There was an article in one of the China English language papers the other day about the challenges Chinese companies face when they do business in America. Many Chinese companies are doing well here in the US but about 40% of companies are losing money. One of the main reasons cited for the failure of these companies is the lack of “cultural intelligence.” Cultural intelligence may be defined as one’s ability to understand the culture they are living or working in. Because they increasingly see the importance of cultural intelligence, more Chinese companies are trying to hire locals when they do business abroad as opposed to bringing staff over from China.
Cultural intelligence is also a trait you need when you source in China. A case in point is the concept of saving face, a concept which is best understood as maintaining ones dignity. You really need to understand the concept of face when you do business in China, or other countries in Asia for that matter. But understanding this concept is not easy when you come from a country, like the US or Canada, where admitting mistakes openly is considered a virtue. In China, on the other hand, people are not wont to admit mistakes because it is embarrassing to do so. When you are doing an order in China and mistakes happen your vendor will most likely not tell you about them because they do not want to lose face. It is up to you to discover those mistakes with constant supervision and/or to affect such a relationship with your vendor that they will gradually come to be candid about their mistakes and work with you. If you don’t understand all this when you source in China, in other words if you do not possess this kind of cultural intelligence, you will almost certainly face problems at production and delivery time. What then can you do? Well, always make sure you have someone on your team who has some advanced understanding of the country where you are sourcing your product. Ideally you want someone who has lived there and speaks some of the language. This will significantly reduce your risks when you source overseas.