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Part 1: The nature of changing terms, agreements and the cultural negotiation differences you face when working with Chinese Suppliers.

Working with Chinese manufacturers is challenging, in many ways. Possibly one of the most frustrating and difficult issues for Westerners is dealing with the ever changing landscape of agreements and negotiations before, during and post production of your orders.

Changing terms of prior agreements.
You will make agreements with suppliers; these may be pricing based, minimum order quantities, sample fee costs or other arrangements. Just remember, until you have the goods in your possession, anything can potentially change, and it will. Only consider things are fully locked away when one of two things have occurred; either you have a solicitor drawn up supply contract in place signed by both parties or you have your goods in your warehouse. If neither of these events has occurred always assume something may pop out of the woodwork and need to be renegotiated. It’s the nature of working with the Chinese culture and supplier. One key point to remember – the Chinese people are very patient when negotiating anything. Don’t expect things to necessarily go fast or at the pace you want them to. That’s out of your hands.

The ‘Yes Factor’.
Chinese people in general don’t like to say no. There are two reasons for this. They’ll be trying to ‘save face’, meaning they won’t want to look silly or incompetent, or they’ll be typically entrepreneurial. The Chinese people will seize any opportunity that comes their way. This means, you may think you’re dealing with someone that ‘knows their stuff’ or is connected to the factory or right industry, but they may be a middle person taking advantage of a good opportunity. Both of these events (saving face or being entrepreneurial) causes the ‘yes factor’. This means, it’s often only experience or luck that helps you read between the lines when communicating with them to know what is genuine and what is achievable.

What you’re told may not be what eventuates.
Don’t be surprised that as a result of both the ‘yes factor’ and/or the ever changing nature of negotiations if you’re told one thing and something else eventuates. Anybody that’s dealt with China would tell you the same thing. How you handle yourself during this time will be paramount to maintaining your relationship with the supplier and keeping as much influence over the situation as you can possible have. If you take a very firm approach and get demanding you’ll over step cultural boundaries, ‘saving face’ will no longer be possible for the supplier and they won’t want to deal with you. Furthermore, Chinese businesses are very interconnected. You may start finding it hard to find any supplier that wants to deal with you! Depending on where you’re at in the product development timeline with that supplier will determine what the cost to your business is.

If you keep the mindset that the whole process remains a negotiation until the goods have landed, you’ll be far better set to preserve and nurture a mutually beneficially relationship with the supplier and your long term success will be far more likely.

It’s very counter intuitive to Western thinking isn’t it!

Related posts:

  1. Chinese supplier agreements and purchase orders – How important are they?
  2. Chinese New Year – What is it and how does it affect you?
  3. The Six Steps to successful Quality Control on China Suppliers
  4. 7 Must Know Points For Businesses Dealing With China
  5. How do I Import From China? – Know the China Sourcing process and timeline

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