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China Law Blog China Law for Business

How To Find And Deal With Chinese Manufacturers.

Posted in China Business, Legal News

Very helpful post over on the Foreign Entrepreneurs in China blog, entitled, “36 Tips on How to Deal or Negotiate with your Chinese Suppliers.” I urge you to read the entire post, but I particularly liked the following (lucky) eight tips because they are important and yet not often enough discussed:

  1. Not all good suppliers have English language websites. Get someone on board who can read Chinese.  
  2. If there is any IP involved, register it in China before you approach anybody and then get your potential suppliers to sign a Non-Disclosure, Non-Compete, Non-Circumvention Agreement (a/k/a NNN Agreement) before you reveal your secrets to them.
  3. If you can’t visit the factory, get an Inspection Company to do it for you. It is not that expensive.
  4. Give realistic purchase estimates. If you promise ten times more than you are actually planning to buy, your manufacturer will make up for the loss in anticipated profits by giving you poor quality.
  5. Learn about your supplier’s cost structure (labor costs, material costs, etc.) so if it seeks to negotiate a price increase, you have a factual basis for arguing against it.
  6. It is a good use of your money to get a China knowledgeable lawyer to draft your contracts so that they are enforceable and so that they cover the points needing coverage, including IP protection, product quality, product specifications, and penalties.
  7. Ensure the manufacturer you are considering has the machinery & capability to produce your product. Ask them to produce a few samples in front of you.
  8. If you can’t visit the factory to check on your product send an inspection company or somebody you trust to do so. 

What do you think?

UPDATE: Quality Inspection Blog has also linked over to this 36 Tips post, adding a number of his own comments to the tips.  

  • http://www.lawimage.com.au/ lawimage

    If you want to deal with Chinese manufactures, you had better find someone who know Chinese culture very well, Because the Chinese culture could kill your business.

  • Volker Müller

    it seems to be common understanding among both Chinese and foreigners that China is different from the rest of the world, completly different.
    This may be true if you study Chinese medicine or Chinese philosophy, but when it comes to technology and business in a modern Chinese city, is it really soooo different?
    “How to find and deal with xxx Manufacturer”. If for XXX you set China, Poland, Uruguay, New Zealand, Marocco (to take an example from each continent), would it really make a difference?

  • Kennethe Spense

    Nice list but is it even worth dealing with China if it is going to be so complicated and such a risk?

  • http://CindyLight.net Cindy Light

    Knowing Chinese culture is very important for doing business in China, as well as dealing with the Chinese clients in the U.S.
    In 2007, I witnessed a senior financial planner, Frank, lose a $500,000 business deal in less than two minutes from his own office in Atlanta, GA. The opportunity was lost when Frank asked a question that culturally affronted his Chinese client, my friend, Young. In the past three years, I could not stop myself wanting to help people like Frank.
    Communication is more than just conversation. While you are dealing with Chinese people in business, you need to learn how the Chinese mind works and how Chinese people make decisions based on their cultural values—- It is the most essential lesson for Americans.
    A simple thing like: Why Chinese people do business at the dining table? If you know the culture, you would do the same thing.
    As a Chinese American, I’ve spent 30 plus years in China ( for business) before I moved to the U.S. I believe each one of us all has something speacil to give away and help the others. Helping non-Chinese to learn and understand the Chinese culture for their own benefit is what I can give. If you need help to learn the do’s and don’t while dealing with Chinese culture, check out my website ChindyLight.net. Let me know if it helpful. You welcome ask any questions.
    My up coming book “Successfully Communicating with the Chinese” offers many answers. You can also find it from CindyLight.net.

  • Vince Ko

    I am in the process of looking for a manufacturer in China for a product idea. I am confused by all the negative things I hear about China. Is there a definitive approach to this IP problem? I have very limited resource, barely enough to get started and can not afford a professional legal service

  • Tina Daum

    I have a question,
    I sent a picture of a unique bottle opener and they sent back an email saying that they would like to manufacture it and when I said mine they corrected me by stateing ours.
    is this normal?
    How should I deal with them.
    how does something like this work?
    Thanks
    Tina

    • Rock

      think about the possibility of their poor english