1. you need to confirm, that sales on your partner are real. Sometimes, following the numbering problem between China and Europe (China talks in 10.000, we talk in 1.000 unit), your partner will easily change one million with 10 million. And, of course, if somebody is selling 10 million USD a year or 1 million USD is a huge change. Especially, if he promise you to sell 1 million.
2. you need to ask the internet sales provider to confirm, that sales are real. On sites like taobao and tmall you can see the sales of last month. That is useful. And than you have sites like JD, VIP, Amazon, where these information need to e also observed.
3. you need to confirm the margin, that is made. For example the same products, different quality standarts (in terms of small % of quality), different marketing (what really matters), brand anticipation and Chinese understanding of market will make a huge change. Let's focus on a real example. An children rocking horse with almost same quality and same producer can be by a good marketing, international brand and know-how on a Chinese market be sold instead of 120 RMB for 400 RMB. Amount of sales is also different. Chinese will be in 3000 a month, international one in amount of 300 a month.
4. initial investment. Once we purchase a goods, where we know the quality (as we do it for 20 years) and the price, we need to be able to touch local costs. We were told, that a manager can earn 300.000 RMB = 40.000 EUR a year in China. That needs to be confirmed. If we compare to normal worker in the office, than costs are significantly different. Normal worker has around 6.000 RMB a month = 72.000 RMB a year (or 80.000 with bonuses).
5. initial investment in terms of amount of products purchased. Obviously we need to be sure, that it can be sold in the amounts, that were orders. And also a rules of MOQ come in the question. It is much harder to start with 1.000s of pieces of something you are not sure, or have no experience to sell.
6. protection of your brand on a Chinese market. That issue is solved by a local registration authority and we were told, that sales on Tmall can not done, unless you have registered your brand in China. Whole process can take up to one year and trust me, it may take even longer.
7. We are informed, that a registration on Tmall will costs us 50.000 EUR as an deposit. That needs to be confirmed, as this amount of money will leave our pockets and once we sale may not return. Also may not return once we finish to sale :)
8. Setting up a rules, what will happen, if the sales are not according the plan. Currently it is described, that a sales of 1 MM USD a year needs a 500.000 USD investment in beginning. Profit will be obtained not the first, but maybe second year. This will be downsized, as it is hard for us to invest in such a long term return expectation with small control over investment.
| money to put in | INITIAL | FIRST YEAR |
| money inside | ||
| Tmall store | xx € | |
| office rent | xx € | |
| people operation | xx € | xx € |
| product developmet (design - people) | xx € | xx € |
| marketing position of brand | xx € | xx € |
| marketing (promotion, photography, webside) | xx € | xx € |
| logistic costs for sales (pay to carrier) | xx € | xx € |
| fixed costs | xx € | xx € |
| purchase of goods | xx € | xx € |
| goods we have | xx € | xx € |
| sales its value of purchase | 0 € | xx € |
| sales | 0 € | 790 000 € |
| sales cash | xx € | xx € |
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