This week’s episode is a special one, as it’s one of the few episodes where I get to have Dave on the show. Better yet, we are sitting in the same room in Hong Kong, just a couple of days after the Global Sources Summit where we both had a blast. Hopefully videos of the talks will be released soon for those who were not able to attend the event.
We have many takeaways from our time in Hong Kong but one of the most eye-opening is just how much Chinese sellers are invading the Amazon market. They’ve grown comfortable using Amazon FBA and have become sophisticated in their marketing techniques. Adding to this is the fact that more and more of these sellers are using downright black-hat techniques to try to win more sales.
This topic is just one of the 5 key takeaways Dave and I will talk about in this episode.
Here are other conversation points:
- What Chinese sellers doing to get market share and what you can do to protect your sales
- Amazon’s cross-border program and how American sellers can benefit from it
- Black-hat tactics employed by many Chinese sellers
- PPC optimization
- Increasing pollution crackdowns by the Chinese government and how it affects you
- Increasing Chinese labor costs
With Chinese sellers getting on the Amazon train and recent factory crackdowns, we might be facing a challenging time ahead. You might be tempted to attempt black-hat techniques like other sellers are doing to stay on top, but keep in mind that the dire consequences make it hardly worth doing. We highly encourage you to stay on Amazon’s good side.
We hope you enjoy Episode 93 of the EcomCrew Podcast. If you want to reach us, just email us at email@example.com. Thanks for listening!
Full Audio Transcript
Mike: This is Mike.
Dave: This is Dave.
Mike: And welcome to this edition of the EcomCrew Podcast. I have a rare treat today. I have Dave Bryant in the room with me in Hong Kong, how’s it going Dave?
Dave: I’m doing well. I think we’re on the third version of the podcast.
Mike: I know it’s so funny. You guys should be here. It’s like, I feel like there should be circus music playing in the background. We had our first time that we didn’t make it through in the first cut with the podcast. The doorbell rang, we had another flob with — I was looking at my phone for a second. Dave got distracted; he needs some focus I guess evidently. And oh yeah, I mean it’s been pretty funny, then I forgot to hit the record button on the next take, and we were talking for three minutes. So let’s see how this goes.
Again I know you guys aren’t in the room with us, but we are sitting in our Airbnb about to check out here. I’m heading to the Canton Fair in a couple of hours. Dave has his family rolling into town, they’re about to go to Disney World, which is really cool. And yeah, we’re on the 50th storey of an Airbnb with a pretty spectacular view. I’ve had a great time here in Hong Kong. What do you think Dave, how has it been?
Dave: I mean I have loved it, because we are now kind of making this biannual trip to come over to Hong Kong, come over to Guangzhou. So visit the Canton Fair, visit the Global Sources Summit, a couple of the other trade shows going on here, a couple of the other events going on here. And it’s an absolute blast, just there’s more and more sellers coming here.
It’s both great for the networking and sourcing products, but just also to have a great time. And I think Hong Kong is probably one of my top two or three cities in the world. So I’ve had an absolute blast here with both you, and a lot of the other guys that I kind of meet their truck over here from North America, Australia, and other places.
Mike: Yeah, it’s definitely been awesome. I got here a few days early. I used some airline miles, which I highly recommend if you guys don’t use airline or have a credit card to get your airline miles, I highly recommend doing that. I was able to fly over here in first class on Cathay Pacific, completely for free. It was like fifty something dollars in taxes. It was pretty epic.
Dave: But you lose the write off?
Mike: I did lose the write off, but that’s okay. I got to eat caviar on the airplane, which is actually just ridiculous in so many ways.
Dave: I guess it’s a wash then.
Mike: Yeah, it’s a wash. But I did have to come a couple of days early which cost me a little bit extra in hotel, Airbnb fees, but it was definitely worth it. I got an opportunity to get away from the office. I love our office, I love our team, but it’s nice to sometimes just kind of take a step away and have some time to clear your head. I took the opportunity to go on a hike over last weekend over to Big Wave Bay.
It was a pretty spectacular hike. I think it was about just a little bit over three miles. The first mile of it was straight up a flight of stairs, and I stopped a few times to take a breath. The ironic thing was I was hiking through a cemetery, and I was thinking how funny would it be if I died in this cemetery?
