Apr 25, 2012

It’s All About the Relationship

A few weeks ago, while everything was shut down in China for the New Year holiday, I attended an event at the World Trade Center in Denver. As one of the speakers spoke about importing, she bottom-lined her presentation by saying that “International Trade is all about relationships.”

I couldn’t have said it better.

Importing sight unseen from an unknown company in China is dangerous. Last year, Businessweek reported that 2,300 vendors from one of China’s largest ecommerce websites scammed their buyers. While I’m sure some good comes from these sites, I receive calls from first time customers who tried to make contact with a vendor on a Chinese e-commerce site and didn’t receive a response, or received a quote and then the lights went out… or worse.

Learning Chinese culture takes much time and expense in the form of costly, week-long business trips, making mistakes, and learning how business works over there. Just understanding the sociological concept of “face” is a challenge. “Face” is somewhat similar to our view of reputation; if a man’s reputation is of good character, honesty, and efficiency, he will be respected; he has “face.” However, “face” has more weight in China than mere reputation; a person can “lose face” just from making a mistake.

Conflict can ensue between East and West because saving face comes before transparency in China. If a company makes a mistake, they are more liable to withhold the truth and say “we’re sorry, production time is delayed” without an explanation. Here in the U.S., we want to know what happened, what the company is doing to fix the problem, and when it will be resolved. The Chinese will fix the problem, but in a way that doesn’t cause them to lose face, which means we may not get all the details.

Over the years I’ve learned that a “face issue” can be lurking if there’s no reply to a request for an update on delivery time… or if I receive an answer that is inconsistent with the original query. (For example, if I ask “Did the factory use the new package design?” and the answer comes back “Factory is boxing the order.” Uh oh.)

In our hurry-up Western culture, we expect answers and a resolution for an issue, now. But when working in China the process can sometimes take a little longer.

Here’s an example for how this looks:

American company buying from American Manufacturer:

U.S. Customer: “I need a lower price in order to compete. Can you reduce your price by 10%?”

(After taking a few hours to examine their cost structure), U.S. Manufacturer: “We can’t provide a 10% discount based on the current product configuration, but if you remove feature X we can. Otherwise the best we can offer is a 5% discount if you double your purchase quantity.”

American company buying from Chinese manufacturer:

U.S. Customer: “I need a lower price in order to compete. Can you reduce your price by 10%?”

Day 1: No response from Chinese Manufacturer. They probably don’t want the business at this price, but don’t want to lose face and say they can’t provide what the customer wants so they say nothing.

Day 2: U.S. Customers repeats his question.

Chinese Manufacturer: “We are checking. Please wait for the results.”

Day 3: No reply.

Day 4: After repeating his query, the U.S. customer receives the following reply from the Chinese Manufacturer:

“It is difficult for us to make your parts.”

By now, the U.S. customer is pulling his hair out in reams. Why didn’t they just say that at the beginning?! He feels like he’s getting stonewalled… but the Chinese are merely conducting business as usual according to the norms of their culture.

The truth might be that the factory could make the parts for the customer at a discount, but they needed higher volume in order to make a raw material purchase big enough for their supplier, or the product needed tweaking to make the price work.

Here’s where the relationship comes into play. Once you’ve taken the time to establish a relationship built on trust with a Chinese vendor, some of the “dance” is eliminated. They open up more up front, and you can get to the bottom of an issue faster. This doesn’t mean a Chinese firm will start to conduct business as a Westerner would, or that you still won’t have to press for answers at times, but now you’re in a far better position than a first time importer would be who was going it alone.

This is a big part of what we offer. Global Trade has solid relationships with three reliable Chinese partner companies that have existed for years. You don’t need to spend the time, money, and effort in building relationships in China because we have them in place for you.

In the end, you spend less time and money on purchasing and more on the sales and marketing end of your business, which is what makes it grow.

New Brochure Available

I have a new brochure available that includes “14 Reasons Why You Should Work with Global Trade Specialists,” information on the company, and more. Let me know if you’d like me to send you some… please feel free to hand them out to others who might be able to use our services.

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About Us

Since 1991, Global Trade Specialists, Inc. has helped companies of all sizes get their products made in China from manufacturers of quality products. We are an American company who works with three trading groups in China with immediate access to thousands of manufacturing companies. We source most products made from metal, plastic, wood, stone, glass or textiles; from prototype to production. Many of our customers are first time importers; we walk you through the entire process.

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