How to manage manufacturing in China when you don’t own the factory

Manufacturing in China 101

As the China-based partner responsible for managing suppliers and supply chains on behalf of our clients, PassageMaker places great emphasis on fostering efficient communication and motivating suppliers. 

My sales team would like me to answer “how to manage manufacturing in China when you don’t own the factory” by saying “outsource your contract manufacturing to PassageMakerand we’ll do it for you”. But I don’t want my blog to be an infomercial, so whether you outsource your China project to PassageMaker, or manage things on your own, here are some tips, tools and strategies learned the hard way during my past 20 years in Asia.

How to motivate suppliers in China

Even if the factory is motivated by your order and excited to do business with you, it doesn’t mean you can assume the desired product will show up on time at the agreed level of quality.  As buyers, it’s critical for us to communicate the details of expectations during the negotiation and contracting phase.  Setting up a robust quality control system is essential.  We have covered quality systems in other blog posts, but for the sake of this article, let’s assume you already have defined you expectations for quality, price and lead-time. But how to ensure the China side really understands? 

How to foster clear communications with suppliers in China

It’s not uncommon someone may think he actually said what he was thinking or thinks you understood what he may have said. (I said it that way to make my point). Compound this by the cultural and language differences often found in the international business realm and it doesn’t take long to realize miscommunication is inevitable.

Writing down what everyone said and agreed to and then sharing it with the other person, will help avoid miscommunication that can cause you money and time. Now, I am not saying if you write down what was said there won’t be miscommunication or ambiguities in your e-mail summary. But, writing down provides you a record of what you think was said and agreed to, and allows both parties the chance to clarify. The big stuff should be in the contracts but day to day communications often use email.

By taking the lead and providing the summary, you can control the presentation of information, how it is presented, what it says, and of course share with your counterpart how YOU see the world – what you understood. Additionally, this will help avoid any intentional ambiguities the other party may have planted.

Oh, and it’s a best if you have them reply with a confirmation.

Effective e-mail communications with Chinese factories and staff

How to manage manufacturing in China when you dont own the factory-1

If you communicate globally via email with co-workers or suppliers in China, you probably have at some point become frustrated by the amount of time it takes to get an answer to what you consider a simple question. Part of the reason is language and culture, but dealing in multiple time zones plays a big role too.

For example, if you are in N. America and sending e-mails to China, it is essential to have clear and effective communications because there is very little overlap of working hours in the two places. Should you get an unclear response to your question, you have to wait another 24 hours to ask and hear back.  This cycle can go on for days and somehow a simple question like “did the samples arrive and get sent to the suppliers?” takes 2 weeks to answer.

Monday: Did the samples arrive and get sent to the suppliers?

Tuesday: China Answers: Many boxes arrived, which samples?

Wednesday: Did the red samples of part #682 arrive?

Thursday: China Answers: I’m out of the office on a factory visit; my assistant at the office says some of the red samples arrived. I’m sending her spreadsheet with the details.

Friday: The spreadsheet was in Chinese, can’t understand. I sent 10 samples, did you get at least 6 so you can send 2 to each of the 3 suppliers?

Monday: China Answer: No answer

Tuesday: China Answer: Sorry, I sent the email to the wrong address. We got 5 and I wasn’t sure which supplier you wanted me to send them to, please advise.

Wednesday: F*%$ it, we don’t have time left to make the parts and deliver them.

Thursday: China Answer: Which parts are you talking about?

Time: 2 weeks/ 10 days/ 0 Progress

Even simple communications get mucked up over email, so to help improve things around my office; about 10 years ago I created the following protocol for all my China side staff.  It proved so effective, now all staff regardless of nationality have a laminated copy of it attached to every monitor in my organization.

