7 China purchasing, supplier mistakes to avoid

From poor communication with detailed components specifications and not partnering engineering and purchasing teams, to incorrect use of procedures for bidding and purchase orders in China’s electronics marketplace – learn to avoid common mistakes working with Chinese suppliers and vendors.

CHINA’S ELECTRONICS SECTOR is a marketplace full of competition. Booming opportunities are accompanied by guidelines and regulations in both culture perspective and government control point of view.

Ignoring any of these will bring troubles to you and make you frustrated.

Things may go wrong even if everything looks perfect at the beginning. It is not because you have not chosen a right partner / supplier, but because some minor aspects you did not address properly turned into concerns or unfortunate mistakes.

Below are seven mistakes to serve as reminders, as well as some ideas on how to avoid the mistakes, when working with suppliers in China’s electronics industry. (See: Managing China manufacturing supply chains)

Mistake 1: You are unable to embrace changes
China is an ever-changing marketplace. Chinese technology suppliers and vendors are always ready to embrace new opportunities and because of this, their business profiles could change frequently.

Suppliers define their business strategy, future growth points and seek new partners regularly. Chinese suppliers are willing to work with customers innovatively and adjust their own strategy accordingly whenever possible. The Chinese professional is used to changes because change happens all the time in China.
 

 
New changes can bring new opportunities and new cooperation models. However, if you stay away from changes, you will have less chance to obtain the best value from your Chinese suppliers.

You should not take for granted that a supplier selection and fair value analysis you performed one year ago will still be valid the next year.

You are encouraged to always investigate new suppliers that can meet your needs since new suppliers are emerging almost daily. You should also investigate new business capabilities, or areas of new expertise, with your existing supplier diligently in order to further leverage your relationship — cooperating with them in new areas possible.

Make the effort to book time to talk to Chinese suppliers and understand their new business areas, and strategy revisions, periodically. It is always important for you to understand the supplier’s most up-to-date competencies to better work with them.

Enjoy exploring Chinese suppliers. Enjoy opportunities brought to you by changes.

Mistake 2: Forcing brainstorming and misunderstanding not being direct
In meetings with your suppliers, you ask for their core competencies. You want to understand whether your supplier can meet your product specification expectations and other concerns like meet schedule and delivery challenges.

You are happy to receive a positive answer which could be “Yes, we can do that” during the meeting conversation. But, later you may find out your supplier cannot work with you on this commodity, or schedule, due to some reasons.

Chinese people seldom say “no” which they consider as totally give up an opportunity or showing they are not professional enough to take up the task.

When delivering a message, Chinese seldom express themselves in a direct manner. Instead, they tend to work on the most important points at the very end. Not like western people, who brings up the issue at the very beginning, brainstorm then recap in the end. (OEM Exclusive: Request list of EMS/ODM providers anywhere in China or the greater Asia region)

Based on my observations, Chinese are not used to brainstorming explicitly in a meeting.

Only one out of ten Chinese feel comfortable to fully express their thoughts and opinions in a meeting.

The rest nine feel better to discuss with each other and express ideas to manager after the meeting.
 

 
I suggest the best way to work with your Chinese suppliers is to brief them in meetings on issues without forcing an answer right away. Leave time for your suppliers to do offline discussion which would be much thorough and fruitful. Then you can schedule another meeting afterwards to gather input. This would ensure a reply which is less likely to be broken in the future.

Mistake 3: Requirements and specifications that look good to you – may not be
Chinese are shy to ask questions and would like to show expertise without bothering the customer. Hence, even if they do not ask, they may have different understanding on the specifications you provide.

I have never encountered the case where supplier starts to produce a part before confirming the exact parameter requirements with customer.

When components / parts specification and parameter is considered well-known industry standard, Chinese tends to investigate by themselves instead of asking customer to clarify.

When you purchase technology hardware and electronics or components that needs to be customized by your Chinese supplier, make sure your engineering team and procurement team meet together to exchange ideas and thoughts before engaging the Chinese supplier.

Procurement understands the subject and goes through each requirement specification with the supplier under technical team’s help. Make sure that the Chinese supplier understands your requirement details well before they start manufacturing.

Mistake 4: You avoid bidding in China to your peril
In some countries or regions, electronics components or commodity pricing and terms could be well-defined for certain items. Or, suppliers are well-designated to serve specific territories or fields. Bidding may not generate much value in such situations.

While in China, our markets could be more competitive due to the existence of a large number of producers and resellers.