11 Feb David Hoffmann | Why Having An On-The-Ground Presence Matters
Sometimes, life takes you on a journey and you end up where you need to be. This is exactly what happened with today’s guest, David Hoffman— who started off in retail, selling consumer electronics and is now the current CEO of Global Regency, an international trade powerhouse.
In 2016, David found himself thinking when he saw an opportunity to assist small-medium sized enterprises, startups, and entrepreneurs who were struggling with quality management issues and sourcing from China.
It was at this point that he launched Global TQM, under the Global Regency umbrella— offering educational and mentoring products and a done-for-you service that business owners can’t seem to get enough of.
“There’s just so many things that can go wrong,” says David, as he talks about why having an on-the-ground presence is essential to your success while doing business in China.
We’ll go into more detail on that, as well as…
- The two critical barriers when you’re looking for Chinese manufacturers or suppliers
- Unspoken rules to follow when you do business in China
- Keys to success when dealing with suppliers
- The pros and cons of moving your manufacturing to China
- How clear and concise communication and instruction can save you a lot of heartache in your manufacturing
Mentioned in this episode:
Joris Bryon: Hey, this is Joris of the Ecommerce Excellence Podcast and today I’m really excited to talk to David Hoffmann. David is a serial entrepreneur and has built multi-million dollar companies. He has led the international trade powerhouse Global Regency as the CEO for over 15 years now. And he is considered an expert in China sourcing, supply chain, private label and brand licensing. and Global Regency services or licenses, famous brands and retailers like JVC, Cuisenaire, Kmart, Walmart, Aldi and many others.
In 2016, David launched globaltqm.com under the Global Regency umbrella because he saw an incredible opportunity to assist SMEs, startups and entrepreneurs with quality management issues and sourcing from China. And they offer a range of educational and mentoring programs and actual done-for-you service. So I’m sure this is going to be really interesting. David, welcome to the Ecommerce Excellence Podcast. Super happy to have you here.
David Hoffmann: Hey, Joris. Thanks very much and thanks for having me.
Joris: Yeah, just to get started, I’d love for you to tell a bit more about your background. How did you get started? How did you, well, evolve to this point in your career because it’s been a long career already.
The Beginnings of a Serial Entrepreneur
David: Thank you, Joris. I’ll try to keep it short. I wish I could say it was all planned but it wasn’t. A lot of it was a series of events that led me on the journey. So, you know, I think any entrepreneur takes opportunities when they’re presented with them and your personal circumstances, you know, guide your choices. And hopefully, the path becomes a good positive one along the way. I started in retail in South Africa, where I come from, where we worked for a company and a lot of retail stores, selling consumer electronics.
And that was really the platform where I learned about retail industry selling and consumer electronics. And I grew through the ranks in that company until about 16 years ago when I got the opportunity to come live in Hong Kong and doing the sourcing and quality control. And that’s really when I started branching out into my own entrepreneurial journey from there, which led to a number of different opportunities.
Joris: Okay, so when did you know you wanted to be an entrepreneur? Because you started out working for someone else and you even moved to Hong Kong for them. At what point did you know like, Okay, this is what I want to do? I want to be an entrepreneur.
David: Joris, I always knew that I didn’t want to work for someone. That was kind of something I always knew about myself. And, you know, working was a means to earn money and get experience. So it was always my desire. I didn’t know if it would work out that way, but it was certainly what I wanted. So a lot of the decisions are made were always focused around, you know, the level of independence those opportunities brought me and the opportunity to, you know, be financially independent.
Joris: Okay, so from those early years in South Africa working experience, how, what have you learned that you could use later when you started on your own?
David: The grass is not greener on the other side. You work a lot harder when you work on your own. I mean, I have a business partner and, you know, I mean, I don’t think you ever work completely on your own. You always got surrounded by people in your life and in your business that you work with. But you work a lot harder. And, you know, the stakes are always a lot higher. And there’s no fallback, right? Where you can say, Oh, well, regardless of my performance, you know, there’s still a company that I work for that does well and pay my salary or my bonuses.
You kind of realize if this doesn’t work, I’m dead. What do I do next? So it kind of lights a fire in you that really makes you go all out and work 10 times harder than if you’re working for someone. So, you know, people sometimes say, Oh, I’d love to work for myself and have that independence. You know, I’m so tired of working for someone and I go, well, the grass isn’t greener on the other side. You know, it’s going to be a lot harder, but it is ultimately worth it.
