Doing business in China for the first time

Posted by Zaid December 11, 2016 0 Comment 666 views

Having returned from my first trip to China I’ve got to say that I was blown away by the experience. I’ve written about my experiences to dozens of destinations on Travpacker.com but none of those visits evoked the same sort of feeling that I had after visiting China.

Sure, Antarctica was the most unique experience, Torres Del Paine National Park (Patagonia, Chile) is the most beautiful hike I’ve been on, the Otter Trail remains my best hiking experience in South Africa (which is now a regular annual event for me) and Morocco remains the most charming. But beyond these R&R destinations I return feeling stoked, humbled, wowed, motivated and inspired by the culture, work ethic, innovation, and discipline I encountered in China. I could use expletives and colorful metaphors to emphasise how pleased I was but I’ll keep this article safe for readability at work. Believe me, it was that good!

After designing and testing four prototypes of my Mixed Reality solutions in South Africa I felt that manufacturing the commercial version of the solution in China was the next logical step as there were local manufacturing limitations in South Africa that I could not overcome. I needed some new hardware components and to source a number of existing (but niche) hi-tech electronics components from Guangzhou and Shenzhen in mainland China (after entering via Hong Kong which is a Special Administrative Region of China). I’d exchanged over 80 emails with the foreign-trade agent of a Chinese factory and paid a large deposit prior to my visit. The cost of shipping the goods via DHL was approximately 70% of the cost of a flight there so I decided to inspect and collect the goods in person. South African Airways allows 2x23kg baggage for economy class passengers and 2x32kg baggage for business class passengers.

While I thought I had the manufacturing component sorted out I needed help sourcing the electronics components from the markets. I found a local guide and translator online who agreed to meet and assist me source my shopping list of 7 components.

A week before my visit the factory sent me the “good news”. The products were completed. I had a look at the photos they sent and became nervous as it wasn’t exactly what I expected. The design had a few visual flaws. The production department of the factory proposed another solution but this would cost me about 40% more. The factory also advised that customisations to the packaging I required wouldn’t be possible as there wasn’t enough time for them to complete it before my collection that Saturday. I told them not to worry, I can extend my stay in China if necessary but I first want to examine the progress in person before considering the more expensive solution.

I arrived in China on a Friday evening. That night I had dinner with a South African friend and his Chinese friend. He asked his Chinese friend to accompany me to the factory to translate and assist if necessary. The factory would send a car to collect us both at the nearest subway station to the factory (I only made these pickup arrangements at 10pm on Friday night with the factory on WhatsApp).

First day at a Chinese factory

At 10am Saturday morning we arrived at the train station and were collected by 2 company staff members within the train station.

factory staff pickup

We were taken to the vehicle which was driven by their manager. I made some small talk with the factory staff but my new Chinese colleague filled in any silence by having longer discussions with them in Mandarin. It helped lighten the mood.

On arrival at the factory (an old building in an industrial district of the city) we had to walk up to the 5th floor as their only elevator was in use transporting goods. I walked into the CEO’s office where he asked (via the translator) to hear about my concerns with the product. I said I’d like to see it first. On inspection in an adjacent room where I had to remove my shoes I was actually pleased with the solutions. They had made improvements since sending me the photos but still recommended I proceed with their newly proposed solution to make it even more perfect. I agreed. I also inspected the proposed baggage to package the equipment and agreed to its use. We then returned to the CEO’s office where he made Dragon Tea and served it on little cups.

Dragon Tea

As soon as I finished a cup he refilled it again, and again, and again…

He said that the proposed solution can be completed by Friday (5 days later). I was planning to leave mainland China for Hong Kong on Wednesday but since my flight out of Hong Kong was only next Sunday I agreed. Collecting these goods was my number one priority (the main purpose of my trip). We went through the costs again. Because this was the first order of a custom design the price was quite high. I’d have to use up almost all my US dollars but I was prepared for that. The CEO hands me his business card with 2 hands. I accepted it with both hands (and a slight bow).

We were then dropped off at the subway station and that’s when I had a proper chance to ask my Chinese colleague how he thought my visit went and what they’d been discussing among themselves in Mandarin. He said that the CEO was 30 years old. The CEO started the company 4 years ago because he believed that they possessed the skills to create something great and could earn better. He felt that the meeting went very smoothly and shared the same feeling that I had – these young people are clever, hard working, resourceful and seem to be trustworthy. This is the type of company I want to partner with. On return to my hotel room I confirmed a few more technical details of design changes to the factory foreign trade agent via WhatsApp. At dinner I remember telling my friend that everything seems so normal there. Where’s the culture shock?

