What are the two Most Frightening Words for a Foreign Purchasing Manager in China? Part 1

No Problem (没问题) and Very Easy (很简单)

When I was hired by a US firm to help with their sourcing efforts my first question was what issues are you facing? Their response was simply, bad communication, production schedule delays and quality control issues. They loved the prices they were getting from their Chinese supplier and it was one of the only ways they were remaining competitive in the US market. That being said the Chinese suppliers were not very responsive to continuous complaints. This is a common complaint that I hear from US firms conducting their sourcing in China. When you have your quarterly or bi-yearly meetings, you address the same issues over and over.

For smaller firms that can’t afford to set up their own operation in China or have someone full time at the factory, this can be a very frustrating ordeal. I was brought in as a consultant to deal with this issue. I hope to share some stores from my experience as well as share some issues I faced and how I dealt with them. Lastly I’ll offer a few suggestions for any companies in similar situations.

1. In the situation I outlined above, the US Company didn’t understand how Chinese culture worked. The common phrase of “Chinese only work with people they trust and are friends with” plays true even in this situation. Even though you are providing them orders, if you haven’t put in the time to firmly establish your relationship, they don’t see it as a relationship/friendship. They see it purely as business and nothing more. If that is the case, they are going to do the bare minimum to keep you happy and nothing more. I believe in every China business/law blog you read about how US firms underestimate how much time needs to be spent with a Chinese company before choosing to do business with them. It is probably the biggest mistake I still see foreign firms make in China. Yes it cost more and may seem to take forever, but unless you firmly establish a friendship with the Chinese company you plan on working with, you will have problems for the duration of your relationship. Additionally, since you are on their turf, if you haven’t established this relationship, once the problem arises, it’s going to be too late to fix.

2. In my situation I didn’t have the liberty of being able to put in the initial time because we couldn’t afford to stop working with our current suppliers. Therefore, I suggested that I try to put in as much time with our current suppliers to try to establish a better relationship. At the same time though I recommended that we look for new suppliers.

3. Titles in China Matter — Before our first meeting with a Chinese supplier, I told the CEO of the US company that he needed to give me a title that the Chinese would respect and would open doors for me. He also needed to make sure they understood that I had power to make decisions that could affect their orders. Since I can speak Mandarin Chinese, I needed to make sure that the General Manager of the supplier company would respect me and that I could communicate with him directly. Before I was brought in, our company would only be able to communicate through the Chinese suppliers sales manager who would serve also as a translator. Plane and simple this doesn’t work. Things can be lost in translation and the GM won’t disclose some details to his own worker that he might disclose to you. Also, the sales manger also will be afraid to translate anything that is said by the US side that he deems too harsh. Therefore, the GM never fully understands how the US Company is feeling. Your business is too important not to have effective communication.

4. Use Chinese Tactics against Chinese — At one of our supplier meetings, we specifically choose a date for our meeting because the supplier said they would have finished our sample for inspection by that date. We confirmed these dates three times since executives were flying in from the US to inspect the items and had to travel to another city the next day. We couldn’t afford it not be completed. Upon arrival, we found the sample was “completed” but still not assembled. When I asked them in Chinese why the product wasn’t finished, they told me since it was a new product; they wanted us to give them some guidance on putting the product together (等您过来给我们指导啊!) We helped them put it together and the crisis was averted. That night when we got to dinner, I made sure through 10 shots of rice wine (白酒）, 7 beers (啤酒) and a pack of cigarettes that I established my friendship with the GM of the company. More importantly though, I made sure I asked some crucial questions while I knew the GM was drunk (This is often a tactic they use against you). Once you have learned Chinese culture and the tactics they use against you, you need to create opportunities to use the same tactics on them. It takes years to learn, but puts you back on a level playing field once you have mastered it. One question I asked the GM was the question of why the product wasn’t completed for inspection. This time around he told me the real reason. He said that one of the machines that he needed to cut products broke and they just got it working again this morning before we arrived.

In addition to some of the details I outlined in the stories above, here is a list of some common sense items when deciding on which Chinese supplier to work with:

A. Make sure you have someone on your staff that not only speaks Chinese but also understands Chinese culture. Also, make sure you give that person a title respectable enough that the GM of the supplier company will answer his/her calls, emails and wechat messages.

B. Make sure you visit the factory and have the supplier make a sample for you to inspect before you decide to work together. A short visit to a factory can give you a good idea of how big the company is, how many orders they have, how organized they are and how well they pay attention to details.

C. Do your best to confirm which products will be made by the supplier himself and which products are outsourced to a third party. Chinese companies will pass orders off to neighboring factories if their workload is too heavy. If any problems arise from these products, they love to cast blame on the other factory as if it’s not their problem.

D. Make sure you established a friendship with the GM of the supply company. Also, to maintain this friendship, your Chinese speaking employee needs constant communication and face time with the GM.

E. Chinese don’t like to answer questions directly. Be patient and learn how to ask the same question in different ways until you get the info you are seeking.

Part 2 to follow….