Silk Road International Blog

While the Google controversy is truly fascinating, unless it’s directly impacting your ability to do business it really doesn’t matter exactly why Google says they might be leaving China.  For most people it doesn’t even matter if they leave China or not.  (For the rest of us in China, the new uber-slow, ultra-filtered internet is almost worthless, and probably not getting better any time soon—time to move the Shenzhen office to Shangshui.)

One thing that most people should take from the Google mess is this: no matter how big you are, no matter how much money you throw at China, no matter how many other countries you’ve been successful in already, no matter if you hire local or foreign or both, the bottom line is that China is still a different beast. My friend from Wal-Mart and I have sat around and told the same stories about working with factories in China. Exact same problems, just different dollar amounts.  Your size doesn’t matter when dealing with China–no matter who you are.  The pool is just so big here that most foreign companies are nothing here.

China ranks first in the world in exports, first in car sales, third in GDP, first in people, first in internet users and the list goes on and on (and will continue to grow–better get used to it).  But it ranks 140 out of 183 in terms of freedom. Even if you don’t like this particular survey or the rankings (certainly a very hawkish source), the fact is that China is wildly different than what most westerners are used to.  It’s much more like the ASEAN countries—just lots bigger (than all of them put together).

And that’s the real trouble.  If you’re coming from Vietnam to China, or vise versa, you’ve probably got some experience that crosses over very well.  If you’re coming from Perth or Detroit or Liverpool, probably no so much.

The fact that HK, Singapore, Japan, Macao, Taiwan, South Korea, Malaysia and Thailand are ahead of China in the rankings is not all that surprising—they all had a 30 year head start and more international exposure.  But that Cambodia and Lao are also ahead and openly repressive and corrupt Vietnam is about the same says clearly that economic development and engagement do NOT mean more freedom—business or otherwise.

Imagethief, in his discussion on Google last week, highlights the fact that there are specifically predetermined ways companies are expected to work with China.  Though speaking specifically to public communications the analysis is applicable to other areas of work in China as well.

Google has taken the China corporate communications playbook, wrapped it in oily rags, doused it in gasoline and dropped a lit match on it. In China, foreign companies tend to be deferential to the authorities to the point of obsequiousness, in a way that you would almost certainly never encounter in the United States or Europe. Scan any foreign company’s China press releases and count the number of times you see the phrase, “commitment to China”. Demonstrating “alignment with the Chinese government’s agenda” is an accepted tenet of corporate positioning and corporate social responsibility work in China. This is testament to the degree of direct power that the Chinese authorities wield over the fortunes of foreign businesses in China. Even when foreign companies are in dispute with the Chinese government they tend to offer criticism obliquely as long as they have a business stake or operations in the country. Note, for example, the scrupulous diplomacy of Rio Tinto’s communications concerning the detention of its employees last summer, a far more serious situation than anything Google has encountered (although also with far more money at stake).

To me the key part for small business owners here is that there is a play book at all–and the people spending big dollars all know it.  This is something that small companies typically learn the hard way, over years of (painful) involvement on the ground.

Further to that end is an article from the Guardian UK.  The Chinese internet (and country in general), it says, is more like its own intranet than a hub in the global community.  Despite how “small” the world is today, China is still very much an island unto itself.  Like the (legitimate) criticisms aimed at the US for being too culturally insulated (physically isolated), China is the same, only with more people, less overall education, fewer if any emigrants and a more restrictive government.

I’ve been saying this for years—China is unique.  Business is business, I know.  But the context within which business is conducted, personal relationships and communications here are all different from anything most have ever worked with in the West before.

But “different” doesn’t mean threat, although it may be threatening.  In the larger picture, there are generally two theories bantered about by China watchers, the China threat and the engagement philosophy.  James Mann’s book discusses why both have failed and if there is a third path.

