Mark Scholz,

Owner at Scholz Management & Consultancy

Improving operational processes. Performing reorganizations smoothly. Helping with conducting business in China. Author.

Mark’s company focuses on helping buyers all over the world and sellers in Asia to come together. He helps closing deals, obtaining the proper quality, guides production, prevents mistakes from being made and makes sure things go smoothly. He has over 4 years of experience in working with factories in China and knows where mistakes (or misunderstandings) come from. He speaks Chinese and understands the culture. He has produced electronics, toys and bicycles.

Tell in a few sentences about your company. Who are your clients, what is your mission, what problem do you resolve?

- I help companies doing business with Chinese factories. Chinese still have a very different way of doing things and Western people are not always used to the Asian way of doing business. I help people from all over the world and find them potential suppliers, guide them with negotiations, product-design, conduct production and uphold quality. I work with people in Europe and America and of course many Chinese companies. The most common thing I do now is making sure that factories understand what it is the client wants and that clients understand what it is the factory actually does.

Why does the business partnership with China is of interest to you (your company)? Is this interest to work with the Chinese business potential or real?

- I have worked with Chinese factories for over 4 years. I have made many mistakes because I didn’t see the real message factories gave me. I really enjoyed working in China and want to help others conducting business, because when it comes to trading you can’t ignore the fact that everything comes from China. And quality has improved so much now.

How special, according to your point of view, is the business with China (shipment of goods, logistics, quality control of the production etc)?

- Very special. Till now, not one Asian country can match the Chinese way of producing, the quality is good and people are capable of making almost anything you require. Still, prices have gone up as quality has a price and Chinese factories should be allowed to make a profit. Competitors for Asia are far from close. Vietnam does some work, but the quality is not as good yet. India is coming up, but it is also quite difficult to understand how things are done over there.

I do see a future for Africa. The Chinese are moving to Africa more and more, investing in infrastructure, building factories and I wouldn’t be surprised if the Chinese will outsource production to Africa. The raw materials are already there and so is cheap labor…

What prospects of the business with China do you see in whole for your company?

- Difficult to say, but I am hoping to find more companies that seek help with conducting business. My network is grand and my knowledge is quite good, so I can help companies saving money, prevent mistakes and help them see through some smokescreens that might be raised by factories.

How do you assess the current state of being in the know and the level of knowledge according to the different aspects of vision of business with China?

- I still see and hear of many people thinking that in China everyone is a crook, out there to steal your money. And others think Chinese businessmen are the same as Western. I am there for those people. Everyone wants to make money, but many Western businessmen think that everything is cheap in China. It is cheapER, but not for free. Demanding below cost production is getting you nothing but trouble. So the ‘bad’ name some Chinese get are the result of bad business conduct by Westerners. Western people still ignore how things are done in China, the refuse to speak Chinese, so most are still a long way from getting a good relationship. But it is improving. Slowly, but it is moving ahead.

How important and necessary is it for your and for your company? What do you think would your customers say on this question?  What do your customers think about the “made-in-China” goods?

- I think consumers couldn’t care less. They just want a affordable product that has good quality. No one cares where it comes from. Retailers might care a little bit more, but in the end it is about money. Everything needs to be cheap and cheaper. All want to drive the big Mercedes and pay Toyota prices. That doesn’t work. Made in China is a label that now is to be found on almost everything. For instance, close to one of my toy factories, there was a factory making break-pads for BMW’s. Go figure. Quality does come from China.

Still, I did come across sales people suddenly thinking that their own products (with all testing reports and 1000s of sales) were no longer good if it said ‘Made in China’….

Business education, variable seminars, courses and trainings are extremely popular nowadays. To what extent the specificity of doing business with China should be studied by the managers?

- Well. when you are really doing business with China (and it is the only thing you do), it doesn’t hurt to learn some Chinese. Just to figure out what is said (or to be polite). I will start teaching about doing business with China in Fall and I hope to tell how are things are really done. Because you can pick up a book on Chinese Etiquettes, but I always found them useless. Either you are warned not to do things no one in his right mind would ever do (who gives scissors as a gift or would consider to stick chopsticks upright in the rice) or you are told not to do things that are farfetched or that no Chinese cares about (do not flip the fish etc….).

Does the staff factor inside the company important when building the relations with China? Is it enough to manage with the only representative or intermediary which specialization is making business with China?

- Most factories now have people (at least one) that speak English. If not, you can not do business without an intermediary like myself. In the end, I suggest finding companies/factories that you can communicate with. The relationship will slowly grow. You will get more done in a later stage of your business relationship and you will get close to something you can call friendship.

What do you think will help to minimize the various risks arising when doing business with the Chinese companies?

- First of all is visit companies you tend to do business with. You will learn a great deal about the factory when you see that your factory (like many) is an assembly place. Most don’t produce the whole product.

Everything comes from somewhere else. This limits the way you can do business. Understand this. Also understand that samples do not come from an unlimited source. Most factories do not keep stock and every worker in the factory is a specialist. Hardly any person can product your product from A to Z. Finally: PAY for your product. Allow people to make profit. If not, you will be the price and your quality will drop.

The CEO of the company and the majority of the managers do not possess the required amount of the special knowledge on this problem. How can they solve the problem of communication with the Chinese business?

I said it in the other answers. Spend time, learn some of the language and do not think that ‘going to China’ is the solution. It might be, but it takes time. Production of a (new) product will take months. And Chinese do need your attention and help. Without it, things will go wrong and that is waste of everyone’s time.

And the last question. What would you like to tell to our audience?

I said it all. Money is being made in Asia and lost in Europe and America.  Anyone in trade, in give always or whatever production item: you are crazy if you still buy in the West.

One thing I hope to teach Chinese companies is that especially in Europe it is impossible to buy huge quantities. Please remember, a country like The Netherlands, Lithuania or Denmark is not to be compared to Germany, the UK or the US.