Suppliers in China – Break Through The 5 Main Barriers

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Suppliers in China - Break Through The 5 Main Barriers

Suppliers in China – Break Through The 5 Main Barriers

Western companies have five main barriers to engagement when it comes to suppliers in China. When being examined through Western-business-eyes, China certainly looks an endless sea of business opportunities, quite affordable labor and billions of potential customers. However, there is a significant set of challenges in working with suppliers in China. Barriers that can easily shatter these lovely, but a little bit too optimistic initial thoughts. As a matter of fact, this article will contemplate the top five barriers standing in the way of Western companies and their prospective suppliers in China.


1) Fear of Fraud – Lack of Knowledge

The feeling that you aren’t in Kansas anymore just couldn’t be more accurate once you set one of your business feet in China. Where to start and who should you ask for safe and profitable business advice in China are the first questions for your thorough prep work to begin with. We have all hear the stories of fraudulent suppliers in China that are paid for goods that are never shipped, as well as factory tours that are staged and altogether fake. If you are going to make the move to China, you need to create a specific, comprehensive diligence plan.


2) Credentialing

Your next stop on an “epic” business journey in China is to choose the Chinese business partner or company, which you want to do business with. It comes without saying that you need to make sure you won’t be doing business with the corporate “ghosts” that exist only on the paper. Get yourself a multi-parametric supplier portal that can have separate workflows, languages, and validations specific to China.


3) Safe Payments

It seems that there’s no other way than to get used to the constant fear of fraudsters while doing business in China. This doesn’t have to be necessarily a bad thing for you. Try to do as much diligence as possible on the suppliers you chose to work with. On large relationships, Conduct multiple reference checks and take the time to establish relationships with their banks and their attorneys. Don’t forget to hold off on paying too much up-front until after those goods are received and the quality can be inspected.


4) Contracting and IP Protection

For quite some time China was a victim of its notorious reputation as being the safe harbor and even the counterfeit empire of the world. Well, times have changed a bit, and so too has China’s stance on Intellectual Property. China still has a way to go to catch up with the rule-of-law mentality of the western world. But there has been a shift in certain legal areas. Having this been said. You are far away from proper IP/copyright protection. So, keep your eyes open and do things to protect. When you are on-boarding, your suppliers ask them for their internal policy on things such as IP and Quality.


5) Communication with the supplier

Communication is the key, and in the business world of China, you’ll be shocked at the number of ways a westerner can offend their counterparts in China. Many of the mistakes made by Westerners are simple and can be avoided by having a translator or a business liaison familiar with the culture. Nevertheless, the most complex problems in China usually have surprisingly simple business solutions. Like using a contract written in Chinese, paying a visit to your business partner’s company and following the proper business customs.


The Final Verdict on Suppliers in China:

There is a growing number of Western companies doing business in China. So, there is a way to navigate the many barriers to doing business. Perhaps the best way to begin your big journey in China is with small and proven business steps. Make sure you establish some internal guidelines and diligence criterion on suppliers you work within China. Do not be afraid to develop relationships with a reputable Bank, Law firm, Advisor or consulting company Based in China.

Keep in mind doing business in China is a two-way street. There are reliable, reputable Chinese enterprises equally eager to do business with you that may be leery of companies from the West.




Joe Flynn is a Silicon Valley Entrepreneur who created Lavante, Inc. Lavante was started with the vision using Machine Learning, Natural Language Processing and advanced Data Extraction techniques to transform the traditionally manual-based Account Payable Recovery industry. Lavante Was acquired by PRGX Inc. in November 2017. Joe is currently working on a new venture using Artificial Intelligence and Machine learning to transform trade partner communications across the entire supply chain.