Anyone you talk to in China thinks that the rest of the world (especially many politicians the US and the popular media) sees China as a threat.  I agree that this is the most popular approach for many in the US (media)—they need a villain in their myopic, simplistic, sound-bite driven world of ratings.  “China is good” doesn’t have nearly the impact as “Red Hoard” or “Chicoms” does.

But even in the midst of this Google mess, I don’t think that China is an inherent threat.   I do believe that China, for purely short-term domestic political goals thinks that the rest of the world is a threat to China (or at least wants the Chinese populace to think that the rest of the world see China as a threat).  Because the Chinese Government is scared (of the rest of the world or of losing domestic power) it then acts like a threat—a threat because it’s actions are based on an aggressive fearful position that it’s being attacked.

China thinks that the rest of the world acts just like they do—the specifics in the response to Google and the attacks on the Whitehouse, for example, are exactly what is going on here.  China assumes that Govt communication issues/companies in the US are tied to and part of the US national interests and that the corporations actions are directed by the govt—just like they are in China.  Of course they see everyone else acting like they act.  We all do this. (And just because they are paranoid doesn’t mean they aren’t right.)

But like the strict law defense that we’ve heard from China over the years (“Our laws are more strict than those in the US!”  Yea, but you have no enforcement, so the laws are often meaningless.), just because China is honestly acting in their own best interest does not mean that they are not, at the same time and by those very same actions, threatening others.  Just because you’re not an overt threat does not mean that you are not threatening.

For precisely this reason, China is not a global partner or good neighbor.  Could they be?  Yes.  Will they?  I doubt it; only because they’ve determined that it’s not in their best interests to do so.

Side Note: And for those who are offended at this, this blog isn’t about “yea, well the US sucks too!”  I really don’t care what you think about the US.  This is about the question “will China act like the super power that it wants to be” (and claims internally that it already is).  You want to complain about the US?  Go get in line somewhere else.

And I’m convinced that foreigners are trying to use some kind of reverse psychology on China–convince them that by our mass stupidity they really are the best in the world.  These, for example, are defenses of China’s GFW: “We have a very controlling govt in Australia too.”  “I guess that the people of China really do want to decide their own direction with the internet.”  So by this same logic, if we have human rights violations in Australia, then it’s OK to have them in China too?  How about other crimes?  How about just crappy quality?  That OK too?  And which part of “the people of China” do you think are “deciding” anything about “their” internet or anything else for that matter?  Sorry.  I’m finished.

This Google mess bring to light specifically how “business” can very quickly become nationalized and politicized.  Just like Rio Tinto last year.  What is considered “State’s interests” is up to anyone’s guess.  Like so much of the content that is blocked on the Chinese internet or the people that are stopped at the border crossings—it’s random, political, emotional and event (rather than policy) driven.

If you don’t think that this affects you, Mr-I’m-here-doing-business-on-a-tourist-visa, then you just wait for the combination of the tightening economy and this year’s census.

One of the best lines that I’ve ever read about doing business is form Jame McGregor’s One Billion Customers: “Most business people come to China with way too much trust.”

I strongly suggest that you read James Mann’s book, The China Fantasy.  Excerpts from my review:

“But if you wonder why economic change in China hasn’t lead to political change or why no one seems to mind that every US president has taken a hard line on China to get elected but then reversed course in office then you should read James Mann’s The China Fantasy: Why Capitalism will not bring Democracy to China.”

“This is not a rah-rah China book and it’s not a China disaster book either—it’s a middle ground, a third path.  Mann says that it’s far more likely for China to continue to grow economically and remain repressive politically than any other option.  The question is: can businesspeople and politicians and consumers in the west live with that.”

Tags: Business, China // 1 Comment »

While working in China is a completely new experience for most foreigners—and a completely foreign experience at that—there are some things that are, well, pretty easy to understand, I think, but that many new-to-China foreigners just don’t seem to get.  I’ve put together a list of issues that have stumped more than one foreign client in the past few years—and I made the list because all of these issues came up within the last month working with clients in the US during the current run-up to Chinese New Year.

