BONUS Episode #016
On today’s episode, We are joined by Burak Yolga, a specialist in international logistics, product sourcing, and navigating the complicated global marketplace – making him the ideal guest to talk about the implications of the Caronavirus on e-commerce sellers.
We will also be talking about recent import tariffs and other critical information pertaining to the recent volatile international economy. A little background on our guest – Burak is originally from Istanbul, Turkey – but has traveled the world doing international B2B Logistics. Currently, Burak is the founder and CEO of ForceGet.com a company that specializes in international logistics. Burak, we are so excited to have you as a guest on our show and looking forward to our discussion.
Websites Mentioned During Episode:
www.Forceget.com
www.1688.com
www.Globalsources.com
www.Firing The Man.com
Facebook
YouTube
Instagram
David (00:00):
Navigating international markets is complicated already. What are some new problems that have come about since the Coronavirus?
Burak (00:10):
Basically, Chinese factories have been closed almost 60-75 days.
Ken (00:16):
Two of my suppliers have reached out recently in the last week or two and and they’ve offered discounts.
Intro (00:21):
Welcome everyone to the firingtheman.com Podcast, a show for anyone who wants to be their own boss. If you sit in a cubicle every day and know you were capable of more than join us, this show will help you build a business and grow your passive income streams in just a few short hours per day. And now your host serial entrepreneurs, David Schomer and Ken Wilson.
David (00:46):
Welcome everyone to the firing the man podcast. Dave, we have a very exciting guests. We are joined by Burak Yolga. Burak is a specialist in international logistics, product sourcing and navigating the complicated global marketplace, making him an ideal guest to talk about the implications of the Coronavirus on e-commerce sellers. We will be also getting into recent import tariffs and other critical information pertaining to the recent volatile international economy. A little background on our guest. Burak is originally from Istanbul, Turkey, but he has traveled the world doing international B2B logistics. Currently. Burak is the founder and CEO of www.forceget.com a company that specializes in international logistics. Burak we are so excited to have you as a guest on the show and are looking forward to our discussion. First things first, tell us a little bit about yourself and the path that led you to specializing in international logistics.
Burak (01:43):
Hey man thank you so much for an opportunity and a great introduction. Um, you know, it’s, as you said, it’s, it’s really complicated situation now. We all been going through with the logistics, eCommerce, business B2B businesses and I hope everything. Everything is going to be back to normal very soon. So as you said, I’m from Turkey originally. Uh, I’ve lived in China seven years. I still have an office in Guangdong Shenzhen. If people don’t know that it’s in the South, Southern part of China in Guangdong province. Uh, it’s one of the largest cities in China and mainly producing electronics, uh, between Hong Kong and uh, Guangzhou. Uh, so we have offices in Shenzhen, uh, Hong Kong as well as in Miami. Uh, and I moved to us a year and a half ago. Um, uh, we started the business in here and, uh, you know, back and forth. I’m traveling. I used to, now unfortunately with the coronavirus, uh, it’s a little bit tough, but you know, we start, we keep doing the operations and things are coming back to normal a little bit. Um, my, my background is, uh, I have a international business major, uh, bachelor degree and being lived in China seven years, work in different industries, different platforms, uh, and now, uh, our core business is the logistics freight forwarding from China to worldwide. Now we’re working on our digital platform. Hopefully it will be active, uh, middle of April. And you know what, we just helped the e-commerce sellers on Amazon sellers. Okay.
David (03:16):
All right. So Burak navigating international markets is complicated already. What are some new problems that have come about since the Coronavirus? What have you, what have you seen in your business?
Burak (03:31):
Actually, we need to back it up a little bit. Uh, things started that thing in 2018, um, a lot of big markets, they started to, um, get smaller, especially the brick countries like Russia, Brazil, India, um, middle is with the oil and gas prices went down. I think everybody knows that. So Chinese factories and companies already had cashflow issues and the pressure, uh, worldwide, you know, the orders getting smaller and smaller. So factories are more and more flexible with a smaller MOQ, a smaller order quantities. Um, you know, the living costs in China increases really high every year. It’s like 15 to 20% of the interest, uh, uh, inflation, uh, in the country. So things are like really getting expensive. Uh, but same time people’s income is actually getting lower because the demand is going down and in the world. So then, you know, this, um, the tax where the trade war started between the us and China two years ago.
Burak (04:30):
So a lot of companies, they lose business. Uh, some of the suppliers, they try to shift their purchasing orders from China to Europe. Uh, East Europe, like Turkey, India, Bangladesh, some of the industries, uh, already have be shift to Southeast Asia, like Bangladesh, Vietnam, Thailand, Cambodia so nobody was expecting such big issue at the moment. Uh, and the timing was really not good at all. Um, this virus started, uh, right before the Chinese new year. So factories was closed almost 20 to 25 days. Uh, once we were getting ready to open up, you know, the businesses, this virus hit China. So basically Chinese factories have been closed almost 60 to 75 days. So it’s, it’s, it’s a massive crisis for the companies in China for the cashflow. Um, now, uh, we are, what the March 13, uh, 80 – 90% of the factories are back to work.
