This article from The Telegraph is a good example how NOT to do business in China. It’s quite amazing how open everybody was apparently in this interview. It also illustrates a few of the basic pitfalls one can encounter if not very careful and alert.
Come back? Not for all the scooters in China.
The Chinese way of working has almost defeated one British entrepreneur, writes Malcolm Moore in Wuxi
At 8 o’clock in the morning, the Bright Mountain Motorcycle factory in Wuxi, one hour’s drive from Shanghai, whirrs into life. But as the production lines start rolling and workers begin bolting together the day’s order of motorcycles and scooters, one person is not happy.
Chris, who asked that we did not use his real name, is a 28-year-old British entrepreneur determined to make his fortune by manufacturing high-end electric scooters in China and importing them to Britain.
He arrived in the southern city of Guangzhou two years ago to search for a factory that would help him design and build a scooter. Without any experience of business in China, or any language skills, it has been a gruelling process.
Now, with rows of his scooters standing on the floor of Bright Mountain’s plant, waiting to be loaded and shipped, he is clearly exhausted. For the past six months, he has lived at the factory.
“If I had known back then how China works, I would have used a factory in England,” he says wistfully. “Well, maybe not England because it is too expensive, but perhaps Taiwan or Japan. I’m looking at switching production to there for the next batch,” he adds.
From the very beginning, delays have eaten into the budget for his start-up. “I’m £50,000 to £60,000 over budget,” he says.
Unlike in the West, Chinese businesses aim to build relationships with their clients before they negotiate the details of any order.
“We seemed to spend all of our time just sitting around drinking tea with bosses. I played ping-pong for hours with the head of one of the largest battery factories in the north. They put us up in five-star hotels and we had endless drunken banquets,” he says. “But then when it came to negotiating the deal, it kept breaking down.”
Finally, Chris met Victor, a Chinese sales manager for Bright Mountain, who assured him that he could build the exact scooter that he wanted. A deal was struck for an initial test order of 25 bikes. Since then, however, nothing has gone to plan.
“Initially I went back to the UK while they were making the prototype. Victor sent me email updates with pictures of the bike and when it looked like it was finished I returned to China,” says Chris. “What I found when I got to the factory was no prototype, just a wooden frame with an engine in the middle.”
Across the courtyard from the main factory floor, Victor works in Bright Mountain’s sales office. He is in charge of foreign orders, but the only two other orders from abroad that Bright Mountain has had so far have gone disastrously wrong.
One, a shipment of 3,000 motorcycles to Germany, ended in acrimony when the Germans found that Bright Mountain had substituted the specified parts for cheaper ones, causing the engines to explode.
The second order, a monthly shipment of 1,000 scooters to India, was terminated after the first container was opened and all the bikes were found to be rusty.
Victor is frank. “I would not buy my wife a bike from Bright Mountain,” he says, shaking his head cheerily. “They are too dangerous. Of course, that’s just the domestic models. Export ones are OK.”
When asked what had happened during the making of the prototype he freely confessed to having lied to Chris. “During all those months, I did nothing. Nothing at all. He asked what was happening, so I emailed him to say everything was fine and sent him photographs from a friend’s factory,” he says.
“Victor is the most dishonest man I have met in my entire life,” says Chris, tersely. “But the problem is that no one takes any direct responsibility. The workers lie to their bosses. The bosses lie to the salesmen, the salesmen are our point of contact, but they don’t know what is going on,” he adds.
Other mishaps seemed to occur randomly. When Chris asked for the prototype to be made in black, he received one in bright pink. The workers managed to scratch a large number of the bikes and had not ordered enough spare parts to replace the damaged panels.
But now, after several months of delays, there is just a list of 10 small modifications that need to be made before the bikes can be shipped to the UK and sold. To get them done, Chris has to visit the deputy head of the factory, a man who Victor describes as “the big potato”.
Outside, two workers buff his Mercedes S-Class sedan. “The big boss is the second most corrupt man in Wuxi!” Victor says proudly.
The factory used to be state-owned and much of its office space now lies empty, the staff having been stripped back. The deputy head’s office is expansive, with a polished marble floor and a solid bronze statue of a bull. The boss sits on a sofa in the corner, wearing a light green sleeveless shirt, rimless spectacles and a Rolex. He listens calmly to Chris’ demands and orders the chief engineer to take care of them.
“When we were told about the order by our salesmen, we didn’t realise how technically difficult it would be,” he explains later, quietly.
“We never would have taken it if we realised we would have to come up with an entirely original design and such a high standard. It has cost us a lot of time and effort to fill the order.”
Chris returns to the factory floor, but most of the engineers are not working on Chris’ bikes, but are instead in a small back room, smoking and “designing” new bikes.
Bright Mountain’s design process involves taking apart a well-known bike, perhaps a Vespa or a Honda, and reverse-engineering it until the factory has its own pirated version to offer to its customers. Today, the men appear to be working on a version of a Harley-Davidson.
Meanwhile, on the production line, 18-year-old Jiang Shasha says the work is “quite relaxed”. She’s tiny, and looks much younger than she claims to be. She arrived at the factory from her home province after failing China’s university entrance exam. “We are busier in the morning and then we get to relax a bit after lunch,” she says.
“They work to order,” says Chris. “I’ve seen them work all night and all weekend if they have an order to fill. When they don’t, they slack off,” he explains.
At 11.30, there is no sign of the chief engineer, Xiao Yi, or Little Yi, who has been put in charge of finishing off Chris’s bikes. “He’s never around. One lunch he went to karaoke and came back sozzled,” says Chris in dismay.
It is not until four o’clock that Little Yi returns, perfectly sober. By then, the activity in the rest of the factory has slowed to a virtual halt in the late afternoon haze. Workers stand around chatting as the sun streams through large windows onto the production line. Little Yi grumbles at the list of last-minute changes and disappears into his office.
By 5.30, it is clear that Chris will not manage to ship the bikes on time. “I came here with a list of 10 things. The list has now grown and I don’t think we’ll get anything done today,” he says. “My natural instinct is to trust people and I have learned not to do that in China.”
On the mountain behind the factory there is a Buddhist temple. Victor proposes that we go there to pray for the bikes.