Companies looking to develop supplier relationships and source product from China need to be ready for a culture shock.
``The key word is relationships,'' said Jack Keogh, vice president of global work force development for Prudential Relocation International. ``China is not like any place you've ever worked before. The big issue is culture, and the bureaucracy that goes with it. The ways you get things done in the U.S. don't work in China.''
First of all, it's about respecting other cultures, even when certain business activities-such as bribes-don't jibe with one's normal business ethics, said Keogh, one of the speakers at GlobalAutoIndustry.com's seminar on China.
``The (U.S.) is the odd man out,'' he said. ``The rest of the world has more in common. When you're trying to respect, it doesn't mean you have to agree. It's all about reconciling dilemmas.''
Suppliers will encounter a number of challenges when looking to source products from China. Among those, he said, are a work force that's not as profit-driven as employees in Western culture, and logistics that can be a nightmare.
``Among the world's most highly industrialized nations, China is last in the development of infrastructure,'' Keogh said.
Chinese companies need to concentrate more on offering service-based logistics, he said, noting that firms that have made heavy investments in distribution channels normally offer the most reliable and efficient networks.
But in what the Prudential executive calls the ``New China,'' things definitely will be different. Competition is fostering a new generation of businesses equipped with world-class capabilities. ``They have both the desire and know-how to grow as OEM suppliers and bring their own brand names to new markets,'' Keogh said.
Trends and drivers of this market include membership in the World Trade Organization, market growth, changing customer requirements and liberalization of government policies. Additionally, companies are looking to forge partnerships that reach deeper than selling on price.
``Price is only the starting point and not the conclusion,'' he said. ``Collaboration is the essence of what is driving business in China. If you find the right people with the right locales, and form the right partnership, you're in a whole different ballgame.''
Keogh used the term guanxi to describe the new relationship between manufacturers and buyers. He said there is no single way to translate the word, but it roughly means that personal trust is critical.
``You've got to have local partners who come to trust you, and that doesn't happen in one trip,'' Keogh said. ``You have to show you're willing to do it their way.''