Three useful tips on doing business in China

I was reading the China Business Review the other day there was an article about protecting one’s IP in China.  The article was written by the founder of a small company who took his production to China in 2009 and who has experienced the ups and downs of overseas manufacturing. Although the article mostly details the challenges in finding a Chinese partner who is going to respect your IP, there is a lot of useful advice that pertains to sourcing in China as well.   Among the valuable lessons imparted in the article are as follows:

  • Confirming that your partner has the expertise to do your product. I think this is good advice. Too many people just assume a vendor can do a product because the vendor has assured them they can.  And how do you confirm ? Of course samples are very important and you never want to go with a supplier that cannot give you a near perfect sample.  But you also need to visit your prospective supplier’s facility to make sure they are not simply subcontracting your order out and that they have the capacity to do your orders.  And remember good samples is only a start. You need to ensure that your vendor will sustain your quality standards during production. And the only way to do this is with an inspection of the goods before they leave China
  • Clear and frequent communication.  The author of the article details how some of the poor prototypes he ordered early on were not as much the fault of the Chinese factory as they were the fault of his company who often provided insufficient product details.  This rings very true.  In fact, most small companies that source in China tend to omit important product details, simply because they do not understand their own products and/or are assuming that vendors will fill in those gaps on their own. As I often advise people, never make assumptions when you are doing business in China.  Tell your vendor everything.  And regard communication with your vendor as perhaps the most important aspect of your relationship, equally as important as cost and quality.
  • Have someone on your team who understands Chinese. The author hired a translator for their meetings in China. However, when 20 minute conversations in Chinese on technical and legal issues were being reduced to 30 second summaries they decided that far too important content was not being delivered to them.  They saw the need for a company employee who understood Chinese.

Here is a link to the article. China Business Review article 

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Some tips for first time China travelers Pt. 2

Travelling accessories

Make sure you buy a fanny pack for your wallet and passport.  There is very little violent crime in China but pickpockets abound.  I have known at least one person who had their passport stolen and she had to wait two weeks before the US Consulate could arrange a replacement for her. So be careful about this especially in crowded areas.  Fanny Packs are the way to go. Check with your airline regarding luggage restrictions and take over a half-empty suitcase if you can. You will do a lot of shopping in China and will need the extra suitcase for your return trip home.  Also make sure to take an adapter set with you.  You may need to use your hair-dryer or recharge your digital camera. China uses 220v and there are several types of plugs in use in China so you should buy an adapter set instead of a single adapter.

Food & Water

The restaurants in the hotels can be quite good. But they are expensive.  You will save a lot of money if you eat outside your hotel.  The food can be just as good and you will experience the thrill of eating in a real Chinese restaurant.  There are usually lots of restaurants around the hotels and these are recommended as they tend to be a little friendlier and may very well have menus in English, given their proximity to the hotels.  But do yourself a favor and try to get out of the hotel to eat.  The one exception is Breakfast.  The Breakfast buffets in the western style hotels are wonderful and a great way to start your day in China.

The water is fine. Bottled water that is.  But only drink the bottled water that you have bought in a drugstore chain or hotel kiosk. The reason ?  There is fake bottled water in China too.  And make sure not to complain about the water or food when you are in China.  This will not sit well with locals.

Taxis  

Getting around by taxis is cheap.  But trying to hail a taxi in a big city like Shanghai or Guangzhou can be a challenge.  And even more so if you are a foreigner.  Many cab drivers will not pick up foreigners because they know most foreigners cannot speak Chinese and you can easily spend an hour or two trying to hail a cab around rush hour.   So choose a hotel that is near a subway or public transportation line or hire a guide to take you around.

Hire a guide  

If you are going to China for the first time and will not be on a group tour then I would highly recommend trying to line up a guide beforehand.  One way to do this might be to look on Craigslist for the city where you are headed to see if there are some students offering guide/interpreter services.  A quick check of Craigslist Shanghai shows plenty.   You may be able to interview some candidates on Skype and make a decision that way.  Needless to say, you do not want to pay anyone anything before you have met them.  You can also ask the Concierge where you are staying if they can recommend a guide.  But finding a guide on your own on CL is probably much cheaper.

Keep your complaints to yourself  

In China you will encounter a lot of situations that will make you shake your head.  But at no time should you get angry or articulate your dissatisfaction to people.  The one exception would be in the hotel where you are staying. In short, tell yourself not to be an Ugly American when you travel abroad.

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Some tips for first-time China travelers Pt. 1

I have talked to a few people lately who told me they are planning a first trip to China.  Although I have written about first trips to China before these posts are more focused on first-time vendor visits and I have really not written a post about first-time China travel for the general traveler.  Accordingly, over the next two posts I will talk about travelling to China.

