A Business Sits on Relationship： A Reflective Analysis of Previous Working Experience

Wang Lin

Abstract： This article is a case of study of the marketing strategy of Hua Sheng Da Zipper Manufacturing Company. This company is an example of small private enterprise trying to survive through the fierce competition all over China. By analyzing its market， this paper tries to demonstrate the mechanism of relationship in Chinese business context.

Purpose of This Paper

Reflecting upon the only working experience in the field of business， as an international trade promoter as well as a business English trainer in HSD （Hua Sheng Da， a name in Chinese language expresses smoothness， prosperity and achievement in business） Zipper Company in Shenzhen， this term paper is written for the purpose of analyzing， reflecting， and criticizing my last companys internal managerial strategy， customer management system and eventually raising the awareness of the serious pitfalls for the companys leading managerial authorities.

Environmental Analysis

Here， this paper would like to use the common way to analysis business environment in North America， the strategy of SWOT， strength， weakness， opportunity and threat. “Strengths， Weaknesses， Opportunities and Threats （SWOT） analysis is one of the most effective approaches used for analyzing strategic management policy of an organization.” （Shinno， H.， Yoshioka， H.， Marpaung， S. & Hachiga， S.， 2006）.

Before I begi n my analysis， I would like to introduce some background information of the company I used to work for. These pieces of background information represent the notion of practicing individual companys identity. The above information is from the companys English version website and is also written on HSD Zipper Companys brochure.

“Hua Sheng Da Zipper Co.Ltd.， a Guangdong-Hong Kong Joint Venture， is a large enterprise engaged in producing zipper series products. Now the company has over 800 employees and covers 48000 square meters. With its total investment reaching RMB 100，000，000， it introduces into advanced international equipment which completely covers zipper products. And the annual total productive value is more than RMB 100，000，000. Located in Lou Village， Shenzhen， the first lichee village in China， Hua Sheng Da has beautiful environment and convenient transportation. Sticking to the tenets of people-centered and sincerity makes the achievement； Hua Sheng Da respects knowledge， contributes to the Hua Sheng Da via science and technology， strives hard to present green brand of HSD and serves domestic and overseas customers. Hua Sheng Da builds good brand image in domestic and overseas market via its excellent quality and consummate after the service. Hua Sheng Da would like to cooperate with ambitious persons and jointly create resplendence with them.” （2003， p.1）

From these descriptions， HSD vividly represents a positive image of an energetic workforce and a humanized managerial strategy. I worked in HSD Zipper Company for almost one year and my job title is foreign trade coordinator. As a matter of fact， my exact job responsibility was similar to sales personnel. Later since the foreign trade was a new business department in the company， I was appointed to do something else like business English trainer and translator.

As far as my year-long working experience in HSD concerns， I have to take the courage to present my point of view of HSDs SWOT.

One of the strengths about HSD Company is the low price of its zipper. For example， one unit in the length of 3# nylon zipper open with auto lock was sold by the price of 1.01 Chinese dollars， which was about 0.12625 US dollar by the time I left for Vancouver. Anther big strength about the company is the working labor advantage. Shenzhen has been nicknamed as Mainland Hong Kong for a long time. Because of its fast economic growth and favorable geographical location， every year， Shenzhen attracts thousands of people either with professional skills and or with their strong physical labors. For hiring a skilled worker （by skilled worker， I mean workers with at least a college degree）， the starting salary in HSD zipper company is 2，000 Chinese dollar and the company offers free meal plan and accommodation. As for hiring a physical labor， basically the company only renders the free meal plan and accommodation. Their incomes will be calculated by how many qualified pieces of zipper accessories they will produce every day. They dont have a starting salary but the company doesnt have restriction on the maximal number of how many qualified pieces of zipper they can produce. Above all， the two strengths I mentioned are their most obvious advantages under the environment of mainland china market.

The other big strength of HSD zipper is that they are not beginner in Chinese zipper market. According to my boss， HSD zipper had ranked top 3 Zipper Company by the zipper association of Canton Province. Besides that， HSD zipper has occupied a certain share of local market. However， the stastical number of that is yet to be calculated. In addition to that， the current CEO has a steady number of customers in various fields related to zipper business like fashion clothes making， handbag factories or quill factories. In a word， the current CEO owns over 90% of the whole HSD zipper company customers.

Lastly， HSD Zipper Company has been actively participating in all sorts of business communities in order to get the more and more people all over the world to know the name HSD. HSD zipper participates one of largest online business advertisers， Alibaba network. Before the membership of Alibaba business community， HSD Zipper Company had already been an active member of the Canton zipper association.

