Ted Ciuba, Business Development Manager

ONE sentences about business with China:

In my experience, one needs to constantly adapt and innovate when doing business in China, because what worked yesterday may very well not work tomorrow — it’s fun!

Profile:

Company Name: Modern Space Asia Group
Company website: www.modernspaceasia.com

Who are your clients? International luxury retailers.
What is your mission? To reset the industry standards in terms of quality, scale, capability and general business management.
What problem do you resolve? Our customers are able to expand their retail locations — world wide — on time, on budget and with high quality and integrity standards. In short, they can trust us.

What kind of problems between Western companies and Chinese manufacturers do you see?

Primarily, quality and ‘accountability’ have been and continue to be issues with many manufacturers and businesses, in general, in China. Service is also a headache for many corporations conditioned on Western levels of service.

For Western manufacturers, there has been an inability to adequately invest in their operations, technologies and work forces due to declining revenues and margins — leaving many companies ill-prepared to capture current and future opportunities within their respective industries.

Though we don’t consider ourselves to be a ‘Western’ manufacturer, we have brought what we consider to be Western principles in terms of trustworthiness, service and accountability, combined with our position as our industry’s leader in quality in Asia. We have combined this mixture with our team of Western and Native Chinese team members to offer a wholly unique business model wherein we have the strengths of both Western and Chinese businesses — and hopefully — few of the weaknesses of either.

How a Western company can find a reliable Chinese supplier?

Meet and spend time with the people who you are considering partnering with. Most importantly, do not necessarily take what is told or shown to you at face-value. Do your research. Visit factories in-person and more than once. Do so announced and unannounced. Interview both competitors and current/past clients. Be wary about financial statements or really any paper trails, as they are easily and frequently forged.

Basically, it takes time and it is not easy. Don’t look for short cuts and be very careful with ‘outsourcing’ the investigative work to others.

What is necessary for TOP managers of western companies for start-up business with China?

Realistic expectations and attitudes are important. Though many people do get rich, far more lose. Many of the people who come to China with a get-rich-quick attitude fail. Also, it should not be assumed that one can transplant a successful business model from another country/region onto China and achieve success.

Come to China with an open mind, and don’t be afraid to cut losses when necessary. There are no rewards without risks, but irrational and unnecessary risks are often the undoing of companies and individuals here.

This environment is tough, competitive, frustrating, constantly changing and yet loaded with opportunity. Go for it, but have a well thought out plan in place first, and be willing to adapt and change the plan when necessary.

What are the risks while working with a Chinese manufacturers and with what they are related?

The Chinese tend to be concerned with getting rich, achieving status and purchasing everything necessary to achieve the status that being rich affords. In other words, the pursuit of wealth is often the only concern, and the Chinese want to be rich now.

This can lead to many short-cuts and underhanded business practices. Western concepts of business ethics are not yet fully developed here.

Be smart.

What kind of advice could you give to Western companies: how to effectively sell Chinese products?

Chinese products generally sell because they are lower cost. This typically sells itself. Selling low cost products is easy, its everything else that’s difficult: managing the relationships with the Chinese suppliers, logistics, enforcing contracts, etc.

My advice would be to construct a cost matrix to include as many ‘hidden costs’ as possible with things such as late delivery, unacceptable quality levels, fraud, IP theft, etc., and then weigh these costs against the benefits of low cost, location, scale, etc. that producing and selling Chinese products offer.

How usually do you prefer to conduct negotiations?

One needs to be patient and try to remain calm. Contract negotiations with Chinese companies can be a very frustrating experience. Try to build relationships with your counterparts before, during and after the negotiating process. Try to avoid having the terms and conditions of the negotiation itself dictated to you. Be respectful, but also firm and strong.

Also, understand that contracts are often broken in China. If the Chinese know someone and you don’t (and they do and you don’t), the contract can be viewed as little more than a starting point for the business relationship, or, how things were seen at that specific point in time.

Be very careful giving away technology, IP, business processes and clients to Chinese companies. They may take what they need from you and then dispense of the relationship or rewrite the terms once they have the upper hand. Its important to keep something from your Chinese partners in order to maintain leverage in the relationship, and hopefully, encourage the Chinese to conduct business in good faith.

Who usually makes main decisions? International sale manager or director of the company?

Generally, I would prefer to negotiate with someone as high ranking within an organization as possible. You may reach an agreement with one person or team only to have their ‘boss’ veto their terms, yet still expect you to stand by yours.

Go as high up the chain as possible.

What would you like to tell to our audience?

Business in China is a lot of fun. Be smart, then go for it!

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