That night I could not sleep. I didn’t sleep until 4pm the next day! I think it was because of the 10 or more cups of Dragon Tea that I drank. Dragon Tea = potent stuff.

The Electronics Markets

The following day my “online guide/translator” met me in the hotel lobby at 9am. We were going shopping! It was a 10 minute journey by subway into the electronics markets (spread over a number of multi-storey buildings). The markets fully open at 11am so we were early. Stores were slowly opening but I had a good sense of what everyone (open or closed) was offering.

electronics market

There were plenty of suppliers offering silicon chips, cell-phone accessories, CCTV cameras, VR Headsets, foldable electronic music instruments, robot vacuum cleaners, cables, memory cards and branded PCs.

foldable piano

robot vacuum

After 3 hours though I didn’t find anything on my list. My priorities were 2 hi-tech multimedia components and these weren’t available at the market. At 12:30pm we decided to go to a coffee shop.

coffee shop

My guide needed to use his laptop to research a few companies and make a few calls. He found out that a company with a component I needed had a satellite office located on the 26th floor of a nearby building and they would be able to meet us from 2pm. We met the company and none of them could speak English. Thankfully I had my translator guide. They demonstrated a number of products and I decided to purchase 2 models which I can use to develop my software with.

hitech component test

One of the staff members accompanied me to the ATM on the ground floor of the building to withdraw cash and pay them.

We visited a few more buildings. I managed to purchase a R40 lightweight, foldable tripod that fits in my backpack. I couldn’t find the projectors I was looking for. Many companies online were advertising 5500 lumen projectors for USD280 but I learnt that the lumens were highly exaggerated by these traders. Such projectors simply don’t exist at that price point. These projectors can’t work outside. I also learnt that branded goods (PCs, processors, phones, clothing) are actually more expensive in mainland-China than in the US or in neighboring Hong Kong. My guide purchased his Dell laptop on Amazon from the US. I didn’t see any unbranded PC’s. My guide said that locals prefer branded goods these days. There were however a lot of unbranded / fake phones.

In the electronics markets of China – Spherical Image – RICOH THETA

There was a shop offering 3D DLP glasses that works with my projector. I took out 90RMB (about R180) to buy the no-name brand glasses. The shopkeeper then takes out the original branded glasses (new, sealed in the box) and shows me that the unbranded glasses are just like the real glasses. When I enquired how much the real glasses was he responds (via the translator who was laughing) 100RMB. That’s R20 more. I obviously settled for the real deal.

Having a local guide in the electronics markets is a must. I paid USD130 + a bonus to my guide.

Chinese phones and the Internet

I returned to the market the next day and bought myself a cell-phone (Huawei P9) which was about 45% cheaper than the SA price. Huawei is a Chinese brand so it is cheaper than other high-end mobile brands in China.

Huawei store in China – Spherical Image – RICOH THETA

I then went into a building of the market dedicated to cellphone cases and bought a few.

phone accessories

What I learnt later was that there were no Google services on the phone I purchased and a lot of the software was in Chinese. I managed to download Google Play via the Huawei App store, removed many Chinese apps and have restored most of the standard Google solutions. Holding the Home button still takes me to a Chinese voice assistant app though. I’m sure I’ll figure out how to remove this one day (I use Google Now to summon the voice assistant). To access my Gmail I had to use a VPN app in China. Although Facebook (which is blocked in China) is accessible via the VPN I didn’t want to risk it (you leave a location footprint on FB when performing any activities).

I took the next day off to relax and get advice from the factory’s foreign trade agent on how I’d be able to transport my goods with me to Hong Kong upon collection. The agent offered to go to the coach station at 7pm (after work) that night to see the bus schedules and book my ticket. This was beyond the scope of what they were being paid for.

D-Day!

The following day I visited the factory to collect my goods. I was collected again by 2 factory staff members from the subway station but this time they used one of the Chinese competitors of Uber (Kuaidi Dache or Didi Dache) to transport us to the factory. I left my personal “luggage” (a backpack strapped to my back and another to my chest) in the CEO’s office and proceeded to the factory floor. I ordered 2 different sized solutions which had now been disassembled. We would reassemble the smaller unit for me to inspect and learn how to do it myself. I noticed a slight issue with the solution and we were able to solve it on the spot. We then proceeded to the CEO’s office for Dragon Tea while his staff disassembled the solution and got it ready for packing. I also paid in cash the outstanding amount and they handed me my bus ticket to Hong Kong which they insisted I shouldn’t pay for.

