The Buyer – Supplier friendship

A vendor I know sent me an email the other day and told me they were doing business with a former client of mine. They said things were going well. It made me feel good of course, as I had introduced both parties to one another. But then as I thought more about it I realized that what is probably going to happen is that the first few orders will go well but then the vendor and my client will start to take each other for granted. And that is when then the problems will start. Something will go wrong with an order and the client, probably unfairly, will blame the vendor. It always seems to happen like this. So at some point today I think I will write to my client to remind them not to take their relationship for granted. I deliver this message all the time to my clients but for some reason it rarely sinks in. At fault I think is the propensity among western importers to view their overseas suppliers as nothing more than suppliers.

As I see it, however, a buyer-supplier relationship is a friendship. And when you have a friendship you have to invest in it to keep it going. In other words, you should never take the friendship for granted. Case in point: when I moved to Tokyo four years ago I made an effort to stay in touch with friends back here in the US via email, skype calls and Christmas cards. Some people reciprocated and some did not. Now that I am back in the US I am less inclined to get in touch with those who did not reciprocate.

And the same with your relationships in China, you should never take them for granted. On the buyer side, you cannot take it for granted that your supplier will continue to ship you product that meets your expectations. You have to meet your supplier sometimes, spend time with them, listen to the challenges they face in their business, cut them some slack on QC requirements etc etc.. And as trivial as it sounds remember them on their major holiday which is Chinese New Year. I don’t know one China vendor I have ever done business with who has not wished me a Merry Christmas or sent me a card. Yet I have never seen any US company I have worked with reciprocate by wishing their Chinese vendor a Happy Chinese New Year. That hardly seems fair and I am sure vendors do notice this slight. On the supplier side, a supplier cannot assume that just because you are their customer you will continue to give them orders. They have to deliver quality product to you each time, discuss problems with you, work hard to understand your business and the challenges you face as you try to deliver product to your customers in a very competitive market.

And of course the Christmas card is always appreciated.

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What do you do when you are confronted with the issue of Child labor ?

Someone wrote to me the other day telling me they were looking for a vendor in India because they had customer who did not want product made in China, because of the association of China with child labor. I can understand this because the customer is a Global Brand and if there were any association between the customer and child labor that would be very bad PR for the customer. I am not sure things are much better in India but I don’t know because I do not do a lot of business there.

I have seen a lot of child labor in China over the years. I think things are much improved there now under the commitment of the Chinese Govt, especially in the big cities, but if you go deep into rural areas you will inevitably see child labor in the factories or at the cottage industry level. In many cases it may just be a few kids running around the factory floor helping out their worker-parents ( more play than hard labor). In other cases it may be small children officially engaged in production. The best thing you can do in this situation is to mention it to your vendor but try not to sound too indignant. After all the US and other developed countries have their own history of child labor. The Chinese are well aware of this and if they don’t point it out to you can be sure they are thinking about it. . You can of course choose not to do business with a factory where you see child labor but depending on your product and the region where you are having it made you might have a hard time finding any factory that was in compliance with Chinese and International child labor standards. .

How do I handle child labor when I see it ? I will mention it to the factory boss and tell them it makes me uncomfortable.. Fortunately in China these days you can have these frank discussions with your vendors on issues like pollution, corruption, child labor etc. The reality however is that unless your orders are very big and you have a presence at the factory, the problem is not going to disappear. It will just disappear when you are there. If I am in China on behalf of a US or Canadian company I am working for I will mention what I see in my in my reports and advise the companies I was working for to consider child labor a very negative mark on the vendor. If we are in the process of vendor selection then the presence of child labor during an audit would be a good reason not to choose a vendor.

In the end though if you want to do business in China you just might have to put up with unsavory practices like child labor, for it is one of the harsh realities of doing business in the developing world. And remember there are two Chinas, the developed China i.e. urban China and the underdeveloped China i.e. rural China which is 60% of the country.

But make no mistake about it things are getting better. As the Government urbanizes more land problems like child labor will eventually go away.

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The San Francisco start up mentality does not work in China

I had an email from another San Francisco Start up company last week. You can easily stereotype these start ups and this one is no different. The employees are all in their 20s and 30s judging by the youthful, telegenic photos on their website. I detected a hint of hubris in the email I received which is not a quality you want to have when you travel or do business in China. The person who contacted me wrote:

“What I am really looking for is someone who has the connections can ensure we get what we are after and that the samples we see are what we receive as well as that the costs quoted are all inclusive and there are no ‘blind sides.” As you can see San Francisco start ups don’t attach much importance to grammar. This city moves too fast these days apparently to care about such trivial things as good grammar.

My first reaction when I read this is do they really think sourcing or doing business in China is that easy? If it were then thousands of US businesses, big and small, would not have failed in China over the past 30 years. I advised this person that the best method of ensuring that they get what they pay for is to have someone on the ground in China overseeing production from start to finish. But even then, I explained, there is no guarantee that what the vendor puts in the container will be what you the buyer will pull out of the container a month later. The vendor may have used sub-standard raw materials in production, or the product may not react as predicted to a new environment, something that may become evident only after it has been put in the hands of the consumer. I have seen this happen many times.

In short there is no way to ensure with a China order that what you see is what you get. That is an American way of thinking that really does not apply when you source product halfway around the world in China. All you can do is to think about reducing risk, and adjust your attitude about doing business in another country accordingly.

Not surprisingly I never received a reply from this company. But that is OK. I will let someone else deal with them.

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Don’t pay someone $500.00 to do a spec sheet for you. Do it yourself.

The other day I was looking at the website of a China sourcing company. This is a western managed company with an office in Shanghai and they offer the full range of China sourcing services, product development and design, sourcing, QC, logistics etc etc. But I was surprised to see that they charge over $500.00 just to do a specifications sheet for a customer. That is a shocking amount of money for something that is really pretty easy to put together. Making a spec sheet may take you a couple of hours, between taking and downloading photos, and in some cases photo-shopping them, and then getting all the product details in order. But it is not all tedious and in some ways can be a lot of fun. I personally enjoy making spec sheets.

Every good spec sheet should have the following info:

Product description including your company’s model or SKU
Product dimensions
Material content
Pantones ( to indicate product colors if applicable)
Label specifications
Packaging specifications
Testing requirements (if any)
Price (if quoted)
Target Cost (if seeking a quote)
Order QTY
Order QTYs in increments of 1000 or 5000 ( if seeking a quote)
Special Instructions ( there are always some)

A good spec sheet will include photos of the product from every angle possible, including perspective shots and ALL product dimensions should be indicated. Regarding material content you should be as specific as possible. For example instead of just indicating your product is made out of cotton you might need to indicate “cotton jersey” and then give the weight because cotton jersey comes in many weights (oz per linear yard) and vendors need this info to quote for you. When doing a spec sheet always work under the principal that no detail is too insignificant to be included.

A helpful tip is this: request that your vendor do a spec sheet as well once they have your product in hand.. They may include details that you have overlooked. Or they may not have included details/instructions that are important.

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