A trade magazine called "Asian Sources" was published in Hong Kong in 1971. In its statement of purpose, it said: "it will serve businessmen active in the trade of consumer products made in Asia for export to Western markets."

Fourteen years later, this company launched Electronics Supply and Manufacturing - China, its first specialized magazine targeting the mainland China market. In 1995, the company launched Asian Sources Online – a round-the-clock portal aimed at becoming Asia's online trade center. The company was renamed Global Sources 4 years later. In the past 37 years, Global Sources has never left Asia or China.

In the past three decades, China's export enterprises have gone through a long and winding development path. But Global Sources has stayed focused on serving only companies at the top of the "enterprise pyramid". Being the elite of China's export industry and one of the most active and loyal developers of export e-commerce platforms, what does Global Sources have to say about the current export market situation?

There are opportunities in times of crisis

Ebworld.com: Since the start of 2008, China's export enterprises have been under enormous pressure. How does Global Sources view this "crisis"?

Pepples: The revaluation of the Yuan, rising costs of raw materials and the market change triggered by the US sub-prime crisis have made the export business very difficult. It will be hard for many suppliers to maintain revenues in 2008. However, when the market is transforming, buyers and suppliers change their business behavior as well, and thus opportunities emerge. How well China's export enterprises seize these opportunities is vital to their survival.

Ebworld.com: The stronger Yuan and rising raw material costs have weakened the advantages of China-made products. Have buyers been switching to other supply bases to source?

Pepples: None of the buyers I met are planning to "leave China", especially the electronics buyers. We had a Private Sourcing Event for Digital Personal Electronics Devices on June 17 in Shenzhen and many buyers at the event were actually planning to increase their sourcing volume. A buyer even said their North America operations had increased their China sourcing by 10 times in the first five months of 2008 compared to the same period in 2007.

Another buyer said that, out of their sourcing list, only one product can be found outside of China. This proves that although prices keep rising, China-made electronics products still have competitive advantages due to their good quality and wide variety.

Ebworld.com: Why did these buyers increase their sourcing in China?

Pepples: I think large retailers can always come up with innovative ways to increase their sales. I heard that some US companies have repackaged their products or rearrange their product mix to attract consumers. For example, some retailers who used to only sell TV sets may have added TV cabinets to their product catalogs. The US economy may be in recession, but the US market always creates demand for new types of consumption.

Ebworld.com: Have you noticed any change in buyers' sourcing behavior?

Pepples: From what I've observed, buyers have increased their sourcing volume, including placing more OEM orders. They are also consolidating larger orders with fewer suppliers and placing larger orders to gain a pricing advantage. This tactic allows selected suppliers to source a larger amount of components and gain pricing advantages from the upstream supply chain. This, in turn, lowers sourcing costs for buyers.

Ebworld.com: What impact does this new sourcing behavior have on the suppliers?

Pepples: Many buyers are now shaking up their supply bases, so small-to medium suppliers should now reposition themselves and upgrade the competitiveness of their products. Consumers are always demanding new products, in which products can roughly be separated into the high-end, middle-range and low-end categories.

Suppliers should realize their strengths and limitations, concentrate on the right target buyers and work relentlessly to improve their products. This is the only way to attract buyers.

On the other hand, buyers, particularly top buyers, are more concerned about quality of the products. In 2007, quality and safety issues of the China-made products brought nightmares for buyers. If exporters get necessary, recognized certificates to prove their product quality, it will be much easier to attract buyers.

Ebworld.com: What do you think are the major management challenges for China's SMEs?

Pepples: The management of "talent" has long been a major challenge for enterprises, and this hasn't changed. Global Sources has had a presence in China for 27 years. During this period we've seen many changes in management style. In the beginning, China suppliers were puzzled by the red tape of international trade, such as permits and foreign exchange. Later, they were more concerned about the lack of management leadership and cost control. But these were all related to the lack of talent development. The new e-commerce era has drastically changed the way we communicate. Enterprises now need to respond faster to the market and clients. This is a great challenge for their employees. How to recruit and retain capable talent is an important issue for companies in China. Financial incentives are becoming less effective – more and more enterprises are favoring a learning work environment for their employees.

