Importing from a foreign country is always a bit of a chore. You have international tariffs, customs, and the like to take into account. Before any of that comes into play, however, you've got to consider the subtleties involved in doing business with people from another culture. This issue is particularly pronounced in the East-meets-West scenario that occurs when importing from China.
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Today I'll explain some of the intangible communication issues that arise between Chinese manufacturers and Western importers. There are many cultural differences that play a big part in the way Chinese business contacts will interact with you, and you've got to understand these differences to really succeed when importing from China. Otherwise, you'll be stepping on some unexpectedly temperamental toes.
Because of the difficulties inherent in importing, (production issues, miscommunication, timing, etc.) issues may arise where you'll need to rely on more than one contact to fulfill your orders.
Because miscommunication is so rampant, you must diversify your suppliers. That way, if one drops the ball a bit too often, you've got a backup that you've also been courting to pick up the slack. And when I say "courting," it's not an exaggeration. There's a bit more romance in making a solid business contact in China than you might expect.
We'll cover this point in a bit more depth below.
As I alluded to earlier, it's extremely important to establish a friendship with your Chinese contacts. In Chinese culture, contractual obligations are considered secondary to ethical ones. Repeated social interaction with your supplier will help you maintain a productive relationship based on trust, mutual benefit, and camaraderie, rather than simple monetary gain.
The Chinese celebrate a lot of holidays. In fact, sometimes they have weeks off at a time. There were 54 holidays just last year, and close to that number again this year. You need to keep an eye on the days (and weeks) they'll be relaxing, and adjust ahead of time. That way it won't cause any delivery delays in your business.
This obviously won't be an option for everyone, but it's highly recommended if you're doing a substantial amount of business there. Going to visit your manufacturer in person will reinforce the relationship you're trying to build, and getting to know your Chinese contacts personally will pay big dividends in future business transactions.
Directness is considered a sign of immaturity in Chinese culture. Chinese business conversation is all about subtlety. Asking direct questions will usually cause discomfort, and rarely result in getting a direct answer. This goes double for complaints. If you corner your Chinese suppliers about quality issues, they will avoid taking blame, not because they are trying to weasel out of their responsibilities, but because the Chinese view of fault is different.
They see problems as unavoidable facts of life with no direct cause; rather, they are results of a confluence of circumstances, almost entities in and of themselves. You've really got to skirt the issue and imply your meaning to a Chinese supplier to get your intended result. To their credit, they are usually very practiced at understanding your underlying intentions.
This should be another obvious one, but be prompt with your payments. It's considered part of your moral obligation to your business contacts, and it will lubricate the many gears of the machine before they even begin to get rusty. So set a schedule for payment and stick to it.
Another aspect of Chinese culture that can cause a lot of misunderstandings is the idea of perfect service. As mentioned earlier, the Chinese expect their operations to run into snags. Problems come and go: The idea is to get the process to go as smoothly as possible, and take mistakes in stride.
One approach to minimizing the difficulties this will cause you is to align your thought process with theirs. That means setting goals instead of standards. You just can't have unbreakable rules, because such a thing doesn't exist in the Chinese mindset. They're too flexible in their thinking for that. Instead you have to have targets to aim for, making sure not to sweat it when the results aren't exactly bullseyes.
The phrase “flattery will get you everywhere” comes to mind. Chinese workers are often only minimally compensated as far as pay is concerned. Words of encouragement or inspiration are surprisingly effective motivators. This is just one more example of how the relationship-building process is so essential to doing business with a Chinese supplier.
You just have to be nice, and give credit where credit is due. And if it's not due, you might consider looking for something else to compliment. The nicer you are, the more compliant your contacts are likely to be.
Once again, the real secret to success with your Chinese suppliers is being culturally sensitive. Making an effort at understanding the way they do things will go a long way in expanding your business into this market. So be sensitive, subtle, and just generally congenial. You may be surprised at how much of a difference it makes.
If you'd like to learn more about importing from China, check out these other SaleHoo resources:
Sales of your company’s new product are going well. Because one of your key suppliers is located in China, you check every week to be sure your part order is on time. So far, there are no problems….or so you are told.
One morning you wake up this : “We are very sorry but your order will not ship for three months.”
“What happened,” you ask, “You said the order was on schedule.”
Three days and seven emails later, you are told the following:
“your parts were damaged when the loading dock collapsed,
“we had a flood at the plant.”
“the delivery van crashed,”
“there was a fire at the plant…..or a power outage…..or a mud slide.”
You may be dealing with the unluckiest factory in all of China. Or more likely, the supplier is using your distance and your pre-payment to their advantage.
These are manageable hurdles if you know something about doing business in China. Because we may dress alike, watch the same movies and drive the same cars, but we are not them, and China is not here.
In China, you earn the right to good execution from a supplier.
So, based on our 10+ years experience sourcing products in China, we’ve compiled this list of 9 dirty little secrets suppliers don’t want you to know. Learn these, and you can change how you ask questions. You can bullet proof your contracts and even hire local help if necessary.
Read on:
The goal of factories in China is not to sell to you, but to sell to the large multinational or original equipment manufacture across town.
As a general rule, you are a bonus, and your business must be profitable.
No one wants to mess up, but if they do, there is little consequence. There is no Better Business Bureau where you can log a complaint.
Sound harsh? Sorry. It’s true.
(There are some self-reporting scammer websites. Check out Supplier Blacklist.com. Or check this list of scam reporting websites on China Check up. Note though that most websites have no specific category for China. )
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What you can do:
First, look for small to medium sized factories that specialize in the specific products or processes you need. If they are smaller and if they do not heavily advertise in the west, chances are high they will appreciate your business.
