Episode 39: Doing Business with Chinese ManufacturersAugust 4, 2016 in Ecom-Crew-Podcast, Ecommerce, Importing, Product Sourcing
This is Mike Jackness with Ecom Crew. On today’s episode I’m going to tell you about my recent trip to China. I want to stress that these types of trips are essential if you are going to do business with Chinese manufacturers.
My trip consisted of 3 places; Shanghai, Pon, and Na-Jing. At all these places I visited some of my suppliers. During this visit I made some notes for future visits. So I’m going to share some of the tips and observations I made during this last visit to China.
The tips I cover today:
- How valuable the Canton Fair is to overseas trade
- China’s great public rail system
- Why you should not go to China in the summer
- Why staying in American hotel chains is best
- The importance of knowing the culture of your hosts
- Bring gifts for your hosts
- Always think about the long term
If you have any questions or anything you’d like us to discuss on the podcast please go to ecomcrew.com and fill out the contact form. Also we would really appreciate if you would leave us a review on iTunes. Thanks for listening!
Full Audio Transcript
Mike: This is Mike and welcome to episode number 39 of the EcomCrew podcast. Today I’m going to be doing a solo-cast, which is kind of awkward for me. Grant’s usually here, as you know, every other week but it’ll probably just be a short podcast this week. I wanted to talk to you guys about a recent trip that my wife and I just completed to China. And we were over there for seven days. We went from July 19th but you don’t actually land until late in the evening of the 20th, and then came back on the 27th. So it was a pretty fast trip, pretty rushed and eventful, but we only had a short amount of time this time because we had some personal stuff to take care of the week before and then also the week after. So if we didn’t go that week in July, then it was going to delay our trip until basically right before the Canton Fair and then we were going to try to have to combine it with the Canton Fair and that wasn’t good for us either.
So yeah, we ended up going for a week, like I said, between July 20th and July 27th and I just wanted to kind of talk to you guys about the trip and why I think it’s really important, if you’re going to be sourcing stuff from China, to make the effort to do these types of things. Now, my professional career, my whole life, I’ve always been really big on personal relationships and face-to-face meeting, and I think that that’s just as important here. Getting an opportunity to meet manufacturers that you’re going to be doing business with for years to come and placing substantial orders with I think is incredibly important. And we’ve been going to the Canton Fair in China for each iteration since last year. You know, they have a fair in the springtime, which is the April/May and then they have a fair in the fall, which is the October and November. And this year, we’re going to be make what’s going to end up being three trips because of this trip in mid-July. And looking back at this now, this trip I think was actually more productive and going to have more staying power for a bunch of different reasons.
So now, if you’re just looking for manufacturers, I think, obviously, going to the Canton Fair is the best bang for your buck. There’s going to be thousands, and I’m not exaggerating, literally thousands of manufacturers there at the Canton Fair that you can see very, very quickly. So you can walk up and down aisles and meet new manufacturers that you’ve never had a relationship with. And then, if there are manufacturers in town, it’s a good opportunity to try to go out to dinner with them, or if they happen to be in the Shenzhen or Hong Kong or Guangzhou area, then it’s an opportunity to go visit them on the same trip and go to their factories, and all those things are things that we’ve done. But we’ve been working with a lot of manufacturers that are in the Shanghai area, and Shanghai just is not really convenient really to Guangzhou unless you take another plane and if you’re already over there for the Canton Fair, most likely, you’re already there for a week or two or possibly three. So trying to string another trip like that along with this would be very difficult. So what we ended up doing is actually going to see one (and in one other case, two) factories per day and then just basically went to a new town each day.
So but firstly, I want to talk about just accommodations and so if you’re going to be going to the Shanghai area, that really covers Shanghai, Nanjing, Ningbo, and in that area if you kind of pull out a map, if you draw a circle around… The neat thing about Shanghai and China in general is their high-speed rail system. So we were able to take a high-speed train every single day to a different location, and I’ll be talking about that here as a part of this podcast, but it’s really just amazing the infrastructure that they have in China. If you’re listening to this podcast from the United States, Amtrak here is kind of a joke, right? I mean to take a train from L.A., for instance, up to San Francisco takes something silly like 12 hours. You can drive up there in half the time. You can fly up there in 90 minutes. Now, if you live in the Northeastern United States, it’s really the only spot in the country where a train makes sense, which is that Northeast corridor between Washington, D.C., Baltimore, Philadelphia, New York, and then Boston. And I lived in the Northeast and I’ve been on that Acela Express and the Metroliner several times in my life and that really is very convenient and a great way to get around, but it’s such a short and small area of that country that you don’t really think about the whole country being wired with high-speed trains like China is.
So yeah, we got up the first morning. I mean we went right to it on the 21st of July, out to Zhenjiang (and I’m probably butchering that name) and it was about an hour train ride out to the high-speed rail stop and then about an hour car trip. They were the one factory that was far from the train station, and they actually drove us out to their new factory, which is still under construction. They had one floor of it up and running and then the other floors were still – they were pouring concrete and running electrical and doing some of that stuff. So then we took a tour of their current factory and had lunch. And one thing that was kind of key about this trip: So we left early each morning, had meetings with manufacturers, and then came back that same night. And that prevents you from having to do the dinner routine with these guys, which is not bad necessarily, it’s just that a part of that is that they want you to get drunk and we’ll be talking about that. In one of the cases, I had to do that because it was a very important manufacturer that we were working with. But for the most part, I wanted to get back home and get a good night’s sleep and I didn’t want to be drunk seven days in a row in China.
