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Why China Factory Dilemma

By Cyrus, on January 28th, 2010
Number of View: 3010

Many entrepreneur fail in setting up factory in China….why? Maybe cross-culture difference especially for those foreigners who are not Chinese easily get cheated by the locals, paying educational fees buying bad experiences. How locals cheat foreign businessman.

Recommendation…very useful tactics. Most locals will introduce you their friends in different industry. If you are setting up factory will recommend you their friends working in construction earning commission from your pocket but bad workmanship and bad quality, price usually 50%-100% higher than market price. The locals will also introduce their friends working in government sector, tax authority, custom, labor authority. Those who are fake easily deal with but for those real government people will be earning double commission. If a custom officer visit your factory first you have to give “red packet”, 2 guys 2 red packet….1st commission. Once got your name card will call you again introduce you their friends or relatives working in related industry getting business from you….2nd commission whereby the custom officer take commission from his friends or relatives. If you disagree the custom officer could either blacklist your factory unable import export or hold your goods at custom for 48hrs inspection in which directly affect your factory production lead time. So in the end whos the loser? Knowing locals working in government sector although maybe useful but if you tackle the wrong people will bring in troubles to your factory.

So how to prevent from this dilemma? Simply knowing just 1 custom officer you should have other friends working in same custom sector through different network. Once the custom officer introduce business to you especially most often situation buying your waste materials like carton box for recycling but paying at low price. You simply answer “sorry my factory already given to XXX custom officer, maybe next time” This tactic could resolve your difficult position and also maintain relationship with this custom officer, maybe useful in future. Any side business from your factory like buying local raw materials, how to reject government people offer simply answer “my factory raw materials are nominated by buyer due to quality control and trademark”.

New factory setup always facing lots of recommendations in business from the locals but most important always use the locals deal with the locals.


 

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