For the sake of your own industry: if the genie granted you three wishes ... Today: Alexey Balashov, Sourcing Expert, Supply Chain Management (RU/CN)

For the sake of your own industry: if the genie grants you three wishes ... Today: Alexey Balashov, Sourcing Expert, Supply Chain Management (Russia / China), Fashion Retail.

The first impression of this person, doing business with China, speaking Chinese and understanding the past, present and future of this country: skill and ease. The next thing you understand: she delights in her way of contextualizing the situation and balances it in such a way that it is difficult to remember who started and what happened. However, the main thing you remember in the end: the task that was assigned to you will be completed and the goal will be achieved, there is no doubt about that. He is, as it is said in this Chinese proverb: " who walks gently, walks far".

1.

All work for the year depends on a good start in spring.

一年之计 在于 春。 (Pinyin: yī nián zhī jì zài yú chūn)

 Spring is a key time of the year.

 The Supply Chain also collapsed this spring, but those who "survived" will end up at a profit. Why didn't they "survive" more?

- I will say it on behalf of Retail, not Food Retail, because it is not an expert in all industries. Not everyone who "survived" will end this year with a profit, but at least they "survived." However, let's remember the principle "the strongest survives". My opinion is that in a crisis, especially unexpected, which we saw in the spring, it is not the "strongest" player who survives at the time of the onset of the crisis, but the most prepared.

Commercial organizations, as a rule, do not prepare special action plans for such extreme situations. This is in the range of preparations of special services and government agencies for emergency situations.

Even those who have long been developing omnichannel and distance selling did not anticipate such a development of events that at one point, at the behest of government agencies, retail will be closed, production and supply stopped, and chains they will be left alone with their unfinished online store and the demand of millions of consumers, locked at home.

The winners, or "stayed afloat," were those who had a margin of safety at the time of the crisis; a small debt load, low lease payments and low wages, and most importantly, a working sales channel and constant demand for your products.

And those who were the "strongest" in retail before the crisis, but not the most forward-thinking, may have remained the same, had there been no quarantine, but they delayed the development of distance selling for too long, and the reality has changed dramatically and now entering the "last wagon" will be difficult. And this hurts especially, if yesterday you were the "strongest", but today you already need to get on the "last car", and your structure is completely and is not ready for changes.

 2.

Take action after thinking three times (measure seven times, cut once).

三思 而后 行。 (Pinyin: sān sī ér hòu xíng)

Any crisis is an opportunity, but not everyone can see it. What products can Russian manufacturers export to China and would you agree to deal with these particular groups and product lines?

If you search for the keyword 'Chinese' on any job search site right now, you will find plenty of job openings for specialist finding clients on Chinese social media. Six months or a year ago, no one was looking for such specialists. The reason is that China has surpassed the whole world in sales on local social networks and has reached a level of remote consumption that is still not very clear for the bulk of suppliers of goods and services in Europe.

The very principles of such distribution remain incomprehensible to Europeans, where, unlike China, traditional retail still predominates and the overall level of digitization of society lags far behind that of Chinese.

The fact that someone already knows how to sell European products remotely in the Chinese market is encouraging and they are willing to share this knowledge. But there are great doubts that it can be organized by someone from outside.

Everyone has already seen many failed attempts to bring European brands to the Chinese market; this process is many times more complicated than one might imagine having a successful business in Europe.

The main thing is not to flatter yourself and not to think that you can somehow conquer the Chinese market by storm. It does not have a unique offering for the Chinese market. And if there is one and you start promoting it there, in 2 weeks its analogs and local copies will appear there.

3.

Multiple friends mean there is no deep friendship.

广 交友 ， 无 深交。 (pinyin: guǎng jiāoyǒu, wú shēnjiāo)

 Similar to "A friend to everyone, not a friend to anyone".

 In the Sourcing & Supply Chain system, the principle described works differently. What is its impact in the future, where the resilience of the Supply Chain is a forced replacement of suppliers (Tier 1), validation of new ones and decentralization in record time?

 - The frequent change of suppliers is typical of companies that turned out to be unprepared for crises. These are not the ones that are constantly growing in any condition, but the ones that are trying to "survive", to adapt quickly to the new reality, to the new conditions of competition. With these tactics, you can already make serious mistakes at the strategy level, which can have global consequences for the company as a whole.

Some companies are tremendously proud of their mobility in this regard, so that for a season they can completely move supplier orders from one country to another. The first consequence of this "mobility" they face is reputational risks. Returning to the country they fled from can be very difficult. Especially if the company is large and the country is small. The entire industry will quickly learn of the "runaways" and conclude that the customer is not trustworthy and "disposable." Most vendors need a consistent, predictable customer who consistently places large orders and can be included in production planning for at least several years.

Well, the most dangerous thing that can happen is an order transfer without proper preparation and analysis of the details and specialization of a new country, when you do not get the quality you expected at all, at the wrong time, as you should have. , and you never know. nuances.

