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Written by David A. Dayton
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.

David A. Dayton is the CEO of Silk Road International (SRI), an U.S.-owned and managed international procurement agency based in China. Click here to visit SRI's Website.

Our valuable Editor David A. Dayton has been with us since Monday, 02 November 2009.

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0 #2 Michael 2010-02-12 00:43
thanks so much for this article. i experienced the same as you! Honestly i am so f+++ tired of doing business in china. i am more and more outsourcing to vietnam, thailand and corea, philipines and even japan. They dont respect even basic business ethics in China. sales sales sales and nothing else. business is not only sales but also respecting rules, contracts, people and furthermost: paying customers! bye bye china.
0 #1 mak98 2010-01-15 11:25
so true. where do they want to go with THAT mentality and middle age values they have? world power? what a joke. with this values and work mentality they will go nowhere!

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