And I think that China’s a very big custom country, where if you drink tea with them, have a meal, it’s kind of the same thing. Obviously, getting drunk with them I think is another level, but I felt like getting tea, just having tea and having lunch with them was good enough. But it was an opportunity to see the factories, to see the products. In the case of the first factory, they make our IceWraps fitness products for knee braces and wrist braces and things of this nature. And we’ve already been working with them, so that was pretty cool to actually get to see their factory. We have met them on a couple of other occasions at the Canton Fair in person but never got to visit their factory. And they had some new products there for us to look at, one of which was a knee wrap that I put on and it was actually irritating the back of my knee. You know, the skin on the back of your knee is a little more sensitive than, obviously, the side or the front. And I mentioned this to them while we were there and they actually cut the fabric and resewed the thing back together right there in the factory – it was absolutely amazing – and then gave me a new sample. And it obviously wasn’t of production quality because like they did it on the fly but those are the kinds of things that you can get done like while you’re in China. If you, obviously, try to do that through email, that would’ve taken weeks, right? And it probably still wouldn’t have been the same. So yeah, that was our first stop.
And our second trip was out to a city called Wuhan and we’re working with a new manufacturer there that might be making us more IceWrap type products. Now that city is actually far enough away that we took a plane flight, and we tried to do that early in our trip just because we were already tired and knew it was going to be a long trip and just kind of wanted to get that out of the way before the weekend came. So we flew out there for the day, it was about a two-hour flight, left at like 9:00 in the morning, go out there at 11:00, went and visited their factory for a while, talked to them for a bit, saw the samples that they had made for us which were really neat that they had waiting for us there that we were incredibly impressed with. And then we went to lunch and then we came back and looked at the samples some more, talked a little bit more shop, and then we went back to the airport. So another incredibly productive day.
And then our third stop was out to a place called Nanjing, which is up the river from Shanghai about, probably two, three hours by boat and probably about three hours or so by car, but by high-speed rail, it was I think like 90 minutes or something like that. Same routine. You know, we got picked up at the train station, went out and visited the factory, saw a bunch of samples, and then had lunch and then came back, talked more about some products, and then went back to the train station. Another just incredibly productive day.
Then the next day was actually a Sunday, which is pretty much an off day in China. Like those guys over there (that’s one tip for you), they pretty much work six days a week, which is kind of weird compared to the United States, or even someplace like Europe, where they work even fewer hours. And so Sunday was an off day but one of the manufacturers that we do work with, the lady spent the entire day with us – it was amazing – just doing sightseeing stuff. We went up to the Pearl Tower, which is in the middle of Shanghai. It’s kind of one of the tallest buildings in the city and you just get this amazing view. They have a glass floor in the building so you’re walking on a thick piece of glass at one point looking down. And if you’re afraid of heights like I am, it definitely can make your legs a little bit weak. So that was interesting. Had a great day with her. Definitely couldn’t thank her enough.
And then the next day, we went out to Ningbo. And Ningbo’s like another really big port town. It’s south of Shanghai, across the bay, across the river. Again, we were able to get up early, take the high-speed train. I’ve talked about this on the podcast a little bit. We’re working on a brand for some baby stuff and we visited a factory for that out there. Was incredibly impressed with them. Definitely going to be placing an order with them. So we did that factory tour in the morning and then went to lunch with them, and then in the afternoon, we went and visited another factory for a product that we’re working on for ColorIt and so we got to tour that factory and then we went out to dinner with those guys, and like I said, there was one time where I made an exception. We did a dinner theme because this was going to be the biggest order we’ve ever placed as a first order. It’s going to be about $150,000 as a first order so I really wanted to see the factory itself and make sure that it was up to par with what I was looking for and meet those guys and kind of just solidify a relationship with them. So I felt like that was really important and just had a really great time with them.
And then the next morning after we got up, luckily we left a little bit late because I was not only tired but probably a little bit hungover. We drove back to Shanghai. So we didn’t take the train both ways; we just took the train to Ningbo and then drove back, which was pretty neat. Just got to see a different perspective, got to go over I think it’s the fourth-largest motor vehicle bridge in the world. It’s like this 20-mile bridge across the bay there. It was really neat. And then we went back into Shanghai, had a meeting with the same manufacturer. Their office is in Shanghai but their factory’s in Ningbo. So we did the office part of it, got to have lunch with them again, and just talked shop, talked money, and got quite a bit done. and that was really awesome and we actually placed the order while we were there. So we’re pretty excited about that and our hope is to get these products in for Christmas, for Black Friday, so our hope is that they’ll ship and be at our offices here in California by the middle of October, and that’ll give us time to get them shipped into Amazon and have them checked in and everything for FBA.