Burak (05:31):
Um, but they don’t have full capacity. Yes. Yet, one of the reason is all of the employees were not able to come back to work because some of them are still under quarantine Um, and another reason is a lot of raw material suppliers are not doing yet full capacity. Uh, so some of the factories are back to work 100%. Their employees back management is back, but then the raw material suppliers are not back to work so they don’t have enough material to produce or they have material and they don’t have enough employees to make the full capacity production. So I think this will be keep going another 15 to 20 days, uh, we are expecting things are coming back to normal, a little bit more in China. Uh, I think middle of April, beginning of may, but unfortunately now the, the virus have been spread it out to Europe and us. So I think now a Chinese factory is going to have like less orders. So this had like a kind of snowball effect. Um, you know, and I think it’s going to keep going, uh, another uh, one or two months. So Chinese factors are having serious issues, uh, for the cashflow at the moment.
David (06:52):
Okay. One thing you and I had talked about prior to this interview, and I’d like to dig into it a little more, is once this Coronavirus is solved, there’s still gonna be backlog. They’re still gonna be carry over implication these factories. And so if things continue trending in this direction, when do you think things will be totally back to normal?
Burak (07:15):
I think it is, it is really unknown right now. I mean, and Chinese factories also don’t have the information yet. Um, the thing is the international business as well as international logistics is really connected to each other. Even if you work with a factory from Japan or Vietnam or Turkey, probably some, some of the raw material is either coming from China or the production equipment is made in China. The spare parts come from China. So there’s like a really big, um, it chain. The problem is not only because of the China, the problem is actually globally. The rest of the world is very dependent on China. So this is one of the issue with the supply chain and logistics now. So when you go back to your question, a lot of people were expecting things coming back to normal in China, uh, end of March and April, which is actually doing pretty well right now.
Burak (08:12):
Uh, 80 to 90% of the factors of back to work there. Manufacturing, we started to do our shipping process. There are a lot of Queue, a and backload for air shipments, but there a lot of space. I’m able space for the ocean freight. So the air prices increased 30 – 50% at the moment in the market because a lot of airplanes, a lot of, you know, airlines canceled their flies, the passengers and 20 to 25% of the air cargo actually carry by the passenger flight, like commercial flights. And the rest of it goes with the cargo flights. So we have still a lot of lack of source for the air. Freight wise, the price is not, stable we cannot really find the enough space or the price are changing very, very often. So manufacturing wise things are coming back a little bit normal. But now the freight forwarding and the logistic is having this issue facing this problem with the space pricing and as well as uh, this very big cashflow, uh, pressure from their clients in China and the rest of the world.
Burak (09:26):
Because last two to three months, nobody actually made payments internally like you know, from China to Hong Kong. So that brought a pretty big depression out of China. And this is something that people are trying to fix on it.
Ken (09:40):
That’s interesting you mentioned that I uh, two of my suppliers have reached out recently in the last week or two and, and they’ve offered discounts, you know, Hey, if you place in March, we’re going to give you a, you know, a 10, 15% discount and then kind of speaks to what you were talking about. The cashflow problems. I think they’re hurting for orders right now.
Burak (10:00):
This is, this is, this is really true. Um, if we had this a podcast six months ago, a year ago, I would have told you guys or your listeners that they should be negotiating with the suppliers, very low deposit, like discount and, and sort of things.
Burak (10:15):
But now a lot of companies actually, they’re trying to increase their deposit limits. You know, they want to get like more money in advance. So this, this really happens because they really need the cashflow. Imagine that you had a factory with hundreds of employees and you’ve been closed last three months and everybody was expecting to come back to work end of January. But now it’s back to middle of March and now the clients who place orders from Europe, now they’re having problems so they cannot make the payment to your factory. So this is the major problem. If China had the problem, they opened it up, they would start surviving, they will start like working on but now their client are having the issue. So that’s that that brought this thing to kind of next level for Chinese suppliers. So I think this is the, this is a very right time to negotiate the price.
Burak (11:07):
I mean I know that some of our supplier, they tried to increase the product price. The reason is their raw material prices increased because there’s like a really big demand right now. Chinese factories, they try to produce as much as possible and make the sales. But on the other hand it’s not so easy to find a raw material in the market. So this cause companies to be more aggressive on a sales wise. So I also hear a lot of people, they’re sending us a message, Hey, we open it up. You can place an order, you can get the samples. Yeah. Now I think, um, one of my friend was placing an order and he had a little bit worried about this corner wires and I told them, for example, it’s just an idea. Everybody’s case is different. But I told them instead of ordering 2000 piece, keep it safe for you.
Burak (11:50):
Order 5,000 a piece unit and only put 10% deposit. And then the more you ship, you paid a balance and then ask the factory to keep the rest of the stock for you in their factory in China. This way you don’t have to pay everything up front. You don’t have to ship everything and pay crazy amount of shipping fee or their house be FBA before Amazon. And the more you buy from the factory, your cargo will be ready. So it will be very efficient to do it. So now factors are more and more flexible with the payment terms, with the discounts, um, you know, you can place an order, fix the price. Now. So in the future, if the price change, you are not going to be affected that you’re going to have ready stock. So one of the thing issue a lot of Amazon sellers are facing right now is they’re running out of stock because everyone was thinking, okay, I don’t want to put so much money. The Q4 just finished, let me get paid and then I’ll place an order right off their Chinese new year. I hope you didn’t happen to you guys, but I don’t, unfortunately a couple of my friends, uh, they have this problem right now.
