It has been almost 10 years since I arrived in China. What I learned very quickly was that business moves faster here than in the USA. Just like the Dongguan sky, everything was a grey area. Deals get made quickly and once you shake hands, you’re committed. Whether playing dice at KTV, or sipping tea in an office, you are only as good as your word, and every day proves that sometimes it’s still better to be lucky than good.
One night I was out with a factory group that was set to manufacture their first season of footwear for us. Styles were confirmed, but I knew my customer could use some help on margin, so I decided to have some fun with it.
“I need to buy that style for 25 cents less,” I told the factory owner as we were toasting with glasses of beer.
“Your price is already very good,” he replied.
“I know,” I said. “But if we can get 25 cents out of the shoe, I think we can increase our volume and do some bigger numbers.” The price was good, and the shoe was confirmed, so any token was coming out of the factory’s pocket.
“Let’s make a deal,” I said pulling in a female colleague and grabbing two big glasses. I filled them both to the top with beer and said, “if your guy can drink this faster than a girl, then we keep the price as is. If not, we get the 25 cents.”
“Deal!” he said immediately, and suddenly everyone in the room wanted to get involved. After a loud ceremonious countdown, glasses clinked and chins raised. Luckily for me, his guy had already drunk too much, and he was a third of a glass behind when my colleague slammed her empty glass on the table.
“Winner!” I yelled, and even the factory owner smiled as he shook my hand and confirmed the new price. My customer was pleasantly surprised with the reduction, and every revisit to this factory, we laugh about that day.
Chinese New Year always brings at least one new and interesting experience. For example, several years back, my wife and I were invited to dinner with a long time friend and supplier. He showed up with some presents for my kids, and a bag with a bottle of wine for me. We enjoyed a great dinner, catching up and sharing stories.
After dinner, he insisted on walking us down to the car carrying the bags. It struck me strange, but I only gave it a passing thought.
“Let’s put these in the trunk,” he suggested, holding up the bags.
“Nah, just throw them in the back seat,” I said. We shook hands all around and climbed in. About halfway up the block, I reached back for the bag of wine. Knowing this supplier had great taste, I wanted to see what it was. Taking out the bottles, I noticed that the bag still felt heavy. I looked down in it and, there at the bottom, sat a fat red envelope. I picked it up expecting to see some pink 100 RMB notes and was surprised to see a stack of green.
“Turn the car around now,” I said calmly to my wife.
“Why, I don’t understand, what’s wrong?” replied the supplier. “But this is Chinese culture. Blah, blah, blah.”
Okay I get that, but I am not Chinese, and I insisted that he take it back. You only get bought once, after that you are simply for sale.
As much as you try to keep everything above board, sometimes transactions that are definitely off-the-record need to take place.
“The injection shop is closed,” I was informed by one of my developers.
“Closing … or closed?” I asked, thinking about the $500K worth of steel that we owned now sitting on their shelves.
“Closed. The owners have fled back to Taiwan and the workers have trashed the place. They have also locked down the front gate and nothing goes in or comes out.”
Three different departments shifted into overdrive, and what started out as a seemingly simple problem turned into a three week ordeal to recover property that we had bought and paid for. We went down every avenue we could think of, but in the end, we sat down with local authorities.
It took about four trips across town, and hours of waiting before we were finally able to meet the guy responsible for this little township outside of Dongguan. The government had been forced to cover RMB 7 million in outstanding costs owed to the workers, and now they were looking to “recover their losses.” It didn’t take long to “come to an agreement,” and we were granted access to the factory.
Activity around the front gate had slowed after several weeks, and when we stormed the factory at 2 am, complete with two gigantic flat bed trucks and a couple of rented fork lifts, there wasn’t much resistance. It helped that several government officials accompanied us. I think they were amused at us dressed in black and wearing headlamps and gloves, but why not act the part you have to play, right? Within an hour and a half, we had safely extricated over a half million dollars in tooling and sent it on the way to a new supplier.
I am happy to say, that as much as these times were exciting and entertaining, business in Dongguan is evolving. I haven’t been to a KTV in years, and suppliers as well as customers are just as happy to have a drink after dinner. My suppliers have come to respect our company as an honest and established business, and my long standing rule of, “if you can eat it or drink it, no problem. Otherwise, don’t accept it,” lives on.
The government is doing their part and sudden factory closures are decreasing. Business continues to boom though, and as the city grows more beautiful, crop after crop of first time China visitors arrive and get their first taste. The process may change, but business still gets done, only in Dongguan.
Michael Roy, general manager at the Advanced Manufacturing Group, has been doing business in Dongguan for nearly ten years. He has been married to a Chang’An native for five years, and has two children.