Trust Between China Manufacturers and Foreign Companies: A Fuzzy, Yet Important Concept

So much of our business is involving China these days that I find myself reading ChinaLawBlog’s posts on a daily basis, and they almost always touch upon experiences we are having as well.  One of the recent posts  touched on the terrible job Chinese companies do in collecting on their international debt.  Chinese companies have approximately $100 billion in accounts receivable with foreign companies–and the reasons behind this are often the same or similar fraudulent practices that many foreign companies complain about so often when they operate in China.  Foreign companies sometimes just don’t pay up.  And what’s a chinese vendor going to do? 

This brought up another issue that I’ve been wanting to write about for a few months now, regarding an Alibaba.com survey that I saw a few months back.  The survey  (which is still up, but might require signing in) was posted online on the Alibaba.com website and was only taken by 80 or so users, but offered up an interesting point regarding concerns about trade and manufacturing between other countries and China.  The results?

26% – Trust between a supplier and buyer need to improve
19% – Delivery problem; high shipping cost or long delivery
19% – Problem with quality of products
14% – Communication problem and language barrier
10% – Security problem with internet trading
5%   – Service offered by Chinese suppliers is lacking
2%   – Response to customer is slow and poor
2%   – Price is too high

Certainly, many of the issues listed are intertwined.  But, the big, fuzzy concept "trust" was the winner.  I wonder how many of the survey respondents were Chinese.  Probably not the majority.  But if you listen to chinese factory owners’ and managers’ concerns, they can be just as worried about entering into a business relationship with a bad business partner as anyone else.   And as ChinaLawBlog’s post points out, for good reason.  Everybody’s got to get their’s first.   It helps when you’re building a relationship with a supplier, to put in the time and put yourself out there a little bit–share the risk.  Of course, you complete all your due diligence about who you’re dealing with as well.  But it’s important to remember where the other guy is coming from as well.  In this department, we’re not that different after all.