So I was going up there, my heart was pounding, but yeah it was fun. Not just the hiking, but the people that I met, the food. I love the food over here, lots of really interesting conversations. Hopefully we’ll share a few of those with you guys here today. And then obviously the opportunity to be at Global Sources.
Dave: Yeah, well so jump into it, kind of our big takeaways from both the Global Sources Summit conference, and just hanging out here for a few days, and kind of getting a kind of a feel for what other sellers are doing especially in China.
Mike: Yeah, so before I get into that, definitely we would be remiss if I didn’t take the opportunity real quick to thank Meghla and Cameron and their team over here at Global Sources for hosting us at the Global Sources summit, for giving me the opportunity to speak here not only once but twice, and also host a panel. It was a blast. I had a really good time doing that.
My first talk was on ten sourcing fails, some of which we’ve talked about on this podcast before. The next one was on how to increase profitability in your ecommerce business. I’m assuming that both of those presentations will be available on the internet. They have made those available in years past, and when they are, we will mention it on the podcast. Probably also send out an email to you guys so you can watch those.
It’s a way to attend the Global Sources Summit without having to come over to Hong Kong. But again I mean you need to take time in your life, in your business career to also come to these things. Watching presentations on the internet doesn’t have anywhere near the same impact as being here and talking to other sellers, going to the meet ups, and we’ll be talking about some of that stuff here, and just some of the things were really eye opening.
And probably the biggest one is the invasion of Chinese sellers into the marketplace. Not just Chinese sellers set up in Shenzhen and these Amazon farms. I guess they kind of come over here where they have hundreds of thousands or even tens of thousands of people in office buildings all like the Borg trying to assimilate into Amazon, and take everything over, but also Chinese manufacturers that are doing it. And probably the scariest part is just like they can care less about any type of white-hat tactics.
They are willing to do whatever it takes to do it. So I’m kind of curious Dave, I mean after being here now for a week or two and going through the talks and talking to other people here, what’s your kind of takeaway and what’s your level of comfort now walking away from here this week?
Dave: Well, we can kind of debate this, but so Chinese sellers have been on Amazon and America for well basically forever. But definitely it’s a huge number of sellers that are just more and more being comfortable selling in America, and going on to Amazon and using FBA. So Chinese sellers have been there forever, but the thing that really struck me which you kind of alluded to is just their sophistication.
So like Mike mentioned, they’re more prone to using black-hat tactics. They’re not afraid of the suspensions that we’re afraid of. So maybe we’re actually just overly paranoid in America, or maybe the Chinese are just really careless and not afraid at all.
Mike: It makes it easy when you have a hundred accounts; that’s actually one of the big takeaways I had from one of the meet ups. The guy was telling me that it’s a requirement of being hired at most of these places. They make you make an account, they take your officially issued government ID, and send them into Amazon or wherever to make an account. And so their thing is just if they get shut down with one account, they’ll just switch to another, which is kind of scary.
Dave: Yeah, I mean we have a friend actually who works for a Chinese company in San Francisco, and they’re — I mean I got floored one day when he showed us this spreadsheet of about five different Amazon accounts that they had for this account in San Francisco. So a lot of people — and it’s not just Chinese sellers. I mean we shouldn’t I guess make it exclusive to them, but it does seem to be more predominant with Chinese sellers, just taking a lot bigger risks with Amazon.
And when you’re not afraid to get suspended, then it leads you to take bigger risks than you might take otherwise. So I think it gives a bit of an unfair advantage. People talk about, oh the Chinese get lower cost, and that’s their big advantage. Well, that’s one advantage, but the marketing tactics that they can use is I think even a bigger advantage right this second.
Mike: Yeah, I completely agree. And not only are there people that are just selling these in these offices launching private label products, but then you also have the manufacturers directly coming in, and their margins are better. So that’s another advantage obviously that they have. And the thing is they’re also getting more sophisticated, they’re hiring westerners on their staff that don’t write Chinglish listings anymore. They’re taking good photography and writing the descriptions.
So for me like the big takeaway is to be doubling down or tripling down even on a lot of the strategies that we’ve been working on now for the better part of a year or two, which is branding. It’s the thing that they just can’t do. I think you need to be thinking long-term about what can actually be done from over here. They’re never going to fully understand the Western culture, just like I’m never going to fully understand the Chinese culture. And I think that that’s something we need to take advantage of.
