How to pick a China Sourcing company

I had an email from a South African company last week. They were reaching out to me to help them source self-balancing electric scooters, those cool scooters you see when you walk down the street in any major American city nowadays.  It just so happened that the company emailed another sourcing company at the same time and as they failed to bcc the email recipients, I could see the other company. Out of curiosity I looked at their webpage and saw that this is a Chinese sourcing company based in China.  As is so typical with China based sourcing companies, this company promises that the importing process will be cheap, fast and reliable, that is as long as you use their service. The website is full of information but when you read much of it you realize it does not say much.  For example there is a tab on “how to import furniture from China.”  It looks promising but when you click on the tab the gist of the lengthy text is that if you want to import furniture you need to find a good supplier.  And that’s all. There is nothing about the myriad of problems associated with sourcing furniture in China e.g. a factory’s drying facilities, the quality of hardware and lacquers, fumigation certificates  etc etc, a few of the things that come to mind when I think about importing furniture from China. Much of the text is cast in ungrammatical language and when they advise you to watch out for scams they spell it “scums.”  They say they have 6000 suppliers in their data base.  It looks good but how many of these suppliers are active suppliers of theirs they do not say.  I suspect very few. This is the kind of China sourcing company that often comes up when you do an online search.  But it is not the kind of company I would advise someone to use.

The kind of company I would recommend using is a sourcing company that spells out clearly the risks of sourcing from China.  Such a company I came across a couple of weeks ago.  They are located in the Midwest and the owner is a Chinese lady who has been helping US companies source industrial products in China for 20 years now.  There is a tab on the website of this company labelled “essential China advice” and it pretty much spells out the obstacles that one encounters when sourcing in China.  I read through it and I think it is excellent in terms of the advice it offers e.g. anticipate mistakes before they happen so you will be in a better position to deal with them when they do happen, if in fact you cannot circumvent them with adequate foresight; Do not make assumptions about your China partners and/or China orders but be on top of everything at all times; Don’t be in the habit of taking big risks; Play by the rules in China. And much more advice along these lines.  After reading this I come away thinking, wow, doing business in China is costly, challenging and there is no guarantee of success, what I knew all along, but what so many people do not know when they contact China based sourcing company and are told the process is easy. Here is the link to the company Good US based China sourcing company

In short when you are looking for a China sourcing company, don’t go with the people who tell you it will be easy. Go with the person who tells you it will be difficult and that you will need to stay the course, no matter how difficult.  And that you may not always succeed.  Go with the person who tells you that you will sometimes need to show up in China to meet the people who are making your product and helping you grow your business, and not those who tell  you that you don’t need to go to China and that they will manage everything for you.  In other words, when looking for someone to help you with you China sourcing use your common sense.

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When you go to China, drink the water

My Toronto client stopped in Tokyo yesterday on his way to Shanghai and we had dinner. This is his first time in China and so I was giving him some last minute advice. He said he had been told by someone that he cannot drink the tap water in China and that even bottled water can be fake. He seemed to be somewhat concerned about this and I told him not to worry. I told him that no one drinks the tap water in China, not even the locals, unless they boil it first.

As far as fake bottled water, yes, maybe it happens but he should not be concerned about it. He is staying at a western chain hotel in Ningbo and there he should be able to stock up on legit bottled water and carry a few bottles with him when he is out during the day. Vendors will give him bottled water as well and he should drink it without worrying about where it comes from. I told him that at no point should he give voice to his concerns about safe water in China because the vendor might interpret that as sign that my client was looking down on China. I then related my experience of travelling to China with a colleague who asked the vendor about the ice cubes in her Coca –Cola and whether they had been made with bottled or tap water. She had arrived in China with very negative impressions of China to begin with and did not heed my advice to act politely. The vendor did not react favorably, I found it embarrassing and let’s just say it did not help an already strained relationship between our two companies.

As I told my client 入乡随俗. ‘ru xiang sui su’ That’s Chinese for “when in Rome do as the Romans.” Or you might say, when in Rome don’t complain to the Romans about the Roman water.

