International Small-Medium Size Enterprise Sales Channels Penetration and VSM used for “Build in China”
Actual Challenges & Opportunities of an International Small-Medium Size Enterprise in China
Currently, along with the appreciation of the RMB, it is more difficult than ever for international small-medium size enterprises based in China to gain benefits from exportation, from a sales points of view. Furthermore, from a purchase perspective, the price of commodities like crude oil, non-ferrous metals, iron ore, and coal soaring increased in the meantime. It seems that some international enterprises are stuck in both sales and purchase ends. The problem international small-medium size enterprises are facing is how to win a reasonable profit margin.
One of our clients is one of these companies and does have those challenges. We are supporting them by figuring out how sales channel penetration and value stream mapping (VSM) are used to support “Build in China”.
Sales Channel Penetration
First, we analyzed our client's existing customer database and sales revenue. We found that the client mainly relies on one big customer, which is quite often the case when this type of small and medium-sized companies start their operation and sales activities in China.
Based on this point and on risk management, we worked together with our client to pick up three prospective industry segments: e-mobility, telecommunication and new energy. All of these three industries are also part of future trends in the Chinese industry and matched with “achieving a carbon peak and carbon neutrality" as one of the key tasks in the next few years. Once the industrial scope is settled down, we supported our client to pinpoint their suitable potential for one to two target/lead customers per industry segment to start sales activities. Of course, potential customers have a dynamic status according to actual investigations. Hence, we help IMIG clients to build both dynamic and stable cross-network sales channels for the sake of business risk considerations.
During the new customer development stage, IMIG provides professional tools like a roadmap to help our clients to perform customer assessments. This includes a comparison with the project qualification profile, a competitor analysis, a summary of the position today, an action plan and many more to make sure that our IMIG client does build up know-how about their potential customers. During the project, we found that our client was receiving new product development opportunities from their potential customers. Furthermore, we found that there is a bottleneck regarding the communication with their European based headquarter. To align the client’s requests of their potential new customers in the Chinese market with the standard product development process of the headquarter in the European market, we adapted the product development process accordingly with different seminars to smooth the coordination process and make it work more efficiently.
After this analyzing process, our IMIG client found that more than 90% of customers want our client to increase their local operation in China for a physical factory initial audit, to bring the price/cost down, to provide a more flexible service, prompt delivery, etc. Based on the customers’ requests, IMIG starts to support our client with the “Build in China” process.
VSM used for Build in China
VSM (Value Stream Mapping) is normally used to eliminate waste by analyzing each step of the material handling process and information flow. IMIG creatively uses VSM to help our client to increase their operation and value-adding activities in China.
After mapping the whole value stream, we classified four models (today, min, mid and max) with four different seminars and supported our client to make a detailed financial analysis and configuration (including operations cost, initial investments, manpower plan etc.) to provide multiple options in order to make a final decision.
IMIG also maintains a relationship with different local investment bureaus to help our clients to find the most suitable workshop location from both a finance and an operational point of view.
Meanwhile, IMIG provided the process and a general timeline for “Build in China” in order to provide a clear and holistic picture to our client.
Is your company facing the same problems and bottlenecks as well? We carry forward continuous research about international small-medium size enterprise sales channels penetration and VSM used for “Build in China”. Please contact us if you are interested.
Senior Consultant | IMIG China
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