Recent Chinese Negotiation Tactics: Translated!

The following is a list of tactics presented by managers, bosses or engineers to me in meetings that we had regarding rejected product with a couple of large factories (more than 600 employees each) over the last month.  The quotes and the “translations” are from meeting notes that I took (to make sure positions and options don’t change later on (and they quite often do)).  By the end of the meeting with the second factory I realized that I was hearing some of the same things from each factory—and many of them I’d head before from others too.

1.    “We have a lot of pressure from our boss to get this product moved.”

Translation: “We are under internal (financial) pressure, by our boss, to get the product out the door, or we may lose our jobs.”  But instead of fixing the problems the position most often chosen is to take a hard line with the client and get the product sold, more or less as is, rather than spend more money to repair/replace it.

Some times this is not as bad as it may initially seem—you now have a few folks whose jobs are very dependant on your satisfaction.  You have the opportunity to now show them how it’s in their best interest to meet your standards (and move their product).  A starting point is often convincing them that you really do want the product.  For western buyers going to this level maybe a “duh! Of course we want it” experience.  But for Chinese factories who are often burned by buyers who can’t pay for orders this is a very necessary starting point.  With the stink that you probably just threw over product quality, they are honestly unsure if you’ll really take it (late and substandard as it is).  Once these managers realize that they can keep their jobs if you’re happy you’ve essentially got some people working for you on the inside.

2.    “We did our best.”

Translation #1: “We’re not exactly sure what you’re complaining about—this level of quality has been fine for other clients (that didn’t do their own QC).” What this boils down to is either the factory over sold their abilities in the bid process or they underperformed in the production process.  Of course, neither is acceptable.  Further, I almost always doubt this claim because usually reworked product, samples and some of the production all met the contracted standards.  So if they can do it some of the time, the problem is QC and the management of inline processes in which case the people you are talking to are most like the ones directly responsible (and the ones least likely to want to admit it).  But even if they do admit it, this doesn’t mean that they are willing to or have the ability to fix the problems (in this case sub-standard product).  Which is why there is a second translation.

Translation #2: “This is as good as it gets from us.” Just because factories have some international experience/clients and have the same machines that you’ve used back home does not mean that they can consistently achieve the same results.  Often, specifically because of where the blame sits, factories are completely unwilling to redo product that is “just slightly off.”  Remember, going from 85% approval to 95% approval is typically much easier than going from 95% to 97.5%.  If you’re already at your factory’s threshold point pushing them may not be worth for either of you.

3.    “We’ve already spent a lot of time and money to fix it.”

Translation: “We’ve have used up our limited amount of boss-given leeway to redo your product; the costs of doing any more work will be taken out of our salaries/bonuses.”  You will never get past this obstacle unless you move up the corporate ladder and get to someone who can both make money decisions and override the managers’ objections.

Sometimes you need to work with the people that you’re given and sometimes you need to go over their heads.  It’s a tough call, and I’m second guessing myself a lot as to when to piss people off and when to work with them—because that’s really what going over their heads means; you’ve decided your quality is more important then their face.  And while it is to you, it’s most likely not to them.

The difficult part about going up the ladder is that the higher you get, the less the people know about your project (and the more they rely on the people you’ve diss’d for information).  Of course, one word from the boss and you can get all that you asking for too.

4.    “The rework is not very good and we were worried about this before we started.”

Translation: “This is not our fault, you rejected it and asked that we fix the problems we thought were really non-issues in the first place.”  Of course the replacement of rejected product was a choice too, and was what most clients want, but what factories won’t due unless they are under legal pressure to do so.

This is an attempt at managing your expectations. Expect to hear this just before doing some QC on re-work.  Often, when the rework is done right, this can also be interpreted as humility and/or an attempt at preserving face.

5.    “If the client had agreed to these standards in the beginning we could have avoided all the arguments.”

Translation: “See, we told you that you were too strict!”  This is the classic transfer of responsibility for delays to “unreasonable” client demands rather than poor internal QC.  Never mind contracted standards, when things go south what can actually be done becomes the real standard.

We hear this all the time as we’re finalizing shipments—original standards can’t be met, we battle for all the rework we can squeeze of the factory and then settle for “as good as it’s going to get” and then the factory says something like this—“see we told you it was already good enough.”  Implying that actually trying to achieve the contracted QC standards was a stupid and unnecessary waste of time on my part.  Silly me.

6.    “We didn’t know this was going to happen when we did X rework.”

Translation: “Your client’s request for rework is the source of this new problem (and additional expense), not anything we did.”  Probably more than any of the comments listed, I hate this one the most.  Why?  Because it means there are now new problems, and new problems can turn a late project into a really late and expensive headache.  Cost can really rise any time retail packaging is ruined by reopening/repackaging, for example.  This is never what you want to hear—it almost always means that you are back to square one in your resolving-concerns-negotiations.

This also means that as little as possible effort (and planning/forethought) went into the rework process; and that’s what’s most frustrating about this.  With just a little preparation or even an honest desire to do it right the second time this can almost always be avoided.

For example, we had to get a factory to remake large plastic lids for a client’s cooler project.  The factory had to go into their own pockets for the money to replace a full 50% of the order and what happened after the new lids were made and painted?  They put them in $0.03 plastic bags before they were dry and ruined the finish on 20% of them!!  They had to buff/polish and repaint hundreds of lids because someone just didn’t care enough to check and see if the paint was dry.

7.    “We’d really like to sell the entire quantity.”

Translation: “We expect that you’ll buy the entire ordered quantity regardless of your problems with quality.”  This is another tricky situation.  If you agree to buy everything, and you may have too to avoid losing deposit money and/or current product, you’ve got to both manage rework and control the rejected product (so that you don’t see it on eBay later on).  If you don’t agree to buy it all the factory may just take a loss on the project and recycle it (e.g. sell to another “trading company” that will sell it and share the profits).

Asking a factory to rework 100% of an order (or even 50%) and honestly letting them know up front that you’ll still probably reject 10-20% of it leaves them with very little incentive to help you out.  There are times when it’s prudent to be quite.  If you play your card right you may get the final rejected qtty’s offered to you at a discount—you laugh.  I know, you didn’t want it in the first place and now that the whole order is sub standard why would you want an additional 10% that’s really substandard?  Why?  Because sometimes that the best option.  Getting out of a bad agreement by taking everything with you and not leaving any sellable product behind can be a very good thing for you.

My definition of Chinese Cooperation: Paying more to get less than you originally agreed to and being honestly happy about it.

8.    “This is good enough for the Japanese.”

Translation: “As everyone knows, the Japanese are the end all be all of QC; you’re being unrealistic in your quality expectations.”   You know, for a country that openly hates the Japanese, Chinese people sure respect Japanese work standards.  At least they do whenever we reject product.  I have to admit, I’m not sure that Japanese standards are as great as they are cracked up to be.  I mean, if they would, on a regular basis, accept our rejects then they’re actually pretty low.  Or…it could be that the factories are overstating their indignation to get us to back off of our QC demands.  No, couldn’t be that.

Regardless of what other clients will or will not accept (I really don’t care), my opinion is that your standards should always be as high as possible.  You can almost be assured that you’ll have to come down at some point—and the higher you start, the higher your standards will still be when you’re finished.

As I’m constantly reminding my project managers, negotiations isn’t about what you want as much as it’s about understanding where the other party is coming from and what they can actually do for you.  Understanding what options are realistic for your supplier is a valuable starting point in discussing how you’ll get what you expect (or at least what you can accept).

Bonus: here’s our list of 30+ negotiating tactics that we’ve collected over the years working in here in Asia.

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