David (12:52):
Yeah, I’m having that problem in, in my business for sure. One thing I want to dive into that you just talked about, which I think is, it’s an awesome technique, a technique that would actually solve a problem in my business and that is placing a larger order and having only a portion of it shipped over. And I’ll tell you right now in my basement, it looks like a warehouse. I have boxes from wall-to-wall. And the reason for that is I will make an order of say 5,000 units and I don’t want to get hit with longterm storage fees. And so I have them shipped to my house and then I’ll send off about a thousand at a time. And what you just said I think really addresses that problem. Can you talk a little bit more about that and how that you may bring that up with a supplier?
Burak (13:37):
Right. I mean, we also give the service because some of the suppliers, uh, we have warehouses in China, different cities, large ports and airports. Uh, some of the suppliers, they’re very willing to do this. They are, they’re happy to help the clients because they received a big order. Uh, once they receive a big order and they can buy it cheap and they can sell it cheap and they have the larger revenue and which means cash for them. But some of them, they say, okay, we placed this order but we don’t want to keep it in our warehouse. We don’t have enough space. So as the force gets in, we can handle that and then receive the cargo to our warehouse? And then we help you to ship it partially. So this way you don’t have to take, you don’t have to do extra because once you ship it to your basement, you ship, you pay the shipments, your basement you do a little spent time, uh, extra work, then you have to ship it to Amazon again.
Burak (14:27):
I think that’s too much work. And you know, a lot of people will be like to do Amazon on the, especially FBA to make the things removed. So this makes an extra, extra cost and extra time for them. So I think, uh, this, this, this kind of like a small tactic. We’ve been doing it almost like two years. Uh, when we talked to the factories, uh, we manufactured this 8,000 in his tire inflator, uh, for one of our clients and they only wanted the ship be like 2000 piece than 3000 piece. Then the rest of the 3000 pieces we placed order of 8,000. We get the proforma invoice for 8,000 piece. We got really from a good price. And once we get the proforma, we told the factory, Hey, we’re gonna do a partial shipment. Is that okay for you? They said yes.
Burak (15:10):
So we only paid 15% we picked up the 2000 we paid the rest of. We paid the entire 2000 piece. We keep the 15% in the factory as a security deposit for them. The rest of the 6,000 unit in the warehouse, we ship another 3000 after a month we paid a fully for the 3000 and the rest of the 3000 we’ve paid off after 20 day. So this way they didn’t have cashflow because we pay like regular basis. We didn’t have cashflow, we sold it, we ship it, we get our money back. So everybody was kind of happy with this deal. If you have a good forecast, how many units you’re selling a year this way, I think instead of making eight orders in a year and you can make two orders a year and keep everything, you know, in an order.
Burak (15:56):
Of course there are some, some risks of this, uh, you know, you, your product can get suspended, your product, your, your listing, might be removed anything can happen. But, um, in some point if you’re a, um, let’s say experienced sellers, um, if you want to save money on the shipping, uh, buying product this way, factories like it’s, and I think it’s also a good favor. Like it’s also a good business strategy for also buyers. We’ve been doing this for a long time. I think you guys should also try it. Yeah, absolutely. Absolutely. And you said we a lot and when you’re talking, when you say we, you’re talking about www.forceget.Com. Yes. Um, we have full freight forward service. Sometimes our clients are asking some help, you know, because we have a team in China, we have a team in the U S and sometimes for people dealing from, from US to China, we have some of the states there have to all far as some of them, like 15 hours time difference.
Burak (16:54):
So it’s sometimes difficult. So, uh, once we have, once we help you, uh, with the freight forward, then we also have a special team for sourcing that can help you with, you know, negotiating the suppliers for price, the trade term, uh, do the final inspection. I think with us, one of the key thing for businesses, you know, especially if you’re doing an FBA, uh, you know, the customer service and customer happiness is the most important thing in the competition. So you have to make sure the product that you’re shipping are, has no manufacturing defect no label problem or packing problem. Everything needs to be perfect. Um, so that’s why we are also offering this kind of additional service to our clients who wants to use our freight forwarding service. So this way, um, you can save a lot of money if you have something wrong with the shipment and order.
Burak (17:45):
We have, we have had this many times. Uh, you know, it’s unfortunately, you know, I lived in China seven years, I’ve been to 200-300 factories, at least maybe 20 trade shows. Every time you meet Chinese suppliers, you’re talking about like a long-term business relationship. Um, good relationship like you know, quality service. I mean of course there are really, really good big factories and quality people that you know, even your service. But in my experience there are also a lot of companies, they don’t have QA quality assurance, they don’t have a QR. Um, they don’t have raw material testing when they receive the raw material. A lot of factories if any of you have been to China, you know, you go to factory, it is a factory but it’s actually a small workshop. So a lot of things can go wrong. So that’s why we always tell people, um, to make sure you do the final inspection.
Burak (18:41):
And one thing, if you don’t mind me ask one of the thing, Chinese factories do a lot, you know, again, I exclude some of them. They send you a great sample that the sample is, perfect quality. You back and forth, pay a lot of money for the DHL, ups, confirm the sample, everything’s perfect. And now you placed the order 2000 piece and you receive something very different than the sample you received. This happens to a lot of people. So the only way to avoid that prevent that is, uh, making the final inspection before you, ship out the cargo. Instead of sitting home and praying, I hope my cargo, my goods are good shape. Good quality. It is very, very important to do the final inspection. What do you think guys?
