In early 2015 I did a podcast episode for the awesome Global From Asia podcast, covering my experiences and tips on finding a Chinese partner for your Ecommerce business.
You can listen to the podcast here: Global From Asia Podcast 81: Finding a Chinese Business Partner for Ecommerce (with Russell Smith)
The episode is relevant whether you are looking to partner with a Chinese company or individual to buy in China and sell ‘back home’ on Amazon, Ebay or your own platform, and equally if you are looking to sell in China via Taobao, Jingdong or your own Chinese language Ecommerce store.
Main message of the podcast: focus on the positive!
There are a lot of horror stories out about partnering with Chinese. I wanted to dispell some of those myths and share some positive experiences that I have had myself. I know bad situations do happen, in my personal circles I can think of several, but:
a) it does work both ways. For every frustrated Westerner wondering why their Chinese partners are so strange / difficult / confusing / tricky, there is an honest Chinese businessman pulling his hair out complaining about how he just can’t get through to his Western partner.
b) there are a lot of businesses and deals that do work out! So I want to share the positive experiences that I have had partnering and doing business with Chinese. (Knock on wood – I so far have never had a major ‘being ripped off’ experience doing business in China. Some minor ups and downs – all the time – but nothing to make me seriously question the integrity of the people I chose to do business with.)
Other topics discussed in the episode
In this episode we also talk about:
- Sourcing in China to sell on Ebay and Amazon
- Creating your own Ecommerce store
- The differences and challenges of FBA vs. Third Party Fulfillment
- Partnering up with Chinese (main bulk of the show)
- Benefits vs. Potential problems of a Western / Chinese partnership
Benefits of partnering with a Chinese company / business person
In my experience the benefits of partnering up often come down to improved communications with factories when purchasing in China. The ‘insider knowledge’ they can bring to the partnership is invaluable, and simply having a Chinese representative make first contact with the factory can help with negotiations, especially over quality and price.
Just make sure the communication between you and your partner are super clear from the beginning though, or the increased clarity between your Chinese partner and the client or supplier will be for nothing.
A Chinese partner can also help you leverage things such as mainland China companies, office spaces and staff with greater ease. They can help invite you to China for a more convenient visa situation, and in my experience are very hard working when they have the right motivation.
Chinese are willing to invest in your knowledge and mindset!
The final point I make, which is counter to many people’s experiences (including the host of the podcast!) is that Chinese can be very willing to invest money into a project.
Not everyone agrees with this experience, but for me my partners have always been willing to invest cash into the business, allowing me to invest my expertise, vision and systems mindset.
Maybe it’s how I pick ’em!
I strongly believe that China does not need Western cash investment right now. They have cash. They need mindset and vision. As a foreigner, investing cash into China leaves you more open to being tricked, manipulated and coming out empty handed.
Investing your skills into a partnership (I’ve always been able to negotiate 50/50 or better so far) leaves you in a much better ‘take it or leave it’ negotiating position, always able to back out at anytime without risking losing money.
The right Chinese partners who want to start a legit, honest and value-driven business are out there, you just need to network around a bit and find the ‘right fit’ for you.
Disclaimer: Of course, there are *thousands* of examples that prove me wrong. Western money coming into China is a big thing, and people do very well with it. My point is more that the other way is possible too, and in fact can be easier and very profitable for newcomers to China (who want to minimise the risk of being tricked or ending up in the hole).
Challenges of partnering up in China
Of course, the challenges of China are huge and not everyone has the resources and situation to partner up with suitable Chinese companies so easily.
- Be very careful of the ‘meaning of things’ when working with Chinese. What does ‘fast’ mean to you? How about ‘soon’, ‘good’, ‘reliable’ or ‘careful’? Don’t take the meaning of these words for granted, especially if / when you are working in your own native language, not theirs.Be specific about turnaround times, what good and bad quality means to you, and don’t rely on assumptions that we ‘all understand’ what those terms mean. Nail it down in stone, you’ll both be happier in the long run.
- You’ll also want to be wary of a situation I have found where Chinese workers, partners and people in general are much more ready to just ‘go for it’ before formulating a solid plan, and ‘figure out the rest’ down the line.This doesn’t always apply, but can be very frustrating for a Westerner trying to formulate a very calculated and specific business plan before pressing play.Terms, contracts, policies and plans can all change on a moment’s notice in China, so be ready to face those challenges in your business when partnering.
- There are also some big cultural differences which you just may not be aware of. Be flexible and give the benefit of the doubt sometimes. Often intentions are good from both sides, but things get lost in translation (both language and cultural) and simple things can become big problems. Usually both sides are just as confused as the other.
- Negotiations in China can be quite long-winded and there is a tendency to talk indirectly. If your partner is drilling down really hard on a point that just seems logically unimportant to you, think outside the box and consider if there are any other parts of the deal they might be strongly unhappy with.Often it is a case that there is something they want you to fix without them having to prompt you. They’d like you to notice and suggest a compromise, without having to directly discuss the problem with you.
Of course, there is so much to discuss on this topic. We couldn’t do it in a blog post so short as this.
The podcast goes into much greater depth and has opinions on both sides, so go ahead and give it a listen now. Let me know if you have any question or comments in the box below!
Further Reading / Study
Check out the Global From Asia Private Members Forum. If you’re interested in networking with business professionals and entrepreneurs in China, Hong Kong and Asia then this is the place for you. Come and say hi. (This is a non-affiliate link!)
Also see the book ‘Selling To China’ by Stanley Chao. Stanley is a consultant on China business and provides a great insight into the reality of working with Chinese. He points out that a lot of the things we hear about business in China (pass the business card with two hands, tap the table when they pour you a drink…) is really not *that* important in the real world. He shows you what is. A great read and a reference source for me. (Also non-affiliate – just spreading the good word!).