Doing business in China: Meet face to face and mind your Ps and Qs
‘Never rush things – Asian culture does not approve of being pushed into anything’
A shirt factory in Nantong, in China’s Jiangsu province. “Relationships that don’t start out right will break down,” says Alan Dixon. “When they do, it can get messy and costly, especially if the manufacturer has something belonging to you and you can’t get it back.” Photograph: STR/AFP/Getty Images
Theya Healthcare founder Ciara Donlon: “Making in China is not the cheap option. We make some items in Portugal, and China costs more and takes longer. The minimum order is also five times bigger.”
When Ciara Donlon set up Theya Healthcare in 2014 to produce specialist post-breast surgery underwear for women, she needed two things: someone to turn her ideas into finished designs, and someone to make her a set of samples. She came up against a brick wall on both.
So Donlon turned to Linkedin to find an experienced lingerie designer in the UK – and all the way to China to have the samples made. Three years on she is still doing business in the People’s Republic, scotching the notion that manufacturers there are only interested in volume and have little time for start-ups.
“They would have preferred a big order, but once they saw we were serious they met us on volume in the expectation of an ongoing relationship,” Donlon says. “Our manufacturer normally makes ties and sportswear, but they had the specialist equipment we needed and making in China also gave us access to high quality bamboo yarn. We pay a 25 per cent deposit on ordering and the rest when it’s ready. The quality is excellent and the only real drawback is the time difference.”
She adds: “Let me also say that making in China is not the cheap option. We make some items in Portugal, and China costs more and takes longer. The minimum order in also five times bigger.”
Donlon made her connections in China through her designer, Kelly Lakin.
“Kelly’s experience was invaluable, as she understood the formalities of doing business there,” Donlon says. “I’m quite blunt, and that doesn’t go down well. You have to be a lot more diplomatic. If there’s a problem, you don’t tell them directly, you appeal to their sense of accomplishment and suggest that, with a little tweak, the product would be much better.”
Never rush things
“You have to be careful around your language and your attitude,” he says. “Never rush things – Asian culture does not approve of being pushed into anything. Asians also don’t like saying no. If you hear the words, ‘We will give it serious consideration’, that’s a bad result and you may as well pack your bags. What you want to hear is, ‘How long will you be here for?’ or ‘Can you meet my boss later in the week?’
“There is still a perception that volume is what matters most, and that there are quality issues and delays. In fact, this has improved significantly in the last decade. However, those contemplating doing business in China still need to understand it’s not a single market. It’s got over 1.4 billion people, 24 provinces and four autonomous regions, and each are markets in their own right.
“This is why it makes sense for an Irish company wanting to break into the Chinese market to specifically target one of the densely populated cities – there are a number with over five million inhabitants – rather than the market as a whole.”
Meeting potential suppliers or customers is vital, Dixon advises. “Long-term relationships are key, and that requires face to face meetings. Resources like the e-commerce site Alibaba are useful, but one has to be cautious. There have been scams.”
“Some companies think they don’t need to go to China if they’re buying a commodity,” Dixon says. “But if the component is important to the success of your finished product, then you can’t afford to leave it to chance. Visit the factory, talk to those who will be making it, and cover off areas such as your IP if relevant. IP is always a potential issue, as some Chinese companies assume they can use it any way they want and start making products for other people.
“If someone offers to buy your software, for example, don’t get carried away. There is no such thing as a free lunch. Say no until you’re very sure what’s involved. Relationships that don’t start out right will break down. When they do, it can get messy and costly, especially if the manufacturer has something belonging to you and you can’t get it back.”
Theya Healthcare now employs seven people and has just landed preferred status supplier with Britain’s National Health Service. By contrast, Itchy Little Monkeys is in the early stage, but founder Nicola McDonnell also struggled to find an Irish producer for her product: a soft mitten that helps break the itch cycle for children with eczema.
“It was a real challenge to get the Shruggi’s manufacturing sorted,” she says. “I googled manufacturers and quickly realised I had no way of knowing what they were really like. I got in touch with the Ireland-China business association and found Ken Duggan, whose company has a presence on the ground in China. He helped me source the best producer and ensured that they met ethical and quality standards.
“We managed to get them to make an initial order of 600 units. They were prepared to do this in the interests of building a long-term relationship. I pay Ken a percentage of the order value and am happy with this, as his input is invaluable. His company looks after everything, including the quality control, leaving me free to focus on developing my business.”