Joris: Yeah, I think a lot of entrepreneurs can relate to that. I mean, usually, when people start on the entrepreneurial journey it’s either to get more freedom or to get more money and preferably a combination of both, of course. And then it turns out like it’s a lot of work, and I mean, there’s most of us probably have read The Four Hour Workweek. I don’t personally, I don’t know anyone who managed to have a four-hour workweek. It’s like, it’s a lot of work right?
David: Yes, absolutely. Exactly. Exactly. And anybody who’s read the Four Hour Workweek, there are great ways to delegate things. But on the line of, if you’re in a business space where automation can run a lot of business that helps, but certainly the early stages it requires time and energy.
Joris: Yeah, absolutely. And I think the Four Hour Workweek is more book on productivity and efficiency than on really reducing your number of hours to four. But anyway, that’s a totally different discussion. So you, yeah, so you’re active in China. A lot of ecommerce owners, they import from China or one import from China. What are some hidden risks of importing from China?
Lesser Known Risks of Importing From China
David: Joris, when you’re importing from China, there’s loads of hidden risks in terms of product quality and product pricing and knowing what you’re getting. Not that those characters aren’t inherent anywhere else but I think when you’re dealing with China, there’s so many different levels and standards of manufacturing. And, you know, depending on which manufacturer you’re dealing with, knowing the level of what they can produce and the materials they use and the shortcuts they may or may not take are all factors that you don’t have to necessarily think about doing manufacturing in other countries.
So you’re going to trade with a lot of caution. They are unfortunately a lot of scammers out there where they take your money, take your deposits don’t deliver goods on time or deliver inferior quality product. So you got to do a lot more work behind the scenes to validate and qualify what you’re going to get and who you dealing with. And I think that’s, people underestimate that.
Joris: And how do you find a good supplier or good manufacturer? Because, I mean, there’s always a language barrier and on top of that sometimes you’re like thousands of miles away from China and you have to judge somehow whether it’s going to be good to buy or not. And it’s really hard to do I can imagine.
David: Yeah. And language barrier and distance are two critical barriers. So there isn’t a short answer to it. How do you find any good relationship? I think you start a relationship with good intentions and you nurture that relationship over time. And I think to spot, you know, you judge your relationship on how well they communicate with you, how well you communicate with them. The responsiveness, the performance, you do a lot of sampling. And you slowly build the relationship. And if there’s a pattern of communication issues or quality issues, or commitments not being met, you start realizing it’s not a good relationship.
But there’s a pattern of some positives and a willingness to do things right you go deeper into that relationship. So there isn’t really a short answer for you but I do say, you know, a lot of sampling, a lot of checking, a lot of cooperation. Don’t leave things to the manufacturer to do on their own. You gotta check things every step of the way. And if you own that responsibility, you know, it makes for a better relationship.
Joris: Yeah, right. Yeah, that makes sense. And what would be like a good starting point for someone who’s considering to import from China?
Why Attend a Trade Show In China?
David: I always recommend visiting China is a good starting point and attending a trade show because I think it opens up your eyes to the reality and scale of what’s going on out here. It gives you an opportunity to meet a ton of suppliers under one roof without having to travel massive distances between them. So from a productivity perspective, it’s great. And from an exposure perspective, it’s great. And then if you got time, you start visiting the factories and understanding how they work and operate. But I just think a trade show is a great starting point to really take a big jump into the world of possibilities.
Joris: And any trade shows in particular? I can imagine it really depends on the product you want to source from China.
David: Depends on product category. There are a couple of big ones in China like the Canton Fair, which they hold twice a year in April, and in October, which is in Guangzhou in China. And the Canton Fair is actually spread over a three week period because each phase, phase one, two and three is helpful one week and they cover like, a huge range of product categories, or industries actually to be more specific. And I think any product carrier you’re interested in you’ll probably find at one of the phases of the Canton Fair. So to me, that’s a great one to get started at. If you have to choose one that would be the one I would recommend to everyone.
Joris: Okay, cool. So let’s say we walk around the trade show you start talking to some suppliers. What are some good questions to ask a supplier to see if it’s going to be a good one?
