Up until now, I have written lessons about “hard” issues: screening suppliers, writing specifications, negotiating the right terms, and inspecting quality.
But I feel I should take a moment and focus on “soft” issues, and in particular, how to build good rapport with suppliers because it is so important, while at the same time so difficult to get right.
First, let’s look at what specialists call the “inner circle” and the “outer circle”.
1. Some background: the inner and outer circles
I might be guilty of grossly over-generalizing here, but I feel that the Chinese are still very close to the village community system, where anyone from a different town cannot be trusted.
They care a lot about their family, their close friends, and some of their colleagues or customers; however, they don’t care about what happens to people who are outside their circle. When I say “they don’t care” it is more like they do not want to get involved with anyone outside their circle regardless of the trouble or danger those outsiders could be in, they would rather turn the other way and walk past instead of helping.
What does it mean for the foreign buyer?
Should you try to make friends with suppliers’ salespeople and managers?
It can help but this is a fine line.
It means you should spend quality time with them outside of work – for example joining them for a group meal.
You should talk about you and your family, and inquire about theirs. Show photos of your city, bring specialties from your country, teach them a few funny words, and so on. It will all help you get closer to their inner circle, and your orders will get a higher priority in their minds because of the relationship that is being built.
It does NOT mean that friendship comes before business, though. Here are two examples:
- If they produce inferior quality or they ship goods late, they should expect that you would act tough.
- If they suggest inspecting quality by themselves (basically asking you to trust them blindly), you should brush that idea off immediately.
2. Visit the factory frequently
In China, face-to-face meetings are much more productive than emails or phone calls, especially if you can get in front of decision-makers.
You are probably in contact with a salesperson, who has a limited influence in the organization. If you can, come regularly to China and talk to the middle managers (who allocate capacity and set priorities) and/or the technicians working on your orders.
If you have already met with the boss during a previous visit, remember his name and ask for his input. He might not physically be able to attend your meeting, but you can ask the sales rep to ask for his decision when you get stuck on an important issue.
3. Be seen as a “good customer”
More and more Chinese suppliers have realized that they need to cultivate a certain number of good buyers and treat them well. From a buyer’s point of view, it does not take much to achieve this status.
Show that you care about your supplier. Ask questions to understand their situation, and try to take it into account in your decisions (at least in a small way). This will help you be categorized as a “good customer”, even if you insist on following professional processes.
4. Remain polite
Some buyers are disrespectful towards their Chinese suppliers, particularly when problems arise, and this attitude is usually counterproductive.
Again, this is a fine line. When you drive a car you can be assertive, but you should not be aggressive. Same thing when you address your suppliers!
You should avoid asking tough questions in a direct manner. I remember one of my clients who, after being shown a factory’s mistakes, placed some samples on a table and asked “why did this happen?”, “didn’t you control the materials, as you promised us before?”, “why didn’t the line operators catch it?”, and so on.
Big mistake because he was putting down mid-level people in the supplier’s company. My client offended all the key people working on his project on a personal level. And in public. They lost face.
What is face, you might ask?
In situations where someone has made a mistake or done wrong, and the error is made attributable to that person in public, then that one person has “lost face” – their reputation in the eyes of their peers has been reduced. Losing face is an experience no-one wishes to have befall them. So, even if the one losing face is clearly “wrong”, some folks will go to great lengths to avoid the appearance of losing face.
If the factory is clearly at fault, you should work with them to identify the root cause(s) of the faults and set corrective actions then follow up to check their progress.
Business is business, and you should defend your interests, however, keep in mind that Chinese people tend to mix professional and personal relationships.
Now, if you are in front of the factory owner and if you are one of their significant customers, you can push hard. You can be tough and scream. As Paul Midler wrote in his latest book, nothing can offend them.
5. Use email wisely
So, you, or your inspector, have found a problem. What should you do?
If you are at the factory yourself, everything is easier. You can give them immediate feedback about what is acceptable and what is not (you should take photos and write a note about it).
If you are not on site, you should send emails to convey information (photos, lists of problems, potential root cause, etc.) and ask for a response. Try to make only one point per message. Then you can call your contact to ensure they have received your email and they understand what you are explaining and then ask when they will respond.
Do not send and re-send long emails. If you apply too much pressure, you will probably not get a clear response. Similarly, be careful not to place blame on any particular person.
The natural tendency of Chinese suppliers will be to justify themselves and find an excuse (which will often be a “white lie”). The most important thing is to get them to formulate their next corrective actions and to commit to a time frame. Keep focused on this, rather than asking “who messed up?”
The advice in this article is my personal take on this subject. Ask 10 different people and you will get 10 different opinions, so you should make up your mind as you gain experience.