One entrepreneur started out with a $49 USB stick and a seat at an internet cafe. But by using her teaching skills and knowledge of China, she has created a thriving new business.
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Entrepreneur: Lindy Chen, Managing Director
Company: ChinaDirect Sourcing Services
Business type: Product sourcing company
Business founded: 2005
Employees: Australia (6); China (4)
Turnover: (2007 - 2008) $1.15 million
Head office: East Brisbane, Queensland
Contact details: (07) 3392 1421
The ChinaDirect Story
Lindy Chen hit rock bottom in early 2005. Three years earlier she had migrated from China to Adelaide to be with her Australian boyfriend; now she was heartbroken, poor and in a foreign country. Chen was tempted to return home but that would have been too easy. She says: “I felt that where I fell down should be where I get up.”
On the strength of a 10-year career in trading with foreign businesses in China, Chen found work teaching the subject at a TAFE in Adelaide.
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Key learning points:
- Free advertising - If you can’t afford to advertise, consider what skills you can offer for free.
- Cost packages - Never underestimate the value of your services; package them so the client understands what they are paying for.
- Value-adding - Only take clients who can see you adding value to their business.
- Feedback - Put in a system for client feedback to help you find ways to improve your business.
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In hindsight it was an ideal platform for launching her new venture. She says: “Friends started asking me to source products from China. I realised I had a real talent for this sort of thing and there was a strong demand for it.”
In September 2005, with $2000 saved from her TAFE job and support from the Federal Government’s NEIS scheme, the 36-year-old founded ChinaDirect Sourcing Services. It acts as a sourcing project manager for Australian businesses in China. She says: “I had a $49 USB stick and an internet cafe for my office. I needed to get very creative to promote the business.”
The Challenge
Promoting a new business with negligible funds and finding the right way to value her services and charge clients.
The Solution
With no money for advertising, Chen thought ‘What can I offer for free?’ Chen decided to leverage her education credentials by giving a free information seminar about doing business with China followed by some paid workshops.
It was an inspired idea: 106 people turned up for the first free one-hour seminar. Chen didn’t have enough interest to run her paid workshop the following day but it didn’t matter. She had already acquired six clients thanks to the one-hour freebie.
Education-based marketing has remained a foundation of ChinaDirect’s promotion of itself to new customers. But Chen has moved up the scale from using a room at Viva International College in Adelaide to hosting seminars and workshops each year sponsored by organisations such as ANZ and the Australian Institute of Management.
In July 2008 Chen launched her own textbook — Import From China. How To Make a Million… and Not Get Burnt! It sells for $249 and the accompanying DVD is priced at $699. She sold 15 copies in the first month. Chen says that education-based marketing only costs her time and it cements ChinaDirect’s reputation as the experts on China to a targeted audience.
The fledgling business faced a new problem in 2006: how to charge clients. Chen was charging an hourly rate and some clients didn’t understand why negotiations with China took so long. “The work behind the whole negotiations — the research, the tendering — is more complicated than many people think.” For example, one client refused to pay her $2,000 bill even though Chen’s work saved that client between $60,000 and $80,000 in one shipping container.
Chen began packaging her services to avoid the misunderstandings about her fee structure and educate clients about how to properly value her work. She did this by breaking down the sourcing into three stages:
- research and tender
- sampling and purchase order negotiation
- order and delivery management.
Chen then quoted a flat rate for each stage according to how long she estimated negotiations with manufacturers would take. She got the packaging idea from a suggestion in a client-feedback form. As a result ChinaDirect’s clients can now see exactly what they will get for their dollar.
Chen says: “I learnt to never underestimate the value of my services.” Now, before Chen takes a client, she determines whether or not she can add value to their business. Then she explores whether the client can see value or not. “If they can’t see the value, I don’t take them.”
Chen developed a system called a Value Check in mid-2007. Potential customers simply type in their requirements via the ChinaDirect web site; Chen and her team then do a free analysis to determine whether ChinaDirect’s services would help the potential customer. “We are straight with our clients,” she says. “As a result, some clients will come back to us and say, ‘Hey, this project is not suitable but how about another one’.”
The Result
From its standing start in 2005, the business turned over $107,000, with Chen as the sole Australian employee and two staff in China.
By 2007–08, ChinaDirect’s revenue had jumped 10 times to $1.15 million, with six staff in Australia and four in China. The business now has more than 100 clients. Chen estimates that ChinaDirect has saved its clients more than $2 million in purchasing costs.
Chen plans to have ChinaDirect agencies in all Australian states and territories within two years. Her five-year plan is to expand internationally.
ChinaDirect has picked up a shelf load of awards for its efforts. Its bag includes the 2007 Home-based Business Awards (business services category winner), the Australian Institute of Management Excellence Awards (owner-manager of the year 2008 finalist), the 2007 My Business awards (fastest-growing small business category finalist), and the Small Business Champion Awards (entrepreneur category finalist 2008 and 2007, business services category 2008, and new business category finalist 2007).