1. Order your 2Q products in the 4Q of the previous year NOT in the 1Q, just weeks before you need it.

Everyone knows that nothing gets done in the States the last week of each year.  From about Dec 23^rd to Jan 2^nd you can just count on 50% of every office staff being out on holiday or taking their accumulated sick days or just not working (because everyone else they need to talk with is on vacation).

So why is it hard to understand that China has the same event, just at a different time each year?  Sure CNY is on the lunar calendar so it changes every year.  But it’s still in same quarter, always in January or February, so it’s not that different.  And besides, Easter is lunar; the dates for President’s Day, Mother’s Day, Memorial Day, Father’s Day, Labor Day, Columbus Day and Thanksgiving change every year too, but we don’t forget those.  If your secretary was Jewish, you wouldn’t forget that she’s taking off for Chanukah (every year).  So if your supplier is Chinese, how is CNY a surprise every year?

Remember, all of China (the whole 1.5 billion people-population) goes on vacation for at least 10 days if not more; and all at the same time.  So Chinese factories also place their 2Q orders early too.  January is easily the busiest month of the year for everyone in China—and so if you’re late placing your order, you’re out of luck.

Just assume that if you want anything before April of any given year, you’d better order it before Thanksgiving.  Mark your 2010 calendars now—I’ll wait.

2. Working with China is like working with a contractor–it’s always going to be late and over budget.

If you’ve ever worked with a contractor on any building or remodeling project you know that while the end result can be very satisfying, the process is usually hell.  Delays, over billing, living through a mess in your house (or office); it’s just not pleasant until it’s completely finished.  Working in China is much more like working with a contractor than working with a box store (which is the attitude that I feel like some people come to China with).

China is not Wal-Mart or Home Depot or Target or Costco.  You can’t just walk in and buy 5 or 500,000 pcs in the same amount of time.  If you order 5,000 pcs you’re not going to be able to get 500,000 pcs made in the same amount of time.  Even if the contract says the lead-time is 45 days, that does NOT mean that you’ll have product in your warehouse with in 7 weeks.  If you get a bid on 350,000 pcs you’re not going to buy 70,000 pcs for the same price.  Just because they’ve “done it before” doesn’t mean that your production run will not have issues.  I caution everyone to assume that production will certainly have issues—the question is just how many issues you’re going to have.  You’ll probably have at least 2-3 pull your hair out scream at the wall issues.  Know it going in, and when it happens, you’re ready.  And if it doesn’t, well….it never doesn’t.

China is a contractor not a retailer.  The price and supply of materials is not set even though you’ve got a contract with a fixed price.  The time to create a new product (or even do re-orders) is dependant on many things that are not confirmed when you sign the contract (holidays, raw materials, mistakes, power outages, people problems, mistakes, transportation issues and weather, mistakes).  I honestly don’t think that we’ve ever done an order for any product in the last ten years where at least one things hasn’t changed that affected the final date or price. (And yes, that’s what I get paid to do: eat the new costs and fix the problems for people that are not here themselves.)

This is not an excuse for inefficient labor or poor quality production or mistakes or flat out lies.  But it is a realistic view of working here.  You have to know that just because “you can do it back home” doesn’t mean that you can have it done here—and let’s be honest, you can’t do it back home (for the same price) or you’d be doing it there now and you wouldn’t be here in China in the first place, right?

With the cheaper prices comes more need for management and QC.  Remember when you go factory direct you are cutting out a lot of fat in the pricing but you’re also cutting out a lot of legitimate services too.

3. Just because the rules are the same doesn’t mean that business is the same.  AKA: Driving in the US vs China, part 748.

When driving in the US you assume that everyone is going to follow the rules and you’re bugged at the one guy that doesn’t.  China is the opposite—no one follows the rules and they are all just fine with that.  In fact they usually only get angry at the foreigner that does follow the rules (and is driving different from everyone else).

