Which is better, meeting a vendor online or at a trade show ?

What people are saying about Mulberry Fields
a very interesting blog…” – a company in France

I saw a post the other day in one of the most popular China blogs and the blogger was talking about the best way to meet vendors in China. Of course this is a topic I am passionate about having worked in product development and sourcing for many years. Much to my surprise, the blogger omitted to mention trade shows as a way to meet manufacturers in China and he seemed to say that online sourcing followed by on-site vendor visits was the way to go. He is a lawyer and not a manufacturing person so it was an understandable omission. But I put in my two cents to the discussion and here is that two cents accordingly.

I personally think going to a trade fair in China is the best way to get started. You really can get a good idea of your product cost/design and production by spending time talking to a lot of vendors over several days. Some of these vendors will leave you with a good impression, some with a bad impression, some you will find too big, some too small. But you really come back from the trade show knowing a lot more about your product and its cost and feeling confident that you have actually met people who can help you grow your business.

The problem with online sourcing is that you really have no idea who you are dealing with as often you are just exchanging emails with an account manager or salesperson. Even if the quotes are good and you get some good samples back, you can show up in China and find the vendor to fall far short of your expectations. Of course you can meet someone at a trade fair too who, when you visit their factory, falls short of your expectations. But this is not as likely to happen because a trade show booth can in fact tell you a lot more about a vendor than a website. It also sends vendors a strong message that you are active in China and are looking for options. If on the other hand a vendor knows you have spent 3 or 4 K to visit them, after only having met them online, they may simply regard you as having deep pockets which is not the impression you want to give vendors.

Finally, I would add that for the most part vendors need to see actual physical samples of your product to give accurate quotes. The quote you get based on a picture is most definitely not going to be the cost you pay when you go into production. If you are FEDEXing samples to multiple vendors in China trying to find out who can do your product the costs will add up. I have had customers spend hundreds of dollars on one sample shipment. When you go to a trade show though, it costs absolutely nothing to hand a sample to a vendor and ask “how much?” Often vendors will just borrow your sample for few days and return it to you while you are in China.

I have written a lot on trade shows and sourcing online. Here are some of those posts.

Preparing for the Canton Fair
The Canton Fair
Sourcing online: Not the best way to find a vendor
Sourcing on alibaba




The usefulness of due diligence when evaluating a vendor in China

What people are saying about Mulberry Fields
“What you say is absolutely true about what you need to do in order to succeed in China.” – a company in Italy

I recently had a customer run a credit report on a vendor he thinks he wants to do business with. The report came back and everything looked OK. The Company is in good financial shape and has had no litigation on record for the past three years ( not really a long time by which to measure but still acceptable). My customer had met them at a trade fair in NY this Spring and really likes them. He said they had a very professional presentation and very good products. I looked at their website and I must say it is very nice. They do projects for some big global companies so quality is probably pretty good. And most importantly for my customer, who is focused on cost, their prices are very good.

But after doing some research I realized that this company is just part of a big 11 company HK/Taiwan/China conglomerate. This somewhat concerns me because conglomerates can be very bureaucratic. And in China some conglomerates include bankrupt state run companies which may indicate that management leaves something to be desired (the government does not want these companies to go under so they put them in a group of other more successful companies). Most importantly from my own experience working for small companies that sourced in China from big suppliers, if the PO QTYs are not substantial you often do not get the service you want. An Account Manager is usually assigned to your account and things go well or not depending on the dedication and efficiency of the manager. You very rarely, if ever, have a chance to contact with the GM or owner of the company. When you work with a smaller company you do. This is not necessarily to say that small companies are always better. Sometimes they are and sometimes they are not. The point is you should be aware of how a vendor’s size may impact your order. Or, as I put it to my customer, he will go from being customer # 1 at his current vendor to just another customer at the bigger vendor. That is still perfectly OK if what he stands to gain is a lot. But if he is the kind of person who likes to involve himself with production and is in the habit of working closely with his vendor, working with a big vendor might be frustrating.

My customer is planning a trip to China to visit with this company. He has already said that if he likes them he will give them an order. My advice to him was to try to find some other vendors in the same geographical area and to visit them as well. He should then be able to see who he feels most comfortable with. It may be that the company he met in NY will be so attractive to him that he will not be able to say, no. Or it may be he will be put off by their size and the fact that he has no access to decision makers and will decide to go with a smaller vendor who may offer more service tailored to his needs. We shall see.

