The relationship between a factory and a buyer can be a contentious one. I even have thought at times that the factory might like it that way. So, I always try to turn the relationship into one of mutual cooperation as much as possible. That seems pretty obvious to those of you that have never done business in Asia. But, for those that have, they’ll know what I mean. To give you a bit of my own psycho-analysis, I believe a lot of this kind of attitude is a lingering effect of communism. Most of the relationships in Asia are still authoritarian in nature. There seems to be a lot of people that believe that you don’t get ahead by hard work and diligence, but in stead you have to do it by being clever and finding ways around the authority. In this relationship the buyer is the authority. So,
One of the key reasons that some people fail at importing and outsourcing is that their objectives can’t be seen, easily. They have requirements that are either vague or require interpretation. In the eyes of the factory in a low-wage country these kinds of requirements are mostly null. What do I mean by that? It’s pretty simple in practice and quite complex to figure out why. In practice, basically, a foreign factory, especially an Asian factory,
There is a time and place to outsource to China. There are jobs that Asian manufacturers and outsourced partners are very good at and even better than any other options available. This isn’t true in all situations, though. The key question to ask is, can I get a better product by going to Asia to get it. This question has both to do with quality and monetary value. If you can get your item made in Vietnam or China for 25% of what it costs to have it made in the US and only have to sacrifice a little on quality, then that might be the way to go. Back in 2001, that was certainly the case. But, today, these kinds of savings are becoming hard to find, and some items are even on par with products made in the US after you include the cost of ocean freight. Back in the early 2000’s, it was hard work to find an Asian manufacturer or outsourcing partner,
There are some common things that I’ve seen happen over and over in the importing business over the last 10 years, and they all have to do with these three pitfalls. The first is details. Importing is all about managing the details. There is a reason that low wage countries are low wage countries. It is because they don’t have the infrastructure and expertise that comes with doing business in a developed country. So, if you want to import product out of one of these countries, then you had better have all of your details lined out. What do I mean by details? There’s a major difference between the mindset of a factory in Asia and an importer in the US, and that is what is valued in the product being produced. The importer values the features and quality of the product being produced. The factory values getting the product packaged and passed the inspector at the cheapest possible cost to them because generally they are getting paid the same whether they cut corners or not as long as the inspector doesn’t reject the item. So, when I say have your details lined out, I mean that all features and product attributes need to be in a document somewhere that the factory has seen and signed.
Welcome to BrianScyphers.com. This is my personal blog, where I’ll be blogging about my experiences as a business owner and entrepreneur, my past experiences as an employee of a Fortune 50 corporation and a medium sized importer. My views on business and career have changed dramatically over the last five years because of these experiences and I’ll be sharing the background behind a lot of these new ideas. Especially the pitfalls that I found in Asia as both an importer and an outsourcer in India.