David: Well, I think, I mean, ultimately you want to understand a little bit about their background, who they manufacture for, what they manage, what brands they manufacture for, what countries they export to. Because and, you know, every country’s got its own regulatory requirements or compliance requirements. And it’s easier to work with a manufacturer who has some experience with what your requirements are going to be.
And then ultimately, you do want to talk to them about the product, understanding the minimum order quantities they’re willing to accept, getting an idea for the products they’re producing, the materials, the finishes they can do and of course getting pricing and container loadings because you want to be able to calculate, you know if a product’s feasible or not. So you do need to get into the discussion of pricing so you can work out what it’s going to cost you to land the product, and if you’re going to be able to sell it for a profit or a margin. Otherwise, you don’t want to spend too much time there.
Joris: Yeah, sure. Of course. Yeah, that makes sense. Of course, there’s also like, the cultural aspect. Are there any rules that people should know when they do business in China?
David: Yes, it means, doesn’t mean yes. It can mean no. A way of just agreeing with your question. So like yes, yes, yes. Culturally, the Chinese don’t like to say no, so they’ll say yes and they’ll try their best and it doesn’t necessarily mean they can do it. And I think the language barrier really is important to understand the difference because, you know, I hear people go to suppliers and talking a very complicated English or sometimes they explained things, you know, in a way that the supplier just doesn’t really understand.
So just to slow it down, have the suppliers repeat things back to you, confirm it all in writing later is important. But the language barrier and cultural barriers are important to understand. You know, they’re not, it’s not an aggressive climate. It’s more of a relationship, you know, they have to like you, you have to like them, and then there’s a willingness to help you and support you. So, you know, building that relationship is very important to get cooperation.
Joris: Okay. To me, that sounds like really confusing that yes, it’s not always a Yes. Do you, by now, I mean, I’ve been there a long time. Have you found like, a way to detect when they’re saying yes, but actually meaning no?
David: Yes. We put it in writing, and we asked them to sign it off in our purchase orders. And then if it’s, and then when they don’t want to sign it back we know that didn’t really mean yes.
Joris: Okay. Yeah, that’s a good one. Okay, yeah. But there’s no easy way to detect when they’re saying to your face like, yes. And you just go like, hmm, okay. That’s not a yes.
David: No. You can’t tell. You’ve just got to work with them, get lots of samples, see if they can really do what they say they can do.
Joris: Okay, I can imagine that’s difficult for a first-timer who wants to navigate his way around suppliers in China.
David: It is. And that’s why the more you understand about the factory and can see the products they already producing and get samples, you know, hopefully, you go where you feel like it’s going to be easiest for you to communicate, and the product’s already close to what you want. You don’t, your goal is not to educate manufacturers on how to produce the product, you want to just try to find people who already got a certain competence. But that’s why it’s hard work. You know, you’re going to kiss a lot of frogs until you find your princes or princesses.
Joris: Yeah, that’s not an easy task. Do you have like any horror stories of businesses that you know, that tried sourcing from China and it went horribly wrong?
China Sourcing Horror Stories
David: How much time do you have?
Joris: We still have some time So go ahead.
David: Joris, the whole reason I came to Hong Kong 16 years ago with the tension to stay for one year, and the reason I ended up staying here 16 years was I just realized, if we were going to be successful in the product business and importing from China, we have to have a physical presence on the ground here.
Just because of so many issues, whether it’s quality problems, wrong plans, wrong colors, containers, shipping half empty. There’s just so many things that can go wrong. Packaging is incorrect, artwork is incorrect. You know, products don’t meet a certain standard. A lot can go wrong. So being on the ground here has really been one of our recipes to success.
Joris: Yeah, I can imagine that. That’s a huge difference. You have to rely on a manufacturer you’ve never really worked with before and you’re really far away? They said yes but they actually meant no then a lot can go wrong.
David: A lot can go wrong. And sometimes, to be honest, the mistakes come from your side. You think you explained something clearly and it could be, you know, it could be quite subjective. You know, if you said I want to produce this in green, and you show them a color sample of green by email, you know, green, you know, green can look very different on different monitors and it’s very subjective, right? So, you know, if you don’t know ah, I should have specified the Pantone color, you know, you can’t really blame them, but you do blame them.
Joris: Sure. Yeah. But they’re not mind readers so it all starts with you. If you have the right perspective and are really clear about everything and you can avoid some of the mistakes I can imagine.
