Four Maxims that will help you succeed in China

Sometimes I have found that I come up with catch phrases when giving advice to people who want to source in China so I thought I would publish a few of these here today. They are easy to remember and reflect some valuable wisdom acquired over the past 25 years.

1.) The best way to work with a problem supplier is to avoid them altogether. I get emails from people all the time who are having problems with their suppliers and it usually comes out that the person did not really research the supplier fully before giving them an order. In many cases the supplier is just someone the person met on Alibaba or another internet site. I often think the best way to find a good supplier is to eliminate as many bad suppliers as you can. You do this by doing your Due Diligence (DD).

2.) Work with your vendor, not against them. Too often people who source in China have a mindset that their Chinese suppliers are there to serve them and that they (as the buyer) can dictate the terms of the relationship. Wrong. Mutual respect is the basis for any successful relationship in China and you have to show your vendors respect at all times. When you have problems don’t look for blame. Look for solutions (this reads like another good maxim in and of itself).

3.) When doing business in China you need to be patient. And when you think you cannot be patient any longer, you still have to be patient. Patience is the one virtue you need more than any other when you source in China. When you rush your orders, rush your vendors that is when problems happen. So give yourself plenty of time on your orders. And, more importantly, give your vendors time.

4.) Be Calm, Be Clear, Be Polite, Be There. I had a customer once who had a lot of experience in China, having sourced there for years, but she found that this rhyme really summed best what it takes to succeed in China so she printed it out and put it over her desk. If you are sourcing in China, you should do the same.

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Innovation is nothing new in China

Shaun Rein, the author of The End of Cheap China, a book I reviewed on my blog a couple of years ago, sent me an email today. In the email he was publicizing his new book about innovation in China entitled The End of Copycat China: the rise of Creativity, Innovation, and Individualism in Asia. The Book will be available in the fall.

I enjoyed The End of Cheap China ( review here The End of Cheap China ) and I am sure Rein’s new book will be just as good. Because you know what I agree with Shaun Rein. I think there has always been tremendous innovation in China. What is the old phrase Necessity is the mother of invention. Well no where is that more apparent than in China where decades of poverty have forced people to be innovative in every nook and cranny, something we do not see in developed countries.

One of my favorite examples of Chinese innovation occurred about four years ago on a trip to Guangzhou. I had broken a pair of glasses in Tokyo and could not find anyone in Tokyo who could repair them. I must have gone to five or six optical stores but no one could do it. All that wonderful Japanese innovation could not mend my $ 200.00 pair of glasses. Fortunately at the time I was headed to China for the Canton Fair and I knew if I took my glasses I would find someone there who could fix them. SEven years of living in Shanghai taught me this: if something is broken the Chinese can fix it. And so I packed a pair of broken glasses with me. One day after the fair I took the glasses to an optical store in Guangzhou and they told me 没问题 ( trans “no problem”) and asked me to come back in an hour. When I returned my glasses were fixed. The frame had been broken and while the Japanese looked at the frame and said it could not be fixed and just gave up at that point, the Chinese solved the problem by looking for a solution in the part that was not broken, the lens. What they did was to drill holes in the lens and then attached a wire frame to the lens. In many ways it was a typical Chinese solution, crazy but functional. And I have seen it many times over the years.

Of course these were just glasses and I can not use this one example to make an argument that China is on a par with the west or Japan in terms of innovation. I do not think it is. But the innovative spirit is there and China is catching up to the west. In fact, a recent study by the University of Michigan and Peking University makes the point that China has already surpassed the United States in innovation in Science and Engineering. The study was published in the Proceedings of the National Academy of Sciences in the United States of America. Reading this study critically one can question its objectivity since both of the authors are Chinese . But there is some truth to their findings otherwise it would not have appeared in such a prestigious journal. At least that is how I would look at it.

Why then China’s bad rap as a country and culture that is imitative and not innovative ? I think much of this misplaced attitude is owing to inherently negative views of China that have prevailed since the Cold War ( and perhaps before). Just as 40 years of anti Western propaganda in China have led most Chinese people to have an unfavorable view of the West, especially the US, so have four decades of anti-China propaganda in the US taken its toll in terms of how Westerners look at China.

But this is changing because China is innovating like never before.

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Book Review: The End of Cheap China

A few pages into this book I was skeptical about it, beginning as it does with a scene in a Changchun hotel many years ago where the author is being hounded by a woman of ill-repute. Hardly how a book on the Chinese economy should begin I thought. But in fact the book gets better.

Shaun Rein is a half-Chinese, half-American, Harvard educated consultant who has worked in China for many years and who is a frequent contributor to the WSJ, MSNBC and Bloomberg. There are valuable insights in this book on evolving consumer attitudes, Chinese manufacturing and an especially riveting chapter on China’s food safety. According to Rein many Chinese, and especially those with kids, are very concerned about food safety, as they should be. If they don’t make trips to Hong Kong to buy special foods they rely on western supermarkets and fast food chains in China, with their sophisticated supply chains, as safe havens. And so Rein thought as well as he took to the habit of patronizing his local Subway sandwich shop in the financial district of Shanghai. For eight years, Rein went to this outlet for lunch only to discover one day that it was not a real Subway store. Subway had apparently known about it and had even won a decision in a Chinese court but the fake store continued to operate for years. In other words, it makes no sense to be paranoid about your IP in China, a point I am making all the time to my clients and in online discussion boards about China business. If Subway cannot prevent IP infringements, then small businesses certainly cannot. The chapter on food safety is ironically entitled “Why Chinese consider KFC healthful.” Of course Rein’s account was written before KFC’s problems in China came to light. I hope for Rein’s sake he did not eat there as well.

As critical as he is of some of China’s changes, Rein nevertheless has a very positive view of China’s vast potential. This probably is owing in part to his mixed Chinese heritage, and the fact that he has married into a prominent Chinese family. But he has also lived in China for some time, speaks the language, and has seen first –hand the transformation of post-Mao China. There is a strong tone here on China’s development, from its entrepreneurial women to its mega malls and billionaires. The author seems critical of those who don’t see China the same way he does. But who can blame him. Anyone who has been travelling to China for some time knows what an incredible place it is. And of course this is why China is becoming more expensive.

The only criticism of this book is that it does seem to portray Shanghai, where Rein lives and works, as the microcosm of China, which it is certainly not. The challenges faced by a US owned and operated furniture company in Shanghai, as detailed by Rein, are not the same challenges facing furniture makers in other provinces. Prices, wages and the cost of manufacturing in Shanghai and other big cities in China are rising to be sure, but there are still many areas of China that are as yet untouched by development and look like Shanghai did 20 years ago, when you could live comfortably on $ 60.00 a month.

But overall, this is a very readable account of modern China ( or at least modern Shanghai) and recommended to those who are interested, travelling or doing business in China.

Here are some other book reviews:

Poorly Made in China
The China Price
China Shakes the World
One Billion Customers

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