Here are some interesting or useful articles that I found recently.
According to Dan Harris, more and more importers want to use one of their Chinese suppliers to ALSO be the distributor/licensor of their products in China.
It makes sense, since the manufacturer will benefit twice from high China sales: as the distributor and as the maker. And the Chinese domestic market looks so promising in certain categories…
However, I see this as a high risk. if there is a conflict somewhere (for example the production manager leaves and quality starts suffering), the whole relationship will turn sour.
As Dan points out, it is very important to use good contracts that cover most possible problems while being fair to the supplier.
The five styles of Chinese negotiators
Andrew Hupert shot a video for each of the main negotiating styles:
If you want to know the best way to behave in front of different types of Chinese counterparties (whether buying from them or selling to them), go ahead and watch these videos. As usual, Andrew gives very relevant advice.
Jacob Yount gives a list of reasons why importers need to pay a LOT of attention to the way they communicate with their Chinese suppliers.
As often with Jacob, there are a few great quotes. Here are three of them:
In English, there is less “oomph” with each requirement, each clause, each consequence, than if the factory is reading or hearing it in Chinese.
When the vendor asks you a question, it’s not the time to send a ultra-pithy and misspelled response from your iPhone. It’s also not the time to be cutesy and say “same as sample” or “Like I already told you…”. Answer them as straight as possible. Give a visual with marked lines, circles and descriptions if necessary.
An argumentative supplier can be a caring supplier. In China, if someone argues, that means they care.
According to this recent survey conducted by Global Sources:
- Chinese suppliers are more optimistic about export markets than last year. Most of them expect moderate growth (0-20%) next year.
- Many of them hope to develop exports in developing markets (Brazil, Russia…) rather than in Western Europe and the US.
- The main tactic to gain new business is slowly switching from attractive pricing to higher value added.
- 45% of Chinese suppliers hope to increase efficiency in production.
- Their main concern is price competition and increasing costs.
This article focuses on two heavy trends in the Chinese job market:
- Employers can’t get enough graduates from technical schools, in their search for skilled workers for the manufacturing sector. But students tend to avoid technical schools and target white-collar job, which are exposed to a much higher unemployment rate.
- Migrant workers currently based on the coast are often happy to find a job closer to their home town. This makes it even harder for coastal manufacturers to find good technical talent.
Callum Makkai explains how an importer can reduce its risk of dealing with an Asian supplier: using a letter of credit, lining up a backup supplier, keeping orders small at the beginning of a relationship, and so on.
But this is not enough, since it only protects against “catastrophic failure”. Quality control (before shipment, and tied to final payment) is the only way to put immediate pressure on the supplier.
As Liz Long writes:
One of the biggest mistakes new entrepreneur’s make is to assume that they and their supply partners will remember everything that has been discussed and decided on during the design and sampling phase. Manufacturing involves lots of moving pieces, and it just takes one incorrect measurement or swapped material to make an entire production run useless.
And the solution is to develop a QC manual (what I call an inspection checklist) that collects all the client’s requirements. A very useful document!