Whatever you do, don’t rush when you do business in China

I was talking with a client today about his China strategy. He is anticipating placing an order in China this fall although he has not decided on the order QTYs ( it depends on his sales of course) and we have not yet settled on a vendor (we have several candidates). A little background: His company sells to major drugstore chains in the US and he came to me last year because he was not happy with his current vendor and wanted a change. So we have found a few vendors and gotten some samples, some of which look very good. Pricing so far is also good. I can sense my client is very enthusiastic about his product and very optimistic about the growth of the company, He should be because he has a good product and has added some wonderfully innovative packaging. Yet, I thought it was useful to remind him of a few of things as follows:

1.) He should give himself plenty of time on getting set up in China. He should not rush into any relationship with an untested vendor. I must have said that five times during our call. Don’t rush.

2.) Do not promise your customers delivery dates without first confirming these with the vendor. There is a mentality among sales people who think they must have a “can do” attitude with buyers in order to get orders. Buyers exploit this mentality by asking for short lead times. Sales people say “sure, no problem” and then the battle is on with the factory in China to get the order out ASAP. And this is why problems happen. So I advised my client to check with the vendor before he promises his customers any delivery dates and then to add on a couple “safety weeks” to the vendor’s lead time. But my client is fortunate in that his product is in use all year around and he does not have to worry about hitting seasonal sales periods.

3.) Audit the vendor. I have not visited the facility of any of the vendors I have found for my client. They are as unknown to me as they are to my client. But I think it is essential to visit the main candidates before giving anyone an order. My customer is hesitant to do this because it is of course costly. He asked me if there were other ways to get an idea about the vendor, maybe using google maps. I told him credit reports, questionnaires, and photos may help give him an idea but the problem is you have no way to validate anything. It is simply risky giving an order to a vendor you had never visited. I suggested alternatives, namely hiring an inspection company or auditor in Hong Kong to visit the vendor or even asking a friend of mine in Shanghai, a China manufacturing consultant with 25 years experience in China, to go down and look at the factory. I am just trying to think of anything. My client said he would think these over. I hope he comes around because I see this as an absolutely necessary step when you do an order in China.

So once again, when you do business in China it comes down to patience, patience, and more patience. And when you have exhausted your patience, you need to be patient still.

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