Setting the Right Tone for Cooperation with China Suppliers
Many foreign buyers have struggled with their cooperation with the China supplier. If you are among them, you've probably looking for a guide or tips to improve your cooperation with the China Supplier.
For today’s blog post, I thought I would share four advanced, yet simple, tactics that I have used to ensure there is a greater likelihood that my Chinese supplier will actually meet my expectations:
4 Tactics in Cooperating with China Supplier
1) Effectively Communicate Your Expectations
It’s no good to stick your expectations down in the small print where the supplier may not even see them. Perhaps that will protect you if a court case was to arise, but it’s much better to make sure your supplier is aware of the key terms in advance.
So, make your contract bilingual and easy for them to understand. And before the two of you sign off on the contract you should spend some time to go over the key points one by one to make sure the factory really gets it.
2) Leverage the power of “face”
I like to encourage a signing ceremony whenever possible. When the terms are discussed as a group and the contracts are signed in front of the group, then there is a substantial loss of face for any party that breaks the contract as loss of face, is often more effective than a fear of legal repercussions.
3) Never let dust settle on the contract
Smart buyers know to set up a comprehensive purchase contract with the supplier, under which various simple purchase orders are placed. Over time, the supplier starts paying attention to the PO and forgets about the terms of the general contact. I do it a bit different. Each time I place a new PO, I have the general contract attached and signed off on every order. My general contract defines the relationship in terms of my expectations for Intellectual Property, penalty for late orders, warrantee terms and such. Since the supplier needs to sign the general agreement each time an order is made, he can’t look me in the eye and say he didn’t remember the terms of the contract. As factory management may change over time, this practice also helps ensure that the current round of leadership at the factory is always up to speed on my expectations.
4) Finding the right supplier
Finding the right supplier is the single most important step in the sourcing process. A supplier that truly values your business will see you as a partner and try harder to meet your expectations. On the other hand, a bad supplier that is out to steal your technology or a vendor that is planning to milk you for as long as they can before throwing away the relationship…their interests are obviously not in-line with yours. So, you and the factory are going in different directions from day 1. So, follow the “hope rule”. If you are “hoping” your supplier is going to do a good job, you have already lost. You should have done enough research on your supplier to “know” they are going to do a good job. It’s not an easy task, but I trust that this blog post has gotten you pointing in the right direction.
ABL Blog: Sr. Editor and Primary Content Creator: Michael J. Bellamy
Originally from Upstate New York, Mike moved to Asia in 1993 and is a China business advisor to both Fortune 500 companies and small businesses. Recognized as an expert on doing business in China, he has been interviewed by WSJ, CNBC, FT & Bloomberg.
A featured presenter on China issues at seminars, trade shows and corporate events across the globe.
Learn more about Mike and AsiaBridge Law at
https://www.asiabridgelaw.com/business-advisory-services/
Mike is the author of “The Essential Reference Guide to China Sourcing”
(available on Amazon).