Cultural Differences need not be a cultural divide!
And now for today’s blog…
A good story never goes away… and just to prove it here is the 2nd part of my trilogy about China. If you remember the first part of my tale was about Tony and his attempts to have cushions manufactured in China. Book two concerns a character called Vance who has already built up a successful UK based retail business importing kitchen units, appliances, worktops and tiles from China.
We join Vance as he balances precariously on the cusp of triumph or disaster; his business empire is about to make him wealthy beyond his dreams or crash like a house of cards. Vance is in trouble, his Chinese suppliers are taking him for a ride; money has disappeared, orders are late, goods are damaged and quality standards are slipping. Vance who has entrepreneurial skills by the spadeful jumps immediately on a plane bound for China to stir things up a little with his suppliers.
What follows next is not pleasant viewing, and in scenes reminiscent of the worst of British Colonialism Vance ignores cultural differences and embarks upon a tirade of humiliation and four letter words to bully his Chinese suppliers into submission. Does it work? Well there is a jaw dropping scene in “Tap City” (in China some cities specialise in making just one product. In addition to a town known colloquially as “Tap City” you will find towns known as Condom City, Zip City, Bra City and Toilet City but to name a few) where Vance strips down a shower to its component parts and demands to know how much each component has cost the manufacturer. Completely unaware of the Chinese need to “save face” he humiliates his supplier into dropping the wholesale price from £100 to £59. Effective ? “Yes” albeit in the short term, however Vance’s lack of business manners is building up a sleeping dragon of resentment.
In one interesting scene, this time with a kitchen unit manufacturer, Vance’s deposit of £100k has been spent on an ensuite basement swimming pool to compliment the Managing Directors palatial office suite instead of the raw materials to make Vance’s kitchens. As Vance almost busts a blood vessel in the face of this extravagance, this well practiced extortionist calmly asks Vance for a further £50k up front investment as he has no money to begin making Vance’s units! Vance, even if he survives this ordeal financially will no doubt need hospitalisation to cope with this level of stress!
I think there are some strong learning points here for all businesses looking to source from overseas suppliers; Firstly don’t put all your eggs in one basket, if your business is based on one foreign supplier you are not effectively managing risk, so use a quality intermediary to help you source a range of suppliers and don’t get stuck at the bottom of a chain of middlemen, all of whom are interpreting your requirements and taking a cut. Organisations to consider in the first instance are the British Embassy in China, The China-British Business Council and/or some commercial organisations such as China2West.
Secondly learn something about the country you want to trade with and their customs and culture, this will avoid much misunderstanding later and minimise the risk of irrevocable damage to the supplier relationship. This includes learning a little of the the language of the country you are trading with in addition to hiring a quality interpreter.
Thirdly, don’t pay up front, there are export letters of credit you can set up via the supplier and his/her bank which will enable you to guarantee your financial viability and intention to pay, this allows your overseas supplier to begin manufacturing in the confidence you will pay for the goods you have ordered.
Finally don’t splash huge sums of money around to buy yourself out of trouble, you may as well arrive in China with a neon sign above you head which says “Stupid Rich Foreigner-Exploit me!”. Instead do your homework, work with trusted intermediaries, draft up explicit agreements, respect their culture and don’t pay up front for goods you haven’t seen from suppliers you have never met.
Sounds like hard work? Of course it is, but there are fortunes to be made (and lost) in China, so if you don’t want the effort, don’t go there. Our story closes with one of those fabulous scenes that has you laughing out loud or shouting at your TV depending upon your viewpoint. Vance - completely fed up with the lack of co-operation from the quarry where his granite worktops are being made buys his way out of trouble in the most spectacular fashion. He purchases the quarry and then with great relish returns to sack the foreman! It doesn’t solve his quality problems, but it does wonders for his stress levels!
My Third and final instalment on China coming soon: “Peter” a chilling tale if every I heard one! Keep reading!