So if you are able to improve your products in ways that they just don’t understand, and or work on building a brand, one of the things that we were doing here this week is looking through PPC. And I was really happy to see just how many brand searches we get on Amazon for our products where the Chinese are never going to do that.
They’re looking at commodities that – type of products that are just not innovative in any way, which is still going to sell which is fine. But it’s hard for us to compete in that same sandbox. So I’m definitely going to be doubling down on that perspective.
Dave: Yeah, and from all the Chinese sellers that I’ve seen, like you mentioned they don’t really seem to be building brands. For whatever reason, they’re still focused on just launching products and not actually building a brand around it. And so many Chinese suppliers, they’re selling kitchen utensils and pet supplies and building materials, and there’s like no rhyme or reason to what they’re doing.
And I think just some of that more focused approach, and like you mentioned that having a brand really helps. I think also being diversified in your products. If you’re counting on one or two products to bring in most of your revenue, chances are some Amazon Chinese seller is going to come along and see that you’re doing well and start to pick you off. So I think being diversified so you don’t have all your eggs in one basket is really important.
Mike: Yeah, I couldn’t agree more. And another advantage that these guys have over here is this new program that Amazon has. It’s like a logistics program that allows you to import directly from China. And we saw this at the show. There was actually a lady from Amazon that came and spoke. It’s called the Amazon Cross Border program. And I’m going to try to take advantage of this as well.
They said that if you — so it’s basically readily available to anyone that’s in China. But if you’re a US seller, you can apply for it, and I’m going to do that. And basically what it is is it allows you to have them come pick up the shipment directly from the factory, whether it’s LCL, less than a container load, or a full container, whether it’s a 20 foot or 40 foot. They’ll come pick up the goods directly from your warehouse or your factory in China, which allows you to go from getting FOB price in the exports pricing which could save you a little bit of money there.
They claim that this service is on par with any other freight forwarder service. That’s kind of remains to be seen; I got to get a quote. But where the advantage comes in is that A, they do this thing where they lock you into a fulfillment center, and you don’t have to have inventory placement center service on. So you basically get free inventory placement, which can save you thousands or even tens of thousands of dollars per shipment, which is really awesome. And they kind of had this — the slide up there about like a fast pass basically.
And any buyer that ships any type of volume in Amazon, you know that there’s a lot of times where your stuff just kind of sits someplace, and you’re like where the heck did my stuff go, is it lost? Is it ever going to get checked in? That can be sometimes weeks. Like we’ve had things sit around for two to three weeks, sometimes even longer than that, really frustrating. So they claim that as soon as the container hits, it goes right through. You basically get a line pass over everybody else which is pretty crazy.
Dave: Yeah, I think this program has been around from Amazon for quite a while. Amazon Chinese sellers who’ve been shipping directly into Amazon warehouses in China I think for least two or three years now. But the fact that they say they’re opening it up to American sellers and other sellers, that was kind of an eye opener for me. Now it remains to be seen though if they actually are legitimately going to open it to American sellers, and if they’re going to open it to American sellers of all size. She — the speaker was a little bit standoffish, and didn’t really directly answer the question about can all sellers use this freight forwarding service from China?
So basically she had left an email address that we can contact her directly, and she’s going to give a manual approval. And anybody who has ever dealt with Amazon knows that getting a response from an individual can sometimes be difficult. So if it’s not an automated approval process, I’m a little bit worried that it might not actually be open to both American sellers and especially small sellers. So we will see, I mean I’m really curious with if you actually contact her and try to go ahead with shipping products directly to Amazon from China, whether they’ll actually approve your account.
Mike: Yeah, I’m definitely going to contact her as soon as I get back and whether or not we get approved or not, that’s another story. So we’ll definitely kind of keep you guys updated on that. But the big takeaway here is that it does exist, and the Chinese have access to it. So it’s just another advantage that they have right now, and I want to quickly get on the same playing field.
Dave: Yeah and yeah like you mentioned, that’s one advantage they have just Amazon is really targeting these Chinese sellers, and they’re giving them preferential treatment. And like this girl also mentioned, they just have their annual meeting in Hangzhou for Chinese Amazon sellers, and it wasn’t until two months ago that Amazon actually launched their first conference in America for American sellers.
