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September 14, 2012

Ex-U.S. Ambassador Helps Companies Break Into China

(Replaced with magazine version.)

Frank Lavin is a guy with lots of guanxi—which loosely translated means “connections” in Chinese. The Ohio native has served as U.S. ambassador to Singapore, led trade negotiations with China while working at the U.S. Department of Commerce, and held senior posts in the Asian offices of Bank of America (BAC), Citibank, and public-relations firm Edelman. When Lavin published a business guide on how to conquer overseas markets last year, his friend Karl Rove blogged a positive review.

Lavin is using those contacts to build an unusual type of export business. Founded in 2010 and headquartered in Akron, Export Now’s 15 employees handle customs clearance, trademark registration, order fulfillment and other back-end tasks for 24 U.S. companies. Rather than negotiate for shelf space with Chinese retailers as a traditional distributor would, Export Now runs its own virtual storefront on Alibaba Group’s Tmall.com, an Amazon.com (AMZN)-like e-tailing colossus with nearly 500 million registered Chinese users. “China is the fastest-growing consumer market in the world, but it’s still viewed as largely inaccessible for all but the top-tier U.S. companies or global [multinationals],” says Lavin, whose outfit also has an office in Shanghai. “We have a department store in the shopping mall, and any U.S. company can have shelf space in the department store.”

Among Lavin’s clients are distributors for Osprey, a maker of high-end backpacks based in Cortez, Colo., fruit farmers cooperative Sun-Maid Growers of California, and Brush Buddies, a Fontana (Calif.)-based company that makes singing toothbrushes. Export Now charges them $3,000 annually and takes a 20 percent cut of gross sales. Lavin says his clients do not have to slash their prices to attract customers on the mainland. “You can sell in China more or less at the same price point that you sell for in the U.S., and more or less for the same profit margin,” he says. “You’re not paying a wholesaler, you’re not paying a retailer, you’re not paying a distributor; you’re direct to consumer.”

Lavin, who says he’s backed by “a few million dollars” from angel investors, recently visited Chicago, Detroit, Atlanta, and Seattle to build awareness among domestic manufacturers and state agencies. The Michigan Economic Development Corp. (MEDC) in April started offering $1,000 grants to the first 100 Michigan companies that sign up with Export Now. Lavin worked out a similar deal with Missouri and is negotiating partnerships with eight other state and regional agencies and chambers of commerce. He expects these efforts to bring him 20 or so additional clients by the end of September.

One of the recipients of a Michigan grant was McKeon Products, a 50-year-old earplug maker whose models range from hearing protection for shooters to sleep aids for snorers. The Warren (Mich.) company, which does its manufacturing in the U.S., has had hundreds of orders since its products made their debut on Tmall at the end of May, says Jennifer True, international sales director for McKeon.

Not all of Export Now’s clients manufacture their products in the U.S. Anish Patel, founder and CEO of 25-employee Brush Buddies, sees Export Now as a “very fast way” to penetrate the Chinese consumer market even though his company makes all of its toothbrushes, including its singing Justin Bieber and Lady Gaga lines, in factories in China. In Brush Buddies’ first week selling on Tmall in late August, shoppers snapped up about 400 brushes. “Getting into retail is not a straightforward thing,” says Patel. “That takes sometimes months, years before you even get one store to accept your product.”

 

The bottom line: For $3,000 a year and a 20 percent cut of sales, Export Now deals with the logistical challenges of selling to China.

 

Source:

businessweek.com

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