Small businesses find new way to sell to China

By JON GASKELL
Capital News Service
LANSING — McKeon Products Inc. is looking to double its exports over the next two years, and with help from a new Michigan Economic Development Corp. (MEDC) program, the Warren-based manufacturer of Mack’s earplugs has taken a big step towards that goal.
“We’re very excited to be entering the Chinese market,” said Jennifer True, international sales director for McKeon. “I personally was receiving emails from people in China looking to get hold of our product.”
Now a pallet of Mack’s earplugs has arrived in Shanghai in preparation for sale to a market of 1.3 billion potential customers.
McKeon is one of the first Michigan companies to participate in a new MEDC partnership with Ohio-based Export Now that aims to help Michigan small businesses gain access to China’s consumer market.
Export Now will ship pallets of Michigan-made products from California to Shanghai. From there, they will be sold on Tmall.com, the world’s largest online marketplace, with 400 million registered users.
“What is great about Tmall is it connects consumers directly with businesses,” said MEDC international trade development manager Laura Deierlein. “This means Chinese shoppers know they are getting quality American goods.”
The first 100 companies that participate in the program will pay $1,000 of the $3,000 Export Now charges to enroll. MEDC and Export Now will cover the remaining cost.
“From a management standpoint, this works great,” Deierlein said. “All these businesses have to do is put their goods on a pallet and ship them, and they can get a toehold in the market.”
According to the MEDC, goods sold through Export Now are priced at levels similar to retail in the United States. Producers can also expect the same revenue per item as from domestic sales.
China is already Michigan’s third-largest export destination. According to the Census Bureau, the value of exports from the state to China have grown significantly in recent years, more than doubling from $1.3 billion in 2008 to $2.7 billion in 2011.
The next step, according to the MEDC, is to help smaller businesses get in on the action.
“The program will offer Michigan companies the opportunity to test their products in the China consumer market with limited risk,” said MEDC President Michael Finney.
Finney said the initiative builds on Gov. Rick Snyder’s trade mission to China last fall.
While Chinese consumers generally hold American products in high regard, Deierlein said certain Michigan products have particular cachet.
“We think there is going to be a lot of interest in agricultural goods,” Deierlein said. “Things like dried fruits and wine would do well. Also things like auto accessories or any consumer products that fill a particular niche.”
Export Now President Frank Lavin said the program is perfect for businesses that want to expand globally but are wary about costs.
“Some companies might have two million potential customers in China but the cost of handling those customers, dealing with regulations, dealing with shipping and setting up a physical location is too prohibitive,” Lavin said.
“With this program, it’s cheaper to sell products in China than it is to go to China.”
That was certainly the case for McKeon.
While the company sells earplugs in 60 countries, regulations and language barriers made it impossible for it to crack the Chinese market alone.
“To ship our earplugs it would cost around $40 for every box,” True said. “On top of that, we have to pay customs up to 40 percent. With Export Now, we can get the orders to customers quickly and easily,” True said.
With its projected success in China, McKeon expects to expand at home as well. If things go according to plan, True expects the 60-employee company to add several more workers.
Lavin said stories like McKeon’s will soon be common as a strong presence in China becomes as critical for small businesses as for multinational corporations.
“Ten years ago, smaller companies were anxious about setting up websites. Now everyone has one — it’s part of doing business,” Lavin said. “Ten years from now, doing business in places as far away as China will be just as routine.”