So they’ve been doing — Amazon’s been doing these conferences for years in China for Amazon Chinese sellers, but they’ve only recently started doing it for American sellers. So right now Amazon definitely seems to be favoring those Chinese sellers for whatever reason, and so that’s something you’re going to be aware of.
Mike: Yeah, so the next big takeaway we have here is how black-hat people are getting with Amazon. We already kind of touched on this just a little bit. I mentioned the people that are working for these companies help them to create multiple accounts, but it doesn’t end there. I mean the fake reviews are just, oh my gosh, I can’t believe some of the tactics where they’re just descending on a listing and adding hundreds of fake reviews, not verified reviews. Amazon just lets this go.
Hopefully this is something that they will put an end to, but it’s a big — I guess just a big tactic right now for these Amazon sellers to come in and start putting on a bunch of non-verified reviews. The other thing that kind of comes to mind is leaving negative SEO reviews, which would be leaving actually, this is kind of funny, leaving positive reviews, leaving five star reviews, but saying that I got this product at a discount. And then they report you for doing something wrong. So it’s actually like they do the whole process start to finish from doing the bad tactics, reporting you for doing the bad tactic, it’s pretty sick.
Dave: What was funny, I went to see a Chinese factory and they’re asking me about Amazon. They’re like, hey Dave, do you think we should buy some reviews. And then he was showing me they have like companies in China with — you basically select how many reviews you want, five, ten, 100 reviews, and just these services are everywhere, and all these sellers know about them. And it’s just part of their launch strategy — buying reviews.
And they’re really sophisticated as well. You talked about unverified reviews, but I believe they have ways to get verified reviews too. But I would assume somehow they just find the products and at some point disposing them or reselling them. It’s something Amazon needs to do something about to correct. They did a great job last year getting rid of unverified reviews and items received basically for free, but it’s still such a huge problem obviously.
Mike: Yeah, and one of the other things that someone was talking about was like these computer farms where they’re going through and doing things to manipulate the Amazon algorithm and ranking. So they’re like scraping through stuff and like having like people or bots automatically click on competitor’s listings and lower their click through, their conversion rate or improve their own conversion rates. It’s just absolutely nutty.
My feeling in all this stuff is that if and when it becomes a big enough problem, that Amazon will correct for it, and if we just stay the course and do all the right things and don’t get sucked into this black-hat stuff that eventually we’ll be fine, but in the meantime it always hurts, right? You see all the stuff going on, you’re like, well I want to do it too because it’s not fair. But it’s even less fair when you get your account closed down and you only have one account. So we definitely from my perspective kind of keeping our head to the grindstone and just doing the right things.
Dave: Yeah, I agree with you a hundred percent. Like you can’t fall into the same traps of mistakes that they’re making, because hopefully Amazon gets their act together. And it does seem that most of these black-hat tactics, whether it’s coming from China or wherever in the world, they’re targeting the most popular, popular products in the world, the garlic presses and the yoga mats and the yoga balls.
If you’re in a relatively small niche, I don’t know, I’ve never actually had any black-hat competition affect my products. I don’t know if it’s coming down in the future. But I would think the fact that I haven’t really experienced any negative repercussions about it in my businesses is a fact that I’m kind of in those nichy areas where it doesn’t attract a lot of attention.
Mike: Yeah. Another black-hat thing that we saw, I ran through another speaker, I’m not going to name names, but we had a lot in common. He’s doing a lot of the same marketing techniques that we are. And we started chatting about ways to get more Facebook look like audiences. And he had like this really black-hat way of crawling Facebook groups, and then downloading them and using another tool that was like taking someone’s name and scraping and get their email address, and then turn that into a Facebook profile match.
And I was just like, oh my God, and of course I’m like reading through the tool and how to do this, and there was like a big disclaimer like this is purely against Amazon’s terms of service. They don’t give a crap again over here. It’s just like they’re moving full steam ahead with it, which is just absolutely nutty. I’m not in any position to take a chance on my Facebook account getting shut down. It’s where most of our revenue comes from. I do not want to take a chance with that. And besides that I don’t think it’s the right thing to do either.
