What is the best approach to take with your China vendors ?

I get emails every week from people who do business in China, some successfully and some not so successfully (but everyone seems to have a problem and that is why they are emailing me).  I could put the people who email me into two groups as follows:

1.)    The people who take a bang your fist on the table attitude into their China ventures. These people often enter China with a negative impression of China and they tend to want to dictate all terms in their relationship with their China supplier. They do a lot of yelling on the phone with their vendors. When something goes wrong with an order, especially if it is the vendor’s fault, then you do not want to be around them.  Yet people like this can be successful in China because there are occasions when you need to yell at your vendor to get something done. For example, if you are facing a cancellation date on an order and your vendor is dragging their heals for one reason or another, your only chance to get that order shipped is to express your anger to the vendor.  The downside with this approach though is that your vendor may come to seriously dislike you.  As long as your order QTYs are substantial this may not matter. But if  your order QTYs dwindle and your vendor dislikes you on on top of that then you will soon be looking for a new vendor.

As a general rule I like to advise people not to get angry with a vendor unless all other options have failed and unless the vendor is 100% to blame for the problem ( often they are not).  Anger at your vendor should be the last play in the play book.

2.)    The people who tend to approach China with a more level-headed attitude. They may also have pre-conceived notions about China but they do they do not give voice to these and, in fact, they are inclined to admire China’s progress and see more positive than negative. The are excited and optimistic about doing business in China.  The one downside to this attitude is that it sometimes borders on naïveté.  In fact, China is a very difficult place to do business ( that is its well-founded reputation) and you need to be aware of this at all times while your order is in process. You can never take anything at face value and never assume that your vendor is going to do anything that will give you the advantage. Be optimistic but skeptical ( if I can say that). Or as Ronald Regan once said of the Soviet Union: ”Trust but verify.”

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Not understanding your China orders is expensive and risky

The order I discussed in my last blog post has really been a valuable lesson on how to do business in China or more appropriately how not to do it.  I should clarify that I did not get involved in this order until many of the specifics of it e.g. lead time, cost etc had been agreed on by my client and her vendor.  What I list below are problems that I have seen in this order. Please  forgive the overlap with the previous blog post in some cases.

1.)    Requesting unreasonable delivery dates from the vendor. My client placed an order for 5000 pcs of a high-end design item. In general lead time on an order like this would be 45-60 days, and that is if there are no problems. I always advise people to tack on a couple of weeks for the reason that a China order involves so many parties and someone is usually late, whether that be the printer of the retail packaging, or one of the raw materials suppliers et al.  Had my customer consulted me beforehand I would have looked at this as order as one with a 60 day production lead time ( taking into account the National Day holiday in China that fell right in the middle of production as well as other issues that were apparent at the beginning of the order).  However, the lead-time my client wanted and what the vendor promised her was a little more than one month. The vendor knew this was not possible but they wanted the order and promised my customer they could do it.  My customer, a newcomer in China manufacturing,  failed to read the situation correctly and, thinking she was going to get her order quickly, she informed her own customers that she would be able to deliver by the date she had promised them.

My advice:  Never rush your vendors on lead time but always  take the lead time they suggest and tack on at least two weeks. Count on lead times in most cases of 45-60 days. Be skeptical if your vendor tells you they can deliver in 30 days or less.

2.)    Lack of clear understanding by my client as to what a China order entails.  My client sent the vendor samples of product and packaging and asked them to duplicate these with slight changes.  As problems started to surface with the design, I advised my client that she really should have submitted spec sheets for both production and packaging to her China vendor instead of asking her China vendor to reverse-engineer her samples, which for them has been both time-consuming and frustrating beyond belief.  China vendors do not want to spend time re-designing a customer’s product.  You should have all the information for them in a clear and intelligible format. Spec sheets are indispensable. These should include all pantones where applicable and packaging info. Sending samples with spec sheets is very helpful.  But just sending samples is not enough.

My advice:  Do not give your vendor an order without a spec sheet.

3.)    Failing to pay the vendor a deposit and accepting at face value the vendor’s reassurances that production was moving along ( when it was not). Vendors just do not start production until they have a deposit because they use the deposit to buy the materials.  I informed my client several times that she needed to pay a deposit ASAP but she always felt reassured that it was not necessary because the vendor told her production was moving along.  As it turns out the vendor had not done anything, rendering her ship date obsolete.

My advice:  Pay your deposit as soon as you and the vendor have come to an agreement on an order.  Production will not start until you pay.

4.)    Failing to understand the hidden costs for this order. My customer wanted  a product made with her own fabric and she had to send this to China. The process was time-consuming and expensive.  This was all done at the last-minute driving up costs and increasing production time.  It should have been planned well before the order was discussed with the vendor and all logistics and duty/VAT issues should have been understood prior to shipping the fabric to China. As it turns out some carriers, like DHL, are not allowed to bring leather into China whereas for other carriers it is no problem.

My advice:  Plan, plan and plan. As my grandfather used to say ” Plan your work and work your plan.”