by Dan Harris
After having worked with literally hundreds of foreign (mostly American and European) companies that outsource their product manufacturing to China, I have become convinced that those who put in real time and effort at establishing a good relationship with their China suppliers tend to have far fewer supply problems than those who just phone it in.
And I would venture to say that Jacob Yount agrees with me. I say this because Jacob recently did a post entitled, 7 Ways to Keep Your Supplier Motivated, nicely setting out exactly what you should be doing to solidify your relationship with your China supplier, though Jacob dubs this relationship building supplier motivating. The below are my two favorites from Yount’s seven, with my own comments in italics.
1. Educate / Show. “The client who shares knowledge with vendors is a client who motivates vendors. This form of education gives vendors more knowledge of the product post-factory life. China vendors and people in general can be very content to stay in the dark, even with situations on which they are very hands-on (i.e. not much incentive to self-educate and find out what’s what).
But take note; any education and guidance you give is not in vain. The factory appreciates this, will see you as a sincere customer and this will lead to more effort from their end to help the supply chain succeed.
Not to mention as a double bonus, any education you give on the product; the target market, who uses the product, how the product is used, etc…leads to better manufacturing and fewer problems.”
If this is all Yount had written in his post, it would have been enough. If I had to choose the one thing that differentiates our clients who have great relationships with their China suppliers it would be education. The clients who believe that the more their Chinese suppliers know about their (mutual) product are the clients who almost invariably get the consistently best product and service from their Chinese suppliers.
2. Clarity. A lack of clarity is frequently a sign of an inexperienced buyer. Indications that a buyer is a capable buyer with partnership potential, keeps the supplier motivated. Also eep in mind that in China, culturally, folks do not always take the initiative in asking questions. Many times, your vendor may incorrectly fill in the blanks and keep trucking along. . . down a wrong path of course.
All true. So true in fact that I estimate that around half the time an American or a European company has a problem with its Chinese supplier, the problem stems from miscommunication. In China Contracts That Work, I listed clarity as one of three reasons to have a good contract (in Chinese) with your Chinese counterpart:
1. The first reason is to achieve clarity. Having a well-written contract in Chinese will assure you that the Chinese company with which you are doing business truly understands what you want of it. Put simply, it will put the two of you on the same page. For example, if you ask your Chinese supplier if it can get you your product in thirty days, it will answer with a “yes” pretty much every time. But if your Chinese supplier signs a contract mandating that its failure to ship your product within thirty days will require it pay you 1% of the value of the order for each day late, you will know that the Chinese company is serious about the thirty day shipment terms.
For the remaining five, I urge you to read Jacob’s entire post here.
Dan Harris is founder of the Harris Bricken law firm, a boutique international law firm focusing on small and medium sized businesses that operate internationally. China is the fastest growing area for the firm. Dan writes ChinaLawBlog.com as a source of China legal and business information.