Show follow up, next steps in China

Link update: Registration Link was broken--here's the new one.Perfect timing: I've been invited to speak at China Business Webinars on Thursday Nov 3rd at 9:30AM EST.  In my own humble opinion, this is a must for anyone that is planning on coming to China to work, the presentation will focus on preparing to work within Chinese culture and with Chinese suppliers in China.  You can register here (it's free!).After trade show month, October, in China and Hong Kong it’s time to ask how to best to follow up with the potential suppliers you've found.  At least 2-3 different people at each presentation asked me about service providers in China that they could use once they were back home.  The reality is that even if you’re multi-talented (quite possible), flush with cash (doubtful in today’s economy) and have tons of extra time on your hands (not-likely) you’re going to need some help from people that have both experience and are on the ground in China.Here is a list of people that I have personally worked with over the years and can highly recommend.

1. Project Management: SRI (of course)
2. Independent Quality Control: Asia Quality Focus
3. China/Foreign Legal Representation: Harris and Moure
4. Mediation Services: Southern Perspective
5. Product, Packaging and Graphic Design: Pete Jones Design
6. CAD and Technical Design: San Seriph Design
7. Factory Auditing: BV
8. Product testing: STR
9. Financial payment/auditing and business registration: Fiducia

Maybe you think that you’re too small to use third party services or that they’ll add too much cost to your bottom line, and to some degree you’d be right.  But there are really only three options: you can either use someone else, you can do it yourself or you can just trust that nothing will go wrong (an eventually get ripped off).  There is no 4^th option.So how small is too small?  Well, that’s your call, but if you think that you’re too small to have problems, let me tell you this:  working in China is the same if you’re a small buyer or a huge MNC.   This article, form the WSJ is about the heavy-handed response to mislabeled pork in Chongqing.  Now you might say, “Hey, that’s Wal-Mart.  I’m nothing like that.”  But my personal experience with both suppliers and westerners that work for Wal-Mart in China is that the problems they have are EXACTLY the same problems I have, just on a larger scale.  You can learn from my experiences (and Wal-Mart’s) or learn on your own, but learn you will.One more thing to be aware of before you just start sending money to random bank accounts, you need to be doing due diligence on each product supplier you plan on buying from.  If you don’t, likely there is no recourse for lost or stolen money.  As I’ve noted many times before, Chinese people don’t trust other Chinese they don’t know personally and so as a complete stranger to China, neither should you.  So the first thing you have to do is to verify everything you were told and everyone you met BEFORE you send them confidential art, spec’s or especially money.Once you’ve confirmed that they are indeed who they say they are, you should be onsite—visiting them to both build relationships and confirm capacity.  Only after you’ve visited the factory and personally confirmed capacity can you place an order with any degree of informed confidence.Next, I was asked about component QC if you’re just buying completed product from a single supplier.  You’re right to be asking as your products are only as safe as the component materials.  Thing is, people don’t ask this question enough.  And it can be the real kicker in any given project since very very few suppliers in China actually do any incoming-materials QC (other than to confirm internal profitability).  If it’s such a big deal, why don’t suppliers do incoming QC?  Guanxi.  Most factories work on a “guanxi” basis with their sub-suppliers—meaning they work with other people/suppliers which whom they have history/personal relationships.  Because they have personal relationships they get good deals, they have informal terms, they share in problems/changes and they accept relatively larger tolerances in quality.  Since the relationship is relatively informal, they will not require formal 3PQ on incoming materials or both parties will lose face (and so probably not do business with each other and so lose an opportunity to make money).  And that’s the bottom line for Chinese business—what’s the best possible way to make money over a long period of time? Have good personal relationships in a constantly changing business environment.  Strict rules and standards, if enforced, will only hurt personal relationships.Finally how to follow up on legal decisions in China? This is a great question—and one that I don’t really have an answer for.  The unfortunate situation in China is that while the laws and courts are both getting better at being blind (treating foreigners fairly) there is little to no enforcement of the laws/court decisions in China for anyone, let alone foreigners.  Best case scenario you win and the judgment is enforced, justice is done, the future of your product is protected and you are adequately compensated.  Usually though you win but get very little compensation and spotty or limited enforcement.  Worst case scenario, and one that I’ve heard multiple times, is that you win a case against a supplier but that supplier is a large employer and/or has better connections than you do in the local civil administration.  Who’s going to put the interests of a foreigner (and one who is likely not coming back to do business in the area again) ahead of the local company?  Answer?  No one.   At this point your options are very limited.  You can drop it, you can try to get someone to enforce it for you, you can even try “public” enforcement (taking out ads in papers, adding the supplier’s name to a black list, notifying other suppliers, etc.)