Global Sources' Chairman and CEO Mr. Merle A. Hinrichs must have been pleased by the company’s recently Q4 2007 financial results. Revenue was up 16% compared to the same period in 2006, of which online revenue and exhibition revenue was up 21% and 18%, respectively. As at Dec. 31, 2007, total deferred income and customer prepayments were up 30% compared to the same period in 2006.

"Our success was mainly due to our focus on quality - specifically, our focus on building quality supplier and buyer communities," said Global Sources' Chief Operating Officer, Craig Pepples. He added that he believes in the "80/20 Rule", meaning 80% of the sourcing value comes from 20% of the buyers. For Global Sources, these top 20% of the world’s quality buyers are their bread-and-butter.

Understanding What Customers Need

"Suppliers need to find the right buyers while buyers need to find the right suppliers. Working with the wrong partner could turn out to be a nightmare," a supplier from Wenzhou summed up from their years of experience. As a multi-channel, business-to-business media company, Global Sources positions itself as a platform facilitating trade and communication between suppliers and buyers.

However, this platform does not charge any commissions from either buyers or suppliers. Global Sources generates revenue mainly from advertisement and exhibition sales, including magazine and online advertising fees and exhibition booth fees charged to suppliers. As the financial results of the Q4 2007 show, these are the key sources of Global Sources' revenue.

"Most online platforms gather a group of loyal users through a unique website and then generate revenue from ad sales or online direct sales," said Chair Professor from Tsinghua University's Brand Research Center, Mr. Liu Haifeng. According to his analysis, Global Sources works differently. It provides comprehensive export marketing plans covering online, exhibitions and magazines, which combine to meet the suppliers' three major export marketing objectives: 1. lead generation; 2.branding and differentiation; 3.opportunities for face-to-face negotiations with buyers to close deals.

In fact, there are other similar B2B websites in mainland China. To gain more profits, they are leveraging their platforms and extending to B2C and C2C sectors. By comparison, Global Sources seems intensely focused on its B2B business. Pepples explained: "Not that we are not able to expand our platform, but by doing so, we would distract our attention from our customers' need." He maintained that Global Sources will not follow suit. If Global Sources is to expand, it will be for the sake of their customers. Their magazines and exhibitions, for example, are established based on their "customer-oriented" service belief.

Focused on Seeking Quality Buyers

In recent years, what's impressed Pepples most is the fact that buyers have become more demanding as they have more and more choices.

"Although Global Sources' platform has been around for 37 years and we have been cooperating and keeping a long-term relationship with both our buyers and suppliers communities, we still need to thoroughly understand what they need and provide them with the most appropriate services, helping simplify their sourcing processes." Mr. Craig Pepples thinks what Global Sources should do is to "stay ahead of customers'needs".

"Global Sources' competitive advantages lie in their abundance of buyers – high-quality buyers," said Liu Haifeng. By high-quality buyers, he refers to top buyers. Take Agentrics for example. It's one of Global Sources' major buyer organizations, having 49 customers including 17 of the world's top 30 global retailers. Global Sources serves as Agentrics' unique alliance partner in Asia and provides its members with direct access to expand their sourcing activities in the region through the exhibitions. Leveraging Global Sources' platform, suppliers can interact and network with buyers or meet them face-to-face through Global Sources' diverse sourcing events like the China Sourcing Fairs, Private Sourcing Events, and so on.

Unlike most companies in the industry that highlight their quantity, Global Sources advocates quality. And focusing on quality, Global Sources has come up with many brand new ideas, which are important to the development of an online platform. In 2007 for instance, when the quality of all "China-made" toys, food or anything made-in-China, was being questioned, Global Sources responded by launching its "Verified Supplier" service, which gives international buyers confidence and trust through verified supplier and product information. This helps the verified suppliers differentiate themselves from questionable ones.