Look beyond Alibaba, since most listings on Alibaba are trading companies and not actual factories.
Second, you can hire a local sourcing firm or inspector. Make sure whomever you partner with understands your industry, and make sure they are independent and not beholden to any factory.
The ratio of orders to RFQs (Requests For Quote) is miniscule, so unless the supplier knows you, recognizes your brand or has some reason to believe you will come through with an order, they can’t and won’t spend the resources to review extensive, complex specifications.
Remember — each of your documents must first be translated into Chinese (and that translation is far from perfect). When you reference external test protocol and other documents, you double or triple the amount of work for the factory. Often, any quote you receive is perfunctory and padded so they are sure to make a profit.
Can you blame them?
Now for some good news: This all changes once you are a customer.
Fewer than 1% of all Chinese speak English, and those that do will still struggle mightily with syntax.
These fledging English speakers have a difficult job. They probably learned English from native Chinese who learned from a book, and they can’t go to YouTube to practice.
What to do:
Simplify your speech. When speaking by , copy the grammar used by your Chinese counterpart. Mandarin uses a question participle that does not exist in English. So, be safe and use the “is / is not”, or “can / cannot” question form. Here is an example:
Instead of “Can your factory machine this?”
Say this: “Your factory, can or cannot machine this?”
Then wait for them to reply “Can” or “Cannot”.
When communicating by , use short concise statements and bullet points. Tables and Yes/No questions work well. List as much as you can on the drawing or photograph.
Example:
Can you perform this safety test? YES______ NO______
Expect to pay a price penalty because you are from North America, and don’t fret about it. They expect you can afford a higher price, and they know you usually cannot find their competitors. And so they charge what they feel the market will bear.
What to do:
Your best defense here is to gather multiple quotes to get a feel for the competitive price. Scour the internet for companies producing similar parts, and look well beyond the first page in Google search, because Chinese websites are not optimized for Google (they use Baidu).
You can also use a local sourcing firm who knows the supply base in your industry and will negotiate with several factories.
Most factories request 50% to 100% payment in advance as a hedge against order cancellation and non-payment.
Now, you are unlikely to cancel if the order is late….sometimes, very late.
What to do:
Start small so that you and the factory can get to know each other, because most factories will agree to relax payment terms over time. If they will not ship until the entire amount is paid, hire a local inspector to go into the factory and inspect your parts. Be easy to work with and make all payments on time. Then, before the second or third order, ask the supplier for relaxed payment terms. If you cannot get relaxed terms after several orders, look for another supplier.
Most suppliers do not have the raw materials needed to build your product. They will go out and purchase them. With no specified quality level, the factory buys the lowest cost option, of course! They don’t know how you plan to position your final product.
What you can do:
Specify every item on the bill of material that affects form, fit or function. With so many online catalogs available, it is not difficult to find complete descriptions of similar products. So, do your homework.
Samples help align what they plan to build with what you are expecting, but they do not show the full effect of variation or tolerance. That is apparent only over time and over a large population of parts. But if you do not nail down the top level specification, you may find yourself with products that you cannot use or sell.
What to do:
Obtain the factory’s agreement to meet a top level requirement. If you are ordering standard product out of the company’s catalog, find out how much variation they allow. If it is unacceptable, write your own specifications, and secure agreement from the factory before they begin production.
No factory is proficient in all processes, but in China, it is not uncommon to outsource the entire product without your knowledge.
After all, you are half way around the world, the parts work fine and the price is right. What’s not to love?
Well, outsourcing can be problematic if material and test requirements get lost and are not passed down to the subcontractor.
Mattel Inc. learned the hard way. In , the toy company was forced to recall millions of consumer toys for potential lead contamination after a few highly trusted suppliers in China cut corners, purchasing parts from non-approved, lower cost subcontractors. Mattel’s audit practices did not catch the problem.
What to do:
If your market has specific safety or materials requirements (including OSHA and RoHS), make this extremely clear. Ask for proof of materials, process, test data including safety test data. Check for copies of the original manufacturer’s material certs or test facilities’ data.
It is too easy to fake an authentic looking quality certification for the English website, or pay off a auditor to look the other way. Suppliers know you cannot easily check the validity of a quality certification unless you speak perfect Mandarin and know who to call. You may not even know how the factory is registered in China, since names often change from Mandarin to English.
What to do:
Don’t skimp on your own due diligence because you see a quality certification. If it is important to your program, hire a local independent auditing firm to review the factory. Or, ask for as much proof as you can. Your “proof” might including photographs or samples of similar parts.
If you use a full-service sourcing firm such as AVG Sourcing, factory assessment, audits and inspections are part of the normal service.
There are many positive reasons to source in China. The investment in modern manufacturing and workforce training is unparalleled in this century, transfer of money, raw material and parts is safe, and most factories and factory owners are ethical and want to do business with you.
However, there will always be few snarky suppliers in every part of the globe, and China is no exception. Now that we’ve revealed some of the measures used by these nasty few, you can strengthen your contracts, hire in-country help if needed, and change how you communicate to improve your outcomes.
China is not perfect, it is not here. We may dress the same, but the unspoken rules governing business are very very different.
However, once you have developed a history with a good supplier, they will be your company’s secret procurement advantage and competitve edge. They will keep you informed of new materials and products so you can stay ahead of competition. They continually strive for productivity improvement and pass this savings on to you, and offer more and more services to help you manage your business.
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Building these relationships takes time and requires a methodical process. If you would like help from an experience sourcing firm, contact me at info@avgsourcing or check out our website for free resources.
You will communicate with the engineers and sourcing professionals in your time zone and language, while we manage suppliers from our office in Shenzhen. We stand behind every shipment, and our prices are almost always competitive or less than your factory direct prices.
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