Sunday, March 6, 2011

Handling Issues in China_Part II (Spills into Production)

Unity: If supplier / buyer relationship is off balance,
you're building business on a "shaky" foundation
“Jacob, I read Part I. So things are a bit “weird” in problem solving:  big deal?  Can’t you simply adapt to it and learn to love it?”

That’s what I’m saying:  you must adapt to and at least accept it or you’ll lose your mind…and possibly your money.  In this blog will discuss how solving issues in China can overflow into the manufacturing realm and affect your offshore production.

 Directly addressing and blaming a factory for problems:  This goes over like a led balloon.  If it is your first time working with a factory or if you are not a large portion of the factory’s income, it won’t take long before any finger-pointing or blame-placing becomes counter productive.   It will not have the intended effect of the factory suddenly paying attention to your issues and a decrease in the problem.  Service and response from the factory will eventually decline and more quality issues may spring up from any embarrassment you caused in holding the factory responsible for their mistakes.

Wanting retribution for each problem:  This also will not score you any points with the factory.  In their mind, (for example) “if you didn’t want problems, you should not have ordered such a cheap product.” 

Have enough padding in your quotes that consider possible problems that may arise from the factory.  Picking your battles is extremely important in life, even more so in China.  If the factory makes some small errors that have minimal cost, my advice…and this may sound strange, gladly accept those.  Yes, I said GLADLY.  Then when major problems do come (and they will come), the factory will have seen your previous sincerity and you’ll have more negotiating power to amend major issues.  If you scream “bloody-murder” over a small problem, they will not take you seriously over a much more important and costly issue. 

Holding a high standard of no problems:  If you approach a factory and inform them you accept 0 mistakes and have a very high standard of quality, they will turn you off immediately.  That’s not how they think here.  The mindset here:  “problems will happen,  problems are normal but we have to work to achieve better”.   Keep your high standards, only don’t reveal your whole plan at the beginning.  If timing is on your side, have the mind set of working to achieve the quality over time.  The Chinese are easy to get scared off if you are making too high of demands from the get go.  Give it them your expectations in more of a step by step format.  Don’t think “starter-demands” but “goals-to-reach”.     

Learn to think like the Chinese think: Keep in mind, whether it was there mistake or not, the concept of accountability doesn’t exist here as it does on the Western world.  The Chinese have this concept that all Westerner’s are uptight and we do everything “by the book”.  Approach issues as a group problem, not a one-sided problem (even if they are!).  Remember, they are making much less margin on the order than you are.  What is important to you, is not the same things that are important to them.  They are not working hard for you based on the money they are making off each order.  They will serve and assist based on a respectable business relationship, sincerity and long-term business.  If they think you are a fly-by-night customer they will treat you like a fly-by-night customer.  Long-term relationships are built here based on who you say you are and how much you say you will buy.  Let them orders you place and the cooperation speak for themselves.  Everybody talks a big game in this business and the factories have heard every story.  

Have an inner circle of Chinese partners and colleagues:  All of the above is extremely hard if not impossible without local partners and staff.  If you frequently manufacture offshore, you need Chinese teammates whether overseas or stationed locally in China. 

Relax, be prepared to lose a bit from the beginning and then you’ll be structured for long-term successes.  Rome wasn’t built in day and neither are folks successful at handling China at the first sourcing order.

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  1. Wow, this is an excellent summary of what I keep telling foreign buyers about buying in China. Well done!

  2. We speak the same language Renaud. We do our best to educate buyers but at the end of the day, they are only going to retain or learn a percentage. But then again...that's why you and I are here and are good at what we do (if I may pat us both on the back?) - we know the land we're in and how to adapt. Thanks for stopping by the blog.

  3. Learn to think like Chinese think..great advice Jacob. I am sure it's pretty hard for peeps sitting in an office in Europe or the US to do that.
    But you sum it very well, if they think you are a one time customer you will get treated like one.
    Have a great week Jacob!

  4. You are right, John...reading it a second time, it doesn't sound easy. But if I can get one buyer / importer to stop for a second and change their normal method, into one more adapted to the playing field and they have noticeable improvement, I will consider that worth it. After 9 years of living here, when it comes to switching my line of thought, I still have my good days and the occasional not-so-good day. I think that is written in the "Expat Handbook" somewhere....right?