20 February 2010
Buying from China – The customer is NOT always right.
Having been both involved in the past with furniture sourcing and buying, and more recently operating a retail furniture store and factory (where I now must sell to those same types of furniture buyers), I suppose I can say I truly understand both perspectives. Though I must confess, that for the first time being the supplier, is an enormous eye opening experience – in particular, pertaining to some of the silly things us furniture buyers say and do. And more so, just how uneducated and naive many of us are, when it comes to the environment we are operating in.
Case in point:
This afternoon, the neighbor from the small store next to ours rushes in, asking if we could assist her in translating for an overseas buyer who stopped in unexpectedly to check on the progress of his order. In the spirit of “good relations with the neighbors” I agree (all the while choking back the idea that I should either a) tell the customer in English, that that suppliers product is low quality/low cost garbage and he should just come visit us or b) tell her I am happy to translate for a small fee of course ). Having stopped by without his local buying agent who would normally translate for him, he’s about as helpless as she is. I introduce myself and explain he should just explain the issue and I will translate it to her.
- First Issue: Buyer stopped by yesterday and requested some changes to be made on the screen panels he has just ordered. Because there are more then one, he cannot determine which one the changes have been made to. Quick translation and problem solved (its the one on the far right).
- Second Issue: Apparently the carvings on the screen have not been smoothly sanded enough – in other words “still not up to his standard.”
The look on his face tells me he’s not happy and by now starting to feel a little like he’s being ripped off. He paid a deposit, gave instructions and now the supplier is not delivering. “Whats wrong with these people?!?! He is having trouble comprehending why they won’t just “do a good job.” Now I have been in this situation myself many times before. The look on the vendors face tells me a similar story. “We gave an excellent price, we held the product for him (even though we could easily sell it to another buyer) and we did our best to make the changes he requested.
Its almost always a same/similar situation:
|Trying to achieve a certain standard in the product (preferably even a better standard) and within their budget which they believe they have communicated clearly to the supplier (and at the same time, assuming that the supplier of course understands what they are talking about). Travels to China a few times a year for buying trips. Believes they are “proficient” and experience China buyers. Worries about “over paying.”||Trying to sell a certain type of product, so that it can be paid for and shipped as quickly as possible (and assumes the buyer understands what standard they can produce at). Has never left China and in fact rarely ventures beyond their shop and factory. Has sold to foreigners before with mixed results. Worries about actually getting paid.|
At first glance, the issue lies in that there is probably a huge gap in the buyers standard of quality and expectations verses what standard the supplier is actually delivering. You want white – they want black – and with a lot of pulling and tugging hopefully you’ll get gray. But is it really that simple? Does it really all boil down to just communication issues?
Taking a closer look at the carved portions of the screen I quickly realize that while they are not sanded extraordinarily well, none the less its not bad. And the carvings are quite detailed as well – carved from camphor wood too – not the most expensive wood but surely not the cheapest either. The “manufacturer side of me” suddenly kicks in and as I am subconsciously calculating the material and labor costs on these screens I ask the guy “well, how much did you pay for these?” His answer brings it all into perspective. While not a rock bottom price, his answer was nevertheless pretty close.
So lets look at the scenario again from a different perspective:
|Wants to pay the lowest price possible. Not willing to purchase “as is,” – in other words wants to make further changes, adjustments and refinements to a “ready to go” product. Not willing to pay for such improvements. Unable to assess if purchase price is a fair market price and assumes there is a huge margin in the product. Unable to assess if the vendor is even able (are they capable/willing to invest the time/money) to make the changes requested in the product. Selects a low quality/low margin supplier and attempts to get them to produce higher quality product at the same price point with no incentives (other then the promise of future business). Unwilling to accept delivery of the product until it meets their standard.||Needs to turnover product quickly. Would like to satisfy customers but within their abilities and budget (realistic to the price points). Needs to complete sale and ship product quickly so as not to take up floor/warehouse space. On low margin/unskilled labor products need to “keep it simple.” Unable to invest large amounts of time on smaller customers/smaller orders. Limited abilities/skill set. Unable to produce higher quality product/unable to climb up the value chain. Has already invested additional time/labor in this relatively small order but still cannot receive payment/ship order. Doing their best within reason.|
Clearly the buyer is just as much at fault for this situation as is the seller. Which leads me to a few things that continue to regularly amaze me about western buyers in China:
- China’s been open for business for at least 20 or more years now, and despite a zillion books, blogs, product recalls, websites, and news articles on such topics, many western buyers today seem just as ignorant about business in China as they were 20 years ago and continue to make the same mistakes (over and over again).
- Many wholesaler buyers (particularly small to mid sized companies) continue to source and buy from smaller low quality/low margin suppliers typically run by workers/peasants/former farmers with no high school or college education under the assumption that the low cost of product will equate to a higher product margin.
- These same wholesale buyers continue to be frustrated and surprised when their orders are shipped late, fail to pass their quality inspection standards, or incur other similar problems.
- These same wholesale buyers are foolish enough to believe that a farmer in China with no high school education, who has never traveled abroad, lives in his factory and does not speak English will be able to either a) understand the buyers expectations right off or b) can learn/adjust over a short period of time to meet the buyers expectations.
- These same wholesale buyers still cannot figure out why the supplier will not just “do a good job.”
- Business people still believe the biggest barrier to doing business in China is the language, despite the fact that any long-term China resident will tell you that learning the language is the easiest part of living/working/doing business in China.
Unfortunately this often seems to be the case with both larger buyers and smaller importers. Though the dynamics of each situation change, the perspectives remain the same regardless of the size of the supplier and volume of the customer. As a western buyer in China here is what we MUST grasp before we can be effective buyers.
- Not all products are high margin products – especially labor intensive and primarily hand made products.
- Look at the quality of the product first. On a scale of one to ten, if the supplier is currently producing at a rating of three is no way he is going to be able to achieve a rating of six anytime soon. This is even more so true of you plan to still pay him a rate inline with a rating of three.
- “Yes, I can do that for you,” means “I am willing to try but there is no guarantees.” It does NOT mean you can rest assured they will deliver as promised. “No problem” means there will definately be a problem.
- Make sure you know if what you asking for is possible and if can realistically be done in China. Even more important is can it be done within the price point you are looking to pay.
- Be realistic about what a vendor can do for you and how much of your expectations they are able to grasp. There are a large number of suppliers who were formally farmers and laborers, eventually striking out on their own. Unskilled with little to no formal education, its absolutely unrealistic (and downright foolish on our part) to assume we can effectively collaborate, with these people and/or that they are capable of relating to our needs, expectations and assumptions.
- Instead of going for the “rock bottom price” try paying just a tiny bit extra next time. That might mean changing suppliers. You might be surprised at just how much this can translate into savings elsewhere.
- I speak fluent Mandarin. It hasn’t gotten me much further in business and at times can even be a disadvantage (more BS thrown at me at an exponentially faster rate). What has helped is 13 years of hands on living and working on the ground in China – and that includes many mistakes made and lessons learned. Speaking with other knowledgeable “on the ground individuals,” is invaluable as is regularly reading their own experiences (lots of good blogs on this topic out there).
- Abandon western mindsets – it is after all China, not New York.
- More Patience.
- A bit more patience.