Monday, January 3, 2011

Dealing with 1st-Time Factories

Remain professional: regardless of what
unforeseen obstacle arises.

Chinese factories are busy.  They have times that are slower than others, but for the most part, their production lines are full year-around.  Next to never are the production lines empty and the workers sitting around hoping to get an order to extinguish the boredom.

On the contrary it has gotten to where it takes substantial effort from the buyers’ side to get a factory to treat them serious.  Unless you have an established working relationship with the factory or unless you’re a very big name, the factory is going to first “feel you out”.   But, in this post-Economic Crisis day and age, even if you are a big name, the factory is still going to work in such a way to determine if you are going to be a valuable customer for them.

 The China market is booming; the factory greatly prefers to get a large local order from local companies that speak the language, share the same background and can share in much larger “give-and-take-processes”.  For the most part, factories view Western companies as picky, demanding and over-expecting (see article on “doing things right the 1st time”).

In working with Westerners, the factory feels they have to “mind their P’s and Q’s” so to speak.  They’ve got to be concerned with safety, quality, what they consider minute details and also they have to battle with the English and cross-cultural differences.  

(Although many of the same principles apply, for this article I’m specially referring to factories, not trade companies.  Most of you overseas in the promo & branded merchandise business are dealing with trade companies, not factory direct.  Many times you think you’re dealing with a factory, but you’re not…hope to discuss trade companies vs. factories in a future post). 

It is possible to form lasting beneficial relationships with Chinese factories.  Many of you reading this have already done so and can “teach this young whippersnapper a thing or two (colloquialism from my home area).” 

A few tips in dealing with a first-time factory:

Obligation:  The factory doesn’t owe you anything:  They way a large portion of overseas (especially Western) buyers speak to factories here, you would think the Westerner saved the factory manager’s life or his son’s life.  They speak in a way as if they are doing them a favor by approaching them and the factory should be counting their lucky stars.  And not only are they granting them this divine favor but the factory owes them quite a long list of obligatory actions:

Every email is peppered with “asap this” and “asap that”.

Samples are assumed to be free and sent on the factories’ dollar.  Why?  You haven’t placed an order yet?

Normally you wouldn’t communicate with a company in your home country this way, why speak to the factory this way? 

Quantities:  Let your quantities speak for themselves.  Don’t tell the factory how much you’re going to buy.  They’ve heard every quantity-tale under the sun sung to them as if it was written in stone.

There’s nothing impressive about a big quantity until the big quantity is actually ordered.

Samples:  to continue from the above comment from samples, you should be the one sending them samples.  Put together a package of items that you’ve dealt with in the past, items that look to be sellers, items you want to duplicate, items you want to use for quality referrals…you should flood them with well-labeled sample pieces that give strong physical representations of what you expect. 

Factories in a certain area of production are normally flexible in all ranges.  So getting price quotes that are not based on something physical can be relative.  It depends on your expectations, quality you want, desired structure; etc…the factory is flexible on this.  When you have them blindly quote on the beginning and then tell them their price is high; what do you expect?  They don’t have a point of reference. 

You want a factory that will consider quality issues
you never thought of ~ vigilant
Pick your battles:  Chinese factories make mistakes.  They make many mistakes.  For whatever reasons, mistakes are rife and you’ve got to be ready to deal with them and to deal with them in a way that you don’t deal with mistakes in your home country.  Be ready to give and take.  And when I say give and take, I mean “give, give, give and take”.  Don’t try to fight every battle.  Be willing to lose; lose time, a bit of money, even patience, but if you hold them accountable for every mistake, it will get worse where they will either drop you off production or will produce in such a way that your negativity reflects in the product’s quality. 

Sure you can drop them as a supplier; but you’ll have to start back at “square 1” and the next factory will very do the same if not worse.  I know, I know it doesn’t sound fair, but it’s not meant to be fair, it’s China….

Payment:   Countless times, I’ve heard from factories that they are much more willing to deal with a customer if payment is made on time.  This goes a long way with the factory. 

Be vigilant on your agreed-upon-payment dates and make the payment when you agreed to make it. Make it early if you feel comfortable with the quality.  It doesn’t make sense to push, push, push on delivery time and then be late with the payment.  If the factory has upheld their end of the bargain, be sure you do the same.  

Visit:  If you plan on doing a large volume, you’re going to need to visit their facility.  I’m not talking about coming and shaking hands and exchanging name cards at the Canton or Hong Kong fairs (which I don’t consider solid forms of sourcing…for another blog).   I’m also not talking about coming into Shanghai or Hong Kong and hoping to visit their facility in 1 afternoon. 

I’m talking about a visit.  I’m talking about not staying in the closest large international-hub city (Shanghai, Hong Kong, Guangzhou), but I’m talking about taking a bus or car to the city where you’ll actually find the factory.  Stay there.  Stay close to the factory.  Visit the factory a few different days.  Tell them you want to watch some production runs.  Tell them you’d like to watch them produce current orders and also would like to run some sampling processes while you’re there.  If you really want to spend much money at this factory, should also be willing to spend much time at this factory.   

Having them pick you up in the nearest large international city and escort you back and forth in a whirlwind trip (where you spend more time in the car than you actually do in the factory) isn’t worth a hill of beans.  I also recommend if a first time factory, you DO NOT allow them to pick you up or cause them to go out of their way doing special favors.  Here’s the scoop; the Chinese really don’t like doing this, they just feel like they have to.  If you come directly to their factory the first time, they’ll know you’re not playing games.  They’ll know you’re not just another milquetoast Westerner who wants to come boss them around.  Also you won’t be beholding to them from the beginning on any special favors. 

These are just some general overview points;  with each point I could go more in-depth.  To get the relationship off the ground, be professional, lighten up a bit and don’t be hardnosed.  Set boundaries from the beginning;  let the factory know you are a professional and expect good quality, but that you also are human too, wiling to work together to achieve a group success.  Do due diligence;  send them samples, visit them and show that you’re eager to have them as a strong China-partner.  Helping them lower their guard from the beginning will create a lasting relationship; after you’ve returned to your home country, they will remain vigilant on quality, price and service.  

No comments:

Post a Comment