Therefore, in the supply chain, balanced development is important as the company grows. A decrease in the proportion of orders in a given country should not occur due to a strong transfer of orders to another country, but due to placing orders with new suppliers as their own volumes increase, that is, in absolute terms, the volume of orders from old suppliers may remain unchanged, but their share of the total volume will decrease due to the introduction of new suppliers. In other words, if there is an example of "eggs and baskets", as the number of "eggs" increases, you only need to add new "baskets".

 4.

Chi * can be short and a cun ** long.

尺 有所 短, 寸 有 所长。 (pinyin: chǐ yóu suǒ duǎn, cùn yóu suǒ chánɡ.)

 * Chi (Chinese measure of length equal to one third of a meter)

** Cun (Chinese measure of length, one-tenth of chi)

Each person or thing has its own advantages and disadvantages.

How would you explain to the heads of Russian commercial companies (foreign) specializing in the sale of clothing and footwear, based on the wisdom contained in this proverb, about the need to preserve part of China's supplies during this crisis and about the consequences of the interruption of work with the usual suppliers in full?

 - I have already partially explained the consequences in the previous answer. I can only add that in China, the activities of any industry are controlled by government agencies, and the export of clothing is no exception. God save, if the supplier makes a complaint and you end up on the "black list" of unscrupulous importers, for example, because you did not pay for an order already placed. Then it will be really difficult to work in this country.

Of course, business is business and you have to take risks in it. Chinese manufacturers will accept your orders, but due to the loss of confidence, they will be assured in every possible way, it is unlikely that you will receive the above prices and payment terms.

And as for the Chinese wisdom on merits and demerits, everyone can see it for themselves. China is rapidly becoming more expensive, but the level of labor productivity, the availability of a local raw material base, and the versatility of production capacities give China the opportunity to compete with other countries for a long time. And not all categories of goods can be produced in other countries at competitive prices and with the required quality.

5.

 A) "Iron mortar, when sharpened, can become a needle."

 只要 功夫 深 ， 铁杵磨成针。 (pinyin: tiě chǔ mó chéng zhēn.)

 If you have the determination and desire to work hard, you can succeed in any difficult endeavor;

 B) ¨ From three simple shoemakers we get the sage Zhuge Liang * ¨.

 三个 臭 皮匠 ， 赛过 一个 诸葛亮。 (pinyin: sān gè chòu pi jiàng, sài guò yī gè zhū gé liàn)

* Zhuge Liang is a prominent political sage and strategist in Chinese history.

 More people, more wisdom.

A + B is opening a new service business with a focus on building supply chains from China, quality control, commissioned logistics coordination.

Have you already thought about opening your own company with like-minded people from different industries?

- I thought about it, but in the case of China, this moment is already lost, the intermediary business of exporting from China is no longer relevant. The heyday of the relevance of this business took place in the 1980s and 1990s, when Western brands transferred orders from the Philippines, Malaysia and Thailand to China. I didn't see this moment, but according to eyewitnesses, doing business with Chinese manufacturers at the time was comparable to doing business in Africa right now. Or even worse, a serious production base began to appear in China, but there were no specialists in terms of export, they did not speak English in the factories, they did not understand, and they did not meet customer requirements. At that time, Hong Kong intermediaries first joined the process, followed by local import and export companies, which were designated by the government as intermediaries, prohibiting factories from working directly with importers.

Now the situation has radically changed, the factories have been working directly for a long time, and any schoolchild can independently organize the supply of any products through AliExpress, etc.

6.

Without a doubt, it is very paradoxical to say that Time is unreal and that all statements about its reality are wrong. Such a statement includes a much greater deviation from the natural position of humanity than is associated with the statement of the unreality of Space or the unreality of Matter. Such a decisive violation of this natural attitude should not be taken lightly. And yet, in all ages, the belief in the unreality of time has proven extraordinarily attractive.

John Ellis McTaggart, The Unreality of Time (1908)

 Is China the country where the unreality of time is especially felt and where everything is possible?

- Absolutely. This is a completely different world, in which time flows in another way and something that is impossible for us is possible, and vice versa. This applies to all aspects of life. Only there is it understood that the reality to which we are used, in fact, has many more facets than we could have imagined before. Coming to China, immersing yourself in this world, you understand that everything, it turns out, can be different, different from what you imagined before. Furthermore, we generally represent the world in two dimensions: if there is something white, we assume there is an opposite, something black. China is destroying these perceptions and adding a new dimension. When you get there, you understand that there is something else, the opposite, a kind of violet, which you could not think of before, can easily be added to black and white.

7. And if the genie of the magic lamp grants you three wishes, and your ultimate goal is to heal Fashion Retail, what would you ask for?

 - make the consumer put quality over price again

- so that the process of bank loans to mall developers and landlords would painlessly allow all parties to set rental rates from tenant billing

- for designers to start creating garments different from other brands.

This is all very naive, but if I meet the Retail Genius, I'll ask about this ...))

Books:

The Unreality of Time Kindle Edition / John Ellis McTaggart

https://www.amazon.com/Unreality-Time-John-McTaggart-Ellis-ebook/dp/B018IY44WY