Due Diligence is such an important concept when you do business in China. Here are some more posts on that:
Product saftey standards
Selecting a sourcing company
The basic due diligence on your China vendor
What happens when you do not do your due diligence
A red flag vendor



Book Review: One Billion Customers by James McGregor

What people are saying about Mulberry Fields
” A very interesting blog. – a company in France

In 1987 James McGregor and his wife sold just about everything they owned and moved to Taiwan to learn Chinese. Two years later the couple was in Beijing where McGregor had accepted the job as Bureau Chief for the Wall St. Journal. And he is still there 23 years later. 25 years in Chinese speaking Asia and 23 years in China. If you want to learn about China James McGregor is someone you want to listen to.

In One Billion Customers you can see the change in China from 1990 to today. The Beijing of 1990 as McGregor describes is the Beijing that I discovered when I lived there in the summer of 1990, drab, gray, a mass of humanity on bicycles, pool tables and piles of $0.10 watermelons on seemingly every corner, an absence of any foreign brands expect for Tang, Nescafe and the globally ubiquitous Coca Cola. Today in Beijing cars probably outnumber bicycles, there are about 100 McDonalds outlets and probably three times as many KFC restaurants and foreign luxury brands are household names and affordable to many Chinese citizens.

McGregor captures this unparalleled growth and very appropriately refers to China as a “start up” which it really is when you consider China was one of the poorest countries in the world a mere thirty years ago. But McGregor rightfully notes that beneath the start up mentality is a “deeply ingrained culture” that always prevails and which is why it is so difficult to do business there. Overseas business people that enter China and fail to acknowledge this always fail and McGregor has plenty of examples of failure for his reader.

One Billion Customers, is meant to serve as a guide for people doing business in China as McGregor himself writes: “This book is intended to show rather than tell what it is like to do business in China.” This is a bit of a cryptic remark and I am not sure what he means but at the end of each chapter he does end up “telling” people how to do business in China with a list of tips, what he calls somewhat banally “The Little Red Book of Business.” This detour at the end of each chapter detracts from the narrative of McGregor’s story, and the tips sound like sweeping generalizations about the Chinese and how they do business, not to mention that sometimes the tip itself just contradicts what McGregor has written elsewhere in the book. For example, McGregor writes, and correctly so, that “people should not succumb to the notion that all Chinese people are corrupt and that the system requires corrupt behavior.” Yet, among the tips at the end of Chapter 3 is this “Assume your procurement dept is corrupt unless proven innocent.” One Billion Customers would have been a better book had McGregor just left out “The Little Red Book of Business” altogether.

McGregor also seems to fall into the trap of using examples of how big companies or US Govt officials achieved success in China and implying that small companies can duplicate the success if they follow the same example. Charlene Barshefsky’s stormy negotiations with Chinese officials over China’s entry to the WTO in 2001 takes up all of one chapter and McGregor implies that her style – she had her bags packed and was ready to leave Beijing unless the Chinese negotiations team gave concessions – is suited to small companies or executives in China. It is, of course, not. And McGregor admits as much later in the book by drawing the line between multinationals and smaller companies. In fact, he describes the process of doing business in China for non-multinationals as a ‘swamp”

Still even with the inconsistencies and an overall tone towards the Chinese that might best be described as suspicious, One Billion Customers is a book that is worth reading. It is not the best book I have read on China. But it is far from the worst and it does leave one with a sense that although China is not an easy place to do business some things are definitely getting better. I think anyone who has been doing business in China for awhile would agree with this.

Here are some other book reviews:

Poorly Made in China
The China Price
China Shakes the World
The End of Cheap China


What doing business in China and baseball have in common.

What people are saying about Mulberry Fields
“I have read through quite a few of your blog posts and have enjoyed them very very much. We do business in China and face many of the challenges you describe. Much of what you write resonates with me and there are some very helpful tips” -a kid’s apparel company in Utah.

