In Asia, people really do judge you by your face, by your voice,

by your body language. People will say: “I don’t like his face,” or but many times the people who say this turn out to be right.

“I don’t like her voice.” To us, it sounds precipitous and judgmental,

 

with 10 to 15 companies. Each audit can cost from $1,200 to $1,800. At Newtimes, we really keep a close eye on social compliance. We don’t want to bring our customers to factories that will not pass social audits.

 

Third-party remediation is increasing. Every time we put a factory into third-party consulting, it costs the operator a minimum of $10,000 –– and can cost as much as $20,000 or $30,000. Thus, the cost of running a clean operation has significant margin implications, for both the factory and its customers. These costs all show up eventually in your FOB prices.

 

Environmental regulations have stiffened, as well. Many factories in the south have been forced to shut down or invest in clean energy and water treatment facilities.

 

Until recently, the Guangdong government was trying to push out dye facilities, wash facilities and other enterprises that were polluting the environment.

 

These facilities have moved to the north, the middle and outlying areas –- and in classic domino fashion, this has increased the cost of transportation. So if you are, say, a producer of denim and need to use a wash facility, it now costs you 20 percent or more in increased transportation costs, just to get your goods to the facility and back to your factory.

 

Chinese factories have been working on ever-decreasing margins for the last 10 years. Where they used to be at 20 or 30 percent, they’re now down to eight, six, even four percent depending on the volume.

 

CULTURAL DIFFERENCES IN BUSINESS

With all this in mind, let’s consider cultural differences, for these too affect you if you are trying to deal with Asian suppliers –– especially suppliers under unprecedented stress.

 

The challenge is to understand what the person across the table needs and wants. In Asia, these can easily be “lost in translation.”

 

The key differences we have found are depicted in the accompanying chart, “Cultural Differences that Affect Business Relationships,”

taken from “The Global Leader: Understanding Chinese Business Culture and Business Practices,” by Murray Johannsen, Legacee Management Systems, Inc. They mirror our own experience, as a Hong Kong-based company doing business in Asia.

Essentially, these cultural differences are:

n Logic

n Expressing agreement / disagreement

n Communication of information

n Expression of honesty

n Expression of self

n Thinking orientation

n The individual

n Nature of the business relationship

n Conflict resolution

n Time sense in meetings

n Conflict results

 

n

Logic: The first consideration, logic, is very important for American business people. Here in the US, we typically think in a very linear fashion –– A leads to B, B to C, C to D, and so on, in a straight line.

 

In China, by contrast, thinking is more of a spiral. People think and talk in what might seem to us as an indirect, roundabout way.

 

For example, an American business person visiting Asia has likely been in a meeting during which what would seem to be a very simple “yes” or “no” question is asked.

 

But instead of relaying a one-word answer, your translator or your agent talks with the factory for five or 10 minutes.

 

And you sit there. If you could, you’d be drumming your nails on the conference table: How could an answer possibly take so long? It was a very simple yes-or-no question!

 

Well, the answer is that they’re not simply discussing your question. They’re discussing all the ramifications, all the issues