Ebworld.com: As the third-party e-commerce platform, in what ways does Global Sources help suppliers overcome the current export challenges?

Pepples: The world economy is not in good shape and, frankly, I don't think we can solve their problems with a few new tools. What Global Sources can do is to try our best to provide an ideal platform for trade between buyers and suppliers. From our experience, the worse the economy is, the more professional information and services buyers and suppliers will demand.

In 2008, we doubled the number of our Private Sourcing Events to 80. We also launched our new "six-star" package for our higher-end clients, including two verification services from third-party organization. We also offer "one-star" package for the entry-level clients. All of our star package clients have been visited at least three times by Global Sources before they are listed as verified suppliers. We are now the only B2B e-commerce platform that provides buyers with both "verified" and "unverified" suppliers. We aim to enable more exporters to connect with the highest quality buyer community in the world.

"I don't see any crisis"

Ebworld.com: In the past years, we noticed a trend of B2B platforms providing more different services. They are now dividing different suppliers into different industries. Does that mean we are going to see a significant change in the market shares of B2B portals?

Pepples: I think it's going to change – in a healthy way. Global Sources focuses on serving quality, high-end enterprises. In 2008, we have noticed a change in sourcing behavior of buyers and that helped us offer further advantages. We have also further specialized into the industries we serve; we have deepened our understanding of buyers' sourcing behavior; and we are providing verified and unverified suppliers for our buyers. All these have turned the challenges in 2008 into opportunities for our suppliers. Meanwhile, now that the suppliers are more demanding, it's difficult for new B2B operators to enter this industry.

Ebworld.com: It's now the trend for B2B platforms to further specialize industries. How does Global Sources decide on new specialized industries to expand its business?

Pepples: We come up with specialized new "verticals" through our observation of market trends and demands from both buyers and suppliers for any specific industry. If an industry is dominated by only a few players, we will not spin it off as our new vertical, because we need to take into account growth potential. The baby and children's product industry is a case in point. We spun it off because sourcing demand was soaring - some toy retailers in the US and European markets had expanded to include the sales of baby and children products.

Ebworld.com: Some mainland China B2B portals have recently rolled out a series of new services, including launching management software and providing capital raising services. Does Global Sources have any such plans?

Pepples: I think for an export enterprise to succeed, the management need to select the right media and understand their buyers. Currently we have no concrete plans to help suppliers raise capital, but we are working closely with some financial companies and we publish relevant information in our Chief Executive China magazine. We do not rule out the possibility of offering the service in future. But I must emphasize that Global Sources is a media company. Our mission is to provide the right information at the right time.

Ebworld.com: As the export outlook is dimming, many enterprises are looking to domestic trade. Does Global Sources have any plans to cope with demand for this?

Pepples: Global Sources is aware of the huge potential for China's domestic trade. In November 2007, we launched the China Global Sources Online ( www.globalsources.com.cn ) dedicated to China's domestic trade. This website is different from other domestic trade platforms in the sense that we have a greater number of overseas buyers. From our magazines, you can actually see advertisements of foreign suppliers wishing to import into China. This means we are facilitating trades of not just export of China, but import into China.

Ebworld.com: What is your comment on the competition between the full-line B2B portals and the "vertical" websites from specific industry?

Pepples: For domestic trade, Global Sources focuses on suppliers with finished products, while the vertical industry websites focus on raw materials or half-finished products. There is not much competition between the two. And Global Sources' edge is in export. I believe China suppliers are getting closer to the top international retailers. They will be stepping up their efforts on supply chain and sourcing management.

Vertical industries have their strength in being more specialized, but I don't see any crisis for us, because we work on fulfilling customer's needs. Our buyer community may not be the biggest, but their sourcing volume is huge. For both buyers and suppliers, the most effective platform is the one that gives them business.