This may seem controversial, but I believe that many importers worry too much about being 'nice' with the Chinese factory that supplies them. But is this a good way to conduct this relationship?
Are You Going Too Easy On Your Chinese Factory?
I am enjoying Paul Midler’s latest book, 'What’s Wrong with China.' It is full of interesting observations, many of them relevant to business people working with China.
Midler makes a point that I particularly liked.
We constantly tell American and European buyers that they should be much more direct in their dealings with their Chinese suppliers. Those buyers are often afraid of shocking a supplier and causing an endless string of issues this way… but in most cases, by appearing weak, they encourage the supplier to be strong.
What is the problem with a Chinese counterpart who thinks he has the upper hand?
- He makes bold moves without authorization
- He does nothing when pushed to take action
- He plays with pricing to display his power
- And so on...
Midler explains that a typical China factory counterpart has very thick skin:
No matter what you do, you cannot offend these factory people. In the United States, upsetting the person you are doing business with can result in the cancellation of a deal. In China, as long as there is money to be made, all abuses are easily forgiven.
Naturally, this contradicts every book on Chinese business etiquette ever written, but it is nonetheless true: Chinese are never shocked by bad manners, especially not when it comes from foreigners. Quite the opposite, they anticipate such bad behavior. The foreigner as barbarian is an archetype. Chinese consider their civilization to be the epitome of sophistication.
Is this true?
With the owners and top managers of Chinese factories and trading companies, absolutely. They are used to tough counterparties – do you think their own suppliers (the wood manufacturer, the canteen operator, the building owner, etc.) are nice to do business with!?
We noticed the best way to get a factory boss to respect us, as consultants, is to tell him how badly he and his staff have been managing their operations. They don’t know what they are doing, they made serious mistakes, and it has cost a lot of money. Show them the evidence. Let them know that we are no fools.
Similarly, when we are brought in by one of their customers to fix their organization, we KNOW the factory boss will push for an alternative solution – usually “a friend who is very good and will do it for free, as a favor,” or a local team of ‘consultants’ (usually trainers) with very low fees. With most of these manufacturers, we have to be very direct, stick to the facts, and let their customer know all the bad things we see.
Oh, and bosses from Taiwan and Hong Kong, and who have been managing operations in the mainland, also have a very, very thick skin.
Now, is it always true?
There are exceptions, of course, but mostly with the lower-level people in the Chinese factory.- Some of them feel they lose face and start to hate the buyer
- Some freeze when confronted with conflict, don’t know how to handle the situation, and withdraw
- Some quit on the spot
But not a single time have I seen the boss display one of these reactions. To be sure, someone will call the police if you turn up at their factory with a gun in hand. But there are many things you can get away with.
Midler makes the point that showing one’s anger is a good thing, as it clarifies the boundaries that are not to be crossed:
These industrialists try to get away with whatever they can and stop only with they receive some piece of external feedback as a sign that they have been pressing their luck.
There you go… Some foreign buyers know when to create a ‘significant emotional event’ to pass a message.
“I give you 3 months to do xyz or I will start reducing the order quantity” is usually more effective than, “come on, it’s not that difficult, and think of all the benefits you will gain”.
Your Thoughts?
Do you agree with mine, and Midler's, points here, or do you think that being direct isn't the way forward with a Chinese factory?
Do you have any interesting experiences to share about your dealings with Chinese suppliers?
Please add your questions or experiences as a comment below this post, and we'll gladly reply.
You might also be interested in this blog post: 3 Reasons For China Manufacturing Problems. In it I talk you through 3 reasons why a China factory's management are causing common manufacturing issues, and what they are.
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