Ken (19:26):
Yeah, absolutely. I do a final inspection on every single order and it’s, you know, it’s, it’s saved me a lot of headaches. Uh, you know, like you said, there’s so many different, uh, variables at play and you know, I, I’ve had, uh, inspections where they found errors and, you know, I, I had my, you know, supplier fix them before they shipped out. Otherwise, you know, it’s going to ship out, get to the customers and they’re, you know, they’re going to be unhappy and you’re going to get negative reviews. It’s just a bad cycle. So, uh, you know, final inspections, it’s a must have for every order for me.
David (20:00):
Yeah, absolutely. I had a similar experience a couple of years ago where I did get a really good sample and then I had this particular order show up at FBA warehouses. I launched that product and I was getting a lot of three star reviews and I was like, there’s no way I like, my listing was under attack and it wasn’t until I got a couple of returns in and compare them to the sample in was like this is a totally different raw material than what we talked about.
David (20:29):
And that was a really disappointing because I had 3000 units in the Y that I had to sell out in. It puts you in a tough position where you know your reputation is one of your biggest assets. Why don’t you go have 3000 mediocre products that you need to unload? And so there’s a real.
Burak (20:48):
Reputation and as well as your cashflow, you know, it’s, it’s, you know, you pay freight, do you pay everything down from, you wait maybe 60 days. You spend so much money to rank the product and then eventually you sit with the 3000 units and then you know, an old, the thing factor says, Oh sorry, probably if you’re lucky enough. Yeah, absolutely. I mean, I don’t want to sound horrible guys. You know, I have really, really good Chinese suppliers. Some of my friends are like really, really good friends. You know, we’ve been doing business long time, but this is all a bad experience. Like every country has that. But you know, the only thing in China that we have is this, you know, it just, but you know, one thing I’m going to tell you guys that maybe sounds a little weird to listeners, but look at this business from the Chinese seller perspective.
Burak (21:37):
You know, most of us will kind of, if you’re working, if you’re doing a first time business with the Chinese supplier, we kind of have a trust issue. We don’t know if they’re going to get the deposit. You know, a lot of people are using Alibaba trade insurance, which I think is not really worth it. I mean I have a couple of friends, they’ve used Alibaba trade insurance and it didn’t work out that well. Uh, some of them are very successful. Um, but Chinese suppliers also don’t trust you. I mean don’t trust us because we are overseas. They try to get as much deposit possible because there’s a lot of buyers. The they canceled orders the last minute with a private label, you know, they don’t know what to do with the rest of the stock. They try to sell it like a cheaper in the market.
Burak (22:24):
So a lot of things are going also from their side. When I, once I told you, okay, it’s hard to trust the suppliers, not only hard to trust but let’s be more careful. But they basically have similar perspective. So we kind of need to do a little bit empathy with this people and remember that we are overseas and if somehow we place an order pay very similar amount of money deposit for my personal orders. And you know, for our, my clients, we always encourage them to pay maximum 10% of deposit. And most of the factories are like, except in this unit, they open the door from 30% you can negotiate 10 to 15%. We never pay more than 15%. Uh, so they also have the issues. So it is very important to find a middle way. And sometimes most of the people, they say, you know, I want to work with the factory directly.
Burak (23:19):
But it doesn’t mean the work with the factor directly is always the best option. It may sound, I’m jumping from topic to topic guys, I’m sorry for that if I do that. But you know, once you work with the right suppliers, is can be a trade company. It can be a big factory. But every different size of a factory workshop has their own expenses and their have own MOQ and a minimum order quantity. So some of the factors they have, they accept only the large orders. So it is sometimes hard with the factory because in my opinion, the buyers, especially Amazon sellers or e-commerce sellers who starts new, they need to find the right type of suppliers. Which means if you’re looking for not very big quantity, then sometimes it’s better not to chase the largest factories because for them, if you’re going to be a small customer, then they may care about you less.
Burak (24:17):
So please make sure that you choose the right factory or right trade company. Now you’re going to work with it. Definitely do an inspection. Don’t only rely on alibaba.com because there are a lot of fake accounts, fake companies, student, alibaba.com some of the accounts are very old. I’ve had this personal issue that I went to a Chinese factory, that Alibaba address. Even there was nothing like, it was like an empty area. Like there was not even a building there. So I was like, how was it a gold supplier that has five years history there and they’ve changed the factory location almost two years ago and Alibaba did an update the factory location, you know, so that was, that was like a crazy experience where I’m like, you know I, I sent a picture to my friend and you know, he’s like, okay, so what? I’m like where’s the factory?
Burak (25:06):
He’s like, no, where is the factory? We had this weird conversation. So you got to be like really careful the type of the supplier that you choose and the way you negotiate with them. So don’t always go with the largest factory and make sure they care about you. And under small tip maybe I can give you is make sure you understand who are you dealing with in the company. One of the thing in China we call that Guangxi is very important to have the good relationship with the suppliers. But make sure that the person you’re dealing with, your sales representative, they have enough experience or they have enough time in the company. So if not, they’re probably not a decision maker. And if there are none of decision making or you’re probably don’t want to negotiate with them in a sort of business term, any sort of payment, if there’s any problem, all they tell you is, Oh, let me report it to my boss and then it’s going to be like a ping pong game, you know, back and forth.