Before sending an e-mail, I will check the following:

  • Are the right attachments attached?
  • Are the attachments formatted with correct page breaks and look nice?
  • Has the attachment been spell checked?
  • Has the e-mail been spell checked?
  • Is my point clear?
  • Does my email avoid sarcasm and phrases that could be misinterpreted by the reader?
  • Do I need any other people in the organization to give a 2nd option before I send the email?
  • If I am assigning a task, can this task be assigned using our project management software rather than via email?
  • IF the task must be sent be email:

A) Is the person I want to do something listed in the “to” line? Don’t expect somebody in CC to know they have been assigned a task.

B) Is the task clearly stated in the email?  Who, what, when, why!

  • Review who is in the “to”, “cc” and “bcc” to confirm your email is not sending sensitive information to the wrong people.
  • If the people who will view your email don’t speak your language, make sure a translation or at least a summary is provided for them.

Couple of notes:

1.    Send me an email and I’ll be happy to forward you the bi-lingual version of this document so you can cut and paste and share among your team.

2. It is not an understatement to say that moving from a spreadsheet based system to proper project management software has changed my life as a manager.  We made this change when we had about 50 staff. Today we have 200 and I know I would have hung myself had I not had this software in place.

3. Make sure your Chinese staff have English spell check on their computers. Some China computers don’t have this out of the box, but installing it is easy.

4. You need to have some incentive in place for people to follow and respect the rules. At my shop anybody that breaks the protocol has to buy me a beer. And I like expensive imported stuff from Belgium!

5. Many of the points are obvious, but unless your suppliers or China side co-workers are trained up, you will run into problems.  So take a minute to go over the protocol and make sure everybody signs off.

Closing remarks about communications and managing China-based entities

In short, is sad but true- in China, even simple communication is not easy. I hope the above tips help you communicate better with your Chinese business associates. And if you outsource your project management to PassageMaker, you can rest assured we’ll get the right message delivered to the right person at the factory!

I’m going to leave you with some more valuable resources to read up on should you want to dive in a little deeper:

How to manage a team to coordinate your supply chain in China

7 things to note when outsourcing supply chain management to China

How to take advantage of the RMB when buying from China

How to find and manage suppliers in China by leveraging professionals!

Manufacturing in China vs USA: Discover how China can ‘work’ for you!

Staff and infrastructure costs in the US vs China What brand owners importers and manufacturers need to know

Comparing manufacturing in China vs USA

During my 20 years living in Asia, I’ve owned a number of different business entities in greater China, ranging from China WFOE’s to HK holding companies to virtual offices. In some cases the teams were set up to sell to China and in other cases we were buying from China.

China is not only a massive market but it changes rapidly, so I don’t claim to be an expert on all aspects of your China business; and anybody that claims to know “everything about China” should not be taken seriously! I’ve had my share of success as well as failure, and in this whitepaper I’d like to share some of the key lessons, pitfalls and best practices that I learned the hard way when answering the deceptively simple question of “how much does it cost to hire staff and rent space in China?”.

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“What can you expect?”

This whitepaper covers the following:

  • Factory and office staff: Comparison of US & China
  • Labor rates explained
  • Work hours explained
  • Mandatory benefits explained
  • Taxes explained
  • Severance explained
  • 12 month forecast for wages, rents and the RMB exchange rate
  • Options for outsourced manpower and infrastructure

“How will you benefit from this whitepaper?”

While the concepts discussed in this whitepaper may be of interest to anyone that wishes to do business in China, regardless if you are on the buy or sell side of the transaction with China. Readers who are thinking about setting up their own offices or factories in China will find the white paper particularly useful.

This probably isn’t the first article you’ve read about China business. So to provide real value for the readers, in addition to some of the “you probably know already” stuff included in this whitepaper that is common knowledge and generally agreed among experienced China business professionals, I have added the following bonus sections:

  • “You may not know” provides insider information that comes with 20 years’ experience serving on both sides of the buyer-seller relationship in China.
  • “Dangerous not to know” may or may not be common knowledge, but you better be aware of it either way.

“How do you get your own copy of this whitepaper?”

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