Seven Tips for Finding the Right Chinese Partner
China is a major trading partner for the United States, and the relationship is key for both countries. U.S. trade with China is booming, but there are issues that continue to linger, such as the U.S. trade deficit and China’s trade surplus, a Chinese fiscal policy that keeps currency artificially low compared to the U.S. dollar, intellectual property, piracy, counterfeiting, U.S. debt level and Chinese investment in U.S. treasuries, U.S. export controls, the investment barrier, port closures, shipping delays, and seasonal shipping schedules.
Because of these issues and a host of other differences between the two countries, many shippers struggle to do business with China. Below are seven lessons that will help shippers successfully move freight to and from China.
Lesson #1: Get the Right Chinese Partner
- Commodity knowledge. Since there are frequent trade issues for certain commodities, your Chinese partner must understand all of the intricacies of import/export regulations, tariffs, and legal requirements.
- Issue resolution. Your Chinese partner should not only understand the shipment commodity details and requirements, they must also be able to advocate on your behalf when issues arise.
- Personal connections. In China, it is very helpful to have a Chinese partner who has personal connections within the government and business communities. These connections help improve communication, mitigate risk, facilitate shipment delivery, and expedite problem shipments.
Lesson #2: Business Relationships are Personal
- Relationships matter. In the United States, business relationships develop over time. In China, it is customary to build relationships prior to doing business. If everyone gets along, a business relationship may happen.
- Visit China. To develop the necessary relationships with providers and partners, it is important to visit China. Since many firms skip this step, your extra effort will be appreciated by your Chinese colleagues.
Lesson #3: Service Is More Important Than Price
- Experience matters.Moving freight in China is a high-touch, high-value service that requires significant expertise, coordination, and resources. Trying to save a little money by hiring an inexperienced company will end up costing more in the long run.
- Beware of teaser rates. Some freight forwarders and logistics providers quote teaser rates to win customers, then add extra fees and charges after the fact. Because international shipping is so complex, there is opportunity for unscrupulous behavior.
Lesson #4: Experience Trumps Size
- Sales talk versus know how. Many brokers and third-party logistics (3PL) salesmen claim to do China shipments. Calling a contact and double brokering is very different from real experience and expertise.
- Size doesn’t always matter. Even some of the largest 3PLs don’t do China business because they specialize in domestic transportation.
- Hire an expert. Find a person who currently has customers with China shipments. International shipping to China is much more complex and complicated than domestic shipping.
Lesson #5: Get the Details Right
- What mode? Air freight to China is much faster, but much more expensive. Typically, only time sensitive shipments are shipped by air.
- Details matter.Your 3PL needs to effectively manage paperwork, customs clearance, incoterms, trucking companies, changing shipping schedules, and changing requirements from the shipper and consignee.
Lesson #6: Cultural Differences
- Losing face means losing business. The Chinese are typically non-confrontational. Overt conflicts and situations that embarrass others are considered losing face. Doing business after someone has lost face will be difficult or even impossible.
- Keep your cool.Tough negotiations, and dominant or aggressive behavior will not be perceived favorably.
- No long-term contracts up front. Chinese business people will often want to move slowly and see how the relationship is going.
Lesson #7: Great Communication from Start to Finish
- Paperwork. Getting the paperwork completed correctly is a daunting job. Manage the project with a check list – not a dozen piecemeal requests.
- Status updates. Any partners should provide status updates on a consistent basis without being asked.
- Problem resolution. There will be problems on occasion. Both the company and forwarder must communicate effectively to solve the problem.
Finding the right partner may take some work, but in the long run, taking the time to establish relationships and respect with the right providers will save you time, money, and frustration. Following these seven tips will help you find a the right Chinese partner for your business.