PetSmart acquired Pet360 for $130 million in cash and up to $30 million more in future performance-based payments.
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Suppliers will often send samples of materials, sometimes at their expense, to ensure the buyer is satisfied. Buyers can also hire factory inspectors to check on their products before they ship.
A good example of a successful partnership with a Chinese supplier is that of Regrout of Santa Barbara, Calif. When Michael Taylor, a regrouter specialist, came up with the idea for a new power tool a few years ago, American factories he approached would not consider making it unless he put up $75,000 to $100,000 upfront and committed to a high-volume order.
He had better luck with Zeng of ZHZ Hardware in Binjiang, China, a supplier he met through Alibaba.com. Zeng not only worked with Taylor to develop the product, but also invested $50,000 in the design, tooling, testing, certification and marketing of the new tool.
Taylor says the combination of American creativity and Chinese manufacturing prowess proved a good match. The relationship works, he says, because he has taken the time to get to know his supplier. Taylor and Zeng call each other every evening (for Taylor) via Skype. Even if you don't go to those lengths, regular communication and mutual trust will, in the end, pay dividends.
Annie Xu is general manager of Alibaba.com, U.S., part of Chinese e-commerce firm Alibaba Group.