China Syndromes

Over the years, I have written various columns that one might classify as "How Not to Sound Stupid at P-O-P Meetings." They've covered such topics as "Your God, Your Family and Your Mold-Maker," "There's No Crying in Patent Law," and my personal favorite, "Sneaking Golf Clubs onto a Plant Tour."In the past 18 months, "Let's send it to China" has become something of a siren song for cost-conscious customers. However, as often happens with any good idea, some clients are under the impression that China can be some sort of panacea.Here are some practical realities, courtesy of our sister magazine, P-O-P Design: A display parts project must be large enough to justify outsourcing to China -- at least $200,000. Why? For one thing, there are some hefty upfront expenses such as a broker's 25% cut and the very high costs of travel. The Chinese now produce high-quality parts that go beyond the simple molded plastic or welded wire assemblies of the past. They are now considered terrific replicators of even complex display parts and electronic components. However, their lack of first-hand U.S. retail market experience makes it unlikely they could design an effective display on their own. Companies just getting into sourcing from China are advised to use a broker who understands each factory's capabilities. One way to find a broker is to attend regional trade shows where they exhibit. A good broker also can help make travel arrangements. A personal visit lets suppliers know that you are serious about doing business and that quality and ontime delivery is very important. One expert also noted, "In Far Eastern culture, it is considered very poor form to try to take advantage of someone you know personally." When visiting factories, have an actual project for everyone to bid on. It directly tests their capabilities so you can compare apples to apples. If possible, bring engineering drawings, specifications and a prototype for the part you want produced. You must be clear about your company's policy on human rights and safety issues. When a project is undertaken, financial arrangements usually begin with a Letter of Credit. If the relationship grows and is successful, it may then evolve into a joint venture. Even if everything else proceeds smoothly, the China option adds substantially to lead times -- typically between four and six weeks. Items to be shipped should either 'nest' or break down in order to minimize volume.A final thought: Different countries have different capabilities. For example, China is considered excellent for molded plastics; others look to Thailand for metal forming and welding. In short, tasks that can be reduced to a formula can be performed throughout Asia. But anything that isn't routine or standardized, and that requires specialization, adjustment, people skills or close contact with customers, should remain in the U.S.Randy Curtis's recent In-Store Marketing Institute seminar, "Their Box, Your Brand: Working with Wal-Mart and other Mass Merchants," is now available on the Institute's Web site in the Lecture Hall. I say this with a bit of trepidation because at a recent industry meeting, several in-store marketing execs opined -- quite loudly -- that they are getting tired of being taken to the woodshed by Wal-Mart. Nonetheless, I recommend taking to heart what Curtis says during this online seminar. He spent six years as vice president of creative and media for Wal-Mart, so he's more than qualified to take the viewer on a "virtual store check."And being a Wal-Mart guy, Curtis isn't inclined to pull many punches. Some of the pictures he shows are, quite frankly, downright embarrassing. For example, he critiqued one CPG marketer's obvious attempt to butter up the chain by adding the Wal-Mart logo and tagline to its P-O-P display's side-panel. Curtis wondered, "Don't Wal-Mart customers already know that they're at Wal-Mart?"Amen, brother. To prepare industry trend speeches, I often have to look high and low for good examples of "retail-account-specific displays" that effectively blend a brand's essence with a store's story. They're scarce.Why? Having seen a ton of P-O-P over the years, I know that a lot of marketing execs simply don't know how to reduce their brand's essence to a message that can be conveyed effectively on a header. Expecting that these same folks could be sensitive to the retailer's "marketing story" is probably pie in the sky.However, doing nothing more than slapping a chain's logo on your displays is absurd. Target may force marketers to do a lot of things they'd rather not do, but Target has never asked a CPG company to simply print red bullseyes all over everything.Oh, and one more thing: Curtis said the brand referenced above not only used the wrong Wal-Mart typeface on the display, but also inverted the word order of Wal-Mart messaging. Is it really that hard to walk a store, double check the signage and do your homework?One of the In-Store Marketing Institute's top speakers, Paul Pinkus, national director of the In-Store Marketing and Store Design Group at American Express Tax and Business Services, will be leading a "P-O-P Producers Executive Forum," to be held in Rosemont, Ill., (in other words, near Chicago's O'Hare airport) on Wednesday, Nov. 17. Along with panelists Jeffrey Brown of Seyfarth Shaw LLP, David Schwartz of Jacquard Associates and Thomas Estey of LaSalle Bank, Pinkus will discuss financial, operational, intellectual property and financing issues that affect P-O-P producers. To register, contact Kathy Bunce via e-mail at Kathleen.T.Bunce@aexp.com or at (312) 634-4506. The cost is $150.

China Syndromes

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