We receive phone calls from new clients that go like this:

“I found a Chinese supplier through Alibaba recently, and emailed them several times. Everything seemed to be going okay, then suddenly all communication stopped they won’t respond. It’s incredibly frustrating. What happened?”

Here are several reasons behind the scenes that would explain what happened:

1. The supplier didn’t actually sell what they showed on their Alibaba page. One customer contacted us and asked them to contact an Alibaba supplier for a product they were interested in. When our people in China called, it turned out that the Alibaba supplier didn’t sell the product.

2. The product they offered on their Alibaba page didn’t comply with U.S. standards. When another customer asked us to call an Alibaba supplier for them, our people in China found out that the product and cheap prices offered on the Alibaba page would meet Chinese standards, but couldn’t be exported to the U.S. because of certain hazard restrictions we have in the U.S.  We dug a little deeper and found out that the factory could offer a product that would work, at a different price. This factory’s main marketing focus appeared to be selling product for the Chinese domestic market.

3. They don’t know you. Doing business in China is all about relationships, aka guanxi (关喜).

Most Americans have little understanding of the nuances and ways of the Chinese business culture. Chinese companies can be as nervous about doing business with you as you are with them.  While you’re worried about getting good product from an unknown entity that’s thousands of miles away, they’re concerned about getting paid and whether you’re a valid company with financial resources. If you start asking if you can pay them after receipt of merchandise, or by paypal (which will cost them more), or some other way they won’t accept, the chances increase that they’ll disappear.

4. The purchase quantities or order value was too small. We receive many calls from persons who want to make purchases in small or short production run quantities. Such orders are more suited to short run production or prototype factories; many production factories won’t quote an order if it’s too small.

5. There isn’t enough information for them to put a quote together.  Some customers haven’t fully engineered or developed their product, and are hoping the Chinese company will do it for them at no to little cost. To the factories this has “risk” written all over it because they could spend a lot of time in the development phase, which they’re not set up to do, and not get anywhere. They also might be suspicious that, if you don’t come to them with complete drawings or a finished sample, that you might either not know what you’re doing, or have the financial means necessary to see the process through to completion.

6. Face.

Face, the concept of keeping everyone’s name and reputation in good standing, courses through Chinese society. In the U.S., if we contact a potential supplier, we expect them to offer what they can ship on their websites, and tell us straight up front if they can or can’t do the job. In China they may let you nibble on their line a little to see what might be there, even to the point of making a few promises, but then abruptly cut off all communication if one of the above scenarios arises. To the Chinese, being up front and saying “no, we can’t do this job” would be for them to lose face, and for them to say “your purchase quantity is too small” would be for you to lose face, so instead they disappear. This is maddening and frustrating for those of us in the West who are used to straightforward communication, but for them it’s the way their culture works. They can see us as lacking tact and social etiquette, while we can see them as evasive and dishonest. Neither is always the truth.

This is why, to successfully do long term business in China, it’s critical to have boots on the ground there, understand the culture, and establish long term relationships by repeated visits to China.

Which is what we do.

Pictures

In my last trip to China this past March, my wife and I visited a large factory that makes wheels. The company president had a rather interesting looking wood desk and chair set in his office, which my wife is seated at here:

Michelle_Desk

This is a factory that made precision ground steel products…

Steel_Products

And here I am discussing a project with the president of one of our partner companies:

Project_Discussion

The Exchange Rate
After nearing 6 to 1 the beginning of this year, the Yuan continues to float around the 6.2 mark.
Yuan to the dollar, as of today: 6.22 to 1

Rate when the Yuan was depegged from the dollar on June 19, 2010:  6.82 to 1

Change: .60 (8.7%)

Want a Quote?

There’s no charge for us to quote your project. We need the following to get started:

* Engineer’s drawings with all dimensions, tolerances, and material requirements, and/or a sample to send to China. Sometimes pictures with all major specifications will work, if it’s a simple product. We can refer you to a company that can do engineering and prototyping if you need these services.
* Purchase quantities. Our suggested minimum purchase value is $10,000.00. The actual minimum will depend on the factory.
* The major city you are nearest to, so we can include the freight with the prices.
* Details on how you want your product packaged, i.e. individually or in bulk, plain cardboard box or with color labels, blister pack, etc.

Quick Links:
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Email us for a free quote.

Previous Newsletters:
April 2014: Video and Images from Last Month’s China Trip
March 2014: China’s Debt
February 2014: Reference Points
January 2014: If You Don’t Know Who You’re Dealing With…
December 2013: Images from Last Month’s Trip to China
November: Time to Plan Ahead for the Chinese New Year
October: China and the U.S. are Shut Down
September: When Life Interrupts Business
August: Video: Who We Are

All material copyright 2014 Global Trade Specialists, Inc.
This newsletter may be reprinted as long as the copyrights and a link to the Global Trade home page (www.mgtrading.com) are shown at the end of the article.