Doing Business in China.

FLEXIBILITY.

China has become the place to outsource to over the last decade, and a large amount of companies have already done this, but there are still risks in doing so. In the present climate, suppliers have gone out of business, and this creates large disruptions for the customer when it occurs. It is therefore important that customers remain flexible and multi-source their components or goods.

SUPPLIER NETWORKS.

It is important that customers utilise established UK companies to source and set up production with supplier networks in China, to achieve the cost savings that customers seek. By using established UK companies, relationships with the Chinese suppliers are already in place, especially in terms of honesty and integrity, and therefore a large part of the risk of "going on your own" strategy is removed.

ARE LOWEST COSTS BEST?

When sourcing in China, customers must look at whether they wish to go down the "lowest cost route" or down "a low cost route". The "lowest cost route" normally gives risk as suppliers are in the lower quality bracket, cutting corners, poor facilities, facilities which the customer would not use back in the UK and you get what you pay for. If the customer wishes to go down this route, then China may not be the offshore country he should be using. The better option is the "lowest cost route" where suppliers are of a standard which ensures that suppliers have quality accreditation's, that they follow a QMS system, operate to audited procedures, and have facilities which the customer would feel was there own company. The costs will not be the cheapest, but over time, as relationships build, there will opportunities to achieve cost downs on goods.

SUPPLIER LOCATIONS.

Part of the selection of a supplier must be the location of the facilities, as things like a proper infrastructure, allowing goods to be quickly moved from the factory to the port, Government incentives to used companies in special development location, good transport locations with major motorway facilities, ease of entering and exiting China on business trips. In addition, there certain cities which are noted for manufacturing a certain type of product, which means it will difficult to achieve competitiveness elsewhere in China.

CULTURAL DIFFERENCES.

Cultural differences are the most important changes from the west. When doing business with Chinese suppliers, you will find that discussing technical points, it will involve the full team, and discusions on a single point will take time, something the west are not used to. One of the other main points is the breaking off for lunch which will take 11/2 - 2 hours, again something the west are not prepared for. Be polite, as to be abrupt may send the wrong message. Also remember, a large amount of discussion and work is carried on during the evening meal, so also be prepared for this.

I hope that this small insight into doing business in China has been helpful, and should you require any further information, please contact Source-in-Asia Today Limited, who will be only too pleased to help or discuss any points you have.