I have been doing a lot of reading on China blogs and in periodicals this week. As is frequently the case I see a lot of articles about how to effectively do business in China and examples are always provided about China ventures gone wrong. In all these examples the root problem is that the person did not know anything about China and just assumed that because they were successful in their own country they could duplicate their success in China. For example, there was an anecdote in a Harvard Business Review article this week about a successful NYC real estate developer who thought he could sell some high-end property to investors in China. After all China is now home to some of the world’s wealthiest individuals. The developer spent thousands of dollars on PR and even rented a large hall in Shanghai so that he could host a sales presentation. He then flew to China to make his pitch. Well, something went wrong because on the day of his presentation, only eight people showed up. Smart in NY did not translate to smart in China.

But it got me to thinking, why is it so hard for people, even really smart people, to understand and succeed in China? When I thought about this question the other day, the thought occurred to me that it is simply hard to comprehend something that you have little or no experience with. Even if that something has been described to you over and over again in the minutest detail, and you kind of grasp the concept, you really have to experience it yourself to be able to process the complexity and plan accordingly. There is a good baseball analogy for this. When you watch baseball on TV or in person you can effortlessly follow the trajectory of the ball as it leaves the pitchers hand all the way to the plate. It looks like the baseball is easy to hit. And I am sure many people who watch, but who have never played baseball, are thinking, “geez, that looks easy, why can’t he hit it ? “ But far from it. Hitting a baseball thrown at 90 MPH is generally said to be the hardest thing to do in sports. I believe it because when you are standing there at the plate that ball sometimes comes in so fast you literally won’t even see it. Belying its casual pace. baseball is in fact an incredibly difficult game.

And doing business in China is not an easy game either. I know that because I have been going there for 25 years and have the first hand experience of going to trade shows, meeting good vendors who turned out to to be very unreliable, meeting vendors whom I was not impressed with at first but who turned out to be solid, supervising production, inspecting orders, sourcing, getting good orders, getting bad orders, having vendors change prices after they have signed a sales contract, doing karaoke in Chinese with vendors, arguing with vendors, sitting for a factory for 3 days waiting for the rain to stop while a cancellation date on a PO slowly creeped up, etc etc. But there are many people who do not have this experience and, therefore, try as they might, they simply cannot comprehend the complexity of the culture and the sheer difficulty of the endeavor. When they do business with a supplier they met on a B2B site but have never met in person, and they fail to do any due diligence on this vendor and they do not inspect their order before it leaves China, it is just like they are watching baseball on TV and thinking it is an easy game.

So what is my advice to them? It is simple: go to trade shows in China, meet vendors in person, supervise your orders, inspect your orders, line up back-up vendors, get good orders, get bad orders, drink with good vendors, drink with bad vendors, argue with vendors, meet your vendor’s families, learn some Chinese, learn how to cook some Chinese food etc etc. In other words, get the experience. Or as the Great Helmsman himself used to say: 要想知道李子的滋味必须亲口尝一尝 ( yao xiang zhidao lizi de ci weir bixu qinkou chang yi chang) Trans: if you want to find out what a pear tastes like, you have to eat one.

I sometimes have what I call a “China Zen Moment.” This is when I see beyond specific topics like auditing vendors, product testing, trade shows, communicating with vendors, doing spec sheets etc etc and I am able to reduce China Sourcing to its simplest terms. Here are some of those Zen moments
How to win in China
China quality is not that bad
Doing business in China is easy
Don’t expect perfection
Locals too find the going difficult



Product safety standards – do your homework and due diligence

What people are saying about Mulberry Fields
“What you say is absolutely true about what you need to do in order to succeed in China.” – a company in Italy

There are many safety standards that a product must conform to if is sold in the US, Canada or Europe. Depending on your industry, your product and your customer’s specific requirements you might be doing any number of tests e.g. flammability testing if you have apparel or upholstered furniture, small parts testing for baby and kids items, lead, cadmium, phthalate tests for kid’s items and food related items, testing or fumigation for wooden product or palletized orders. And the list goes on and on and on.

When you are developing a product, make sure you know what the testing requirements are for that product and then pass on these requirements to the vendor early in the game so as to give them all the notice they need to get in compliance. Because China does not have the same strict consumer safety regulations that the US and Europe have your vendor may have to go outside his own network of suppliers to find an environmentally friendly supplier. This may take time and will cost more. A couple of years ago I was working on a kid’s bag and the PU straps on the bag had to be phthalate free. The vendor I was working with explained to me that not all the PU vendors he dealt with had phthalate free PU and that the minimums for this material would be higher than for regular PU. It was an obstacle but it was good to know this early on when we were still in the prototyping stage.