But again just shows you how many black-hat things are available over here. I have a feeling that there’s dozens and dozens more tactics that we didn’t even talk about. I don’t even really want to even start the conversation for the most part because it’s tempting. That’s the problem; it’s like so tempting to like to try these things. Like maybe I won’t get caught, or this doesn’t seem too bad, it’s a slippery slope.
And again when you kind of get your account shut down, it hurts so bad. And I’ve been through that before with Google. So I have experience with waking up in the morning and having all of our websites like de-indexed, and you can’t even find your own website and you lose all your revenue. And the stakes are just too high for me right now on Amazon.
We have almost a million dollars in inventory; we’re approaching a million dollars in inventory. When we were doing affiliate marketing of our Google rankings got shut down, I got to keep all the money that I made to that point, and I would just go on with my life and rebuild. But it’s a big difference when you have a huge amount of your personal net worth tied up in gel pens and teddy bears. It can’t pay your taxes, your bills with those things. So yeah I’m definitely trying to keep my head to the grindstone and not do any black-hat stuff.
Dave: Yeah, couldn’t agree more. So kind of moving on from that, I guess the black-hat stuff is, the last black-hat stuff just again the importance of advertising and paid marketing on Amazon. So along with the black-hat stuff that they’re talking about, a lot of these Chinese sellers are really sophisticated in their PPC. Most of us kind of know the general stuff about using sponsored ads and basically turning on an auto campaign. And then if you’re really sophisticated creating a manual campaign out of it; but what a lot of sellers are now really taking advantage of is Amazon AMS.
Go to ams.Amazon.com, you’ll see the types of services that they offer. But the big one is what they call product placement ads. So you want to advertise on a competitor’s product page, you can do this both kind of accidentally through sponsored ads. That’s about halfway down the page, there’s a part for sponsored products on the page. But you can directly target a competitor’s ASIN by using product placement ads. And you get this through AMS. And you basically select all the competitors that you want to target, and if you bid high enough, your ad is going to appear in the buy or right next to the buy box on their listing.
Mike: Yeah and there was a presentation here about PPC. And it’s interesting because at the beginning of the year, I spent a lot of time and effort going through PPC and just kind of optimizing it the best that I could. I was able to reduce our spend by about 20% which at the time was pretty significant. We were spending $1,000 a day, so I got that down to about $800 dollars a day, but I got our sales up by 10%.
And through this process, I was like you know what, I’ve really got PPC down, I felt like a million bucks. But after this presentation I realized two major flaws, and I am humble so I’ll share them with you. The first thing that I did not know is that if you aren’t running an automatic campaign, your products can’t show up as suggested products, other sponsored products on listings. And what I had done is I was running automatic campaigns for a very long time, and then slowly turned those into manual campaigns to get the best results, which had a lot of really positive impact on our PPC.
But what I’ve now realized where I’ve gone wrong is I didn’t keep the automated campaigns on, and then put in the terms from my exact match manual campaigns and put those in as negative terms on my automatic campaign. Having automatic campaign on with a low budget or low PPC again it allows you to have suggested products on competitor’s listings which is really important, and allows you to continue to get other keywords that you may not be thinking about. So that was a major takeaway for me. It was a major fail, but we’re going to turn into a win. It was pretty crazy.
And the other part of that just real quick Dave is that in the automatic campaigns there’s something that I always saw which is ASINs in the campaign. You go download your keyword report and see exactly what terms that you’re bidding on. And I would see other people’s ASINs in there. And I always just thought that was people typing in the ASIN in the Amazon search. I realize absolutely this is now — I never really quite figured it out, but what it is, is that’s actually people from your automated campaigns clicking through those sponsored suggestions on the product.
And the powerful takeaway that I took here is that you take – you can run your automated campaign, download the report, and see exactly which of those ASINs are converting, and then put those in the product placement ads that Dave was talking about through AMS. So our big goal — I’m actually going to head to the Philippines. I want to show my VAs how to do all this as I set all that up like imminently. We basically are going to set up product placement ads in a much more efficient way.
And the way that I did before was just to basically guess at the products I wanted to be listed on, or some competitor that copied me and I was pissed off about it, I’ll put my ad on there. But there’s a much more efficient way to do that. And just to reiterate and say it just one more time a little bit slower.
