Same Story, Different Day

Just this last week we’ve had a few events that I considered fairly typical for China but that each shocked our clients and sent them panicking (the price for telling the truth is the “damage control” necessary afterwards).  Heres what happened and what we did.First, The factory totally used the wrong art on the sample (after careful and specific discussions about correct art) but they wanted us to accept the sample anyway.  They assured us, “We’ll get it right when you place an order.”While we hear this almost daily, frequency does not make it any more acceptable.  We never place orders for products that have not been sampled correctly.  Of course, we’re probably feeding suppliers’ belief that the “Golden Sample” is the only way to get orders, but I’d rather know that it can really be done and then fight for it to be duplicated than approve something that is not up to standard and have to fight for something that I’ve never seen before.We get our negotiator on the phone with them and work things out--let me tell you, having one person who’s job it is to just fix problems has been well worth any expense.  Someone that knows how to play the Chinese games, how to host, joke, argue, blow smoke, kiss butt and use names in multiple Chinese dialects has been invaluable.Second, “Your standards are too high. We don’t want to do your project any more.” This factory even offered to return our money--course, they have our molds and could then knock us off with cheaper stuff now too.We have the standards-are-too-high conversation all the time.  But, of course they made the “Golden Sample” and we’re asking for that to be re-created in mass.  Now they see the conflict of interests that the Golden Sample creates.Of course, we’re going to force this issue every time.  On this we just can’t give in if we ever hope to work with the factory again. That may sound like an oxymoron but establishing standards from the beginning (as opposed to making friends at the expense of standards) is the only way to do long-term business.  Like Audrey Hepburn in Charades said, “I already have too many friends.  Until one dies, I can’t possibly add any new ones.”  I know that it's sacrilege in China to say this, but I'm not here for friends, I'm here for business.Third, Even though we claimed we started the molds ($1200 each), we’re now claiming that we didn’t get your deposit and we don’t want to do your project and you don’t get anything back. This requires some Sherlock Holmes.  Bank receipts, some email conversations and some discussions about “the real reason” why they don’t want to do the order.Turns out that they just got another big order and they don’t think that they have the machine capacity or the labor to do both.  So we get our money back (“We just found it in our other account.”  Amazing, since we never had another account number.) and move to our back-up factory.  This resolved surprisingly quikly.  It could have been much much worse.Fourth, we’re late and you can deal with it or cancel the order and we’ll just stop now. Once punitive contractual penalties are threatened there is actually less, not more incentive for factories to complete projects on time.  So being able to back up your threats with actual substance is very difficult.  In this case, we have terms with the factory, so we can apply the penalties to the balance payment and they don’t have the luxury of leverage.  What sucks though, is that while everyone will agree that the contract says this, and that penalties are complete legal (and even agreed to), the factory will re-coup those loses in the next project we do with them.  Just because a factory agrees to terms and conditions in a contract does NOT mean that they expect that you (or they) will actually strictly enforce any of them.  In fact, it’s been my experience that no one but you even has any clue at all what’s in the documents that have been signed.Fifth, no labor, no product, what you going to do about it?! I’ll be honest, here, we have no solution for this one.  Once again, after Chinese New Year, millions of workers didn’t return to jobs in Guangdong province.  When a factory goes from 700 to 400 laborers, there isn’t much that can be done.  Labor prices and help wanted signs go up, but where there aren’t any people there just aren’t any people.  Incredible, I know.  China doesn’t have any people.  Well, south-east coast China anyway.  We have just had to back up all our completion/ship dates.Sixth, only 1/3 of the work was completed, but everything was packaged and staged for shipping. Sometimes there are mistakes.  Sometimes there are extenuating circumstances.  And then sometimes there are just flat out lies.  Like this time when the bottom half of every carton that was boxed and ready to be loaded on the container was not finished.  1-2 packs per box (6 packs per box) on the top of more than 500 cartons were correct, but nothing deeper than 2 packs had even been touched.  4-5 of every six packs were incorrect.Fortunately we had on-site QC to catch this before it was too late to do anything about it.  Their explanation?  “We thought you wanted them shipped out on time.”  Well, yea we did, but we wanted them correct too.  Solution?  Drag in as many people as we can round up, manage the production line ourselves and get it done ASAP.  Rebook truck/ship and pay the factory less (for being late and for requiring our QC to be there more days than scheduled).