What should I charge them?

Bassman, you are already running a business. The point of running a business is to do what you’re good at and make tons of money. If you’re doing that, then why are you even contemplating diverting your energies elsewhere?

Help a friend out by putting him in touch with someone that knows about this sort of thing, and focus on your own business.

[quote=“Andrew Carnegie”]Every dollar of capital or credit, every business thought, should be concentrated upon the one business upon which a man has embarked. He should never scatter his shot. . .

Put all your eggs in one basket,

and then watch that basket …

…is the true doctrine – the most valuable rule of all.

Andrew Carnegie (Billionaire)[/quote]

Follow my advice and you too could have a disreputable bar named after you.

Bassman,

What you’re being asked to do is pretty much what my husband does for a living. He’s Taiwanese and when people find out what he does (He’s an international trader) and that he has such good English skills, they’re always offering something like this–on the side stuff. He does it all day in the office and we’ve thought of bring it home like this sometimes, but we never have. Why? It takes TIME. Yeah, just sending some emails or making a few phone calls. It gets trickier than you think. And the Taiwanese parties are notorious for the, “Yes, for absolute sure, I want it, or I need it, on day X.” Then they turn around and call a customer/supplier and ask if they can have it by X. It’s maddening. And as the communications guy, you get to hear about that from both ends and often end up looking like an ass. But! It can be lucrative and so it’s always tempting.

If you decide to give this a shot you’ll need to do three things. Get a lot of headache meds ready. Write out a contract stating EXACTLY what your will and won’t do (and you should find out about anything you may not know about so you don’t accidentally get ropped into anything), and how much commition you’ll be paid. Commition is the only way to get paid for this. Per hr. is not workable because it’ll take longer than you have and your fee will end up as much as that of a trading company. Ask for a percent of the profit after costs. That way it’s up to the buyer to leverage his profits so that he can afford you. My husband usually asks for at least 30%, but then, this is his job. And P.M. me if you want to hand this over. :wink:

Good luck!

Strag,

Why am I thinking about doing this?
I want to buy a bigger stake of what I do during the days. I am not the sole owner of what I do during the days but want to buy a bigger part of the school. That is why.

All others,

Thanks for all the good advice. I think $2000NT an hour is what it would be worth although a % would be EXTREMELY good is this particular deal, that must be why they don’t want to involve any trading companies. If it looks like too much I will flick it off though.

A sales commission might be tempting, but I think you should consider a mix of pay per hour and comission on closed deals.

Doing a bit of trading myself, I have never dared to do consultant work purely based on salescomission. I know the customers and suppliers will spare no time to cut me out, and deal directly - how much will it cost them to hire a junior assistant, with English language skills, to handle the repeat business after you have set up the framework?

With comission only, you risk that you spend a lot of time and resources to arrange everything, and in the final moment you are informed that “the deal is cancelled”. Later you may or may not find out that they cut you out, closed the deal directly, and left you with nothing.

Go for an hourly rate (NTD 2-3000) to ensure a minimum reward, and add a modest sales comission as success bonus.

The key is to make sure that they don’t know each other. However it can be hard. Moreover, if the goods don’t pass thru you, you will have a one shot deal only or at best.

In this case, I understood that the customer and supplier know each other, and that Bassman was supposed to handle communication between the parties, not the actual transactions.

A long term business, with reasonable profit, on these terms will require a fine balance between pay per hour and sales/success comission.

Our trading company have problems to keep customer and supplier from knowing each other (almost impossible), so we have to add enough value to each deal to prevent them from doing business directly.

The reason why/how customer and supplier find out about each other:

  1. Marking/lables on the products.
  2. Request for technical manuals etc.
  3. Internet - do a search on the item number/name
  4. Customer send request by email to ALL companies dealing in that product group, and recognizes “our” product.
  5. Pluss a lot more.

[quote=“X3M”]

With comission only, you risk that you spend a lot of time and resources to arrange everything, and in the final moment you are informed that “the deal is cancelled”. Later you may or may not find out that they cut you out, closed the deal directly, and left you with nothing.

Go for an hourly rate (NTD 2-3000) to ensure a minimum reward, and add a modest sales comission as success bonus.[/quote]
This is sound advice. For the trading companies that our company deals with, they often charge a “basic fee” first, and then take a commision on all transactions. What I tried to describe earlier is the simplest situation. The work of a trading company can be quite simple on some days. However, there are a jillion things that can happen that can make it more complicated. In many countries, especially the PRC and to a much lesser extent Taiwan, trading companies operate on the edge of breaking quite a few laws. Also, there is no typical trading company-client relationship. I know a little about trading through HK, and if an opportunity like this ever came my way, I would probably go for it. However, I would seek the advice of people who have worked in the business. I would do a bit more investigation if possible.

Jive Turkey,

Is the kind of trading co you are describing working importing things into Taiwan or exporting things out of taiwan?

I have a few friends doing export from Taiwan to Europe, where they basically help western companies finding stuff in Greater China. They do try to keep them from knowing each other, which can be done by using more than one Taiwanese supplier (If the product is simple and a lot of Taiwanese cos make it).

Adding value usually means that they help the foreign company doing Quality Control, and check packaging, which is often a problem here.

Any other ways to add value?

