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How are Asian Companies Doing in Russia?
a&s International 2008/8/1

Chinese manufacturing power is in the world's spotlight. With improved company image and product quality, vendors are targeting to penetrate Russian markets. To find out if their products are well and soon accepted, A&S interviewed key players in Russia to share their comments towards manufacturers.

Chinese manufacturing power is in the world's spotlight. With improved company image and product quality, vendors are targeting to penetrate Russian markets. To find out if their products are well and soon accepted, A&S interviewed key players in Russia to share their comments towards manufacturers.

In surveillance, an industry source noted, there are a lot of Chinese, Korean and Taiwanese products. "They are cheap and not very famous. They have a large portion of the market cumulatively but no one would know any of their individual names." He recommended that Asian companies entering the Russian market approach major distributors, like Satro, while cautioning that, "everyone else is doing that, too."

Nor are Asian products competition for Alex Kleyner, Vice President of Sales at Simons Voss Technologies. "We emphasize quality; they are all about price and mass production. Also, Germans have done everything from scratch; they have developed their own technology. In China, everything is copied from somewhere else. You have hundreds of companies offering the exact same thing; it all comes down to price."

Keyner has seen no improvements being made in Asian products. "If and when they do make improvements in quality, materials and production processes, it will raise their costs to levels that are similar to European-made devices. So why buy Chinese?"

In his view, the Chinese are not willing to improve quality." They just want to ship as many containers as they can. It is the same with cars. Who wants to buy a Chinese car? Why does everyone want German even though it is much more expensive?"

Communication with Chinese companies was cited by one industry executive as a challenge. "This is a real problem when it comes to technical support. It is often vital for system integrators to have fast lines of communication if they have an issue during project installation. Although there are very good Chinese products available, a general reluctance remains."

"Taiwan is coming along nicely in terms of products, although some product categories still have quality issues," she continued. Taiwanese companies, however, are "not taking advantage of public relations to sell their wins. In the professional segment of the market, their products are considered ˉcheap' and not high spec. They need to build brands more strongly to reach a level of acceptance along the lines of Pelco." Magazines such as A&S do a good job in "spreading the word," she said, but it might be a good idea to work with an agency to get the good stories written up and posted.

Over the past few years, she sees large Korean manufacturers catching up quite well. "They have followed the Japanese model and cleared away some of the most blatant quality issues. As more Korean products, such as cars, stereos and TVs, have found their way into the market, this has helped lift the general impression of their technical capabilities, delivering a positive side effect for security and surveillance." As with the Taiwanese, there seems to be a lack of positive public relations though.

While reviewing the statements made by others, one general manager latched immediately upon the public relations angle. "Definitely, this is a problem," he stressed. "Most Asian companies are simply not prepared to market themselves in Russia. They do not have Russian language materials or these are very poorly edited. They look cheap and unprofessional. The fact that they have not taken the time to prepare something as simple as a brochure indicates to me that they probably are not serious about other issues, including quality and technical support. It really comes off as poorly executed and slap dash."

He was scathing about paranoia. "Many times, you can be discussing strategies with Chinese, Taiwanese and Korean companies and then they freak out. They think that everything they are doing is so unique; they do not want anyone else to ˉfind out' what they are doing. I just laugh. If I were to show you the marketing plan of the last 20 Asian companies that I have talked to, you would not be able to tell them apart."

He was very skeptical, however, that they would actually "cough up the cash" to pay to hire a real professional to do marketing and branding for them. "Look. It is nice to talk about what the Taiwanese, Chinese and Koreans can and should do to better sell themselves, but let's face it; they are in the cost-down mindset. What is public relations? What is marketing? They talk about it, but they do not really understand it. They may be willing to buy an ad; that they can see. It proves that they have gotten something for their money, but public relations? No, that they simply do not get."

Long-term mindset?

Another problem is the short-term mindset. "Because none of these Asian companies have professionals  real professionals, not someone who has learned a bit here and there along the way  the approach is constantly changing or inconsistent. Heading to the Russian show? Okay, let's quickly throw something together? Going to France? Okay, what can we print up in two weeks? If that is the best that they can do, what kind of long-term support over the years do you think that they can provide?"

It also means that they are always changing the approach and not following a long-term plan. "Sales are not doing as well as expected, then change this or change that. There is no thought, no understanding that goes into this. They are always reacting never strategizing. Quite frankly, it is irritating as hell."

Others had a more positive opinion. Aleksey Vitalisov, Business Development Manager at Armo Systems, noted that, "Initially, reputations of Asian companies and their products were bad. That is fading. We are selling Taiwanese and Chinese products though the Russian consumer seems to still differentiate between Taiwanese and Korean on the one hand and Chinese on the other." Many, he added, are still suspicious of Chinese companies are also paying more attention to quality issues. "In a couple of years, they may be able to come out with new products and designs that are competitive for not only price but also quality. Let's wait and see."

His advice to Taiwanese, Chinese and Korean companies is to pay close attention to dealer intentions to determine whether they work with too many different partners. "It would also be very helpful if Taiwanese, Korean and Chinese manufacturers would tell the truth about their specifications. They waste everyone's time making promises that they cannot keep or saying their products have capabilities that they clearly do not."


Flexibility is also important. "Russians want to work with manufacturers that are capable of producing big quantities with some customization. This may include disguised front plates and silk printing of logos of Russian companies." Finally, logistics is key. "Time of delivery is a very narrow bottleneck for suppliers. The time it takes to ship product from Asia to Russia is too long. Anyone who wants to succeed in Russia has to be able to guarantee fast delivery."

Helen Silina, Public Relations Manager at Satro-Paladin, also was able to differentiate between companies. "Ten years ago, Russians viewed Chinese products as having low quality. Now, we know that some products are good, while others remain bad. We know that all the computers that we use are from Taiwan (Acer and Asus). Russians are now able to differentiate based on quality and brand name."

According to Silina, Taiwanese, Chinese and Korean companies can succeed with the support of a good partner. Companies interested in doing business with Satro-Paladin must first meet with the chief of the relevant product or technology department; if that manager agrees to sell the product, the company buys limited quantities to see how well the product does and then moves to expand if it does well.

Messe Frankfurt New Era Business Media Ltd. All rights reserved. 2019/10/17 print out