It is also important that you get your samples tested both in China and locally. Don’t rely on vendor assurances that their products are compliant, or that they have been tested. And don’t consent to use vendor designated product testing labs. Do it yourself. There are several big international testing agencies in China e.g. BV, SGS, Intertek and you can arrange with your vendor to have your product sent to the agency you choose. But also test product on your side with local product testing labs (most big cities have them). Make sure you tell your vendor that you are going to have the samples tested and that if it fails you will just lose more time. That should give them the incentive to do it right. Needless to say, all testing requirements should be spelled out clearly on spec sheets and sales contracts.


China vendor technology – what to look for

What people are saying about Mulberry Fields
” I REALLY do enjoy your posts and find them informative and helpful.” – a Wal-Mart supplier

Vendors love show off their latest equipment from Germany or Japan. Of course the more advanced your vendor’s equipment the better for you, until you consider that imported equipment costs much more to repair than local equipment and parts may take long to order. So you should ask your vendor what they do if they have a problem with a machine ? Can they get parts locally or do they need to get them from overseas ? And always ask them to demonstrate the machines for you. Just because they have fancy, state of the art equipment in full view does not mean it works. I have been in many factories where critical production equipment was broken or in a state of disuse. And I remember one printing mill in Shanghai that bought an expensive piece of machinery from Germany but didn’t know how to use it. So it just sat there ( for years I presume).

When you visit a factory it is always a good idea also to look at the office in the factory to see how the vendor is set up for communication. Do they have just one computer in the office or are there a few ? Are they new computers ? Good brands ? Is there a scanner ? Fax machines ? Telephones ? In short, pay attention to this because communication is so important when you do an order in China.

Finally, always make sure to ask your vendor about back-up power supply. Does the vendor have a generator on site? Power outages are a commonplace in China, esp in the summer. So you want to make sure your vendor is prepared for them.

Just a short list of things to look for when you visit a factory in China.



If you want to distribute your products in Japan, make them colorful.

What people are saying about Mulberry Fields
“A very interesting blog.” – a company in France

I got an email last month from someone who was not satisfied with their Japan distributor and asked me if I could help them find a new distributor. Although I mainly handle China projects I do get inquires about Japan distribution since I am based in Tokyo.

I wrote back to this person and told them that they need to understand the market where their products are being sold and then they have to ask their distributor some questions. This company’s product is an electronics accessory. Of course when I know that I think Akihabara, which is the main electronics district in Tokyo here. If you want an electronic component or accessory, Akihabara is where you go. So I advised this person to ask their distributor if the product was in stores in Akihabara ? If not, then that is probably not a distributor with a lot of reach in the electronics industry. I remember another distribution inquiry a couple of years ago for a US company that made kitchen apparel and they were not happy with their Japanese distributor. It turns out the company’s product was being “distributed” in Japan in one small store in Yokohma where it lay hidden on rack with other items.

I also noticed that the electronics company’s product does not come with many color options. But when you walk into an electronics store here you will be greeted with a rainbow of options. You will see I-phone cases in 100 different colors. For all its conformity, and there is a lot of it here, Japan is actually a very diverse and colorful place. Has their current distributor given them any feedback about their design ? A good distributor will always do that.

I have said it many times before when you do business in China or Japan, the more knowledge you have about local conditions the more successful you will be.

Here are some more posts about doing buiness in Japan ( because after all I do live here)

How the Japanese see the China business
Sourcing in Japan
Understanding local markets is the key to success



Registering your trademark in China. Is it always good advice ?

What people are saying about Mulberry Fields
“I have read through quite a few of your blog posts and have enjoyed them very very much. We do business in China and face many of the challenges you describe. Much of what you write resonates with me and there are some very helpful tips” – a children’s apparel company.

