Most Americans who want to import from China start with the assumption that the Chinese think and do business like we do. This isn’t the case; here’s a few of the differences to consider:
1. In China, as in most of the rest of the world, they work off the metric system. This means their raw materials are produced to metric standards. 1/4″ bolts will be hard to find off the shelf there, as will bar stock in inch measurements. This doesn’t mean that product can’t be made to inch measurements as they machine and/or cast parts all the time to inch measurements, but that there will be times when it will be to your advantage to change the fasteners or other parts with non-essential functions to the metric standard. Some inch products require a custom run, which means higher costs.
2. In the U.S., time is money; in China they would often rather wait and save money if the time window is small. This isn’t to say they’re pokey when it comes to production times; China has come a long way in the past 30 years and has adapted their business culture to international expectations for doing business, but this is still a part of the culture.
3. They’re not as lawyer-happy as we are.
In the U.S. if a manufacturer makes a shipment of defective product, they’re expected to replace it. In China it’s not uncommon to hear of a factory walking away and refusing to take responsibility if they make a shipment of poor product. While this could get you sued in the U.S., it’s a part of the business culture in China. This is why our partner companies understand that they need to only work with factories that commit to stepping up to the plate in case they make a shipment of product that doesn’t meet our customers written standards.
4. That Face thing.
“Tell it like it is. Get to the point and let’s go. I want the truth, now. Did you screw up the order?” In the U,S. we’re used to disclosure to the point where it can be TMI (too much information). The Chinese however are more guarded, especially with foreigners, and, especially when disclosure might cause them to lose face. This doesn’t always mean they’re trying to hide a mistake; it’s just the way their culture functions. Ours is a National Inquirer, Pop Culture society; theirs doesn’t lay everything out on the table. This means we have to ask more questions in the business process if we want to understand our overseas friends – communication is everything. Americans have a hard time trusting someone if they’re not forthcoming with the whole truth, while the Chinese don’t think that everything needs always be exposed, especially if it means losing face. The answer to all of this is guanxi – the relationship. Business is all about relationships.
All those holidays.
Between the Chinese New Year, and the other holidays they have (some which are week-long), the average Chinese worker gets about a month off, every year. Can you remember the last time you had a month off? (Have you ever had a month off in one year?) We in the U.S. have to plan our overseas purchases around these down times – especially for the Chinese New Year, where factories shut down from anywhere from two to four weeks. While I get frustrated with all the time they have off, I occasionally find myself thinking that some of that would be good for us; our lives in the U.S. are too rush-rush-go-go, and we seldom take time to enjoy life with our loves ones like we should. I have a number of friends who’ve picked up life threatening illnesses recently; we never know when our time is up, and work should never be the first priority of our lives. That doesn’t take away for the need for competence and a strong work ethic, but that we should manage our short lives with the wisdom that God gives us.
China Scores a Big Currency Swap Agreement
In the May newsletter I reported that China had made currency swap agreements with 17 other nations. A currency swap agreement is where both nations agree to trade in each other’s currency, effectively eliminating the U.S. dollar’s use in trade between those countries.
Now China, the world’s second largest economy, has signed a currency swap agreement with Japan, the world’s third. That’s a lot of dollars erased from international trade. Why is all this happening?
For those of you who missed the May newsletter, here’s a quote:
“Why are the Chinese making these swap agreements? Is it because they want to dominate the world and take everything over?
The Wall Street Journal pointed to the fact that our “trillion dollar deficits stretch as far as the eye can see,” and that as we grow deeper in debt, more countries will question whether we’ll resort to the printing press. China, the world’s largest holder of dollars, is getting nervous that we’ve lost the will to balance our budget and will devalue the dollar, taking the worth of their assets with it. The more China can trade in Yuan, the less their risk of loss.”
In other words, we’re to blame for the changes that will soon face the dollar. We should pray that our government figures out how to balance its books, and fast.
The Exchange Rate
Yuan to the dollar, as of today: 6.36 to 1
Rate when the Yuan was depegged from the dollar onJune 19, 2010: 6.82 to 1
Change: .46 (6.7%)
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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