Just saw an Inc. Magazine article entitled, “How to Partner in China in 2013.” The article makes a number of good basic points about what it takes to succeed in doing business in China today and I am saying that not just because I contributed two of them. The article’s premise question is “How can you take advantage of [China’s] lower costs and the prospect of over 1 billion new consumers while minimizing risk? The following were proposed:
Start Small and Tough. Arie Lewin, professor of International Business and strategy at Fuqua School of Business at Duke University advocates testing your China partner with “a small, low-risk project to set a high bar for quality and timing.”
Get everything in writing. The article quotes me as saying that ten years ago, the “typical entrepreneur would not have had a written contract with their Chinese suppliers” but now “it’s foolish not to have a written contract,” since most Chinese businesses, especially in places “like Shanghai and Shenzhen” are accustomed to them. The article then advocates making sure that the contract is “spelled out in both English and Chinese, and clearly states the product specifications, the quality requirements, the trade secrets policy, and so forth.” I disagree a bit with this in that we strongly advocate doing China contracts in only one language, usually Chinese. For our reasoning behind single language contracts, check out Dual Language China Contracts Double Your Chance Of Disaster and China OEM Agreements. Why Ours Are In Chinese. Flat Out.
Realize a contract is just the beginning of the conversation. Andrew Hupert talks of the importance of Americans realizing that in China a contracts is “an exercise meant to help the two sides understand the dynamics and expectations of the relationship—not to determine a hard and fast set of deliverables.” I agree with Andrew, but the problem here is that the Chinese side expects to be able to make changes but it also complains when the American side seeks to make changes. In other words, the flexibility goes only one way and it is up to the American side not to allow that, which leads into the next thing….
Don’t let them get away with things—even if you let them get away with things. Even if you plan to let one bad shipment slide, it’s important to let the partner know you noticed. “Let them know you know what’s going on,” says Harris. “And if it happens again, you’ll need a new agreement on that.”
Get to know them—and their friends. “There’s an old joke in China,” says Hupert. “If your partner doesn’t have a picture of your family on their computer, then you’re just a transaction. And that doesn’t count for much.” Reach out to local government officials, and make them aware of you and how you’re helping their economy, says Lewin. “If you’re creating employment, they’re very interested.” By gaining importance as a community member, you gain importance as a business partner, too.
What would you add?