Every so often a US start-up company will contact me with a plan to manufacture in China that involves the Chinese manufacturer producing at a reduced rate until the product can really get off the ground. My response to those plans is always the same:

I am not going to tell you that what you are proposing is impossible, because for all I know, it may be possible. But I am going to tell you that I have never heard of a Chinese manufacturer agreeing to such an arrangement with a start-up company and based on what I know of how Chinese manufacturers are structured and how they typically conduct their business, I think what you are proposing will be exceedingly difficult to achieve. Maybe Wal-Mart could pull something like that off, but I just don’t see a small company being able to do so.

The start-up company usually responds either by backing down or by launching into US company speak something like the following:

We have gotten where we are right now through a series of win-win cooperative relationships with a number of companies and people and I don’t see why we can’t do something similar in China. Maybe this sort of thing is not yet typical in China, but once they see our product and realize how they can participate in it in a win-win sort of relationship, I think they will be interested.

To which, I usually tell them they should try and then when their relationship with their Chinese manufacturer is ready to be formalized with a contract, they should get back to me. They agree, but guess what? I’ve yet to get the return call.
China product quality guru Rene Anjoran, in his most recent post, “Partnering with a Chinese factory: a sweet dream?” explains how Chinese factories just do not think in terms of either “partnerships” or “win-win” and a lot of that has to do with their past treatment by Western buyers. Anjoran concludes his post (and I urge you to go there and read the whole thing), with the following list of ways to treat your Chinese manufacturer:

— Accompany the factory at the beginning of the relationship, to explain clearly what is acceptable.
— Keep monitoring production quality, make sure to get written and signed records, and do not lower your standards for any reason (if possible).
— Dump regularly the worst factories: those that can’t (or won’t) be reliable enough, and those that are growing too fast.
— Give regular business to the best factories and walk your talk, as mentioned above. Make sure you are not seen as a bad customer.
–Tolerate that the best factories get a reasonable premium on their prices: you will make it back easily on lower costs (better quality, less delays, faster responses, etc. all reduce your costs and help you please your customers).
— Don’t switch suppliers for a few pennies, but keep them in competition with at least another factory to avoid unreasonable quotations.

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Dan Harris

I am a founder of Harris Bricken, an international law firm with lawyers in Los Angeles, Portland, San Francisco, Seattle, China and Spain.

I mostly represent companies doing business in emerging market countries. It has taken me many years to build my network and it takes constant communication and travel to maintain it. My work has been as varied as securing the release of two improperly held helicopters in Papua New Guinea, setting up a legal framework to move slag from Canada to Poland’s interior, overseeing hundreds of litigation and arbitration matters in Korea, helping someone avoid terrorism charges in Japan, and seizing fish product in China to collect on a debt.

I was named as one of only three Washington State Amazing Lawyers in International Law, I am AV rated by Martindale-Hubbell Law Directory (its highest rating), I am rated 10.0 by AVVO.com (its highest rating), and I am a SuperLawyer.

I am a frequent writer and public speaker on doing business in Asia and I constantly travel between the United States and Asia. I most commonly speak on China law issues and I am the lead writer of the award winning China Law Blog (www.chinalawblog.com). Forbes Magazine, Fortune Magazine, the Wall Street Journal, Investors Business Daily, Business Week, The National Law Journal, The Washington Post, The ABA Journal, The Economist, Newsweek, NPR, The New York Times and Inside Counsel have all interviewed me regarding various aspects of my international law practice.

I am licensed in Washington, Illinois, and Alaska.

In tandem with the international law team at my firm, I focus on setting up/registering companies overseas (via WFOEs, Rep Offices or Joint Ventures), drafting international contracts (NDAs, OEM Agreements, licensing, distribution, etc.), protecting IP (trademarks, trade secrets, copyrights and patents), and overseeing M&A transactions.