At 12pm a school-type bell rings, the staff quietly line up outside the CEO’s office, sign a register and leave. They work from 0800-1200 and 1330-1730 Monday to Saturday. If they have a big order then they’ll also work on Sundays. Most of the workers looked like they were between 20 and 24 years of age. Via the foreign trade agents I had a good conversation with the CEO. We discussed a number of future opportunities to explore.

We then returned to the factory floor to package the solution. They were initially supposed to pack the 2 solutions into separate bags but they suggested that they fit it all into one and it’ll only weigh 35kg which will be easy for me to transport across the border.

my bag with 2 solutions packed

I later found out (after weighing it myself at the airport) that the bag was 51kg! Before leaving the office the CEO (the guy standing on the left in the above picture) wanted a photo with me. We shook hands after he helped me carry the goods to their car.

They dropped me off at the coach station and 2 of the staff remained with me for an hour to help me load it onto the bus (the right bus) to Hong Kong. While we waited we took a number of selfies and they explained to me that a number of other local passengers were carrying empty suitcases as they’d travel to Hong Kong and buy cheaper goods to return with and sell in mainland China. We said our goodbyes at 1420 when my bus arrived.

At the border I had to drag that 51kg bag (with tiny wheels) on the face-brick floor from Shenzhen via immigration and customs to Hong Kong with no trolley. Weighing only 65kg myself that was a serious mission but somehow I managed to get it through onto the connecting bus in Hong Kong that would drop me at my hotel entrance. That bag was SO HEAVY that the hotel porter thanked me multiple times for helping him carry it. I felt physically broken but inspired and pleased that I was in possession of a world-first solution and an engineering marvel.

Culture-shock strikes! 

Up until my visit to China I was expecting a culture shock of a negative kind (crowded, unclean, unsafe) but upon reflection during my bus journey from mainland China into Hong Kong I had that moment of clarity and inspiration. I just did business successfully with a group of young, smart, hard-working, friendly and innovative people in a vibrant society.

They went out of their way to accommodate me. Beyond what was contractually required. To radically design and manufacture 2 new custom electronics solutions within 5 days was astonishing.

The general sentiment held by many in South Africa is things are bad, the country is going downhill, there is a strong sense of entitlement, and many are angry. In contrast I found the opposite to be true in the cities of China that I visited. These youth were not happy with the low pay and repetitive work at their former workplaces so they decided to form their own company and improve their situation.

I doubt Jayson (the CEO) who was 26 when he formed the company went to business school, studied courses in entrepreneurship, organisational design, organisational culture, etc. Yet his factory operates with a high degree of efficiency and discipline; and entertains international client visitors quite regularly.

They were very friendly. I didn’t expect to be taking and sharing selfies on WhatsApp with the company staff while waiting for my bus after collection of my goods!

There was an issue with the fabric of the product. The factory has offered to assist, but I’m trying to see if I can resolve it in South Africa with a company that can fit it to the frame. I’m not keen on carrying the 51kg structure back to China for a fitting. What they gave me though was a huge head start (we got 95% of the prototype done at 80% quality) in a very short time period. With the help of the Chinese I managed to have a product ready to showcase to the Innovation Hub to win 2nd place in the GAP ICT awards. I’m on my way to resolving the fabric issues soon.

In China I saw a nation that’s not waiting for others to lift them from poverty. They’re doing it by themselves. They want to learn, to work, to own the latest iPhone, eat well and dress smart in a clean environment. I only saw 2 beggars (they had physical deformities). No able-bodied person was lying around waiting for handouts.

I know that a number of business schools have an MBA module that offers an international visit to the factories of China but I wonder if those students would have a similar experience to what I had visiting alone (or with a local guide), drinking bottomless- Dragon Tea, negotiating, paying, inspecting and forming (hopefully) long-term prosperous relationships between both buyer and seller. I want to go back in a few months. Not just to the special economic zones where I did business but further north into the larger cities and rural areas. I believe that there’s an opportunity to learn and experience much more in China. It helps to have a clear vision of what you want, do a little preparation and have a mind that is open to exploring the countless possibilities when visiting.

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