Earlier this year, I decided that 2017 is the year we spend a lot more energy on sharing very specific knowledge, based on our years of accumulated expertise, about the different pillars of our business…with everyone. This will include insight into our product development process, our team culture, our company and project management practices and more.
In my first post, I shared the exact roadmap we use with our customers to help determine if manufacturing in China is the right fit for them. In the early stages, asking the right questions is critical to setting yourself up for success. You wouldn’t believe our customers’ stories (nightmares actually) about their past experiences manufacturing in China – endless delays, major defects, unsellable products.
In this 2nd of my 3 posts on manufacturing in China, I’m going to share our insights into how having good Guanxi (loosely translated as relationships) can act as a magic wand for getting things done in China under challenging circumstances. I’ll share a specific example of how Guanxi helped us work miracles for a client who needed a small number of complicated electro-optical units made in a hurry. I’ll also share why translation does not always equal understanding when you’re trying to communicate in the Chinese marketplace and take a look at the realities of sourcing the partner to match the scale of your manufacturing needs.
In the next couple of weeks, I’ll also share our Quality Assurance Roadmap (Checklist Nirvana!!). When we create a manufacturing plan for our clients, we obsess over making sure we have the very best manufacturing partner, solution, processes and quality control. In this post, I’ll share the exact checklists we use to make this happen.
If you’d rather not wait, you can download the full guide right here (Manufacturing In China: Getting It Right) which covers what I’ll be sharing in this post and the content I’ve mentioned above.
What exactly is Guanxi?
Loosely translated, Guanxi describes a personal connection between two people in which one is able to ask the other for a favour or service, and vice versa.  Guanxi can come from your personal social network such as a classmate or relative.
The Chinese distinction between work life and personal life overlaps. In general, Chinese do not trust anyone deemed an outsider and business is considered a personal matter. In the west, business and personal lives co-exist. In the context of a manufacturing partnership, the right Guanxi can act as a magic wand that opens otherwise closed doors.
A quick example of Guanxi In action:
Here’s a quick bullet point summary of how Guanxi helped us manufacture of a small batch of electro-optical products in China.
- Our client required us to manufacture an extremely complex part of injection mold tooling with five slides and one rotating core for a thread to maintain internal optical components in perfect alignment.
- The order was for only 500 units.
- We were challenged by ongoing (last minute) customer requests for design changes.
- Manufacturers found it difficult to finalize pricing due to the unpredictability of the final product.
- The low quantity order was considered a pilot run or manufacturing trial by most manufacturers and initially it appeared unlikely we were going to secure a manufacturer.
- Competition was low and manufacturers stood to gain very little from taking on this contract.
Solutions and Outcome
- Larry Zhou, Inertia VP Manufacturing, saved the day! Larry’s old university friend had strong relationships (Guanxi) with several factory managers in China.
- In spite of all the project challenges, the university friend (with Guanxi on his side) was able to arrange meetings with eight potential manufacturers and ultimately secured a vendor to take on this challenging project.
- As a result, injection molds for this product were ready ahead of schedule.
- We were able to negotiate receipt of 50 units for testing.
- We were assigned a dedicated project manager for customer team during factory visits.
- Any roadblocks we did run into were resolved within 24 hours.
- The final product exceeded our customer’s expectations (with flawless execution and completion ahead of schedule) due to the the strength and dedication of our team combined with the formidable, yet elusive, power of Guanxi.
Translation does not always equal understanding
It’s important to remember westerners rely on rules of grammar to communicate ideas, while the Chinese rely on symbols. North Americans should leave the notion of western grammatical rules and structure at home. The Chinese language has very few grammatical rules rather relying on ideograms or written characters to symbolize an idea. Yes, it’s complicated; an ideogram can have a number of meanings. The profound difference between our languages can lead to serious problems when negotiating the details of your manufacturing project.
