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Monday, April 6, 2009

Downstream Activities Question and Answers !!!


"Pak Harry thank you for meeting me today. I am pretty new in this swiftlet industry and would like to seek you advise on downstream activities."

This was the opening statement from a young man name Mr.Hong.

I took off from my busy schedule to meet Mr.H at a coffee shop at Damas.

Yes, Mr H what can I do for you?

"I am looking at starting a business in buying of bird nests to China and at he moment I know next to nothing."

My answer: Very good start. Are you sure and serious in this big bug "Jewellery" business?

"Yes. Can I know roughly how to start one?"

My answer: Are you dealing with a middle man on some one direct in China? If you are going direct with a Chinese buyer just make sure you know him well. This bird nest trading business is tricky and something that U need to understand the obstacles that you will be facing.

First and foremost is how much will your Chinese counterparts will be willing to share his profit with you? Normally you will get very little while they will reap the cream of it.

Before you start your first transaction just ask your counterpart to tell you how much can he sell a kilo to the market. Remember to ask him what is the water content and the grade ?

I recently have a word with a friend who have just returned from Beijing. He told me that in China 1 kilogram of those bird nests was going at ringgit equivalent of 20K (very high and I hope he was saying the right thing). But most Chinese buyers who wanted to buy from people like you will ask for a price be around 5-6K. On the top of that they wanted it to be super dry.

So what is the chances of you in making some profit? Very very slim.

Don't be surprised that when you sent to them the first shipment they will list a very long complains that can make you very frustrated for trying to make a honest living.

The best that you can do is to ask them to be transparent. How much they are selling and you tell them how much you are getting. If the net profit margin is say RM 5,000 then you split with them at a ratio that is fair to both parties say 70:30. You take the lower %.

What if they add lots of water and sell them at the same price per kilogram? Well this is something that you need to have a sincere counterparts. If they do that then your net profit margin should be double or triple. Will they share them with you?

Again there will be the export licence requirements in Malaysia. You need to study on this carefully and learn the exact procedures to ensure that those nests can be exported without any glitch at those exit points.

I am not against your wish to be a business man but what I wanted you to do is to know exactly what is bird nest trading and identify all those traps that can make you loose your hard earn monies.

After more then one hour of exchanging lots of other information, Mr.H was grateful for all those sincere advises that I have embedded in his brain tissues.

I told him if he wish to start the business give me a call. I can easily arrange for a kilo of either a process or unprocess nests as a start. Payment term is cash.

"Pak Harry, I am so glad to have met you. All your advises are well accepted and I will come back for help when the time comes."

You are welcome.

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