As for their weakness， one of the biggest shortcomings is about the way the Chief Executive Officer manage his managerial staff. Originally， HSD Zipper Company doesnt belong to the current share holder. Previously， HSD Zipper Company was founded by a Taiwan business man. The current biggest shock holder of HSD zipper， I mean the current CEO， is one of that Taiwan business mans most excellent sales people. Because of the wrong managerial decision and previous CEOs personal negative modeling， the whole company went to a terrible mess. The constant change of managerial staff in all level and the boss unceasing sexual scandals severely discourage the spirit of employees who still want to stick with the company. Facing the unprecedented crisis from various sources， the Taiwan business man decided to sell this zipper company cheaply to someone who can compete with him in the local market. Because of the way the current CEO got the zipper company， he is more willingly to trust someone who is related to him. He equips every departmental manager with an assistant who is related to him. Like， I worked for the foreign trade department. My manager has an assistance who is the bosss older sisters daughter. And the boss older brothers daughter is the assistant of the manager of department of domestic trade. There are many more relatives of the current CEO extended family working in the seemingly unimportant position besides the two examples I gave. This sort of forms a network of supervision. The assistant supervises the managers working performance.

Another obvious weakness is also from the inside. The overall quality of managerial people are pretty low， especially the people in my department， foreign trade department. The CEO dropped out school since he was 12 years old. Only one of his relatives works in his zipper company had a college degree. It is a pity that after the large scale of enlarging the university level of enrollment， it is expected that about 45% of bachelor degree holders will be out of work by the time they graduate. When the boss recruits the sales force in the domestically department， I attended one of those recruitment activities and I found my boss was looking for the one who could express themselves in oral speech clearly and had a quick wisdom. It didnt really matter how much they have professional knowledge about the zipper industry and whether they have a basic professional code of conduct. And my department is newly designed department because historically there is no foreign trade business in the HSD Zipper Company. Foreign trade promoters who hold Certificate of CET-6 （College English Test Band 6） in my department were only three persons plus me. I held certificates of CET-6 TEM-4 and TEM-8. For the rest of people staying in foreign trade department， basically， they dont have a basic command of English language. That was why my boss asked me to contribute my spare time to train their English proficiency.

Talking about the opportunity that HSD had， unlike the mature and advanced North America market， China has one of the largest industrial and fastest growing domestic market. Besides that， China shares border with the other very promising market. Indian and Pakistan have established a long-term benign diplomatic relationship with Mainland Chinese government. That was the original idea of establishing a totally new foreign trade department. Another opportunity is the geographical location. Shenzhen is located in front of Hong Kong. From the border， people can see northeast landscape of modern Hong Kong. Seasonally， there are quite a number of international trade fairs in Hong Kong and inner city of Shenzhen.

As for the threats， one of the long term treats is the expansion of the foreign zipper force. Due to the saturation of domestic market， the European Union， United States， Japanese zipper and other economical forces in the globally market have been targeting and have invested in Mainland market since the communist partys policy of reformation and opening-up. And nowadays， the worldwide syndication of Japanese YKK zipper group has occupied 60% of global market share. The lion share has been determined. The rest zipper business has to fight for the remaining parts. In this sense， HSD zipper still has a long way to go in fighting its position in the global market.

Another temporary threat is from the petrol business. The continuous price rise of the petrol adds tremendous pressure for the business， which runs on these basic natural resources. Zipper manufacturing business is one of the factory businesses which are doomed to rely on the oil to run their machines. The large scale of consumption of petrol and increasing rise of the petrol price add to the cost of production. If the rise of the oil price is increasing by 0.1 Chinese dollar， the cost production will be increased at least 0.08 Chinese dollar.

One potential threat is that HSD Zipper Company has already passed census of ISO 9001. However， for an indigenous Chinese zipper company， ISO 9001 is yet to be competitive in the global market. As for the an indigenous Chinese company who wants to enter the north America market， basically Canada and the States， one needs the certification from UL （Underwriter Laboratories） and ULC （Underwriters Laboratories of Canada） by the begging level. As long as one wants to enter a certain business area which is an active component of the global market， one has to pass the certification from that area. An outdated certification of ISO 9001 is hard to be qualified when preparing oneself to be competitive in terms of coming out of the domestic market.

On the whole， the above environmental analysis tends to present the identity of HSD Zipper Company in terms of how they see themselves as a business entity and how this paper sees it as a component of local and global market.

3 HSDs Unique Customer Management System

The reason I think HSDs customer management system is unique is because its customer managing system evaluates their customers mostly by how much money the customer pays for the company.

The first character of its customer managing system is the individual relationship between the customers and sale people. Each sales person has its own customers. If they leave the company， they are more likely to take the customer with them. That is what my Chinese culture calls “face-recognition”.

The second character of HSDs customer managing system is that this system is hierarchical. The sale person who owns the biggest number of qualified customers will be rank highest in HSDs customer managing system. The qualified customers are identified as those who are able to place a big order and willing to pay first.

