China Expert James Chan is at it again this time in a textiles mag...
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A good agent who generates millions in export sales is the goose that lays the golden eggs. Some companies may become jealous of the large commissions that successful agents can bring in. U.S. managers who make good corporate salaries may wonder why their foreign agents make so much more money than they do, even though they are the “handlers.”Your company net may be 8% and your sales rep is making 10%... !!! An outrage... or your making $120,000 and the sales rep in China is making $500,000!!! But you have no idea how much of the 500K is being used to do what to get the millions in sales for your product in China.
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5 comments:
Dear John I read that article, this is a part that if find interesting:
"I once interviewed a bilingual mechanical engineer in Shanghai whom I was trying to recruit for a U.S. industrial product manufacturer. The engineer said to me: “I believe that your client only has three more years of business in China. This is because people in China will reverse engineer your products and sell much cheaper versions.” "
About chinese reversing engineering foreign products and selling cheapers version. Has this particular thing ever been a problem to you as a businessman?
Never, but then I have always worked in specialty goods, never in commodity goods.
Chan also think the fears are nonsense.
Name one example where China has successfully reverse-engineered a product and sold it profitably. if it were a problem, then it would have happened by now, no?
There is much money to be made scaring people away from doing business. We call them patent attorneys in USA.
Another empty fear is being pirated or knocked off, specialty or otherwise. Just google this blog for pirate and piracy and knock off for the plenty I have said on that.
Also read the book:
Against Intellectual Monopoly by Boldrin and Levine.
"Your company net may be 8% and your sales rep is making 10%... !!! An outrage... or your making $120,000 and the sales rep in China is making $500,000!!!"
I'm not that sure I understand what your saying about commissions here. What would be appropriate commission % for an agent and a sales rep?
Commissions are fairly standardized by industry, they are what they are. Often, they are higher than the net, and often the sales people are higher paid than the managers "above" them. What James Chan is noting, and I agree completely, is in essence do not kill the goose that is bringing in the gold. Managers are easily replaceable, a productive salesperson is extremely difficult to replace. If you have a problem between a manager and a productive sales person, without question, fire the manager.
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