E-trading helps small firm bag market share
By Wang Xing (China Daily)Updated: 2007-04-14 06:58
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An Internet user in Yichang, Central China's Hubei Province, trades on the B2B website Alibaba.com in this undated file photo. [China Daily] |
When Lu Tianming, founder and chairman of Richall International Industrial Co, was invited by private equities from the United Kingdom and France to talk about getting funding for an overseas IPO plan, no one believed that only three years ago he had less than 10,000 yuan to his name.
But with the help of the Internet, the 35-year-old former journalist has successfully established a company that sold 50 million yuan worth of plastic shopping bags to America, Europe and Japan last year. Its customers include Wal-Mart, Carrefour, Coca-Cola, Pepsi, Disney and NBA.
"The world is becoming flat, and I think to me that means big multinationals, small companies or even individuals with great business ideas can enjoy equal opportunities," said Lu, noting that his company's revenue this year is expected to surpass 180 million yuan.
When Lu read media reports in 2002 of Europe's intention to ban ordinary plastic shopping bags by the end of 2008, he seized the opportunity.
With his previous experience of working in a plastics company, Lu set up his own firm in October 2003 producing plastic bags made from environmentally friendly materials. He got on board e-commerce website Alibaba to promote his products.
"At that time, I had only 10,000 yuan left to start my business," Lu said. "I could also say I was forced to turn to the Internet."
Lu embraced the Internet, and it paid off. He has supply and demand information at his fingertips, while marketing expenses have been kept to a minimum.
But as Lu's business began to take off, the issue of online safety and security emerged.
Soon after Lu set up his company, a man claiming to be a buyer for a South Korean firm ordered 500,000 yuan worth of products online. He insisted Lu send the products by air as they were needed urgently, promising payment soon after.
But after Lu sent the products his buyer disappeared. Lu discovered the buyer had left the company six months ago. It was impossible for Lu to recoup his products or money.
Reward of honesty
Although the incident had a great impact on his company, Lu insisted that honesty is fundamental to doing business online. "It is true that on the Internet you never know who you are talking to," Lu said. "But that's why honesty is especially important to people like us who do business on the Internet."
To avoid further problems, Lu devised strict operating practices for his company, vowing always to deliver on agreements. His efforts brought rewards.
In 2004, Lu got a big order from Anheuser-Busch Cos Inc, the largest US brewer that sells Budweiser beer, to produce plastic bags that help keep beer cool. But after the deal was clinched, oil prices began to surge and Lu's raw materials costs nearly doubled.
"At that time, our partner from Anheuser-Busch called me three times a day, worrying that I may renege on the original agreement," Lu said.
Although he faced great pressure from the surging prices, Lu promised his US customer that he would stick to the original agreement and deliver the products on time. "Because our reputation is much more important than profit," said Lu.
After Anheuser-Busch received the order, Lu was in for a surprise.
"I found $100,000 more in my bank account!" Lu said. "The US customer said it was a reward for my loyalty."
Acknowledgment from customers has made Lu more active in running his business online. A year after joining Alibaba, Lu also became a member of Global Sources, another B2B website targeting export businesses.
Last year, Lu invested nearly 700,000 yuan in Alibaba and Global Sources, including membership fees and online advertising. The investment in the two websites brought 90 percent of Lu's customers, and he plans to invest another 1.8 million yuan this year in online marketing.
"My next plan is the Chinese market, where demand for environmentally friendly products is increasing," Lu said.
(China Daily 04/14/2007 page6)
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