My 15 years of hands-on experience sourcing products from China - including home furnishings, giftware toys and sporting goods - have taught me some lessons about how to operate in this unique market. The most important lesson: there is no shortcut to success in working with Chinese business partners. China is a country where anything is possible - but nothing is easy. Understanding the business culture; getting all your business disciplines intimately involved in your manufacturing operations there and mastering the details are the prongs of a winning approach.
Business Culture: Face The Differences
Despite the fact that China has modernized a great deal over the last 25 years, it can still be as difficult to understand for an American business person doing business there for the first time. The same fundamental differences between American and Chinese business culture still exist. Understanding and accommodating those cultural differences is essential. One example is that business in China is based on relationships - as opposed to the US where business is transaction based and primarily focuses on economics. That doesn’t mean that economics aren’t important. It means that collaborating closely with a Chinese partner like a factory owner on the details of a mutually beneficial business model can come only after the other party knows and trusts you.
Another example is that entertaining is a critical part of the overall business culture and it is very important that you be prepared to spend time developing your personal relationship with the factory owner - often at his luxurious home that is located within the walls of the factory. A final example: communication style. Americans tend to be outspoken, looking to cut to the chase and look for resolution. They style of many Chinese business people is to be quiet and reserved in meetings, so that you need multiple sessions with them to get the information you seek.
Make The Time Commitment
Companies sourcing product from China can control their own destiny - if they commit to establishing and nurturing deep working relationships. Whether you establish your own organization in China or you utilize third party providers, it is critical that the Chinese manufacturer believes that you are “all in” at all levels in your company, particularly at the highest level. You need to get your Product Development, Marketing and Logistics people directly involved. Chinese manufacturers do not want to be treated as producers you have selected only because of their low cost. They will respond positively to your deep commitment to working with them organization-to-organization. If they sense you aren’t all in, they will not maintain the high level of scrutiny on quality control, safety issues and on time performance needed to prevent mistakes and drive quality and on-time production. That will cost you money and potential harm to your company’s reputation.
In the next part of this article, I will address several other key drivers of success doing business in China.
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Jack is an executive with 30 years of experience in consumer products, in both private equity-backed middle market companies and large multinational corporations. Learn more about Jack or contact him here.
