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Here's some good news: The hot tub industry has finally regained some of its swagger.
The pool and spa industry is one of new frontiers: Ever-evolving technology and equipment that make for quicker installation, convenience and easier upkeep. Lavish landscape creations that virtually replicate nature, whether majestic waterfalls or complex rock formations. Futuristic computer technology that allows precise and nearly instantaneous design while facilitating seamless service.
Thinking outside of the box has been a necessity for the growth and popularity of this institution in American recreation. And now, here comes the ultimate in thinking outside of the box — thinking outside of the country. Way out.
Nir and Julie Eyal are thriving in their roles as facilitators for pool- and spa-related products in China and other Asian countries. The company they founded last year, New York-based Sunshine Business Development, helps American manufacturers enter the Chinese market by matching efficient and trustworthy partners. Since starting Sunshine, they have negotiated long-term purchasing contracts for clients worth over $2.5 million annually.
"Sunshine helps manufacturers better service their Asian customers by filling in the gaps between customer and manufacturer — essentially outsourcing the manufacturer's Asian sales department," says Nir. "We leave the client and manufacturer happy because Sunshine is the ear to the customer and the voice for the manufacturer, bridging the gap between the miles and the cultures."
The Eyals began selling products to China early last year. They've already negotiated agreements with a natatorium-dehumidification company, a salt chlorinator manufacturer, an ozone sanitation system manufacturer and a heat pump manufacturer.
Julie says her biggest surprise isn't the business' success; rather, it's, "how much of a demand there is for this kind of service. A lot of companies haven't been doing their jobs when it comes to prospecting international business.
"Major manufacturers in the States have trusted our opinions. Part of it is having a natural advantage. My husband has a marketing analysis background. I have a Chinese and business background and speak the language .uently. So we have a lot of opportunities to interpret the unspoken factors in a transaction."
CHANCE, AND TAKING A CHANCE
The Eyals' venture is the byproduct of contacts, happenstance and — perhaps most importantly — having the instincts, integrity and business savvy to identify and cash in on a largely untapped and potentially lucrative market. It all began innocently enough in January 2003, when Nir had a few days off from his job at the Boston Consulting Group, where he was a strategy consultant. He decided to join his father, Victor Eyal — who is president of Heliocol USA, one of the largest solar pool heating manufacturers — at the Atlantic City Pool & Spa Show.
"While I was standing at the Heliocol booth, a group of Chinese attendees stopped by to learn more about solar pool heating," says Nir, who was born in Israel and moved with his family to the United States at age 3. "I watched as my father chatted with the Chinese contingent for a few minutes about his products.
"As soon as they left, my father turned to me to ask how I would work with the Chinese if I were in his shoes. He had all sorts of questions, ranging from the size of the Chinese market to knowing which partner to work with and fears of the Chinese copying his products. I told him that if he gave me some time, I could provide him with a detailed analysis much like the consulting projects I produced at BCG."
The Eyals dove into it, spending many hours on the Internet, at the library, talking to sources and others with international experience in the business community.
"We estimated the market, gave our take on what's happening there now, looked at the country's size and demographics, read up on negotiations in China," Nir says. "We found, for instance, that southern China is where a lot of that country's wealth is being created. A special economics zone in Shen Zhen created a lot of wealth for the Chinese."
After about a month of research, Nir and Julie were confident enough about their knowledge to advise Heliocol on how it could best enter the market. "We concluded that you had to have a very good partner in China, because the transaction expenses of going over there, doing research and training a partner would be very expensive," he says.
The Eyals found the pros outweighed the cons. "China's booming economy has resulted in a tremendous amount of wealth creation," Nir says. "In addition, wealthy Chinese are building new luxury homes, all equipped with swimming pools. There is tremendous growth in new pool construction there. And this upper class is willing to pay for high-quality products."
However, dealing with the Chinese means dealing with substantial cultural and negotiating differences. "Americans are usually straight and to the point," says Julie, a former investment banker. "It's more of a square situation when it comes to legal issues."
Adds Nir: "Americans are, 'You want this and we want this; let's compromise.' But the Chinese are typically much softer in negotiations. It takes a lot longer. It requires more massaging, more trust building; even after the deal it takes more work."
After the couple completed their market analysis for Heliocol, the company asked them to lead its effort into China. Nir and Julie negotiated arrangements to meet the Chinese businesspeople they had met in Atlantic City, and soon after, a contract was in place.
More business snowballed from there. A few months later, the Chinese clients said they needed other pool products, and that they planned to open a branch in the United States to find American-made supplies. They trusted the Eyals so much they wanted them to work as their North American purchasing agents, rather than opening a U.S. office themselves.
At that point, the Eyals decided there was enough potential business to form their own company. Sunshine Business Development was born.
The Eyals deal exclusively with leading pool builders and distributors in Asia, visiting the region three or four times a year. They now have clients in Taiwan, Singapore, Malaysia and Thailand — and they may just be scratching the surface.
"I'd say China is a tremendous market; all of Asia is," says Bob Kimball, sales and marketing vice president for ClearWater Tech, an ozone sanitation system manufacturer in San Luis Obispo, Calif., and one of Sunshine's clients. "And Sunshine is cross-cultured in terms of language and the different approach to business over there, as well as being tech savvy.
"They're a great bridge for the manufacturer and client. Our relationship with them has been brief, but it's obvious they're very diligent and astute."
This kind of expertise breeds all kinds of business. Nir says Sunshine has been approached by several American manufacturers who want to outsource their Asian sales departments to Sunshine. Sunshine also produces market analysis and research for manufacturers wanting to learn more about Asian markets, as Nir did for his father.
Sunshine stands to pick up clients as a result of the cultural disconnect that can happen when American companies prospect international business.
"We've met many Asian pool builders and distributors who were dissatisfied with American manufacturers because they didn't receive the level of support they expected," Nir says. "Since the Asian market is still small compared to the States and Europe, American companies have often made the mistake of selling on a onetime basis and walking away. This policy of sell and forget tarnishes the manufacturer's reputation for years and makes selling in this booming market more difficult in the future."
He says quality and trust can help overcome logistical difficulties like taxes and exporting. "Chinese import tariffs are quite high, but the Chinese consumer is willing to pay a premium for high-quality products if they are represented by a reputable Chinese pool company," he says. As for exporting the products to China, Sunshine negotiates those purchasing agreements with American manufacturers and pool companies in Asia.
One might think there would be no competition for pool products in China, but Nir says there is some via catalog companies that sell the more commodity-type products. "We, on the other hand, represent companies that manufacture high-end products," he says. "Selling high-quality products takes personal relationships and the kind of trust that catalog companies have difficulty establishing."
And as Julie notes, the importance of trust can't be understated in this enterprise. "In Asia, a lot of times we find companies that were burned in the past by Americans," she says. "We're there constantly trying to nurture both sides of the transaction. A lot of times we have to teach the Chinese the way Americans do business."
As for what's next, Julie says, "Right now we're working on new markets, thinking about the Middle East as a new place to prospect business because so many of those countries face similar problems with business relationships outside their countries.
"We just take the areas of the world where people don't have the idea that there can be potential. But that's OK. When we started doing this, people were laughing at us." That's familiar territory for those who build new frontiers.
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