor space to cater to a wide
display of equipment. Staff was seen commencing the dismantling of the booth on
the fourth day of the show.
One worrying sight nobody could miss was the blatant disregard to safety at a
tradeshow where paper predominated throughout the site. Visitors were seen
lighting up beside presses despite numerous signs prohibiting the act!
Peddlers stood outside halls selling the China Print catalogue, similar to
the thick listing of exhibitors given out complementary with registration last
drupa. Buying from these peddlers entitled you to a 50% discount at RMB100 a
book, in comparison to buying from the show organiser.
Major exhibitors commented their booths were not ready on the first day and
many had to wear masks while last minute work was executed. It would not be
surprising to hear that China Print's credibility has been significantly
tarnished as a result of the shortcomings experienced by exhibitors and visitors
alike.
To find out how you could get the most out of your event, trade show or
conference organiser,
you can e-mail
info@directions-consulting.com
or call +86-136 7190 2505 or Skype:
cydj001
About
Directions Management Consulting
Directions Management Consulting is the
partner of
LeadershipIQ in China and
Asia.
LeadershipIQ helps more than
125,000 leaders every year through the
facts drawn from one of the largest
ongoing leadership studies ever
conducted is used to help companies
apply resources where the best possible
results be achieved.
In addition, Directions Management
Consulting is a leading provider of
sales performance, innovation and
experiential learning solutions in China
and many parts of Asia.
Psycheselling.com
is the sales performance arm of Directions
Management Consulting specialising in
conducting training, research and
consulting services for sales managers
and their team.
Raybattle is the strategic
partner of Directions Management
Consulting specialising in experiential
learning events and management retreats.
Currently, Directions Management Consulting
has served clients such as
GSK, InterContinental Hotels Group, Unilever,
Bristol-Myers Squibb, Roche, Philips
Lighting, Carrier, Ingersoll Rand,
Freudenberg etc.
Through collaboration with consultancies
such as
Forum Corporation,
MTI,
de Bono China,
ProWay
etc., the consultants in Directions
Management Consulting have served
clients such as PwC, Volks Wagon, Air Products, Evonik, Wacker, Epson amongst others.
Directions Management Consulting will
increase its efforts to conduct
leadership studies in China and other
parts of Asia, so that more companies
apply resources where the best possible
results be achieved in this part of the
world.
Enquiries and suggestions, pls. e-mail
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