My experience, both driving and doing business in China, is that for the most part, foreigners are usually pissed off at just about everyone here; simply because no one follows the (assumed) rules.  The real problem though, is with the foreigners whose expectations are based on experiences from driving and doing business in the West.  Those experiences then color our expectations of how things are supposed to work over here.  Processes here are completely different, even if the rules are the technically the same, so we spend an inordinate amount of time being frustrated.

Again, this is not an excuse for illegal dealings or getting cut off by some jerk that doesn’t know where he’s going.  But foreigners need to understand that while the West is mostly black and white with very little gray, China is mostly gray with very little black and white.  And the black and white that there is, at best sporadically enforced, if at all.

Part of the reason that the prices are so good here is precisely because enforcement of the laws is so lax. (There.  I said it.  The secret is out.)  Another part of the reason that you can get done whatever you want here is because if there is money in it someone will figure out a way to get it done.  You can do that (entrepreneurialism) when you don’t have the US nanny state breathing down your neck.

4. Just because it’s your project doesn’t mean that you’re the best one to negotiate the prices or solve the problems (obviously, or you wouldn’t be having problems in the first place).

Sometime you need to play a different role (and that other role is NOT backseat driver either).  When you contract with a factory and something goes so wrong that you need to bring in someone else to fix the problem, you are no longer in charge of the negotiations. Maybe you think that you are. Maybe you’re still paying for all of it.  But the fact that you couldn’t fix it on your own tells everyone involve that you’re no longer the Chief.

Problem is, you’re probably part of the original problem and the factory knows that if they can talk with you then they don’t to deal with the negotiator/problem solver that your hired (who is going to be infinitely more strict and consistent since they probably only get paid in full if the problems are all solved and the product is delivered).

Take for example a project we’re working on with a factory in Zhongshan now.  The client brought us in mid project because he needed help with, in his words, “getting the factory to do what they said.”  But the original client is still answering all the emails from the factory; there really is no place for us as the project manager/problem resolver in the chain of command.

After a few days of negotiations and QC with the factory, the factory emailed the client and complained that we were too strict and they couldn’t do what we were asking (which is only what the client originally contracted for).  So client, scared that he won’t get his order, caves in and changes the standards.  Now he’s paying the factory more for less and he’s paying us to do nothing too—and we’ve told him so.

Sometimes you need to let someone else fix things for you.  It’s not a knock on you personally, it’s just China.  You may be great at managing projects and negotiating contracts back home.  But you’re not in Kansas any more and you need to understand that while you may know product X better than anyone else in China, you probably don’t know China better than someone that’s been working here for 20 years.

5. China is huge.

If you’re a geography major or you’re here already, this is a no brainer.  But if you’ve never been here before, I’m warning you.  It’s bigger than you think.  And more crowded too.

“I’m going to China” is like saying “I’m going to the US.”  Ok…where?  New York? Chicago?  Detroit?  Miami?  Houston?  Denver?  LA?  San Francisco?  China has 10 cities the size of LA or New York or larger.  Chances are, where you’re going or where your factory is located is not convenient to anything else you’ll be doing in China.  Similarly the chance of getting a positive response to the question “Have you ever heard of factory x?” is literally like finding a needle in a haystack.  There are millions of factories in China and the likelihood of finding the exact one is slim to none.  Pick the biggest tradeshow that you’ve ever been to and I’ll bet I can find two in Guandong Province alone that are bigger (both in terms of attendees and exhibitors).

Side Note: May favorite question.  “Oh you’re from the US, do you know Joe in New York?”  And the foreign counterpart: “Oh you work in China, do you know this American guy in X city?” I don’t know how many times I’ve been asked these questions—obviously the geography classes on both sides of the Pacific are lacking somewhat.

