Protect Yourself

At the ISA Sign Expo 2010, I counted 33 LED-display providers. Of those, 10 names began with “Shenzhen.” Other Chinese suppliers didn’t overtly tout their heritage. One went so far as to use the word “American” in its name. Several companies represented the same manufacturer, but under different product names. Of the 33, at least 26 represented Chinese-produced products.
Given the huge influx of this new supplier segment, let’s frankly discuss products produced in, and sold from, China.

Purchase protection
The U.S. government and court system provide a certain measure of protection. Generally speaking, if a company from the Western world provides a product that doesn’t perform as contractually stipulated, you can pursue a remedy. That might not be the case when dealing directly with a Chinese manufacturer.
The day after the ISA show, I asked a representative of the U.S. Commerce Dept., “What remedies does an aggrieved customer of a Chinese manufacturer, with no physical presence in the U.S., have for recompense in the event that the product he or she purchases fails to work as specified?”
“None,” was the short answer. “You are wholly dependent upon the good will and integrity of the manufacturer to make it right. There is no viable legal remedy,” the representative said.
China doesn’t punish patent infringement and piracy, doesn’t limit false advertising, nor recognize U.S. Court judgments. Therefore, unless the Chinese supplier has a U.S. presence, with assets sufficient to satisfy your judgment, you have no recourse if the product is defective or fails.

Integrity
Hmm, integrity. At the top of my list of integrity issues sits a Chinese manufacturer’s brochure that features a digital billboard I sold, which was produced by an American manufacturer, not the Chinese company that proudly claimed it. Further research uncovered other Chinese brochures that featured products produced by Daktronics and Barco.
During the 2009 ISA show, a representative from Nichia, whose LEDs have long been acknowledged as the industry benchmark for superiority, visited every Chinese display provider’s booth and asked, “Whose LEDs do you use?” All the companies answered they used Nichia parts. However, Nichia acknowledged none of the companies were its customers.

The display-sales relationship
I’ve worked on both sides of the display-sales relationship. I’ve worked for the manufacturer, and I’ve operated a sign company, which resold the digital signs I bought from a manufacturer. In both cases, I found the relationship to be fairly intimate.
When a project is underway, the sign company and the manufacturer dialogued almost daily about project details that arose, particularly with larger displays. Ultimately, how well a sign company works with the manufacturer can win or lose a sale.
After the sale, the relationship assumes even more importance. When your customer buys a digital display, he or she anticipates that your company will stand behind what was sold and that your company will provide parts and service for a decade or more. As a product reseller, your company will be wholly dependent on the supplier that sold you the display.
For many years, I operated a business that bought and sold Chinese-produced LED displays. We had some cultural and language misunderstandings, but, overall, it was a favorable experience, predominantly because the supplier with whom I worked followed all seven suggestions regarding establishing a successful U.S. presence (see “A Message to Chinese Manufacturers” sidebar).
Several well-known U.S. suppliers in the U.S. have been conducting business here for a long time, using my seven suggestions. They provide viable products from U.S.-based operations doing business as American-styled corporations.
Here’s my main message: Evaluate all display manufacturers before you buy. As a reseller, the information you gain will help you when selling in competition. Let your customers know why you selected a particular manufacturer. Reassure them you use only proven technology with extensive customer support.
The peril comes when doing business with a Chinese manufacturer, direct from China (or any display manufacturer, anywhere), whose lure is bargain-basement pricing. Remember, you get what you pay for.

A Message to Chinese Manufacturers
I’m not disparaging Chinese products or business methods, but digital-display buyers must address some significant concerns when dealing with an overseas vendor. Here are some suggestions (some that recap what I’ve stressed in past columns) that might help make Chinese manufacturers’ U.S. success more feasible:
1. Establish a U.S. presence with American employees. Regardless of a display’s quality and features, a manufacturer must understand how business is conducted on this continent. You will be more likely to succeed if you adopt North American business customs.
2. Establish a U.S.-banking presence. Maintain sufficient deposits in the U.S. so your customers feel comfortable with your commitment to this market.
3. Establish a significant parts depot in the U.S. All digital displays require parts replacement. It’s unreasonable to expect your customers to wait for overseas shipments.
4. Establish a 24-hour, service-support line, manned by English-speaking technicians.
5. Obtain UL certification for your products.
6. Submit your products for wind, dust and water testing, and publish the reports.
7. When selling your product, clearly explain what’s included in
the sale and what, if anything, isn’t included, but is necessary to successfully complete an installation

A Message to U.S. and Canadian LED-display Purchasers
1. Don’t buy digital-display products (from any supplier, regardless of location) that don’t conform to all seven of the recommendations listed in the sidebar “A Message to Chinese Manufacturers.”
2. Your customer will ask you for service support. Make certain you can access the needed parts and expertise.
3. Make sure you understand exactly what’s needed to install the display.
4. Always contact UL to ensure the number listed is accurate.
5. Don’t be shy when asking to see a manufacturer’s financial statement. This is 2010, and these are challenging times. Digital-display costs can be very high. Ensure your supplier is solvent.
6. Always ask for the phone number of the American technical-support line. Call it during odd hours to ensure it’s operational.
7. Ask for the address of the U.S. parts-and-service center.
8. Ask if spare parts are included with the sign purchase.
9. Ask for the freight-shipment policy and charges for overnight freight shipments.
 

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