Burak (26:04):
So I highly recommend you when you talk to connect to a new company, ask them, ask your sales representative how long they’d been working in the company. If it is, 3 – 6 months one year. Just kindly ask them, Hey, can you please add your supervisor or your manager or your boss to the conversation? So one thing, especially the last two years we were facing in China, a lot of people quit their jobs very often. They change companies very often. I’m sure you know, you guys are talking to different people. Uh, one day someone says, Oh, my name is was Apple and the previous company. And now my name is lemon. It happens a lot. You know, they’re using this like English names and they’re coming with, Hey, my name is Michael today. I’m like, okay. About who were you before? So you know, so this happens a lot, so make sure who you’re dealing with.
Ken (26:55):
I’m laughing now because I have a supplier and they use the name lemon.
Burak (27:01):
Oh yeah. You know, I think you guys are using recheck probably. I have maybe like 15 apples and once they change their names, it’s a big confusion for me.
David (27:12):
I too, I have a, I have a may and I have a June. Oh, okay.
Burak (27:17):
You need them. You need them March. And you know, June, July completed the whole calendar.
Ken (27:25):
I wanted to circle back on the, on the freight the pricing. You mentioned earlier the air shipping was, the price had increased substantially but that the ocean freight has went down. How do you, what do you think is going to happen in like the next 30 to 60 days? What do you foresee the price?
Burak (27:43):
I think, I think since the lack of manufacturing continue, this situation is going to stay the same. Uh, because a lot of people, they have a waiting order. Uh, factories are completing the orders. Partially, they cannot finish everything in one time. So that’s why a lot of Amazon sellers or, uh, wholesale companies, they are willing to do partial shipments. Uh, partially shipping. Partial ship means, you know, if you have like 2000 units ready, you want to ship 500 and the rest five on 1,50 whenever the shipment is ready. So a lot of people are facing, have been losing customers, uh, getting out of stock. So nobody wants to do that. So that’s why a lot of people now trying to ship as quick as possible, which is air freight and the rest of the cargo because it’s not ready. So a lot of sea freight companies, uh, where I’m talking about the, the large, uh, cargo companies, uh, the carriers like, um, you know, ocean freight companies, they don’t have enough containers. So that’s why they are kind of delaying their departure time to fulfill the containers because now the prices are still increasing in the sea.
Burak (28:57):
But like maybe five to 10%, but the air has up to 50% I would say the price increase. So it’s a big change. And then the one of the problem is that we call it, there are mostly two rates, one is standard rate and there is like express rate kind of like, you know, priority shipments. If you book standard rate and if someone else comes in and offers more money to the airlines, which is for the favor of the airline. Unfortunately standard cargo cannot fly out, but the express can do. So that’s why the market changes very uh, open right now. Uh, 30 – 60 days right now, most of the air freight, most of the flights had been canceled from mainland China. I’m talking about like large airports like Beijing, Shanghai, Guangzhou, Shenzhen. Most of the flights cancel. They, there used to be maybe 20 flights in a week.
Burak (29:54):
Now we have two or three flights in a week and most of them are chairing medical stuff like mask or medicine or this kind of humanitarian stuff. So most of the shipments now move to Hong Kong and there is a backup back log, a seven to 10 days waiting time. Now Korea is the same. Two weeks ago, three weeks ago, the per kilo, the price was $2.50. Now it’s $3.50 and they don’t even go into the space. We asked price last Friday. They said, could we say cargo is ready Monday? They said, okay, come back to us on Monday because the price from last week, our price from yesterday is not valid because a lot of people, they’re trying to fly out everything. And then so I think 30 – 60 days the, the situation is gonna stay the same for the air. Uh, we don’t know where the price is gonna go.
Burak (30:41):
Uh, but obviously the more Chinese factories produce the more shipments will be ready to stand out. And if people are running out of stock, then there will be more and more air freight. So what I can recommend to people is, excuse me. Um, if you know, when you’re manufacturing, when is, if you know, when is your delivery time, you better book your shipments in advance. So if your shipment is going to be ready Monday, make sure you already did the booking last Monday. So if we’re talking about your shipment is rated today, bad air, you do it a week earlier don’t wait the last minute because you’re going to, it’s very hard to find now truck in mainland China because still a lot of people are under quarantine a lot of roads are blocked. A truck companies, they can’t find enough drivers. Drivers don’t want to take the cargo from a dangerous locations. Uh, the, the speed of increasing, uh, the cases in China is really low right now compared to Europe or US. But still a lot of people are very cautious about this issue. So it is not only the air freight, but it’s, it’s very, very difficult to find a truck. And the price are very expensive right now compared to, uh, two to three months ago,
David (31:52):
Around the turn of the year, we got hit with a big Trump tariff. And that got me thinking there was 30% on some of the products that I sell that got me thinking that maybe I need to look elsewhere other than China for supplies. And then with the Coronavirus happening again, it’s causing some issues with my Chinese suppliers. And so in your experience, what are some of the smart sellers doing right now? Are they staying in China or are they diversifying into other countries?