For example, we’re managing a shipment for a client now that includes product from 9 different factories in 5 different provinces.  This is more than usual, but not unique.  We figured out that we average 6 factories and 2 provinces per order in 2009.   The client in this case had already “found” 3 suppliers at a show and online.  We never could reach 2 of the 3 factories the client “found” but we found the same (or better and/or cheaper) product at completely different factories.

The point?  You’re not going to fly into the Canton fair and come away with everything that you need for your company in one city let alone one factory—so plan accordingly.  The corollary is that if you’re only looking in one area of the country, your missing out on opportunities elsewhere.

6. Everything is relative.

Just as I was about to post this, I got a reality check.  I was eating lunch and started talking with a lady who was living and doing work in India.  She was in Guangzhou on vacation and couldn’t believe how nice it was.  “No noise, so clean, everyone follows the (traffic) rules, it’s so easy to get around.  You can actually walk on the streets and use the public transportation.”  I was blown away.

Coming from the States to China, I often find the exact same things she complemented as nightmarish.  But coming from India, for her China is an absolute dream vacation!

Pollyanna?  Maybe a bit, but as I look out at the large square in the middle of downtown, blue skies and nicely dressed shoppers, I have to agree.  Somewhat.  The infrastructure here is really pretty good (even compared to the US), it’s just that there is more than a billion more people using it.  The pollution is bad, but it’s bad in LA, Mexico city, Bangkok and India too.

China is what you make of it.  It’s a great opportunity for me.  Frustrating at times, yes.  But on balance a good experience.  Will I spend the rest of my life here?  Not a chance.  But other than maybe, Phuket, I can’t think of anywhere else that I’d like to spend the next 50 years either.

Good Luck!

Tags: Business, China, Culture // 2 Comments »

We’ve been working on samples for a large order of clothes for over a year now.  The clothes are cool, new, fun.  But it’s been a very difficult process getting to the end of the road—the start of actual production.

We’ve got the PO signed, the deposit paid and what happens?  Factory tells us: “We don’t think that we can do this order.  We’re really busy now.”  This, of course, was the response to the payment of the deposit.  No indications prior to the placing of the order that there would be anything problems.  We’ve talked EVERY day in the two weeks preceding the actual transfer of funds and every conversation was great.  “Of course we can meet these dates.” “Of course we’ll work with you QC.”  “Of course we’ll meet all the QC standards (you’ll never be as strict as our Japanese clients.)”

So we’ve spent the last week just trying to get them to keep the commitments that they agreed too (signed and chopped) in the contract.  Every single line in the contract was review with them before they signed it.  Every point was agreed to.  Dates were confirmed.  Qtty’s and time frames agreed to.

And then they got the money and EVERY item that was important (material, quality, times, prices) were all no longer committed to.

We have a negotiator/problem solver that we hired just for situations like this.  She worked on the factory for three days before we got back to the point where we were when we made the deposit in the first place.  (Side note–this person does the least amount of actual daily punch-the-clock work in the office, but saves us more money than any other single employee other than maybe QC.)

Here is what she reported to me after the order issues had been resolved.

1. They did it on purpose.  She said that there are times when there are legitimate concerns and changes and times when it is completely a strategy to get more money.  The major difference between real and fake issues include: when you can track changes in material prices, you can see factory capacity already maxed out, or there are differences in the samples and production standards.

2. Fighting about the contract is not nearly as effective as begging.  It’s all about face.  They know they are wrong but allowing them power can often be as effective as offering them money.  The end result of our negotiations is them being in power anyway—they have the deposit, the control the speed for the production line, they monitor the QC, purchase the materials—there is so much that could be sabotaged and be made to look it was just bad luck.  So, giving them the face now and admitting that we’re at their mercy is both pleasing to them and the truth.  We don’t pay any more (yet) and can still go after them legally if we had too.  But at this point they are pretty pleased with themselves and we’re just glad to be back to square one.