My guess is that the company is looking for a cheap way to do it’s business.

It’s obvious, he already told you he doesn’t like agent fees.

I got the same offered a few times and when it came to talk money … duh.

I don’t want to discourage you, but be straight forward with the guy, tell him your time is precious.

Bassman, don’t call me Strag again!! Not unless you want a visit from the SAS.

I can see your point about buying a bigger slice of what you do, but if you divert your attention from what you do then it may suffer, and then it’s not worth as much. Presumably you’re doing OK at it now? Save the money from that and use it to buy the slice. Or if you can make more money trading then give up the school and become a trader until you can buy a school outright with all the money you make.

I can’t see the point in diverting energy away from a good deal for something a bit dubious. Unless you don’t have a good deal, in which case there’s no point trying to buy more of it.

Stick with what you’re good at, at least until you have the resources to dabble with other stuff at no risk.

[quote=“Mr He”]Jive Turkey,

Is the kind of trading co you are describing working importing things into Taiwan or exporting things out of Taiwan?

[/quote]
I know next to nothing about trading in Taiwan, but I’d imagine that the situation I see here on the mainland is not too different from the manufacturing and trading situation in Taiwan twenty to thirty years ago. I work for a HK owned OEM in Dongguan, Guangdong. Our company’s HK parent handles most of the import/export, so we don’t do too much through trading companies. If we do, it’s usually because the trading company is able to tap into a market that we can’t, or the deal will lead to some technology transfer that will help us make higher value added stuff. Actually, the customers of our HK parent company will sometimes use us to source from other suppliers who make stuff we don’t/can’t make, so the HK parent company also does a bit of “trading.”

There are a lot of “soft skill” factors for why a foreign company sourcing from China will want to go through a HK or Taiwan trading company. The fact that most mainland manufacturers lack these soft skills is what keeps trading companies in business. Many mainland producers are not bad at their internal manufacturing processes. The things they make are mostly low value added products, but they can do it well and for very competitive prices. However, since they lack the soft skills needed to bring their goods to market, a trading company trading in the right market won’t have to worry too much about keeping the buyer and the supplier separate. Some trading companies have brought their foreign buyers to our factory and introduced them to us. We’ve got their addresses and all the contact information we would need to cut the trading company out. The reason we don’t is that the trading company is usually able to do something somewhere in the supply chain more efficiently than we can.

One of the soft skills I’m talking about is language ability. Most mainland managers in our factory can’t speak English well enough to be able to understand customers’ requirements. That being the case, our HK staff do most of the communicating with customers. If we were just a mainland company with no HK parent, we’d probably be selling a lot more through trading companies. Mainlanders’ English skills are improving, though, so this isn’t the only soft skill that keeps the trading companies in business. The most important thing for a good trading company seems to be the cultural knowledge necessary to understand the buyer’s needs and requirements. A good trading company will know a bit about the market where the buyer will be selling the goods. Mainlanders know absolutely dick about that. Traders also have a better idea about the quality that foreign buyers expect and all the little details that foreign buyers want followed. These details could concern packaging, shipping terms, product safety issues, etc. The list is long, and that’s a damn good thing for trading companies. These externally oriented soft skills are what keep most mainland factories from dealing directly with foreigers.

Then there are the domestic oriented soft skills that a trading company should have. Even after WTO entry, China’s import/export laws and procedures are a headache. There is absolutely no way to get things in or out on schedule without greasing the wheels somewhere with a hongbao. Foreigners generally don’t understand that until it’s too late. Also, most buyers just don’t have enough knowledge of the China market to find the best source for what they want to buy. Yes, there are trade fairs and directories, but that usually isn’t enough to help a foreign buyer find his own supplier by himself. If a foreigner came to Dongguan looking to find a supplier for some simple plastic parts for which he would provide the design, he would see at the trade fairs or in the trade directories hundreds of companies that all say that they can make what he needs. He could tour each factory to get a general idea of their capabilities. That would be a big waste of time, though. If 200 companies say they can make what you want, the reality is probably that only 50 of them actually have the ability to make it. That’s not even considering yet if their prices are competitive. Most foreign companies are not able to keep their hands on the pulse of the market like a good trading company can. A good trading company will be able to follow any changes in the capabilities of companies operating in an industry and will stay abreast of raw material prices for that industry. That is too troublesome for most foreign buyers to deal with. Most foreign buyers who try to dive right in and do their own sourcing get burned.

I imagine that sooner or later, the need to go through a HK or Taiwan trading company will diminish. Mainlanders’ skills are slowly getting better. However, it will be years before trading companies can be sidestepped.

It often seems to me that HK trading companies do better than Taiwanese trading companies. They are closer to the source, their English is better and their knowledge of foreign business practices is better. My impression is that Taiwanese traders do have one area where they excel above Hong Kongers. The Engineering skills of the Taiwanese are a lot damn better than HKers. I think this enables them to do more trading in higher value added products. I don’t know of ANY HK trading companies that do anything in computer components or high value added comuter accessories. I’m sure there are some (I’m not a trader, so I really don’t know), but I’ve known of plenty of Taiwanese trading companies that were into that and doing quite well.

Can’t you do it for free out of the goodness of your heart ?

The very last thing i would do - distorting the market for the folks actually trying to make a living out of it.