Burak (32:21):
It is definitely a smart move to diversify, especially if you’re, you know, I, I believe some of the industries, they don’t have really a much alternative if you’re in the kind of heavy industry, uh, or like a metal or iron, steel, this kinda industry still, or heavy equipment is still pretty much, uh, based in China. The textile, you can look in Bangladesh, India, Turkey, even East Europe. It’s a really good idea. But one thing I like about China is everything is very, very efficient. The shipping process is very efficient. Uh, the paperwork is very efficient and fast. China had been, you know, they already passed the rookie days maybe 20 years ago, 15 years ago. China had a lot of problems, you know, with the shipments and stuff. But today, if we didn’t have the coronavirus is China has a great efficiency for the shipment you know, the day we pick up the cargo, we could fly out the same day.
Burak (33:20):
It never happens in any other country. It takes really longer to custom and etc. So in this perspective, China is going to still, whatever happens is going to keep staying the largest manufacturing area. However, a lot of Chinese factories who based in mainland China, they already started to open alternative manufacturing plants in different places, especially where the labor cost is lower. Like Vietnam, Cambodia, let’s say if you’re buying electronics, consumer electronics, uh, Chinese factories, they have their own, uh, let’s say, um, they have their own, uh, office or new factory set it up in Bangladesh or in Malaysia to avoid the tariffs and the tax. But still the raw materials go from China. So if it is electronics, uh, if you have high tariff, I would recommend to look. Maybe Taiwan, Taiwan is really good market, very quality. You probably gonna have less quantity, less suppliers, less factory, but better quality.
Burak (34:23):
And the price gap is gone like low, really lower between a smaller, between China and Taiwan and electronics. We work with the Taiwanese suppliers. They’re really great. Um, the textile, Turkey’s really good with textile, cheap, not as expensive as Europe, Bangladesh and India is good. Uh, one of the issues with Bangladesh and Bangladesh India is, makes in my experience, the shipping, the logistic is not as efficient as China and people are getting used to the foreign trade like the, you know, right now, once you have a small request from a Chinese factory, they do immediately. They know what you want, they know the experience. I like the efficiency if you want to, if you’re an eCommerce seller, you wanted the fresh year product, you want to add additional gift, gift card bag, whatever Chinese supplier can find you another source within one day.
Burak (35:17):
So this, this is really great for a lot of people instead of bringing everything together. So if you ever in a specific industry like textile definitely you can look at it in Bangladesh, Turkey, Cambodia and Vietnam is, especially Vietnam is really like a, they’re growing there. Everybody’s talking about Vietnam is going to be the next China next five to 10 years. Once this coronavirus is uh, hopefully losing its a risk and in the danger. I highly recommend you to look into Vietnam or if you have an a trade show you can definitely go or the ones in China, there are a lot of, you know, international companies coming like Vietnam and some of the industrial like electronics, Taiwan, again, Vietnam Cambodia. But one thing guys, I, I few days ago I was reading uh, financial times and uh, I saw how other countries are actually depending on manufacturing to China, between 30% to 70% raw material is manufactured inside of China, southeast Asia is depending on China. So it is really, really hard to take out China from the game because you know, either logistic wise or equipment wise or the end user and product is coming from China or raw material. So it is, it is hard, but in my opinion now Eastern Europe is getting more into the game in the end. Bangladesh as well as Vietnam, as long as you need to make sure that your product, whatever you sell, it doesn’t have too much depending to China and their raw materials supply.
Ken (37:00):
So Burak, for our audience you recommended, uh, Vietnam and Cambodia and Taiwan for sourcing, Do you have a source for that? Do you have a web, like a web portal or do you have a sourcing agent that you recommend people to use to find alternative suppliers outside of China?
Burak (37:18):
Those countries are also, they have like a Page on Alibaba or they also have it in Google, but I recommend people mostly to follow the local trade shows if you, if you have quite a bit sales online sales or income. I think that one of the most important things to follow is the industrial exhibitions and meeting people face to face. But of course if you don’t have a travel experience or if you don’t have enough money or time for traveling, I we sometimes check there’s a Chinese version of Alibaba. It’s called www.1688.com or www.1688.com.cn Some of the local suppliers, they don’t have Alibaba accounts. So you can find a product cheaper, but then probably you’re going to have a little bit of an issue. Would you know the language? A right now as far as I know, Vietnam don’t have its own special portal.
Burak (38:11):
Uh, we sometimes check global source, uh, website, www.globalsources.com. It also have some good leads and the rest, I think, uh, what we do is in our industry since we have lot of connections in Asia. We were asking our networks or connections. So right now as I said, Vietnam still has like five to 10 years maybe to reach the point a where China was like 10 years ago. It’s still growing, but still I think they need time. So pretty much the little companies, they’re depending on China. If you’re looking for a sourcing for a quality products, South Korea is definitely an alternative. Great people, great country, definitely more expensive. But in my opinion, uh, as a lot of Amazon’s seller friends I have, it’s better to look for somewhere where not the Chinese are competing very aggressively. I mean you guys are more experienced than me and Amazon probably, but I mean, you know, the cheap products are a very popular new items.