If you’re running automated campaigns, you can download your keyword report, your search term report from the backend of Amazon sponsored product ads. When you download that report, in there will be all these ASINs. You can take those ASINs, sort them by which ones are actually converting, and then the ones that are converting, you’ll make product listing ads through AMS to bid on those. And I think that that’s going to be a really powerful takeaway for us.
Dave: Yeah, and it’s amazing, we do download that report and you should like today if you’ve never done it before. Download your keyword report on Amazon through the advertising control panel. You’re going to see that these ASINs basically advertising on your competitors’ products, you likely get 40 to 50% of your sales through a product competitor’s pages, not actually through the search page on Amazon.
So download that report, take a look at it. It’s something that will open your eyes about really how consumers are returning, finding your products, and actually buying products.
Mike: Yeah. So that was basically for me the takeaways on PPC. Do you have any other thoughts on that?
Dave: No, I mean with mine, actually I was sitting during one of the speakers. What I did is I actually signed up for my AMS account again. I’d been rejected again last year, went to ams.Amazon.com, signed up. I had to create a dummy vendor express item, and say that I was going to send into Amazon. I’m never going to, but that’s the flawed process that you need to do right now to get an AMS account if you don’t have already a vendor Express account or vendor central account.
So that’s kind of the half that you have to do. But definitely if you haven’t already, sign up for ams.Amazon.com right away, because that’s where all the cheap clicks are coming from.
Mike: Yeah. We all know that headline search ads, which is a part of AMS is now available through seller central. So that is no longer an advantage that we used to have by having AMS. Everyone kind of has access to that now, but those product listing ads give us incredibly cheap ACOS, and they’re definitely worth it. So if you haven’t already done that like Dave said, please go do that. It’s definitely stuff that can really improve your business.
All right, so the last topic we have here is the equivalent of the EPA in China. I don’t know exactly what they call the organization here, although I think it is actually the EPA, is cracking down on Amazon factories just basically destroying the planet, dumping sludge into the river, pumping sludge into the sky. Anyone that has ever spent any time in central and north China knows that it’s a pretty big problem.
It reminds me of LA back in the 80’s. There was a constant haze, probably 330 days a year on the Shanghai and Beijing skyline. Dave is a runner, who just talked how much it gets hard to run here, because it’s just so gross out in some of the northern parts of China. And the government realized that this is a problem. It’s a health epidemic. It’s obviously also bad for global warming and other problems as well. But they’re approaching it multiple angles and they are really starting to crack down.
Dave: Yeah, so definitely starting to crackdown. And it’s both smog and the pollution that comes as a result of smoke and other byproducts into the air. But the other big one too is just all these factories that have all the chemicals, whether they’re dyeing things or cleaning things, they basically take those chemicals and they dump them right just into the river or into a lake or into the ground. And so you come to Beijing or Shanghai, you can see that smog immediately.
But the thing that really scares me is like the effects of all these chemicals that they’re just dumping down in streams and the waterways. So it’s really terrifying. It’s great that China has finally appears to be really cracking down on these factories. And I can speak from experience. I visited a couple of factories with a friend. She makes hair extensions, so basically fake hair that goes onto your head.
And we visited a couple of these factories, and one of the factories that she had worked with said it had shut down. But thankfully they had shut down because of pollution. Thankfully they had found a new factory a little bit further into the country. And we started talking to them about, aren’t you kind of worried that the pollution police are basically just going to come here…
Mike: We have a plan B.
Dave: They have a plan B. And they’re very frank about it. They said, no, no, no, don’t worry about that, we just run the factory at night when they can’t see the smoke.
Mike: It just goes to show you like the mindset over here. It’s like — someone actually had asked a question during one of the presentations, and they were saying something like, what about like common sense or being fair or justice, I think was the word that they used. And I was like, oh my god, I just started cracking – I was literally laughing out loud, because like there is no justice. Like there was no like the Western way of thinking over here. It’s pretty funny, I mean it’s pretty sad actually in some ways, but it’s just part of the culture.
Dave: Yeah I know. It’s definitely a different way of doing business. So it was funny how matter-of-fact a lot of these factories are. And they got their ways to get around things right now. It was funny, that one factory just runs a factory at night, and the second factor actually just has all their products made in North Korea, which we hear about all the stuff going on in North Korea, but again they have their little smuggling lanes that they get through basically to avoid all these pollution controls.
