Beat 'em with marketing

One of the biggest threats industrial suppliers perceive is the flood of products arriving on our shores from China, Taiwan, India, Brazil and various other places with low labour rates and enough technological know-how to make a product North American manufacturers will accept. These imports have been arriving here for a long time now, since the early '90s at least, but many suppliers still seem to be at a loss as to how to compete against them. Quite often, they have simply ceded the low end of the market to the cheap imports and shifted to selling more expensive, higher quality lines.

Analogy time. Just about anyone would agree that McDonald's makes a crappy food product. And it is not really that cheap; you can get a better meal in a Mom-and-Pop diner for less. But McDonald's is everywhere and it's easy. You can do drive-through and you always know exactly what you are going to get. The company keeps itself in front of you all the time with a constant drone of brand messaging. To put it quite simply, McDonald's has demonstrated that you can acheive margins at the lower end of the market with a strong, long-term advertising and promotions strategy.

Industrial suppliers, on the other hand, panic the minute someone beats their price. And well they should, because they have not laid the groundwork to claim there is anything better about them or their products that would justify a higher price. Chinese imports often have a lot of weaknesses. Even if the product is OK, there is often little or no local support if it breaks or you need help using it. I don't want to say the documentation is weak, but you would probably learn more about how to maintain your Chinese product from reading a bubblegum wrapper. China has come along way on the quality and support it offers with its industrial equipment and supplies, but at the same the prices are — you guessed it — rising. Many Chinese manufacturers are outsourcing work these days to even lower-cost countries such as Viet Nam. There is ample fodder here for a marketing campaign aimed at neutralizing the effect of the Chinese price advantage. Manufacturers are willing to spend more on products, but they have to know why they are doing so. They must be shown, convincingly, that the Canadian distributor has a product that is better and better in ways they need it to be better. If that case is not there to be made, time to start looking for another product to sell.

If North American suppliers have weak marketing strategies, Chinese marketing in North America is even worse. It is often impossible to get even basic, necessary information about the product from the company, even with direct contact. The language barrier is a problem, as are the low margins themselves which don't allow Chinese suppliers room for a marketing budget. Also, from what I have read and observed, Chinese businessmen tend to place great stock in networking and personal contacts. This makes them less likely to think an impersonal message in a magazine or brochure is going to be effective. This leaves North American suppliers an avenue of attack they can use to protect their margins and prices: superior marketing. Too bad most won't use it.