Burak (39:12):
You know, Chinese and Chinese people are entering them themselves. You know, the last time, last couple of years when I go to the large exhibitions like Hong Kong electronic fare or Hong Kong toy show gift show Canton Fair, you can see the sign in a factory’s booth saying number one Amazon seller. So the way of doing international business have changed with Amazon, I think it used to be Chinese factory was selling to a Chinese trade company. They were selling to the wholesaler overseas and then there selling to retailer. And then the retailer was selling on Amazon or eBay. Since everybody thinks that Amazon has like juicy money, big pie, everybody wants to take a part of it. So Chinese factories now they start selling directly. So this also changed the game. So that’s why once you do the sourcing, it’s a little bit better to look out of China, uh, countries like Saigon, Cambodia, Vietnam, uh, if it is something similar to textile or home goods, I know that India is goods, Bangladesh, Turkey and Eastern Europe.
Burak (40:14):
I think some of the alternatives of course we are looking for a quality product. They can go to the Europe, but the cost is going to high in textiles. And right now I think China has, uh, as far as I know, 15% plus 25% almost. So there’s almost 40%. And so either sourcing from China plus 40% are sourcing from Taiwan or East Europe could be even the same money even cheaper. But you need to make sure that once you make to calculation and to make sure whatever you’re shipping from, it’s going to have as efficient as China freight forwarding like freight price wise or the enough channel wise. As I say, if your products stuck in China, we can ship out in 10 days, in two days. If it stuck in India, it can take definitely seven to 10 days. So this is very important. I think once you do the calculation, especially now with the lead time very, very long, someone can supplier says for 50 days I was talking to one of our supplier today based say they need 50 days to produce. Normally it was done to turn it by day. So it’s very important to calculate that in the short term and the long term.
Burak (41:26):
I think the one of the most important thing for now to do, people they better follow up the situation, very close. The factories if they do a private label from China and make sure they are on top of the, the delivery and production time they, they follow everything very closely because Chinese suppliers, sometimes they misinform or you know, the delivery time, the delay. So they better know their production time and lead time. And as I said, make their, um, you know, logistic booking freight forward in booking, uh, at least 10 days in advance. So this way they have enough space and better rate than the last minute booking. It was just a small tip.
David (42:07):
Yeah, absolutely. I’m glad you mentioned that. I’m glad you mentioned that. So after talking to you, I’ve learned a ton about international logistics. If are any of our listeners are having issues with that where some ways that www.forceget.com can help help them out.
Burak (42:24):
I think some of our clients now are switching from Chinese, Chinese freight companies to us is one of the reason is one of the reasons the time difference. Of course. Uh, and another thing is Chinese, uh, companies are offering like really cheap prices. Sometimes. Uh, one of our client had an issue, uh, as you know, um, it is actually illegal to change the invoice values. Uh, you know, in order to pay low tax, we are definitely not supporting that. But one of our client had an issue there, freight forward or uh, even change the HS code, if you don’t know what his HS code is, every product has a specific, uh, custom code where once you import that into your country or export it worldwide, we are using the same number for a specific unit. So if you are, let’s say you’re selling a tee shirts and you have 40% of the tax, so some of the Chinese freight forwarders, and again I exclude the regular ones, like the right ones by some of them in order to offer low price, they’re changing the HS code.
Burak (43:28):
So you need to be very, you need to be very sure about your freight forwarder is not changed, HS code uh, make sure that you check what does the tax rate and if they’re offering a very low price, then you need to make sure they are not doing it. Then on your because number one, your company can get a penalty. It’s a, it’s a really big risk. Uh, your product can be destroyed in the custom or they can be refused and you have to ship it back to China and send it back. Which it happened to one of our, a friend, uh, a new customer that they had this problem and reached me and told me that he had 90 days not delivered the cargo and he told me what might be going on. And then we spoke to a supplier and then they said, when’s the freight forwarder to pick up the cargo?
Burak (44:12):
They changed the HS code in order to pay less tax. So instead of paying 40%, they’re declare in the product as a different unit, different item, excuse me, and then pay zero tax. So you need to be very careful, uh, when you get to, uh, offer from the freight forwarder and make sure everything’s very clear, there is no hidden costs and most of the Chinese factories are using their own freight forwarders and they’re only giving you CIF price, which means delivered only until the destination port. And you’re in charge of the rest of the charges such as custom clearance, a U S local port charges a truck delivered to your warehouse or a basement or Amazon. So there are a lot of hidden costs and you think that in the beginning the price is very cheap, but then a lot of things come extra and then they ask you to pay upfront.
Burak (45:04):
So basically you have no choice. So what we do is we are offering very clear, uh, proposal include everything. So we don’t have any extra costs. And as I mentioned that we’re working on our digital platform right now, which is going to be available from middle of April hopefully. And uh, once you have a shipment, he can log in, create an, create a shipment, received a code, accepted code, track everything online, real time, make the payments. Uh, so what we’re trying to do is we’re being more clear to our clients and explain everything a little bit more boutique, a niche service at the moment for people who are very new to this industry. It’s very, very important to be, uh, clear once you receive your prices. And I think that’s one thing that we hear a lot in the market right now and a lot of people, they received a pricing from different companies and everybody is offering different price.