Mike: And what it’s basically meaning is there’s certain types of products that are going to just start costing more. I mean in our experience so far, the biggest one has been paper products. So packaging is getting more expensive which is unfortunate because we put a lot of effort and money in the packaging, and if it’s going to end up costing more it might become cost prohibitive. We’ll see what happens. Anything that has to do with chemicals is certainly getting more expensive, plastics are getting more expensive.
So for me I’m already starting to think about ways to reinvent ourselves and looking at other places around the world to potentially source from, because on top of it, I’m actually happy about the EPA standards. I am happy to pay more and make less. It’s just the way that I am to have better EPA standards. But the other part that’s pressuring as well is that the labor costs in China are also going up just as more people going into these cities, and rent goes up, and things of that nature just like anything else.
As China gets more and more industrialized and becomes more and more first world, not that they’re not already a first world country, but it’s just inevitable that labor rates go up. So that’s another big pressure. So between labor rates and the EPA, might be you need to be looking in other places like Vietnam or Cambodia, India for sourcing certain types of products especially textiles. There’s definitely cheaper labor to be had there. And something that we’re seriously going to be looking at in some of these future Asian sourcing trips. There might be site trips to some of these other countries, and start looking there for potential products as well.
Dave: Yeah. I think definitely in the long-term, probably three or four years out, you need to start to be considering about these other countries to source in. I think China with their labor rates still competitive, the pollution really only affects really small factories that never had pollution controls in to begin with. So the big factories that have some pollution controls in, they’re fine. They’re not being shut down because they’ve handled their products and their pollution in a respectable way.
It’s these really small factories, they’re basically operating under the radar, they are the problem. So if you don’t know your factory, if you’ve never visited them, it’s definitely worthwhile to do. You can get a pretty good feel for these factories right off the bat whether they are one of the smaller factories that probably doesn’t really care about pollution, or a larger factory that takes pollution into consideration. It’s probably not going to be shut down anytime soon.
Mike: Yeah. It’s amazing the variety of factories that I’ve been to here. I’ve been to factories that are on one end of the spectrum that could easily be like OSHA approved in the US. It’s absolutely amazing, like some of these factories are just like gorgeous and really well run. In another end of the spectrum, I went to one of our factories where all the people that were working were sitting on five gallon buckets, like where is their chair? It’s just the rest of the whole thing was just a total crap show, and that’s kind of what you deal with over here. And they all produce good products for us, but certainly some of them I think are more at risk than others.
So we’ve hit our 30 minutes for this episode. We hope you guys have enjoyed the five topics that we have for today. If you have any questions, please come to the comments section on this episode. We have a post on the site for each episode. Leave us any comments you have. We’d be happy to answer them, or come to our Facebook page and let us know there.
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And also AsiaInspection, they had a pretty big presence here at Global Sources as well. We’ve been using them to inspect all our products. I just got an inspection done on some of our cases. Go to EcomCrew.com/inspection, and if you do, that is an affiliate link. We do get — it helps out the show. But you do get a dedicated account manager even from your first shipment.
That’s something that we’ve arranged with them as a special for all EcomCrew listeners. If you go to EcomCrew.com/inspection, you’ll get a dedicated account manager that knows how to bring your products into Amazon and into the US, so they don’t have problems. And also, they’re there for better support. So thanks again for listening to this episode of the EcomCrew Podcast. Dave, I’m going to miss you buddy.
Dave: Yeah, I’ll miss you too, but you never know. Maybe we will hook up again sometime here in Hong Kong, or maybe I’ll make the way out to the Canton Fair, we’ll see.
Mike: We’ll see. I’m trying to talk Dave into it but he’s got, like, I got a family, which I totally understand. So all right guys, we will talk to you in the next episode, and until then, happy selling.
Outro: Thanks for listening to the EcomCrew Podcast. Follow us on Facebook at facebook.com/ecomcrew for weekly live recordings of the EcomCrew Podcast every Monday. And please, do us a favor, and leave an honest review on iTunes, it would really help us out. Again, thanks for listening, and until next week, happy selling.