3. Thanking them profusely (gifts) is the correct response.  A dinner will cost $100 for the manager that told us “we moved other projects back for you.”  A shirt or wallet (brand name but from Ross or another US discount store) gives tons of face and costs $20.  It fulfills the social obligation we had to the manager for “helping” and it saves us a bundle of money we would have wasted in transferring the order or suing them or fighting and raising the price.  I’ve often said that sometimes the best option is paying more to get what you had already agreed to.  When it’s a small gift or dinner it’s almost not even painful.  Ego is a bit hard to swallow, but that’s about it.

Sometimes you are totally in the right. Sometimes people lie to you.  Sometimes there is nothing you can do about it.  But the end goal, which is often very very hard to remember, is to get the project done (correctly, on time and on budget).  You may not get what you wanted at the originally contracted-for price, but on balance you’re still getting what you want (and it’s still at a savings too!).

Tags: China, Culture // 7 Comments »

I apologize for not posting for a while.  I was completing a year-long goal of losing 50lbs and running a triathlon, the Laguna Phuket Triathlon, this last week.  I have never been so proud of 618th place in my life!

I’ve also been incredible busy–I’m writing this from Vietnam. 5 countries in the last week and the contrast in national “personalities” is just striking–I’m literally overlooking a huge street party in HCM city right now.  Vietnam just won the Asian Games football gold.  Thailand was a vacation (whether we wanted it or not) and China is 24/7 business–we were gone for only a week and came back to a new building that had previously just been cement, with a totally new glass face.  Taiwan seems more and more depressing each time I go and Hong Kong is still amazing.   And as we’re heading back to the US for Christmas (country #6 in 10 days), this will be the last post of the year too–other than the annual year-end review of the most popular posts.

Thanks for reading and commenting.  Merry Christmas and Happy New Year.

At the last Global Sources show in Hong Kong I was asked after my presentation: “So is there anything else that you think we (people new to business in China) should know?”  I answered, “Yea, tons!  Do you have a year?”

Here’s the longer answer to that question.  These are my suggestions based on the books that I’ve read over the last few years.  These are all books that I liked and found to be of value, or at least to be of interest.  I tried to focus the list and limit the qtty to what I expected is a manageable amount of reading for someone who is busy moving to another country.

Of course, this list is in no way exhaustive.  Feel free to add to it.

I’ve divided the suggestions into different categories based loosely on the situation of the coming reader.  The first link is to SRI’s book review (if I wrote one), and the second is to Amazon–you’re welcome.  My favorites are numbered (1-10).

First, Business Professionals—meaning people that are going to be working in China in a more or less completely Chinese environment full time.

(4) Inside Chinese Business, by Ming-Jer Chen

(3) Chinese Business Etiquette, by Scott D. Seligman

(7) The China Price, by Alexandra Harney

The Chinese, by Jasper Becker

Managing the Dragon, by Jack Perkowski and (8) Mr. China, by Tim Clissold

Business Leadership in China, by Frank T. Gallo

(5) The Coming Collapse of China, by Gordon G. Chang

(Yes, there are a ton of other books that could go here–feel free to add to the list below–but these are the ones that I thought were the best.)

Sub category: Importers—people trying to build their own brands and markets within China.

All of the Business books above, plus:

Luxury China, by Michel Chevalier and Pierre Xiao Lu

(6) Elite China, by Pierre Xiao Lu

Where East Eats West, by Sam Goodman

Sub category: Buyers—these are people that are here irregularly, but still have significant in-China experience.

All of the Business books above, plus:

Poorly Made in China, by Paul Midler

Factory Girls, by Leslie T. Chang

All the Tea in China, by Jeremy Haft

One Billion Customers, by James McGregor

Second, non-business types. Maybe spouses of professionals and/or English teachers or students (non-business focus).