Best time to travel to China

I have always enjoyed travelling to China in the Spring and Summer. There are a lot of tourists at this time but generally that means that the service industry is in high gear and you will encounter fewer problems.  There are also no major holidays in China during the summer. The time to avoid China travel is during major holidays because transportation hubs are crowded beyond belief.  Major holidays that come to mind are Spring Festival ( Jan Feb), National Day ( Oct) and May Day ( May).  Don’t make the mistake of looking at the Calendar and thinking these holidays last for a day or two e.g. May Day. In fact, holidays in China can impact local transportation for a week or two, and even longer.  So a good rule might be this:  Don’t plan travel in China that a month before or after a major holiday. Check this list carefully and avoid travel in China around these times. China Holidays

Booking  your flight

The flight to China from overseas is lengthy and can be exhausting. For example, it takes 12-13 hrs from San Francisco to Shanghai and 15-16 hrs from NY to Shanghai.  So do yourself a favor and try to book a non-stop flight.  If you stopover in Tokyo, for example, you will have to get off the plane, go through transit security and then get back on the plane. This is not something you look forward to after having been on a plane for ten hours.  The best carriers are Cathay Pacific, China Eastern, China Airlines.  In fact, you may get better service flying the Chinese airlines than the other major carriers. A case in point: once  I was on a Japan Airlines flight that was forced to wait on the tarmac at the airport in Guangzhou for four hours during a thunderstorm. The pilot complained that some of the Chinese airlines had been allowed to take off but the Japanese carrier was made to wait. After that experience, when travelling to China from Japan I always made sure to book China Eastern.   

Selecting a hotel

Hotels in China age fast. Travelling to Guangzhou for the Canton Fair, I used to stay at the Ramada Plaza.  Unlike the Ramada chain in the US which is tacky, if nothing else, the Ramada hotels in China are first class, five star hotels.  And the Ramada Guangzhou was no exception.  It was a beautiful hotel, first class all the way when it opened in 2007 and I looked forward to staying there over the subsequent 3-4 years whenever I traveled to Guangzhou.  However, after a few years I started to notice that the hotel was beginning to look run down; tiles were coming off the floor, the gym which used to be open 24 hrs a day was now open just a few hrs a day,  chain smoking locals seemed to outnumber sophisticated international buyers in the lobby etc etc.  The transformation was noticeable.   So see how old the hotel is. If it is more than 10 years old there are likely issues..  The newer the better.  Opt for a Western Chain, Sheraton, Hyatt, Holiday Inn, These hotels are much nicer than their American equivalents. They are all western managed and the services tend to be extraordinary. You will also profit from the use of an airport shuttle. Arriving in China for the first time after a long flight can be overwhelming and you will appreciate the airport shuttle. Don’t overlook this.  Regarding Chinese hotels you will not get nearly as nice service in a Chinese managed hotel, the exception being the historical Chinese hotels  e.g. Peace Hotel in Shanghai,  Peking Hotel in Beijing. 

Finally, one more tip is to choose a hotel that is within walking distance to a metro or bus. In this way, you will not have to rely on taxis to get around.  The metros in China’s big cities are very user-friendly and have announcements in English. .

Applying for your visa

Once you have your itinerary planned and tickets and hotel booked you need to go to the Chinese Consulate or Embassy in your area and apply for a visa.  There are many categories of Visa so you have to make sure you apply for the appropriate category.  Citizens from certain countries are exempt from visa requirements so be sure to check all this carefully.  Visas are valid only for a limited time so make sure you have looked at your schedule carefully.  A visa approval generally takes no more than a week and there is an expedited service. You should also run your itinerary by a local travel agent.

Here is the link to the visa page of the China Consulate in San Francisco. All visa categories are listed here.  China Visa types

Learning some Chinese 

Don’t make the mistake of going to China not being able to speak some Chinese.  If you are planning this trip well in advance, as you should, your preparations should include a course in Chinese, whether that is online or at your local adult school. Your trip will be so much more enjoyable if you are able to communicate, even at a very rudimentary level, with your Chinese hosts.  And you will probably enjoy better service all around if you attempt to speak some Chinese.    At the very least learn how to say thank you and perhaps some weather terms. And if you really want to impress your hosts learn how to write a few characters.

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The need sometimes to take a break from an idea

An entrepreneur from Singapore, Mark, has been emailing me over the last two months with an idea for a new product. This is a piece of furniture and I think would do very well in the industry he has targeted it for, the hospitality industry.  However, the product design is so complex that I have advised him this would only work if he simplified his design, not only to reduce the burden on factories for sourcing parts and contracting out parts of the manufacturing, but also to minimize shipping and end-user assembly.  I told him that only a large company with extensive manufacturing and distribution resources could pull of the product as it is now. He agreed and has spent the last month trying to simplify his design.  The other day though he emailed me and told me the project is on hold because he has realized there are too many issues.  He said he is focusing his time now on an apparel project and is headed over to China this week.

I was glad to hear this and think this is a good lesson for entrepreneurs. Building a product in China and then getting that product to the US and in the stores here are two different things.  As I told Mark, all it takes is one defective rivet on a unit bought here in the US and he may have a very expensive return on his hands. This is after all a big piece of furniture. So he had better wait until he has 100% confidence in his product or until he has the means to process returns at minimal cost to himself.   And these are the hallmarks of big companies that profit from economies of scale.  Not small ones.   Just look at IKEA and how easily they process returns.  You can return anything to them and they still make money.  Small business, on the other hand, can lose a lot of money if they don’t handle product sourcing correctly.

But as Mark said he has not given up. He is just going to focus on something else for the time being. Who knows but maybe the apparel project will go so well that he will be able financially to revisit the furniture project.  Or just stepping away for a while may lead him to look back at the furniture product to see ways it can be improved and made feasible, what he was not able to do when thinking about it night and day.

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