Because you do need to be aware that FBA can take weeks at that time of year to check things in. So we learned our lesson last year about that, so this year we plan on getting stuff in quite a bit earlier. And then, because we left so late at night, our final day, we went and visited the same person that took us out on Sunday. We actually went over and visited their office that day and got to – we actually use three different manufacturers to put the product together that she uses. She has a trading company, so part of the product was a case manufacturer and they were actually in the same building so we got to go over and meet with them and that was really neat and then we had lunch, like I said, with them. And then we flew home.
So the main reason I want to talk about that, just to kind of give you guys an insight into our trip to China, but the thing I wanted to kind of close this podcast on is just several tips and things to be thinking about on the way over to China. Number one: I would definitely never book a trip to China in the summertime. We went over there, like I said, late July, last week of July. Shanghai is like kind of on the same parallel as like Florida, South Florida, but it was hotter than South Florida. I mean it was just incredible. Every single day, the thermometer temperature was over 100 and we were looking at the heat index, which was somewhere between 115 and 124 and no, I’m not kidding or exaggerating. It was 124 and they just don’t have the same air condition that you’d find in the States. I mean it’s kind of a joke and all I did was sweat every day, nonstop, and it made for a pretty brutal experience, quite frankly.
If it wasn’t so productive and such an amazing trip otherwise, I think it would’ve been pretty miserable but we were getting so much done that I just kind of fought through it. But it did make me dehydrated. You can’t get water like you do over here in the U.S. You can’t get a bottle of water in a restaurant. It’s kind of weird. You ask them for a bottle of water and they look at you like you’re crazy. You basically get hot tea, which is a diuretic and you’re already hot as it is. So you’re drinking a hot beverage and drinking tea, which makes you even more dehydrated. Definitely not a great combination, and even in the hotel room, you were never cold. You could get it cool but you could never really get it cold, and in the factories they have no air conditioning and all, and in some of the offices, the air conditioning would be on but they were kind of these spot coolers and it just was kind of brutal. So if you can plan your travel not to be there in the peak of the summer, I highly recommend that as tip number one.
Tip number two, which we kind of just figured out this trip, is the great China firewall seems to be relaxed a little bit in American hotels. In all the trip that we’ve been to China, we stayed one night in a Weston and it had amazing internet, but we didn’t really put two and two together until this trip, and we were talking to some people over there. We stayed in a Marriott this time and, at our hotel, the internet was great. I didn’t need a VPN, the internet was fast, I was never really frustrated by the internet, which was a welcome change being in China. So that was pretty cool.
And then the other things was, you know, I used my AT&T cell phone and I did a manual switch over to one of the other networks and my internet was unblocked on the phone as well, so that was also a welcome change. The one night that we spend in Ningbo, as soon as we were in a non-American hotel (the manufacturer put us up there), yup, same problem. We had to get a VPN. It was super slow internet. Luckily, we got back late and I didn’t really need much of the internet that night anyway. But yeah, internet can be a huge problem so I think next time we go to China, we’re going to try a Weston or a Marriott. I think that’s a pretty good tip.
Another good tip, like I mentioned, traveling in China, definitely look at the train system. It’s high-speed, superfast, on time, clean, definitely a very enjoyable experience.
And then another thing, like I mentioned earlier, personal relationships are really important. Be prepared to go out with a meal with these guys, have a drink (tea or adult beverage of choice). It’s really important to them.
Another thing that’s really important is bringing gifts for them. This is something that someone else in one of my other masterminds mentioned one time, and you could definitely see like how much they responded to this. It doesn’t have to be something extravagant. We would bring liquor or makeup or something like that, depending on if they’re male or female or depending on something that we know people like if we talked to them before and knew things that they like. You just kind of make a mental note and bring them their favorite American thing. They don’t get to come over here very often if at all, so they definitely appreciate that, and then of course, they end up giving you a gift back. We ended up having to pack a duffel and filled up the entire duffel with things to bring back, so that was pretty interesting. But yeah, bring out a gift for them.
Another thing that really helps in solidifying the relationships is being able to get terms with these manufacturers later on. I think long-term, this trip is going to pay dividends. We talked about potential for getting terms, not having to do the 30% down, 70% on completion, but being able to get net-30 or net-60 on delivery. And I think it’s going to take a few more orders to solidify the relationship, but I think after having the in-person relationship, that’s going to make that happen a lot quicker. So another thing to kind of keep in mind.
So yeah, that was really all I wanted to kind of talk about. Definitely a little bit shorter podcast this week than normal. Obviously, normally we try to do 30- to 45-minute episodes. This one’s going to right around 20 minutes. So I definitely appreciate you guys listening in this week. As a reminder, if you have anything you want to ask us, please shoot an email over, go to the contact form at EcomCrew.com and hit us up on the contact form. We’ll be happy to answer any questions you might have or maybe get that on a future episode. And if you have a minute to leave a review of a podcast, definitely appreciate it. The reviews help us rank higher in iTunes and help more people find this content and make it worthwhile for us to continue to produce it. So we definitely appreciate your effort and time there. So until next week. Hopefully next week Grant and I will be back together again and we appreciate you guys listening and thanks so much and have a great week, everyone.