Burak (46:03):
But please make sure if you have any problem or if you have any question for your shipments and pricing, make sure you are asking your freight forwarder and explaining you and make sure that you ask them to provide you at tax payment documents. A lot of people, it just, you know, they deliver the shipment and I’m, they don’t send you anything. What we do is after we make the delivery, we send you everything, like the invoice that we pay to the custom and everything. So it’s, it’s very clear. And if you have any problem two to three years later, then you see, okay, I don’t have problem because I have all the documents. So it’s very important to work with legit companies who kind of legally responsible to you. I think that’s one thing that we like doing it to our client that we’re very responsible for. Any sort of issue happens in today and in the future.
Ken (47:00):
Where are all of our guests? We all, we always ask three questions, kind of wrapping up the show and not put you on the spot, but what, what is your favorite book?
Burak (47:10):
I’m actually right now what we’re, what I want to do is with myself, I wanna improve my management skills. So, uh, I’ve been reading this book. Um, I think one of the most important thing is having the right team. So it is very, very important. And to hire the right people. So I’m trying to as much as possible. And right now one of my favorites, I’m doing that. audio books especially, I like running a, when I have free time, I like to read the um, or listen to audio videos. I try to listen as much as audio books where I know how to hire the right people. Uh, that’s something that we are working on it now.
Burak (47:48):
Like we are expanding our teams in China, Hong Kong and US. I think that’s one of the most important thing for me now to learn and from the other people, uh, how to hire better people. That’s one thing that I think right now, one focus that I do and read the most of the books that possible and then probably not long term to building a team. Oh yeah, absolutely. Hopefully.
Ken (48:11):
The next question up. What are some of your hobbies?
Burak (48:14):
Oh, recently I do CrossFits I don’t know everybody now going crazy about with this thing, but I really like it. It’s very intense. Um, and plus I’ve been playing basketball since I was seven years old, so I keep doing it. And since I moved to Florida, I, our base in Miami, we are very lucky about like the outdoor activity. So hopefully guys, when you come to Miami I’ll show you around a little bit. So these are the things, it’s, we goes, we are very busy with the time difference and you know, with this issue. So it’s, it’s actually a great way to, you know, empty my head, so I really liked those scores. So I think I would say my new favorite is CrossFit right now. So that’s, that’s one thing that I really like it. I actually, I love basketball, but unfortunately, you know, the NBA is suspended. I like, I used to go to the Miami heat games, but I guess not anymore. So I’m probably, I’m going to find a new hobby. I have to take a break for those for awhile. Right. Yeah. Hopefully it’s going to be back to normal. Uh, everybody’s talking about like a, you know, may or June. Uh, this thing is going to slow down. Uh, let’s hope for it and get prepared for a business wise.
Burak (49:23):
You know, that’s what we are doing. I think everybody should also do that for the business, uh, plan everything and then get ready.
Ken (49:29):
Yeah, for sure. So I’ve got one last question here. Uh, with all of your experience over the years, um, what do you think sets apart successful eCommerce entrepreneurs from those who give up, fail or never get started?
Burak (49:42):
I think, you know, one thing I all to be here today is the networking and keep learning a world changes very fast. Um, I know that I have some skills that I should be improving. Like, you know, my marketing, my social media, IT, whatever, like, you know, I think the most important thing, like keep learning, definitely ask people questions. I think that’s one thing. You know, when I moved to China, I didn’t even know how to ask for a water. And I went to this restaurant I was doing like this and that, uh, I was trying to get water and they brought me rest of the restaurant, like a salt and ketchup and stuff.
Burak (50:20):
And I was like, Hey, if I want to do this, I have to learn it. So then I started learning Mandarin. So I think the most important thing is, you know, to make sure you start everything slow and not give up and keep learning, keep asking. And I think networking is one of the most important thing. I think I love doing networking. Uh, you know, uh, reaching out you guys was one of the best thing I’ve done I think in March. Uh, thank you so much for having me for your in your podcast and I’ve been here in a very short time and stays like almost like a year, a year and a health. But uh, so far I’m doing a lot of networking and I think that is going to make the difference in my life, not only the business why, but also the personal development. And if you keep doing it, I think it’s, it reflect to the business as well.
David (51:10):
Well, we appreciate you being on the www.firingtheman.com Podcast. Where can people get a hold of you?
Burak (51:15):
You can always reach us in our websites. Uh, it’s www.forceget.com. Uh, you can see it’s on my T-shirt I’m wearing. You can reach us in our website, like send us an email or give us a call. We are happy to help you if you have a question, uh, for the sourcing, for the logistics for the import. Um, and also, uh, we have our social media accounts and Instagram and Facebook. You can follow us and hopefully, uh, from the middle of uh, middle of March, middle of April, uh, we’re going to have our own digital platform for our logistics. Definitely a sign up, uh, try it out. Uh, if you have feedback, uh, feel free to reach us back.
David (51:57):
Absolutely. We will post a link to all of those in our show notes for listeners, but thanks everyone for tuning in. We’ll see you next time.
Burak (52:05):
Thank you so much.
David (52:06):
Thank you everyone for tuning in to today’s firing the man podcast. If you liked this episode, head on over to www.firingtheman.com/resource and check out our resource library for exclusive firing the man discounts on popular e-commerce subscription services that is www.firingtheman.com/resource. You can also find a comprehensive library of over 50 books that Ken and I have read in the last few years that have made a meaningful impact on our business or that head on over to www.firingtheman.com/library lastly, check us out on social media at Firing The Man on YouTube at Firing The Man for exclusive content. This is David Schomer and Ken Wilson. We’re out…