As many first-time importers notice, working with a Chinese supplier necessitates a change in habits:

• It is very important to define the product requirements in the smallest details, including the labeling and the packaging.
• Quality and timing are never guaranteed. Expect a very bad experience, and you might be pleasantly surprised.
• Keep your data close to the vest. Try to understand your supplier’s costs, and at the same time don’t give too much information about your distribution model, your market, or your margin.
• Monitor production closely and micro-manage the whole process.
• Don’t take everything they tell you for granted. Once production is under way, in 50% of cases you are not told the truth.
• Don’t promise anything beyond the next order. It is useless. Your counter-party thinks short-term and in a distributive manner (“there is a pie to share, and I want the bigger half”).

I just ran into an excellent description of this feeling, in the latest edition of the China Sourcer magazine. David Dayton evokes the confrontational nature of most negotiations:

I know that in my years of working in China, more than once I’ve started ne- gotiations with that attitude in mind–and you know what? It’s a self-fulfilling prophecy. When I think that it’s me against the world, that’s exactly how it all turns out. I’m sure that much of the not-getting-to-win-win in these situations was my fault. I went in spoiling for a fight, and no matter what was said, that’s just what I got.

While negative attitudes are surely unintentional, this probably happens a lot more than we’d like to admit. With the bad economic situation lingering on there are additional pressures and hard feelings. Combine the latter with the uncertainty and trust issues on both sides of the table and you have situations that make polite and effective negotiations almost impossible. Even when we go into things with a good attitude and desire to make thinks work out for everyone, there are so many other variables that can affect what we do; and what’s done to us.

I bet that’s the feeling of most buyers here in China. It’s just a very tough environment.

Some long-time importers actually end up assuming that certain behaviors are systematic, and it can be quite dangerous too.

I remember working with a buyer who had set up a very strong (nearly bullet-proof) system for avoiding getting burned. The terms of his L/Cs were so subjective that half the banks refused them, and about 20% of the suppliers also refused them.

He had a theory that once a relationship has turned sour–for whatever reason–he’d better cut his costs and stop everything right away with the supplier in question. I saw first-hand how brutally he acted against a poor supplier who had committed an involuntary mistake.

He yelled at them, and told them he would only pay the orders under production after receiving them in his warehouse. The supplier had no choice–it would have been difficult to sell these goods to other importers. The buyer canceled the references that he didn’t need–in other words, the ones for which he had received few orders from his own customers.

All this was totally unnecessary. The supplier was a trading company from Hong Kong whose owner seemed to have good intentions. That supplier got about 100,000 USD worth of product cancelled, and the importer lost a relatively good supplier.

The bottom line is to try to understand the real situation. It is not easy, but it is far better than assuming the worse and resorting to knee-jerk reactions.