What happens in China, stays in China. Or does it? The world inside Chinese factories pt.2

In first part of my “What happens in China, stays in China; or does it?” series, I’ve written about first visits to a Chinese factory, and things to pay attention to. If you haven’t read it yet, before moving onto part 2, I suggest that you take a look at it here first.

In any business, if you want things to go smoother, it’s crucial to understand the parties you are dealing with, whether be it a customer, or a supplier . If you understand your customer better, you can make more attractive products, better ads, higher sales, interesting slogans or targeted promotions, and if you understand your supplier, you can have a more efficient, better and more stable supply-chain.

Since we are talking about factories, let’s get into how factories are managed and how you can get the most out of them by understanding them inside and out. 

Almost all factories in China are family owned businesses managed by family members and/or relatives.

The listed factories on the other hand, have more professional teams running them along with a board of directors, however, they tend to be at least 20% more expensive than the rest (especially for smaller customers/orders) and might not be as welcoming or straight up reject your order unless it’s for a significant amount.

Working with family-owned factories might prove to be extremely difficult to get things done with such management as those families mainly built those businesses from the ground up through various ways (mainly through relationships with key people) and not necessarily have proper skills or education to manage them as the business grows. These people bring in their family-members to run the factory, so the upper management will be all family and relatives of the owner. 99% of the time, your contact window with a factory will be a sales person and not a relative, no matter the title of your sales person, they might lack the authority to make things happen for that very reason. A sales person may not be able to go ahead with a decision, because someone from the family circle thinks it’s a bad idea.

Keep a Project Manager from factory in your contact circle.

For OEM/ODM projects, make sure that you are directly communicating with a Project Manager other than your contact person. In most factories, the way it works is that, Sales are mainly responsible from (obviously) you and managing your account, while Project managers have the role of following up with the project internally. They go and knock on everyone’s door at the factory to track progress and follow up, therefore they would usually have better relationship with the sampling team, engineers, and manufacturing while your sales will be better with finance, operations, and factory management aka the boss or boss’ people.

Another reason to keep a Project Manager in your contact circle is that, engineers aren’t always allowed to engage with customers directly as a factory policy (similar to an NDA), or they simply can’t speak any English. Therefore, when you have technical questions, you will either ask your sales or project manager. Not all sales people will have the proper technical knowledge but almost always, these project managers are engineers, therefore they might be able to precisely answer your question while being accurate and prompt.

Although I’ve noticed that the Project Management part is not one of the strongest points in most factories, if your OEM/ODM project lacks a project manager within the factory, the chances are that it’s going to be a one painful project to complete depending on the complexity, considering that your contact Sales person will probably not have that much time or the proper skill-set to manage all the projects.

You aren't the only customer a factory has.

After the project kick-off, follow-up with the schedule and deadlines as tight as possible. Always remember that you aren’t the only customer that a factory or your contact team has. So, never wait until the last day to ask if something has been completed on time. The customers who keep a tight grip on deadlines will always have priority over the ones that do it less often.

OEM/ODM projects never go smoothly unless you’ve perfected your supplier management skills and are very familiar with the internal affairs at a factory.

Meet the boss.

Another trick to get more out of your factory is meeting the owner. In the beginning of the article, I mentioned that most factories have one owner and run by the family members holding the highest management ranks. Under these circumstances, your contact window (Sales team) pretty much reports everything to the owner or someone from the family.

I highly recommend that you ask your contact window to arrange a short meeting with the factory owner. For the meeting, make sure to bring a small gift for him/her. It’s more likely to get more cooperation out of a factory when the boss knows you and it’s very shameful to “lose face” in Chinese culture, which is still valued greatly. When things go south, which you or your contact window aren’t being able to handle well, you can reach out the owner. He/She will feel obligated to help you out and probably solve whatever the issue is. Just keep in mind that, this is your emergency button, if you keep pressing it too much, it will eventually stop working, so keep it for extreme circumstances.

On part 3 of ”What happens in China, stays in China; or does it?” , I will get more into proper due-diligence of Chinese factories, and of course, continue providing more tips and suggestions.

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