Global Sources invited me to speak to a group of suppliers in Shantou last week. My speech was part of a forum on “export strategies”, designed to broaden the average exporter’s perspectives.
Here is the first part of what I had to tell Chinese suppliers. It addresses the initial sourcing phase.
The importance of the first impression
The initial impression you give to a potential customer is very important. Many buyers think, “If they can’t format their documents properly, what will my products look like?”.
Try to display these three qualities:
- Rigor
- Attention to details
- Quick response
It is not difficult!
Bad habits to avoid
- Using @163.com or @yahoo.com.cn email addresses: unprofessional, but also dangerous for buyers.
- Responding late to inquiries. Use email templates, presentations…
- Sending heavy attachments by email to potential customers.
- Writing quotations in an email. Follow a quotation template that includes specs, incoterm, payment terms…
- Accepting POs that contain terms that don’t match with your PI. Read the PO!
- Saying yes to everything, just to make a sale.
- Promising “we will do our best”: too vague, very easy to disappoint.
- Introducing yourself under one company, and issuing invoices under another company.
- Trying to make friends with the purchasers (except if they are from Sth Europe or Latin America).
- Buying luxury cars while production equipment is old and rusty.
- Five-star reception and showroom, dirty toilets for workers.
Strategy to follow if you are small
Some importers are looking for manufacturers that employ below 400 workers. Don’t try to pretend that you are huge!
Your sales arguments should be as below:
- The owner himself follows each order closely
- We are motivated, we will be responsive
- “Your orders are important to us, we will listen to you”
- Attractive pricing
Strategy to follow if you are big
If you are already a large structure, here are a few arguments that should win you some sales:
- Reference customers
- Organization, quality system (lower risks of quality issues)
- Number of engineers: ability to develop new products
- Familiarity with export market requirements (quality standard, regulations)
- Width of product range
If you are a trading company
If you represent a trading company and you decide to disclose that you don’t own a factory, I can see two strategies that you can follow.
1. You manage production and you report regular status updates
Benefit to the buyer: you reduce his work and his risks. Some importers are looking for this.
2. You get small orders and you place them in small workshops that can’t export directly
Benefit to the buyer: you bring what these workshops are lacking(communication, QC, export paperwork…).
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What do you think? Is there something more that Chinese suppliers should be aware of?
Excellent, Renaud. Now translate into Chinese and drop thousands of copies from an airplane over Guangzhou.
It was already translated, and about 200 supplier reps were exposed to it… It’s just the beginning 😉
:)))))))))))
Another advice: clean your bathrooms properly instead of just burning some incense sticks to hide the foul smell ! Sounds trivial but how many times does a supplier loose points just because of poor sanitaries next to the client meeting room.
Good point.
Congrats on the speaking circuit. That’s very cool….
I’d advise suppliers “not to fill in the blanks”. This is as much the importers’ fault as the suppliers. Let me give a scenario.
The importer has left off a vital piece of detail or the supplier has a question. Many times, instead of asking the question and NOT BUDGING until they get an answer; the supplier instead makes a choice, fills in the blank and proceeds w/out confirming with the buyer.
One of the main reasons they do this is because of timing, but there are other reasons as well.
So what should the supplier do?
They need to not be shy to ask questions. Then let the client clearly and boldly know that if the client doesn’t provide the info we need by such and such date, your order WILL delay and it will be your fault. If they must proceed because of timing (ie LC payment terms), then let the buyer know in writing “we had this question, you didn’t answer, therefore we’re doing this”. If they are to deal internationally, then suppliers need to get more confirmations in professional writing (avoid too much skype or qq…utilize email more)
Also, the suppliers need to slow down before the start of production and assure all possible questions have been answered.
Usually if the suppliers fills in the blank without asking the client, coincidentally, it’s the cheapest, quickest and worse possible solution they could’ve picked…
EXACTLY! I didn’t think of this, but it’s a GREAT point.
Of course, the supplier will exploit gaps in the specs to reduce their time & money expenses.
Great content, Renaud. Transparency of what your company represent and a professional appearance of your business is what most Chinese manufacturers need to work on.
Taking the concept Jacob commented further, it is crucial for Chinese suppliers to recognize and address the cultural difference between the Chinese way and the Western way of doing business in the initial sourcing phase.
Chinese culture is a high context culture where people rely on their common background, tone of voice, and facial expression to explain the situation, rather than using explicit words, in another words they “fill in the blanks” a lot. Which is why in too many instances the Chinese and Western parties can come out of the same meeting reading a complete different meaning into their conclusion.
Phrases from Chinese suppliers like “We will do our best” usually does not imply “The deadline will be met at all costs”, instead mean “We will try to meet the agreed deadline, but no promises”.
In my opinion, there is no right or wrong between higher and lower context of business culture, it is just the way it is. The best advice to Chinese suppliers would be for them to recognize this fact and either stop “filling the blanks” or hire a middleman or consultant that can help them bridge the cultural differences.
The best advice to Western businesses is for them to find themselves a China lawyer and implement reasonable provisions in contracts for any terms that they consider “must” be met by the Chinese suppliers.
I fully agree, Wayne.
I really hate when they say “we’ll do our best”. It is a way to stop a conversation they don’t like (because they hate to commit to a precise date) without establishing anything.
Very good advice! The raw material quality (where is it from) will also tell the quality of Supplier and also their attitude to solve claims will also effect long term relationship.
Thanks Cindy! You are right, these two points are good indicators of the supplier’s attitude.