I was involved in a somewhat animated discussion last week with another China blogger regarding registering trademarks in China and the expense and efficacy of doing so. My position has always been that protecting one’s IP in China, although advisable, is complicated, time-consuming and expensive and therefore not for all companies when they first start doing business in China. The cost to register a trademark in one product class will probably cost you 3 to 5 K ( assuming you are having a western legal firm do the filing for you ), and it can take 2-3 years to get the ownership certificate. And even this may not be sufficient to protect you from “trademark squatters” who can be very savvy. Please note that when you register your trademark in one class it will cost you about $600.00 and this will give you protection in 10 sub-classes, or “goods and services” only. If you want protection in more sub-classes you have to pay per sub-class and the charge is $ 25.00 per sub-class. That sounds reasonable until you figure that in some classes there are hundreds of sub-classes. To take an example, Clothing is Product Class 25 and there are over 300 sub-classes everything from shirt pockets to collars. Therefore, if you wanted air-tight coverage on your apparel trademark in Class 25 and all sub-classes you are looking at upwards of $ 7500.00 ( not including legal fees). This is an extreme case of course but it gives you an idea of how expensive it can get. And make no mistake about it big companies do register their trademarks across all 45 product classes.

One reason companies should register their trademarks, the blogger pointed out, is if for no other reason than to allow their goods timely and safe export from China. Chinese trademark squatters can prevent your goods from leaving China if they show Customs that they own the trademark. China is a “first to file” country meaning that anyone can file your trademark there and be considered the legal owner if you have not done that first. The squatter will then ask you to pay a hefty “licensing” fee to use your own trademark. The fee may be so high that you have no choice but to refuse – and lose your shipment. It is a scary scenario and one you want to be aware of when you source in China. It does happen but to say it happens with any frequency to small importers might be stretching it. Most of the targets are name brands or big companies where the “licensing fee” can be exorbitant. The blogger himself said in a post in Dec of 2011 that his law firm gets a call every few months ( hardly an indication that his phone is ringing off the hook about this). There are a lot of small companies that source in China under their own label without trademark protection and they do just fine. Another China specialized IP lawyer I talked to agreed with me saying that trademark squatters are probably not interested in you if you are a “small fish” and he added that trademark protection is probably not worth the expense if you have a tight budget.

My bone of contention with the blogger was not with his advice that companies should take this “defensive” measure and register their trademark ASAP. I basically think this is very sound advice for a company in China that has the means to protect its exports there. Trademark registration is basically an insurance policy and a good one I think for companies, once again, that can afford it. But is this good advice for a small company on a shoestring budget in the absence of strong evidence that cases of trademark squatting are anything more than isolated incidents ? I am not so sure it is. 5 K would be a lot of money for me to spend on a “defensive” measure and I think it would be a lot of money for my clients as well. And that was my only point all along, namely that small companies on small budgets should NOT be led into believing that they are putting their businesses at tremendous risk if they don’t register their trademark in China immediately . But he would not back down and he made very clear how he feels: if companies do not have the money to register their trademark in China, he argued, they have no place doing business in China in the first place. Needless to say, I find that attitude extreme, a little condescending and just flat-out wrong.

Things got a little heated and we went back and forth for a couple of days. In my last reply to him I said I thought the best thing people could do if they were concerned would be to talk to as many people as possible – including several lawyers and US consular officials – and then make their own decision based on what they heard and their budget. There is also a lot of very useful information online about this subject. Buyers should educate themselves as well. Period.

Finally, small companies should keep in mind that according to the 2012 US China Business council survey on IP in China. 49% of American businesses who do business in China are only “somewhat concerned” about IP enforcement, as opposed to 49% who are “very concerned.” In other words whether you are worrying about your IP all the time or just sometimes, then you are no different than half the Americans ( and probably half the people from any country) doing business in China. So if you can’t register your trademark now, don’t worry too much about it. But get it done when you have the means.

Intellectual Property (IP) is of course a concern for any business with a proprietary design or unique product. Not just in China but in any country. Yet, China poses some real risks because it is a “First to File” country meaning that your patent or trademark is protected in China only if you file it there before anyone else does. If you are doing business in China and are worried about your IP then talk to several lawyers and/or your local Dept of Commerce officials and then make the best decision for your company and product. I have several blog posts about IP. Here they are

Non Disclosure Agreements NDAs
Protecting your IP
The cost to register a patent in China


The importance of sending your China vendors samples when asking them to quote.

