Author: Danny


The magic pill of E-commerce, and the myth

You may have heard that it’s possible to supercharge or even bypass many of the organic growth issues mentioned above. For example, in the case of Bean Pet, they want to create a pet-bone-focused e-commerce site, focusing on a specific segment—in this case, giant organic bones such as cow bones that dogs love. People have the impression that the Internet is a “busy street” where floods of people walk by your website.  This is a false impression.  Creating an e-commerce website without promoting it is no different from opening a shop in the middle of the desert.  No one will know about it; hence, it will not make money.  In addition, added to all the other issues concerning organic growth mentioned above, you now have the problem of making an e-commerce website.


Challenges of building a green business

There are some major problems with making ReFoodAble economically viable in Hong Kong.  One of the first major problems is that Hong Kong is not equipped to sell electricity back to the grid.  This eliminates many potential ways to make money from power generation, to which food waste would be well suited.  Food waste can be used in bioreactors to generate electricity.  Food waste can also be converted back into bio diesel, but ReFoodAble lacked funding and expertise to make this happen. The final barrier ReFoodAble would have is the culture in Hong Kong.  There is virtually no recycling done anywhere.  Getting support from the public would be difficult as I’ll demonstrate later with Noble Earth LTD.


The whole goal of ReFoodAble is to convert all organic waste into usable materials. During the presentation, they went over all their entire company, how it was formed, how they have a working facility located at Ma On Shan.  The also went over some possible ways the funders could help them; they needed about 7 million RMB to do the engineering and get it approved for bio diesel. At this time they are converting the food into pig feed, which is somewhat viable as it works out to be about 2,000HK per ton. It takes seven days to heat and dry the product, and the costs per production are about $800.00 per hour. The government was blocking the initiative to transfer the energy back to the grid. The people at ReFoodAble were pitching to an incubator or a seed fund called Sow Asia.


Sow Asia believes in impact investment and their financial investment company only invests in ventures that have social impact. They have competition such as the CUHA and they already take part in many initiatives.  The CEO of Sow Asia was is a friend of Mr Princeton’s and was there personally during the pitch. The takeaway from this pitch and meeting was that CEOs are very good at painting pictures.  The second lesson was that everybody in Hong Kong wants a cut.  If you want to get anything done in Hong Kong, you have to make it very clear what the incentives are for each person’s participation.


Organic growth

Organic growth relies on gradual customer acquisition, word of mouth and strategic advertisement.  Gradually building the brand and the image of the company. The decision of building a personalized brand or simply using products from other companies is also a tricky matter.  If you promote someone else’s brands, as in a supermarket model, you may end up doing a lot of brand building for free for the manufacturing company, whereas if you build your own products and brand them yourselves, you must have access to this type of skill, which is both expensive and time-consuming.


The VCC System

A mentor of mine, wrote a book a while ago, and developed a method called VCC: Voice-Inflection Conviction Close.  He taught it to use before the prospects came pouring into the show.

Voice inflection, the tone of your voice as well as the volume, greatly impacts your message. One technique is to control your pitch up and down and really animate the way you speak.  This makes what you are saying easier to understand and more enjoyable to hear.  I have been criticized for speaking in monotone a few times. This is a common tendency of people who are deep thinkers. This rule makes sense, as I would rather hear someone who is animated than speaking in a monotone if they are trying to sell me something.

Conviction, the emotion you put behind your words, is more important than your message.  He told me that once, he deliberately renamed the topic of his speech to Elmer Fudd, when he was trying to sell a charity—something along the lines of The Elmer Fudd Charity, which was originally supposed to be the XYZ Charity.  He talked on and on for about an hour about this charity with the funny name. No one laughed; because of the conviction behind his words, he was able to convince them to donate a record amount.

Remember to close the deal by asking for the sale.


Parallel Export, AKA Smuggling

These are just some of the issues that surround getting into China to sell.  So most products, even well-known ones such as Starbucks frappuccinos and Kirkland nuts, are smuggled into the country. The smuggling happens at various ports; the one I’ll discuss is Hong Kong.  There are many ways items are smuggled into China via Hong Kong, driven across the border from the sea port, but my favourite is through old grannies.  Hong Kong is unique in that it is connected to mainland China via a their subway system.

In Hong Kong, Sung Shui, a subway station is one stop away from either Lo Wu or Lok Ma Chau which are the entry points into Shenzhen, China. On any given day at Sung Shui, you can see hundreds of of people lining up to get into the MTR. All of them are carrying large suitcases or large boxes on wheels, just full of goods to smuggle into China. These are things like Starbucks coffee, cookies, milk powder, baby formula; anything you can think of that you would want to consume, but are too afraid to locally in China, so you buy these illegally smuggled products.

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