The last salient character about HSDs customer management system is the distribution of priorities among sales people. For example， current CEO owns more than 90% of the whole companys customers by the time I left. Therefore， his customers order will be always given A-type priority， which is the highest priority. HSDs customer system doesnt care too much about the emergence of other small customers owned by other sales staff. Or in some sense， this kind of system doesnt give credits to the development of small customers. This system marginalizes the small customers with a promising development in their business communities.

4 A More Objective System to Evaluate Customers

A more objective system to evaluate customers means the attitude to break the current classification of customers. One serious harm results from the human rulings evaluation of customer managing system is that this kind of system stereotypes the customers. In most cases， once the customer was classified into that category， there would be very few changes in the way treating the customers. Therefore， the first step to establish a more objective customer service system is to identify customers type in a less biased way.

In this paper， it recommends a new taxonomy of classifying customers. This taxonomy categorizes customers into four groups， “mercenaries， loyalists/apostles， hostages， terrorists”. （Naumaunn， E.， 1995） Starting from the loyalists， this type of customers are those who love a companys product. They keep coming back. They are very glad to buy more and more products they are currently using. They dont mind to take some risks to try new produce from the company they love. They can be used for promoting the companys positive public image. When the price of the brand they are loyal to is rising in an acceptable manner， they wont care about the price and will still stick to the band. They can be also used for further research because the loyal customers will tell their truthful feelings about the brand. From the perspective of internal management， loyal customers can help company “reduce transaction cost， new customer acquisition”. （Lecture Notes， 2006）

Depending on the identification of loyalists， the only difference between mercenaries and loyalists is that mercenaries change too much and are quite price sensitive. And the hostage customer will be loyal under the pressure of the company. They dont have many choices. And terrorist customers are those who are ready to destroy the company. They want more and more services and products from the company with as little as their costs.

According to this new taxonomy， the majority of HSDs customer base is mercenaries. One of strengths HSD possesses is their low price of their zipper products. The current CEOs next five-year resolution is to establish the green brand of HSD. Therefore， nowadays， HSD hasnt become a brand in both local and global market. The strategy they used for marketing depends on individual sales forces relationship with the customers and cost leadership. This determines that HSD has to adjust their product category and the prices consistently.

The first thing HSD zipper should do is to develop those mercenaries into loyal customers. In order to achieve this goal， HSD zipper should explore more product categories. By the time I left， some sophisticated technologies of manufacturing decoration zipper and the zipper for special usage like waterproof， fireproof and invisible zipper have to borrow from the competitors. HSD zipper shares the profits made from the order which requires more advanced technologies with the competitors who have this technology. This is probably one of the biggest headaches of the current CEO.

The second thing is that the current CEO has to stop the trend of nepotism. This suggestion is based on the notion of “employee empowerment” promoted by the Japanese business community. HSD Zipper Company on earth is a private company. The boss is the emperor in his kingdom. If the king is too authoritative， the employees wont be able to feel safe to stick to the company in the long run. As for the current broad members， they should either trust the people they hire or rather fire the people they doubt. The suspicion and jealousy within sales people， CEOs relatives and CEO himself will eventually lead the company into a dilemma in which no one is really loyal to the company and no one is willing to tell the truth to CEO and board members. HSD Zipper Company is trying to establish a favorable public image to the outside and the current CEO works very hard towards the direction. However， a really first-class multinational enterprise doesnt run on human ruling. It runs on its democratic and open management system. HSD really has a very long way to fight for its qualification on the stage of global market because the big improvement for HSD depends on how much freedom and power the current CEO can sacrifice and how much the current CEO wants to improve himself as an open-minded entrepreneur.

Conclusio

The case of HSD Zipper Company seems pretty simple. However， it represents a severe pitfall and inferior ideology in the indigenous Chinese business community. Nepotism and relationship building is the mainstream private enterprise code of conducts all over China mainland. Every time on the managerial conference， the current CEO kept emphasizing the next goal of breaking into the global market. I am sure that he was awareness of the company systems dead point. But the question remains for HSD Zipper Company is that to what extend， the current CEO is courageous to establish a healthy running system for the overall management and eventually how many qualified sales people he can retain in order to keep the mercenary customers. A business sits on relationship.

REFERENCES

Naumann， E.， （1995）. Creating Customer Value. Cincinati： Thomson Executive Press.

Shinno， H.， Yoshioka， H.， Marpaung， S. & Hachiga， S. （2006）. Quantitative SWOT analysis on global competitiveness of machine tool industry. Journal of Engineering Design， 17（3）， p251-258.

Palmer， P. J.， （2003）. The Courage to Teach. New York： Pearson Group.

Downing， C. E.， Gallaugher， J. M. & Segars， A. H. （2003） Information Technology Choices in Dissimilar Cultures： Enhancing Empowerment. Journal of Global Information Management， 11（1）， p20.

HSD Zipper Company. （2003）. HSD Product Series （3rd ed.） [Brochure]. Shenzhen： Author.

Lectures Notes. （2003） Course： MRK730-Customer Value Management.