By David Dayton in 'Silk Road International'

"You know you don't want the answers, so why do you keep asking the questions?" That was the question that I was asked last week. These are some of the questions that I was asking:

1. Why did you sign the contract if you didn't agree with it or even read it?
2. Why did you give me a bid for this price/time if you knew you couldn't do it?
3. Why did you tell me you could do it before you confirmed that you could?
4. Why did you take my deposit if you can't do the project?
5. Why did you demand CAD drawings if you knew you weren't going to be able to use them?
6. Why did you give us QC standards if you can't/won't even meet them yourself?
7. Why did you tell me you had all the raw materials purchased already if you didn't?
8. Why did you sign one contract with me and another different one with the factory?
9. Why did you use one process/material/factory for the sample and another for the production?
10. Why did you tell me that I could come do QC and that you were finished with X% of production when you're not even close to that %?
11. If you can't match the sample quality in production, why did you make a sample like that?

The list could go on and on and on and on. But the answer always turns out to be the same: "I wanted to catch the opportunity." And that's what business is all about in scarcity-driven China: Did you catch the opportunity when it flew past or did you let it go and miss your (one and only?) shot?

The good news is that this is slowly changing—and not just with a couple of big suppliers, but across the board.

Last month while speaking for the Global Sources supplier meeting I heard some very promising new comments from the suppliers themselves. Basically the suggestions centered around the following: The "lowest price" is no longer in China—suppliers here MUST differentiate themselves some other way or go out of business. Chinese suppliers have 10-20 years head start on India, Vietnam, Indonesia, Cambodia, some places in South American and Africa—what are they doing with that experience? Some factories that were led out as success stories share these ideas with the audiance:

1. Be honest about prices, problems, delays, etc.
2. Add value (especially if you're a trading company).
3. Be transparent in procurement, processes and problem solving.
4. Improve service quality, be "professional."
5. Make the buyer feel "safe"/improve the buying processes.
6. Acknowledge and accept the "info age" and its implications.

There were over 700 suppliers present. This is either a good sign that there is a desire for education that was not present before; GS averaged about 300 at previous show. Or this means that the economy is still so bad that suppliers are grasping at straws. I'd like to think that it's more of the former, but it's probably some of both.

For my part, I tried to stress that the opportunities to keep clients rested in the ability to improve the buying experience, not just lower the price. There were indeed a lot of suppliers that were taking careful notes and asking questions (of me and the other successful Chinese suppliers on the panel). Most of the suppliers wanted to know specifics about how to improve or how to deal with specific situations. There was a lot of discussion around the idea that China has to build on the successes of the past and evolve into a more info and services-oriented model of doing business.

But there were still a number of suppliers that just out-right didn't believe that being honest would help them retain clients. More than a few even came up to me afterwards and in completely unbelieving and almost mocking tones asked if I was serious when I said that being honest about problems would help them retain customers. They argued that if they let clients know that there were problems they would lose trust, get mad and leave for another supplier. My contention is this: after 10+ years of working in Asia I've learned a couple of things.

1. There will be problems. Every time. So don't lie to me and say there won't be or there aren't any. There will be issues. You know it and I know it. I want the 3 AM phone call—really, I do. I want to drive out and talk through it with you—really, I do. I do NOT want you to change something just to meet a date. I do not want to find out there was a problem that will delay delivery just 12 hours before the container shows up—I want to know days or weeks in advance so that I can manage expectations. So the best thing to do is…
2. Let me be involved in the process. Tell me what's really going on. Not only will I be glad to help fix it, I'll honestly be happy that you let me know. Remember, it's my money, my project (and my ass if it goes wrong). I want to be involved in the process, for multiple reasons. I care about the quality more. I know what can and can't be sacrificed. I'm responsible for any and all changes. I know what I want and it's my call on what is and is not acceptable.

I'm not going to leave just because the price goes up. In fact, I almost never do if I can get the quality and other aspects of my order correct. But no matter how many factories have realized that this is indeed the expected way to conduct international business (with foreigners or even other Chinese) there are the hold outs that are not really interested in meeting expectations. And with them you really only have one option—don't start doing business with them in the first place.

David Dayton is the owner of Silk Road International and currently lives full-time in Shenzhen, China. He speaks English, Thai and Mandarin and has worked in Asia for more than 15 years. You can contact him at david@silkroadintl.net or at www.silkroadintl.net.