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As A B2B Media Company, Global Sources Is Focused On Facilitating
Two-Way Trade With China By Providing Online, Print And Trade Show Services
Internet Information Providers
Global Sources Ltd.
22/F, Block A, Vita Tower, 29 Wong Chuk Hang Road
Aberdeen, Hong Kong
Tel (852) 2555 4842
Merle A. Hinrichs
Chairman and CEO
Interview conducted by:
Lynn Fosse, Senior Editor
Published - October 12, 2007
Merle A. Hinrichs
Chairman and CEO
Merle Hinrichs, one of the founders of the business, served as principal executive officer
of Global Sources from 1971 through 1993 and resumed that position in September 1999. From
1994 to August 1999, Mr. Hinrichs was chairman of the company. Mr. Hinrichs graduated from
the University of Nebraska and the Thunderbird School of Global Management. Mr. Hinrichs
is a co-founder and former chairman of the Society of Hong Kong Publishers, a member of
the board of trustees of Thunderbird and a board member of the Economic Strategy
Institute. Mr. Hinrichs is also a director of Global Sources Ltd.
Sources is a leading business-to-business (B2B) media company and a primary facilitator of
two-way trade with Greater China. The core business is facilitating trade from Greater
China to the world, using a wide range of English-language media. The other key business
segment facilitates trade from the world to Greater China using Chinese-language media.
The company provides sourcing information to volume buyers and integrated marketing
services to suppliers. It helps a community of over 635,000 active buyers source more
profitably from complex overseas supply markets. With the goal of providing the most
effective ways possible to advertise, market and sell, Global Sources enables suppliers to
sell to hard-to-reach buyers in over 230 countries.
The company offers the most extensive range of media and export marketing services in the
industries it serves. It delivers information on 1.8 million products and more than
150,000 suppliers annually through 13 online marketplaces, 12 monthly magazines, over 100
sourcing research reports and nine specialized trade shows which run 22 times a year
across seven cities.
Suppliers receive more than 18 million sales leads annually from buyers through Global
Global Sources has been facilitating global trade for 36 years. In mainland China, it has
over 1,700 team members in 44 locations, and a community of over 1 million registered
online users and magazine subscribers for its Chinese-language media.
CEOCFO: Mr. Hinrichs, what is your vision for the
Mr. Hinrichs: At Global Sources, we are very
much involved in the greater China market as a business-to-business media company. Global
Sources has been in this market since 1971 and personally, I have been involved for 40
years. Our objective is to facilitate international trade by providing online, print and
tradeshow services to suppliers who are exporting and manufacturing product from that part
of the world. We also offer our services to suppliers elsewhere throughout Asia. About 60%
of our revenue now comes from mainland China specifically, and the remainder from the rest
of the world. On the buy side, we are very focused on serving buyers needs. They
include retail, wholesale, or manufacturing importers and we help them identify products
and suppliers that can meet their requirements.
CEOCFO: Where are the areas of
growth and what are some of the newer ways that you are focusing on them?
Mr. Hinrichs: In October, we are launching the
next generation of our flagship online marketplace at globalsources.com. The site will
offer buyers two major advantages. First, it is a vertical search engine, which will
deliver the largest selection of export suppliers and products anywhere on the web.
Secondly, it will enable buyers to identify verified suppliers who have all
been pre-qualified through face- to- face visits and capability assessments.
In addition, with online services becoming increasingly a commodity, one of the more
important services we have expanded in recent years is a tradeshow service. In
international trade, most orders are for container loads, which buyers do not buy online
since they need to meet with suppliers and ensure that they have the ability to fulfill
their needs. We also have geographic growth because there is an increasing amount of
export activity in areas like India and Vietnam and growth from product development
in the form of new verticals such as sports and leisure, and security products.
CEOCFO: What is special about the tradeshows that you
Mr. Hinrichs: There are tradeshows in many
countries, but we focus on suppliers who have the abilities to meet international product
standards. We work closely with these suppliers to help them communicate their unique
selling points. We spend a great deal of time prompting them on what they need to do in
terms of booth preparation and presentation at the trade shows. Our largest trade shows
are held at the Asia World Expo in Hong Kong, which is at the airport. Next month we will
have two of the larger trade shows in the entire region for exporters with thousands of
importers from all over the world attending.
CEOCFO: What is your take on the concern about the
quality and safety of Chinese goods?