What people are saying about Mulberry Fields
” I REALLY do enjoy your posts and find them informative and helpful.” – a Wal-Mart supplier

I have said this many times before but the best way to get an idea of your “true” production cost is to send the vendor an actual physical sample of what you are asking them to quote on. Product descriptions and images are helpful in giving vendors a general idea of what you want them to do and depending on the product in question may get you pretty close to the “true” production cost ( in some cases it will not). But there is just no substitute for sending the vendor an actual physical sample.

Sending vendors actual physical samples is a good idea for the obvious reason: the vendor can see immediately what you are asking them to do, something that is not always apparent from a photo and desc. But there are two more very important reasons why you want to send your potential vendor a sample:

1.) Seriousness of purpose. Sending a vendor a sample tells them you are serious enough about your inquiry that you are willing to spend $50.00 to send a package to China. Vendors are very busy people and they are probably asked to quote on multiple projects every week. If you throw a big project at them and ask them to quote on it they probably want to make sure that before they invest considerable time doing so you are serious about it. In fact, I have such a project now. It is a huge printing project and I have been reaching out to vendors with just specs and images (because of my customer’s budget and the sheer scope of the project he cannot afford to send samples to any but the most promising vendors. Perfectly understandable). Although my specs are very comprehensive – down to the gauge of paper and type of printing – I have already had six vendors ask me to send them some samples. I think they are looking at the QTYs – which are not huge – and telling themselves that before they do all the work that is involved they want to see how serious I am. So I have had to go back to my customer and advise him that we really need to send vendors something just to show them we are serious. I would add here that in fact one way I tell how serious people are when they come to me with a project is when I ask them to send be a sample. When they do send one I know they are serious in their inquiry.

2.)Respect. When you send vendors pictures and descriptions only, you are asking vendors to do a lot of work. They have to translate everything for engineers and then explain things to people and ask you for instructions as they build your quotation. Depending on the product in question it can be a laborious and very timely process. If, on the other hand, you give them a sample, they don’t need to translate anything. They can show the product to an engineer and there is immediate understanding. When you send them a sample you are telling vendors that you respect their time and want to help them out.

Of course it costs money to send samples to China while it costs nothing to email your vendor and attach some pics. But you should see that as one of the added, but necessary costs of doing business in China.

Sampling is such a critical part of the product development process because it tells you a lot about your vendor and also about your product design. I have written at great length on sampling. Here are some of those posts.

Paying for samples
Working with your vendor on product design
An overview of the sampling process



Setting product tolerances – look before you leap

What people are saying about Mulberry Fields
Your blog speaks to the many issues I have experience with when doing business in China” – a company in California

Anytime you have a product that being manufactured in China that relies on human labor or natural materials you need to give your vendors tolerances. If you are making a willow basket in China, for example, you cannot expect that each basket will be done to exactly your specs because willow is a natural material and the basket is woven by hand. Ditto for many textile products where natural fabrics are concerned and there is significant CMT ( Cut/Make/Trim) involved. And then you have to take into account product color. Natural materials react with and hold dyes unevenly and it is sometimes very difficult to match a color on a swatch. In short consumer goods are inherently imperfect. Because of this it is unreasonable to demand or expect perfection from your vendor or to impose excessively rigid production tolerances.

When you set tolerances, you should check to see if there is an industry standard. In some industries where many parts are made by automation there are globally recognized tolerances. In other industries there are no tolerances and tolerances will be set by the buyer. For example, going back to our willow basket, if the basket is meant to fit into a retail display box the overall product tolerance would pretty much be the inside dimensions of the box. As far as interior dimensions, assuming it is a gift basket, the tolerance would be the minimum which would allow everything to be fit into the basket. That that would be a reasonable product tolerance for a gift basket.

But setting tolerances is an art and should not be taken lightly. You have to find a tolerance that allows you to maintain your product integrity but at the same time a tolerance that is fair to the vendor and does not ask them to do the impossible. If you have extremely rigid tolerances, you run the risk of putting a strain on your vendor that will only have a negative impact on your production. Vendors will become frustrated, angry and at some point might just give up. For this reason if you do have a product that is handmade – or even partially handmade – do some research on tolerances. Don’t just throw out a number to your vendor without acknowledging the difficulty of the endeavor and a justification for your standards.