To many Americans, the Chinese people are a bit of a mystery. If you’ve ever tried to contact a person or company in China on your own, you know that they keep their cards close to their vest. Sometimes it can seem like getting details and information out of them is difficult at best.
We’ve had new customers call who tried to import from China on their own; they sent an email to a Chinese company through an ecommerce website, traded one or two emails, and then the Chinese company disappeared.
Then there’s China’s reputation. Some people see China as a dangerous third world country where all the businessmen are out to steal their product or idea and make a million off it. The news stories of Chinese hackers, and horror stories other businessmen have had make it sound like China is out to steal all the U.S.’s secrets and jobs and bankrupt our economy.
As if the U.S. doesn’t do the same. Ever heard of the NSA? Bernie Madoff? Our courts are filled with companies suing each other for patent infringements, real or imagined. You can get scammed in New York as easily as you can in Beijing.
One of the fun parts of my job is when I go to China to work with our partner companies over there. I confess that I don’t care for Chinese food, but the owners of the three partner companies we work with are my friends, I genuinely enjoy meeting with them and getting to know them more. I learn from them, and they’ve told me that they’ve learned from me.
As we’ve gotten to know each other, we’ve shared more about our personal lives. During the trip I took two months ago, the president of one of my partner companies had me to their home for dinner. It’s extremely rare for a Chinese person to invite a foreigner to their homes; it’s a big honor, and is a sign that the relationship has graduated to a level that many don’t see.
I hadn’t visited their house before, and was surprised to find that the living conditions were the same if not better than many Americans enjoy today. They had a clean, high rise apartment with a nice view of the city, with modern appliances and furniture. None of it looked worn out or cheap. I actually enjoyed the food, which consisted of handmade dumplings, shredded potatoes, and several other dishes. In fact I’d say that this was probably the best Chinese dinner I’d ever had.
They showed me pictures of their family and friends, which included the couple’s daughter. I felt incredibly blessed to be invited into their personal lives and exposed to what their world was like. They were a family, just like us, who worked hard to make a living. They weren’t out to scam me or anyone else, which, is not only a blessing for me but a plus for the business. They’re honest people who have families to feed just like the rest of us.
None of this is to say that China isn’t a risky place to do business, or that there aren’t people who are out to take advantage of others. There are, just as there are in the U.S. You just have to know who you’re dealing with and what not to do. That doesn’t come by sending an email to an unknown prospect and hoping everything will turn out right. Trusted relationships develop through travelling extensively to China over an extended period of time, getting to know who you’re working with and letting them get to know you, educating each other on your differences, finding ways to make things work, and occasional compromises.
I can honestly say that having dinner in my friends’ home was the highlight of my trip to China in March, far more than any business meeting that took place. In the end, it’s the people we know, like and trust who we work with over the long term.
Production Factories Don’t Prototype
We often receive inquiries from new customers who ask if a factory will make a prototype for them. They have drawings that may or may not be complete, and they want the factory in China to make one prototype for them that they can test. We’ve learned the hard way that, even if a Chinese factory offers to make a prototype and quotes a price, that it’s a waste of time and money to ask them to build one. Chinese production factories focus on make production run parts; they’re not set up with the engineers or equipment (such as rapid prototype machines) to make prototypes. Even if they offer to make one, they don’t give prototyping the attention that’s needed and the final results aren’t good.
Note that a prototype is not the same as a first article production sample, which is a sample product the factory will make for you from production molds or tooling. You don’t want to spend thousands of dollars to make production molds for a prototype as once the molds are made they can’t be changed.
If you have a new product but have not created a prototype to test, we recommend that you first have all prototyping and engineering completed by a prototype company in the U.S.; once the final drawings are made we’ll take those and can get a quote for the production run from a factory in China.
We can refer you to several prototyping and engineering companies in the U.S., should you need one.
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: 6.26 to 1
Rate when the Yuan was depegged from the dollar on June 19, 2010: 6.82 to 1
Change: .56 (8.2%)
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
July: What You Need to Know about the ISF Penalty
June: Tiananmen Square and Freedom
May: Our Most Critical Asset
April: Contrasts Between East and West
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.