So You Want to Move to China

This post was originally put on the Silk Road International Weblog by David Dayton on April 13th, 2007. Mr. Dayton writes about the things that foreign companies should expect to get out of China, and the things that are expected of them while they are in China.

First, you’ll get out of China exactly what you expect to get. If you hate China, complain about the dirt, the problems and the lack of QC, etc., etc., that’s what you’ll see everyday and that’s what you’ll take home. This doesn’t mean you have to be Pollyanna and only see the sun that shines through the outhouse window—some things here really, really stink. But it does mean that if you expect to be disappointed or plan to fight for everything you’ll do just that. Do you homework and know what you’re getting into before you come over.

Second, practical experience will do you more good than any degree, guide or guanxi. In coming to China this means know your industry and stand firm on your established standards and experiences. And then, when you’re here spend enough time to understand how your industry works over here. If this means that you fly over four or five or ten times before you close any deal, so be it. Get into factories more than once and more than for the guided tour. If you are going to invest hundreds of thousands of dollars suck it up first and invest in a hotel for a month or three and actually live and work here for a spell. Get to know, not just visit with, the principles involved in your future. And become an expert on what’s going on in your potential partner’s production floor. I’ve seen more than one person come over and make a poor deal worth hundreds of thousands of dollars because he was rushing to catch a flight worth $1500.

Third, invest in your supplier and supply chain. If you expect better quality products you’d better start at the source of the products and spend the time (and money) that it takes to teach multiple levels of the supply chain what you expect, why you expect it and what it will mean to them to meet those standards. If you’re here for the long haul, invest in what it takes to create the supply chain that will justify your investment and provide you the ROI that is expected. Just because your finishing/packaging factory is world class doesn’t mean that their materials supplier is.

Fourth, be willing to learn from the factories and people here. This doesn’t mean that you need to sacrifice any of your standards. But it does mean that due to technology, logistics, politics and even weather you may have to alter your standard production processes. And heaven forbid that you should actually learn something from China!

Fifth, if you expect your suppliers to follow their contracts and respect your IP then you’d better do the same. If you bust your supplier’s butt over IP violations and then have the factory driver take you to the local knock-off golf or DVD shop, what message are you giving to the factory?! Yea, what you do personally does influence how you are seen by your Chinese supplier. Make sure all your legal issues are taken care of in China (and back home) so that the law is always on your side, just in case. Get the right visa, file copy right and trademark applications both at home and in China, if you are going to get an office here in China, do it right.

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