A competent interpreter who really understands the business language of manufacturing is worth their weight in gold. A great interpreter is critical as teams must transfer and share ideas, concepts and sometimes feelings rather than words. Mere, straight grammatical translation is not going to lead to success in the realm of Chinese manufacturing.
Beyond Grammatical differences, understanding the Chinese approach to manufacturing is critical.
The Chinese approach to manufacturing is extremely pragmatic. Each and every step of a product discussion and assessment logically connects to the next. Taking the time to explain concepts thoughtfully has a profound impact on the level of understanding between you and your manufacturing partner, and consequently, on the end result of your product.
In a meeting with a Chinese manufacturer, we introduced a new child safety product. Here’s an example of what we shared with the manufacturer:
- Our drawings with the necessary details, specifications etc;
- The engineering, thought process behind the design
- Why the specific materials were selected
- The importance of certain fasteners
- The repercussions (safety, recalls, etc.) that could occur if the product is not manufactured according to our requirements.
It was the product context we communicated to our manufacturing partners that opened a window into the design intent and allowed our partners to build empathy for each project stakeholder. Treat people with care and respect and they are likely to reciprocate. Your attention to every detail is critical. Leaving anything open to your manufacturing partner’s imagination or interpretation is very likely to end up in unmet expectations and undesired outcomes.
Make efficiency and simplicity a priority when communicating details.
Chinese manufacturers are formidable executors. This is true when working with the technical staff and even more so with the workers. Therefore, streamline your communication process aiming for efficiency and simplicity to improve your chances of getting the very best out of your Chinese counterparts. Stay away from colloquial language and use more formal language that your manufacturer can easily comprehend.
The Sourcing Pyramid
When it comes to building businesses partnerships in China, it’s important to understand that there is often a subtle hierarchy at play. Not all companies are immediately accessible to all customers. Companies worth partnering with are often less visible and more discerning than those that are easily accessible.
Gaining access to these companies requires an added level of Chinese business savvy, Chinese manufacturing experience, and of course Guanxi. Companies advertising on Alibaba are plentiful, very easy to access, but are not always the right contact to build a long-term manufacturing relationship with. These contacts are often dealers, brokers, distributors, or manufacturing representatives.
It is a real challenge for manufacturing newbies in China to source manufacturers with the specific expertise you seek. In actual fact, the manufacturers that are able to meet your specific needs are few in numbers. Like anywhere in the world, proficient companies don’t always advertise, but instead, rely on a network of trusted referrals and relationships to build their business. These companies are discerning and discreet and probably wish to deter customers with very low needs (sample purchases of two to three items).
We created an infographic below to illustrate the various types of companies and what it takes to get access to Chinese counterparts.
- Ideally, target companies above the lowest level of the pyramid to find good manufacturing partners. But beware, a higher position on the pyramid does not guarantee perfection.
- Your best approach to manufacturing sourcing (anywhere in the world) is to always source the most appropriate partner not the ‘biggest’ or ‘best’. For example, a fledgling start-up with a limited production run, should avoid approaching a large, state-owned manufacturer.
- Such a manufacturer’s focus is likely on their larger clients while small customers are unlikely to receive full commitment from that manufacturer. This is not a reflection on capability of the manufacturer, but rather that smaller customers present the least risk to that manufacturing company’s own business success.
I’ve covered a fair amount of material here but still have more to share! In my next post I’ll be sharing our Quality Assurance Roadmap (Checklist Nirvana). When we create a manufacturing plan for our clients, we obsess over making sure we have the very best manufacturing partner, solution, processes and quality control. In this post, I’ll share the exact checklists we use to make this happen.
If you’d rather not wait, you can download the full guide right here (Manufacturing In China: Getting It Right) which covers what I’ve shared in my previous and upcoming posts.
In the guide we’ll show you:
All of the questions we ask to see if manufacturing in China is right for our client’s business
Why building the right relationships (Guanxi) in China matters more than anything else
The exact checklists we use to find the best manufacturers for our client’s products
What we do after we kick off manufacturing to consistently produce a high quality product