Peter DeVries, CEO, Supply Solutions Network

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

Our company provides skilled assistance to small and midsized companies that wish to source products from low-cost manufacturing countries.  We have set up a buying office in China that represents the Customer in finding, qualifying, managing the production process, quality control, product testing/certifications and shipping.  The office is managed by a US manager and staffed by English speaking Chinese employees.  There are many key elements to successfully doing business in China. Specification translation, finding suppliers who can be trusted and price negotiations are just a few points that we address.

2. 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?

Doing business with the Chinese is not something that can be ignored.  To survive all companies will have to understand that we are now in a global economy and participation is not something that is optional.  The economies of Asia will continue to grow and opportunities are there for those that work to understand how they might profit from that fact.

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

China has come very far in the last 10 years to improve basic manufacturing and logistics principles and structures.  They still have many opportunities to gain in productivity which will offset any labor cost increases.  The government has invested heavily in infrastructure that will reduce the cost to bring goods to market.  Their rail system will soon surpass anything found in the world.  They continue to upgrade and support their ports.

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

Our company is positioned to help our Customers as the world economy lifts itself from the global recession.  There will be many opportunities for those that seek them.  For those who wish for things to stay the same or return to the way they once were,  failure is inevitable.  Welcome to the 21st century things will be different, (comment from a MPR television series) but so very true in all areas.

5. 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? 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?

Our company now has over 5 years of on the ground learning experience in China.  However there are no true experts and for those that think they are, they are wrong.  Learning about China is something that is never-ending and once a person or company understands that they can put into place programs to continue to learn and benefit from the knowledge gained.   Most companies understand the importance of participating in the Chinese market.  Some struggle for a process to do so and make business decisions based on how things are done in their own country without doing true due diligence to understand the differences of the Chinese culture.  As an example,  the Chinese have always strived to make high quality products, but they fail comprehend how cosmetics and packaging are so important to their foreign Customers.  Another, while the rest of the world works to reduce labor costs to lower product costs, China strives to reduce material costs, a key element in understanding operational differences.   I think the average consumer believes that “made in China” is not a good thing but then demand lower prices which only forces that result.
6. 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?

There is much that can be learned from those that have gone before us.  However, there are a lot of “experts” that suggest that they have the answers and don’t.  Managers should be chosen carefully who are open-minded and not stuck in predetermined methodology.  They will need to modify practices and interact with a workforce that is unlike any they have experienced and overcome many obstacles.  They need to constantly be aware that unlike other countries the Chinese population is not prepared or experienced in working with outsiders.  Business ethics are not the same and assuming anything is a big mistake.  Also keep in mind that as we study them they are studying us and our business practices.  The Chinese have not had good experiences with foreigners in the past so you have to understand their reluctance to embrace us now.   A basic example will be from a street vendor who tells your translator that he/she should not try to get them to lower the price because they are Chinese and should not help the foreigner.

7. 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?

The most important thing is having a Chinese key staff member that you can trust.  Make sure you pay that person well and plan for their growth.  My contention is that it is best a female, married and who has had a child.  Most important is that she speaks the language of the home company fluently and has graduated from a good university.  Some areas of China are known for having strong willed and business minded women such as Shanghai.  The Chinese are very intent on making money and making it quickly.  Ethics are like many things in China, optional.  As an example I asked my driver why he didn’t stop at that red light and he said “oh, it doesn’t mean I should stop but only suggests that I stop”.   Men are much more ambitious and taking bribes to supplement their income is very common.  There is a lot more pressure on them to make money in order to buy a good home, car and so on to attract a good wife, have a baby boy and take care of their parents.  So set up your office/factory with first a foreign manager, then a key manager.  After that staffing for the other positions can be done in the normal way.

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

I could write a book on this and actually some have.  Don’t assume anything.  Verify everything.  Make sure you write down every detail in writing on the PO and just saying the metal shouldn’t rust is not enough, your exact tolerances need to be included.  Make sure you physically visit the factory multiple times before and during the production process.  Work to establish a relationship with them.  If they believe there is a long term business opportunity they will do a better job.   Lots of things can go wrong and like I said, a few sentences cannot begin to cover them.  Don’t try to go it alone and work with experienced companies in the beginning who can manage the process for you.  That truly is the only way to lower your risks.

9. 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?

Many companies have failed and lost huge amounts of money because of this.  In the end they blame this or that for the failure but it is their lack of knowledge or stubborn attempts to not recognize that a different business model needs to be followed in China that brings them to that end.  There are many potential gains from entering into the Chinese market and some companies just jump in without any long term plan or business due diligence based on assumptions that apply to their own marketplace which don’t work.   My suggestion would be to invest in a person who has successfully done it before.

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

Sourcing products from China is profitable and can make the difference in today’s economies whether your company survives or not.  That said, be prudent when making decisions and align yourselves with partners such as our company to minimize the risks.
Supply Solutions Network | www.supplysolutionsnetwork.com

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