When a relationship turns sour with a Chinese supplier

by Renaud Anjoran on 22 September 2009

Foreign buyers working with Chinese suppliers take time to grasp the subtle but determining differences in the way business is done here. One of these ”Chinese things” was exposed in a good post from Jack Perkowski, entitled America’s China Agenda at Risk. He explained how the Chinese would respond to Obama’s protectionist move (the rise in tariffs on tires imported from China). With obvious and direct measures? Not only. The “total response” will be “more subtle”:

I have been involved in a number of scrapes over the years with Chinese partners. This is not unusual, as anyone who has operated in the country knows. Anytime you bring two cultures together, in this case a Western culture with one from China, rough spots are bound to surface. I was always struck, however, by the way in which a dispute in one area with a partner, customer or colleague affects all aspects of the relationship in China. In the United States, we’re used to “compartmentalizing,” not letting a disagreement in one area affect the overall relationship. In China it’s different. You either have a good relationship or you don’t.

When a relationship sours in China, strange and peculiar things begin to happen. For example, when we came into dispute with a Chinese partner, the routine airport pickup by the drivers from the joint venture just didn’t happen. Or, an agreement by the Chinese partner to distribute dividends was suddenly reversed. Or, the reception for the “expert” sent from headquarters to conduct training was anything but warm.

Of course, the explanations given for these actions, or non-actions, seemed reasonable on the surface and unrelated to the dispute at hand. “All of the company’s drivers were tied up transporting customers.” Or, new investment opportunities for the company caused the Chinese partner to reverse its decision to distribute dividends. Or, the so-called “expert” from headquarters simply wasn’t “qualified.” As if by magic, I learned over the years that all of these issues went away once the underlying dispute we had with the partner was resolved.

All this is very true… And it tends to happen often. In China, communication is often non verbal. We foreigners have to learn how to listen. It is actually our responsibility to be sensitive to subtle signals… I’ve learned it the hard way, and not only in business. Misunderstandings and bad feelings can grow over time without the foreign party being aware of it, until some kind of disaster happens.

I have seen importers wondering why, all of a sudden, everything seems to be wrong with a given supplier. What is the best reaction for a buyer, in this situation?

A few years ago I was working with a company that had a very adversarial view of sourcing. The boss had decided that, as soon as he noticed several signs of a relationship turning bad, he should stop all business (including cancelling orders) before too much harm is done. Is it the right reaction? I don’t think so.

On the other hand, I work with a buyer who understands this issue perfectly. She is quite effective at avoiding the problems described above. During business meeting, she can be very direct and aggressive, sometimes to a point that is shocking to the Chinese… But is no real problem–they attribute it to her different culture and they accept it. On the other hand, during social occasions like dinners, she goes out of her way to get to know them. When she is back in her office and she notices some negative signals (lack of flexibility, delays, wrong samples sent out, price increases…), sheimmediately gets into action:

  • She checks on her side if something has been done that might displease the supplier.
  • She sends strong emails and/or calls them to know what is going on.
  • She keeps digging until the real reason has emerged, and then they can discuss it openly. Finding a solution is usually much easier than uncovering the underlying issue.

I suggest all importers sourcing in China take a page from her book… Train yourself to notice all the small things, don’t be afraid of challenging what makes no sense in your eyes, and be patient!

Related post: I already mentioned Jack’s very insighful book in a previous post (Why is China price so low?).

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