(9) River Town, by Peter Hessler

Oracle Bones, by Peter Hessler

The Rape of Nanking, by Iris Chang

Will the Boat Sink the Water, by Chen Guidi and Wu Chuntao

Wild Swans, Jung Chang

Life and Death in Shanghai, by Nien Cheng

Soul Mountain, by Gao Xingjian

Chinese Lessons, by John Pomfret

China Hands, by James R. Lilley and Jeffery Lilley

Lonely Planet China, here’s the web site too.

Sub category: Politics and/or higher education

(10) China: Fragile Superpower, by Susan L. Shirk

The Tiananmen Papers, by Liang Zhang, Andrew J. Nathan, Perry Link, and Orville Schell

(1)Gifts Favors and Banquets (anthropology), by Mayfair Mei-Hui Yang

(2) Capitalism with Chinese Characteristics, by Yasheng Huang

The Great Wall, China Against the World, by Julia Lovell

What does China Think?, by Mark Leonard

The Search for Modern China (history), by Jonathan D. Spence

Chinese Religiosities (anthropology), by Mayfair Mei-Hui Yang

Tags: Book Reviews, Business, China, Culture, Politics, Thailand // 5 Comments »

Sometimes doing business in China is like getting in a taxi.  The guy pulls up to the curb and you get it.  It’s a working vehicle, probably not too old, middle aged guy driving, license on the dashboard, working meter, lights, gauges, etc.  Everything you’d expect.  You tell the guy (or show him) the address and he takes off.  Most of the time you get where your going and were only scared half to death once or twice—no actual physical or financial harm to your person.   But sometimes you realize that he’s not going the right way.  When you know more than your driver, you can expect there to be problems.  Your questioning of his methods is usually meet with one of a couple standard answers. “Oh, you meant that hotel.”  Or. “I just know the area, I figured you’d know the building.”  Or, “I don’t know, I thought you were going to tell me.” Or, “This is a short cut.” Or “That road’s closed.” Or, in the worst cases, “If you don’t think I’m going the right way you can get out and walk.”  Either way, you know these answers mean a round-about trip to raise the price, fake money back as change or the guy running over your foot as he drives away grumbling at your poor attitude.

It’s amazing how many of the same things happen when you’re doing business.

Example #1. “How should I know where the Vietnam embassy is!? It’s such a small country, nobody cares about it.” (Quote from a HK taxi driver last month.)  Yea, but it’s the most important place in HK for me at that moment, so please, either call someone else or use the damn GPS and find it.

I’m still surprised at how difficult it can be to get factories to make it easy for us to buy from them.  More often than not we’re told something like, the catalogue isn’t up to date, the products offered are not available for sample only purchase, or they only want to do business with foreigners and don’t want to talk to another Chinese (my staff).

I have to say, I think that the quality it of service in HK is really on the slide.  I had to speak Cantonese to this guy to get him to help me find where I’m going (and I don’t speak Cantonese).  Before you say I’m just complaining, remember that HK is still officially a bi-lingual country (Cantonese and English) and everyone in school for the last 100 years has had education in both languages as well as Mandarin for anyone under 20.  So how do I get stuck with the one guy that doesn’t know where I’m going AND can’t speak anything but Cantonese?  Just lucky, I guess.

I think that you can get much more done in HK in Mandarin than in English nowadays.  This is both good and bad.  First it’s fine for me since I can speak Mandarin (yes, I’m the most important reason to me—you’re first on your own blog too, admit it).  Second, it should be good for Hong Kongers (Hong Kongese) since most of their economy is now coming from Mandarin speakers—especially service industry folk like taxi drivers.  But according to my wife (a Mainlander with HK ID) and other mainlanders, people in HK are increasingly rude and condescending to the “new money” from the mainland.  She has a much worse experience in HK than I do even though she speaks Cantonese.  Of course, it’s all relative.  Despite getting lost on the way to the Vietnam embassy (which is quite small and hard to find, I’ll admit) I typically have a much harder time in Mainland than I do in HK—HK is usually where I go when I need a break from China.

