How To Handle China Manufacturing: Negotiations, Strategies, And Experiences

Excellent advice on how to deal with Chinese manufacturers in a post over at the Silk Road International Blog, entitled, "Negotiations, Strategies and Experiences."  The key word is experience and David Dayton, the writer of this post, has loads of that.  David is CEO of Silk Road International Consultancy and he has been working "in and with Asia for 14 years.  He is fluent in Mandarin and has a Master's Degree in Southeast Asian Anthropology, with a focus on Chinese Corporate Culture. Silk Road has offices in the U.S., Thailand, and Shenzhen and I know it has substantial China factory sourcing experience. 

Dayton's post starts out with him relaying that day's complaint by a Chinese factory owner about Dayton's being 'too strict' on quality control how his doing so was costing the factory more than they originally budgeted for, with the rest of the post being Dayton's list of what he was able to take away from this experience.  My favorites: 

1. Your negotiations, factory visits and dinners are all scripted.  "Roles are defined, what can and can't be offered is clear before negotiations start and who you will meet and what you will see is typically controlled to a large degree (as it is in the US and anywhere else'think about it)."  You must learn to play the game and play your role in "the CHINESE script whether you speak Chinese or know their culture or not"  and even though the "Western and Chinese scripts are radically different."
2. Talk with the people with authority to do something about the problem.
3. There is often both a cover story and the real story and "the only way to get to the real story is to ask a ton of questions and take copious notes." Westerners often fall short by taking too many things at face value.
4. Do not push so hard on the inconsistencies that someone loses face.  Your real goal "ought to be getting production done on spec and as close to on-time as possible" and pushing too hard can work against this goal.
5. Good cop bad cop lives in China (like everywhere else).  In China, the boss is usually the good cop, with the manager being the bad cop.
6. China loves the sacrificial lamb.  When there is a problem, it is a common strategy in China to fire someone (or at least say that you have) even though that will do nothing to prevent future problems.
7. Be prepared for the last second closing offer: 
   • Once everyone is friends again and all the issues are worked out there will invariably be a last issue that's just thrown in at the very end. Often literally on the way out the door''Oh, by the way, this material is going to cost more on the next order. We'll eat it this time, but the price is now this much more.' My theory is that this happens because meetings between Chinese usually end with dinner or Karaoke so there is still time to work out issues. But foreigners usually have work meetings during the day and then go home. Whatever the reason, it's almost comical to me'it's something they have to bring up, but don't want to so they wait until there is no possible way to procrastinate it any longer and then, just off the cuff, throw it out.
8. Know the numbers better than your counterparts.
9. China does not do "win/win."  "The guys at Sinocidal said it best: As far as most Chinese are concerned 'Win Win is a panda bear in Sichuan Province.'
10. Nobody ever makes product for a loss.
11. Time is on their side.  They know Westerners want instant gratification, so you must "learn to wait."  For more on this, see my post, "Don't Just Be Leaving On That China Jet Plane."

This advice applies to virtually all Chinese business situations and I urge you to go to the post for additional items on the list and to gain the full flavor of those to which I have cited.