Mr. Hinrichs: These incidents have been very
unfortunate because of the impact on consumers, but it is also unfortunate for the trade
itself. By far the majority of the product that is exported from China meets the consumer
product standards of the country or the importer that is buying the product. Consumer
product standards are different depending on the individual market. An example of that
being that Germany would have a different standard than that of Australia or the US.
Importers themselves have to ensure the products they are importing into their
jurisdictions meet the quality standards that are legally binding on them. They have to do
quality control. How has it affected us? It will be positive for us. Our supplier
customers now know how important it is to provide accurate and verifiable information
because the buyers like Mattel and Hasbro, for example, are going to impose more strict
product standards on their manufacturers than they have done in the past. Also, we expect
that the October launch of our next-generation Global Sources Online
(www.globalsources.com) will resonate strongly with both buyers and suppliers. Our new
site will help buyers identify verified suppliers and it will also help suppliers who want
to distinguish themselves as quality suppliers.
CEOCFO: How is business for GSOL these days?
Mr. Hinrichs: Business is good and business is
growing. The Chinese manufacturers that had problems with their products are going to have
to use marketing and advertising far more extensively than they have in the past to ensure
that they are communicating the value of their product and the capability that they have
as manufacturers. On the product standard issue, I think that China is doing an incredible
job of trying to address this. As you know, Vice-Premier Wu Yi has been given the
responsibility of personally addressing this, quite unusual for a person of her level to
be appointed to this position. Secondly, China has closed hundreds of companies and fined
many others for not meeting specific product standards, and are taking a pro-active role
in supporting this change, not only for an export concern, but also for a domestic
concern. I must say that ultimately it comes back to the importer. As an example, when you
buy a Gap garment and if that garment does not meet a particular standard, you do not
blame the country where it was manufactured; you blame the Gap for not having done the
quality control they should have. It all comes full circle back to the importer and that
importer may be a manufacturer or a wholesaler or a retailer.
CEOCFO: What is the effect of competition with
Mr. Hinrichs: I preface any comment by saying
they are not public, so I do not have access to their financials or their plans. We
compete specifically with Alibaba for the budgets, which are available from the exporters
and manufacturers wanting to promote their product to global buyers. Export suppliers have
three primary objectives with their export marketing: lead generation, branding and
differentiation from their competitors -- and meeting buyers face to face to get orders.
We address all three of these supplier needs while Alibaba primarily does only the lead
Where they compete with us is online. They do not compete with our trade shows or trade
publications. In addition, their focus has been traditionally with the small and
medium-sized enterprises, whereas we do not typically compete at the low end of the
CEOCFO: What has surprised you about dealing with
China over the years of change?
Mr. Hinrichs: It has been an absolute delight to
be participating in such an in-depth way. What most business people would have seen is
that it is miraculous how quickly China has come along in terms of its participation in
world trade. That has been in part largely to do with the assistance of foreign direct
investment, which has been huge. In fact, approximately 60% of Chinas exports are
from foreign invested companies whereas Japan and Korea built their exports in a more
organic way. China has done it in a more inorganic way and has done a phenomenal job of
leveraging not only the financial assets of foreign enterprises, but also all of the
training and the management and the marketing, which comes along with those kinds of
organizations. I have worked in many countries of the developing world, and China is
indeed a first to have been able to achieve this kind of leverage to develop its economy.
I think we should all take our hats off because it has been truly well done. That is
probably one of the primary observations over the last ten or fifteen years. More
recently, it has been their ability to handle the appreciation of the currency in a way
that is maybe not acceptable to everyone, but in a way that will allow the currency to
appreciate. Everyone knows it is not going to be a major reaction like it was in Japan
where a certain amount of pressure was applied and then the currency was ratcheted down;
in China it is being spread over time.
CEOCFO: Why should investors look at Global Sources
and what might people overlook about Global Sources that should be paid attention to?
Mr. Hinrichs: We have been involved in
international trade for 36 years and we have been profitable for every single quarter. We
have been a public company since 2000. We adhere to the highest standards of reporting; we
are currently a member of the Russell 3000, and we have received a number of IR awards. I
think when investors look at Global Sources they can be assured of a quality company, well
managed, with a very long and stable track record of performance in a market with huge
upside and huge risks. We have been able to demonstrate we are able to negotiate those
risks and provide investors with a very good return.
CEOCFO: What should readers remember most about Global
Mr. Hinrichs: We believe we can be viewed as a
proxy for investing in trade with China. I would like your readers to take an opportunity
to visit our website at www.globalsources.com, which will give them a much better
understanding of Global Sources. Also I welcome them to attend one of our big trade shows
in Hong Kong each April and October.
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