Kitchen Anhui FE

Book Review: China Goes Global by David Shambaugh

What people are saying about Mulberry Fields
“I have already learned a great deal about China and your business through your website and blog posts. Very impressive.” – a children’s products company in Toronto

In 1990 I moved to Pudong, a farming area on the eastern bank of the Huangpu River, the river which divides East from West Shanghai. This was a year before Pudong was declared a Special Economic Zone and I was one of only three foreigners living there at the time. 23 years later Pudong is China’s financial capital, boasts several of the world’s tallest buildings and it is home to many global companies. According to a 2011 China census there are now about 50,000 foreign residents in Pudong. So nowadays when people talk up China I am inclined to agree because I have seen the change first hand

In his book China Goes Global, the Partial Power, David Shambaugh, a China expert at George Washington University, acknowledges China’s epochal metamorphosis from one of the poorest and, some would argue, insignificant countries in the world to one of the wealthiest. He calls this transformation, as many have before him, the “big story of our time.” Yet Shambaugh does not subscribe to the hype about China’s global dominance, either present or forthcoming. He writes: “Some observers have already proclaimed that China will rule the world, This prospective is profoundly overstated and incorrect in my view. ……China has a long way to go before it becomes, if it ever becomes a true Global power. And it will never rule the world.”

Shambaugh argues convincingly that China’s global presence nowadays is in his words “shallow.” Not only does China not have strong international alliances, say the way US and other western Countries do ( Chinese strongest alliances are often with closed failed states like North Korea, and Russia), but China ranks very low on many surveys which measure a country’s global standing and effectiveness. Where other nations are committed to international humanitarian causes, the sole purpose of China’s global undertakings Shambaugh argues is to bolster its own economy and it seldom if ever takes initiative in solving global problems e.g. environmental problems.

And the Chinese economy is not what it seems according to Shambaugh. China’s global dominance in exports is largely owing to Chinese Government policies which have artificially given Chinese makers an advantage over manufacturers in other countries e.g. currency manipulation that keeps the RMB undervalued and subsidies of SOE ( state owned enterprises). Shambaugh also argues that China;s main exports are low-value consumer goods and that China lags far behind real global powers like the US and Japan in terms of exporting financial services and high value products. All of these are valid criticisms.

One reason that China has failed to export its financial services sector to other countries is that management in Chinese companies is often mired in inefficiency and lacks a true global mindset. And this explains why so many of China’s international Mergers and Acquisitions – a lot in recent years – are failing. I would have to say that I think Shambaugh is onto something here. Although I have seen China vendor performance improve over the last 20 years e.g. vendors are more upfront about their capabilities than they used to be, working with China vendors is half of the time an exercise in frustration. Vendors still refuse to take responsibility for a mistake, think nothing about misleading customers and if they do not like the project you are offering them they will simply not reply. In my own dealings with vendors in China I often feel that I am dealing with the same people I was dealing with 20 years ago. Progress can be very slow.

As I near the end of China Goes Global I find myself thinking back to a visit to Guangzhou a couple of years ago. I was standing at my hotel window one morning admiring the Guangzhou cityscape which seems to grow taller with each visit of mine to that city. On the expressway below me I spotted a car backing up on the shoulder of the road, an inherently dangerous maneuver. Obviously the driver had gotten off at the wrong exit and rather than get off at the next exit and go back, they had decided it was easier to back up on the expressway. I saw this vignette as being very emblematic of modern China: Progress all around but prevailing attitudes and customs which belie that progress. And this is Shambaugh’s point. China changes but it remains the same.

Still, in the end I am not sure that Shambaugh is not being a little reckless with his claim that China will never ‘rule the world.’ When he writes this I cannot help but think back that day in 1990 when I stood on the main road in Pudong and waited for over an hour for a bus that was not dangerously overcrowded (seven busses in all). If someone had told me as I waited on the dusty road where bicycles outnumbered cars 500-1 that in a space of 20 years Pudong would be one of the financial capitals of Asia ( where cars probably now outnumber bicycles 500-1) I would not have believed them. But it happened. So if China one day “rules the world” or does not, only time will tell.

Here are some of my other China book reviews:

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