2. One more from a HK taxi driver today, “I’m driving the car.  You can’t expect me to know the address too.”  My wife’s response: “How the hell do you know where you’re driving to if you don’t recognize the building name or the street address?!”

This is why I wrote the post today—seeing my wife get angry with the taxi driver made me realize that I have the same conversation over and over with factories, like I mentioned above.  You start a project and then when the money is paid all of a sudden, you can’t tell where they’re going with it—or worse yet, they don’t know where their going and you’ve got to find the way for them.  Of course, if this wasn’t the case, I wouldn’t have a job over here.  So part of me just sighs and goes back to work.

Probably the worst example of this is this line from a factory we worked with last year on some clothing.  “I don’t know what the Chinese government’s standards are, I’m just a manufacturer.  You’ll have to ask them for that.”  Now I’m not talking about standards for import to other countries–just exporting from China.  There are specific standards for clothing that must be met for export from China and specific licenses that must be had to actually export finished goods.  Good grief.

3. “Let me tell you, dishonest is part of their business.”  When you have a couple of people in your office that you can really trust, you often get more information that you really want confirmed.  Thinking that someone is being dishonest still gives you the out, “I don’t think they’re doing that on purpose.”  But then when it’s confirmed, you’re left with the fact that you’re working with a crook and you’d better play your cards accordingly.  Scary.

Today we got a piece of email about some art at a factory.  Now that the order is placed, the deposit is paid and the project is on the clock we are, for the first time being told that artwork needs additional screens/films—at a few hundred dollars per SKU (multiple SKU’s).  Could this be true—could they really need more screens?  Sure.  But did they have art before?  Yes.  Did they bid out the project/art before? Yes.  Did they confirm the files we sent them already?  Yes.  So to me the timing is more than suspect—it’s flat out dishonest.

I know that every process has procedures that need to be followed.  I know that every factory has rules that need to be obeyed.  I know that sometimes people do make honest mistakes.  I don’t have any issues with any of that that.  What I do have issues with is when the factory doesn’t tell us the rules or procedures upfront and it costs me money later.  Or if there are specific rules that are broken by the factory themselves (to get our business) and then we’re asked to pay for it later (like what is happening now).  Or if they don’t own up to mistakes and claim that “this just is what it is—more cost for you!”

We had another client hire us just this week for a similar problem.  The client found and started working with a factory in the summer.  In September, the factory confirmed (in writing) that production could be finished and shipped by Halloween to meet the expected Holiday sales.  We’re now involved because molds won’t even be finished until Dec 7th!  Production won’t even be finished this year.  Getting a deposit is often the ONLY goal of many suppliers–History has taught factories that once a buyer is hooked there is almost nothing that they won’t put up with to get their product without losing the initial monies.

We placed an order with a factory in Vietnam last month only to find out that instead of QC visit this week they are moving to a new location.  They offered our money back, but also told us straight out that if they told us last month they were moving this month, they figured they wouldn’t get the order or the future business–so they didn’t tell us.  We took our money back and placed the order with another factory.  Since they were our preferred vendor option, if they’d told us there would be a delay in the firs order, we actually would have been fine with it.  Now they get nothing.

Finally, I find the news, like taxi rides, to be oddly related to doing business in China—OK, you’re right, I’m either working too hard at analogies or just working too hard.  But if you’re reading this you’re not working at all.  So cut me some slack.

Reading the news to understand business in China.

Obama’s trip to China wass “highly scripted.”  Wow!  You don’t say?!  No one could have possible seen this coming.  According to the WSJ there are a couple of “reasons” for this.  Face and the fact that the US has more debt than clout are, surprise surprise, still important in China.  It’s important for you too.  If you give your factory face and if you pay in cash you can, more likely than not get whatever you want.

Tags: Business, China, Culture // 3 Comments »