David: It’s what I call attention to detail.
Joris: Yeah. I mean, that’s not just in China. I mean, if you source from anywhere else, you have to be clear about that as well I guess.
David: Exactly. And I think one of the communication barriers comes in that, you know, some places would if you said all wanted in green, I would say, can you please, What color? Which green would you like? They come back with the right question. Whereas here, if you don’t specify, they may not prompt you for the accuracy they’re looking for. They might say Okay, sure. Well, send me a picture and I’ll do it and I’ll try and match it as closely as possible rather than saying, Can you please provide me a Pantone color? So it’s just those little things. It’s a two-way street.
Joris: Right. Yeah, and is that a cultural thing that maybe they don’t want to bother you too much with too much questions and they just guess what you mean?
David: No, I think it’s just circumstantial. You know, do they have the experience to ask it or do they not have this experience to ask it? You know, they are getting more and more mature now, the manufacturers. They also need to ask these questions and but they also expect that if there’s a biohazard requirement I’ll make it clear.
Joris: Yeah. Okay. Yeah, that makes sense of course. Apart from the horror stories and everything that can go wrong, any success stories of businesses migrating to China manufacturing? Pros and cons of such a move?
China Sourcing Success Stories
David: Well, I think our whole I think, yeah, with all the potential risks involved, we feel fundamentally here doing it. And that’s because we can, you know, source and develop product at a much lower cost. And when you do put the right attention into the details, you know, you end up with a great selling opportunity and you got a product in the market that sells well, you make a good margin.
And, you know, that’s what the business is all about. The only reason you do it at the end of the day. So, you know, we’ve been having a physical presence in China, we’ve managed to launch whole businesses off the backbone of being able to find, source and develop product quickly. So, you know, as hard as it may be with all the risks involved, if it didn’t make sense we wouldn’t be doing it. So you do have to do it.
Joris: Yeah, of course. Like if you would start over again in your entire career, and that can be apart from your current business, but what would you do differently?
David: I think there would be two key things from the start and outset for me that would make a big difference. I’d only do something that I’m absolutely passionate about that, you know, that when I wake up every day I’m so passionate about it that it doesn’t feel like work. And I would just choose the people I deal with and work with a lot more wisely. And just deal with only people that are like, top players in this space. It saves you a lot of time and effort and mistakes.
Joris: Yeah, I think a lot of people go through that hiring the wrong people and just to realize that they should have invested a little bit more in someone better that would have saved them a lot of money in the end, right?
David: Exactly, exactly.
Joris: And what’s like, the biggest mistake you made? Is that also related to hiring people or something else?
David: Yeah, I think sometimes just hanging on too long. You know, you gotta cut your losses quickly if something’s not working. And then try, you know, you can’t, what’s that they say? An expression, you can’t extract water out of a rock sometimes. If you’re to attached to something where you’ve been working so hard on it, that it’s hard to let it go. So I think, you know, cutting losses quicker and moving on to the next thing quicker is probably, you know, a big lesson I’ve learned over the last couple of years.
Joris: Yeah, and I think that’s a great piece of advice to, well, to wrap it up. This has been really great and I’m sure we could go on for a lot more time. But we’re running out of time. And yeah, just want to make sure where can people find you if they want to connect with you? What’s the best place to do that?
David: So if people want to talk to us, we normally start anything with a call. So our website is globaltqm.com. And if I go to our website, there’s a schedule a call button. Or there’s a form that can fill out to tell us what type of product they’re looking for. But it’s easiest to schedule a call. And you know, and we talk about where they’re at on the sourcing journey, or what kind of services they need on the ground in China, because we love to help entrepreneurs, and starting up in the space, you know, access our resource on the ground in China, and get them going sourcing developing products.
And that’s the best way, schedule a call. What they can do if they hear this interview is they can always, when I schedule the call, they can just put in the notes there that they can mention the podcast name, and they can mention they want to speak to Dave and I’ll personally take those calls because, you know, I enjoy talking to entrepreneurs and identifying how we can help them.
Joris: Awesome, awesome, great. And we’ll put that link in the show notes right away. Thank you so much for being here, David. It’s been absolutely great. Thank you very much.David: Likewise. Thanks for having me Joris. And I hope I can come back soon.