Product Sourcing: What To Expect When Dealing With Overseas Vendors

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After publishing my article on the best way to find vendors for your online store, I had a number of readers email me questions about traveling and dealing with overseas vendors. The tone of these emails were generally apprehensive and expressed a direct concern with being able to find and properly manage relations with foreign vendors.

I’ll admit it. It isn’t easy to travel to a foreign country and deal with a completely different culture. But you know what? You don’t want it to be easy. You don’t want the barriers to entry to be too low otherwise you’ll have a ton of competitors in your business niche.

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Running our online wedding linens business has required me to deal with several vendors across China, India and other parts of Asia. Here’s what to expect when dealing Asian vendors.

Expect A Language Barrier

Despite what you might want to believe, not everyone speaks English, especially in some of the more rural parts of China. Even though you don’t speak the language, you can still get around but it takes preparation.

The key thing to keep in mind is that most people in Asia study English or have studied English in school. They might not be able to speak or understand that well, but they can probably read it much better than they can listen.

So when you are visiting your vendors, it helps to have everything written down or typed in English. If you go in there and start blabbing away, chances are that the vendor will only be able to pick up bits and pieces of what you are saying. They might nod and go “uh huh”, but in reality not have a clue as to what you are talking about.

The same goes for taxi drivers and directions. Write everything down in their native language if possible and if you have to speak, speak slowly and enunciate every word.

The Culture Is Different

One of the main cultural differences between the US and China is that most people in China and other parts of Asia are non-confrontational. Growing up in the Chinese culture, I can kind of relate but if you are a stranger to Asian cultures, you could be in for quite a shock.

For one thing, Asian vendors will rarely correct you, interrupt you, or let you know that they don’t completely understand you. It is part of their culture to be polite and accepting. If you are not careful, this one simple cultural difference can cause you a ton of grief when placing orders.

The biggest obstacle to overcome is that you might think you are communicating when in fact you are not. For example, I could be discussing something with my vendor and they might be nodding and acknowledging everything that I’m saying but then turn around and do the complete opposite once the conversation is done. This can be extremely frustrating.

The key is to ask direct questions and make sure that there are no misunderstandings. Ask, clarify and reiterate all of the terms as many times as necessary and be sure to write everything down as well.

Don’t assume that anything is clear unless it has been thoroughly discussed. The important thing to realize is that your vendor is just trying to be polite. It is your responsibility to convey your intentions and meanings clearly and succinctly.

Contracts Are Not Final

In the United States, contracts are considered final. After a series of negotiations, the final contract is supposed to represent an agreement and acknowledgment of terms.

In Asia however, a contract is about as final as version 1.0 of a piece of software. When I deal with Chinese vendors, sometimes it seems as though having a contract is completely worthless. We might spend a day negotiating and agreeing on pricing and terms only to have things change the very next day.

For example, one time we placed and agreed on a contract for a fairly large order to a Chinese manufacturer only to have them contact us a week later saying that they couldn’t manufacture several of the items we requested. Everything that we ordered was clearly stated in the contract and both parties had agreed.

On another occasion, a vendor and I had agreed on a price for a certain item only to find out that they wanted to increase the price a month later. The key takeaway here is that the definition of a contract is different in Asia than it is in the US.

Don’t expect a contract to be the end all and be all of your negotiations. In fact, I would argue that drafting a contract is just the beginning.

The Quality Of Product Will Not Be Up To Your Standards

I distinctly remember that our first few orders for wedding linens were a complete disaster. Even though we did our due diligence and carefully analyzed the samples that we purchased, our first overseas order resulted in a bunch of defective linens.

Looking back, we did everything correctly. The problem was that our vendors weren’t producing our linens with consistency. When dealing with new vendors, you should never just assume that what you are designing will be manufactured properly the first time around.

It takes time and many iterations in order to achieve a consistent level of quality across all of your product lines. It takes time to develop a good relationship with your vendors so that product irregularities can be resolved.

It’s All About The Relationship

As with all business dealings, your relationship with your vendor is one of the key components to your success. Especially in Asia, face to face contact is essential. In the beginning, my wife and I contacted vendors solely through email. And many of these vendors didn’t give us much personal attention until we physically visited them in their home country.

It’s truly amazing how the relationship with our vendors changed once we went to see them in person. Miraculously, our product quality started improving and they all of a sudden were more eager to help us out with special requests and designs.

I strongly believe that doing business face to face in China and Asia is essential to success more so than with any other country. Don’t be afraid to travel and meet them directly.

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11 thoughts on “Product Sourcing: What To Expect When Dealing With Overseas Vendors”

  1. First, nice article. Great outlining of caveats and gains.

    I know it is the common adage that everything is cheap and available in asia, but the truth is there are manufacturers of all sorts of things right here in the US.

    A great resource is the ‘Thomas Register’. It is an encyclopedia-thick set of books of manufacturers in the US. Some only do large runs, but once you page through this volume you will ask yourself why everyone thinks nothing is made in the US.

    Oh, and no language barrier, no cultural miscues, no expensive trips to asia. No huge shipping costs of a container.

  2. I like Rick’s suggestion about looking local too. I am not that comfortable with buying stuff overseas particularly in China where lead seems to show up in many different products. No travel costs, no language barriers and an opportunity to help our fellow Americans keep their own businesses alive.

    1. @Matt @Rick
      Completely agree with the both of you. I always try to look local if I can, but once you have the entire manufacturing process ironed out, you can’t beat the prices. You just have to be careful that you are dealing with vendors that are certified and tested (ie. to avoid problems with lead etc…)

  3. Hello Steve. Nice article. We lived in Thailand for a number of years and one thing to look out for is the yes yes yes.
    It does not mean yes but I hear you. Personally be careful don’t be misled by the smiles.
    The Baldchemist

  4. Excellent information on dealing with overseas vendors, Steve. Thanks for sharing your wisdom!! :-)

    *smiles*
    Michele

  5. Lars says:

    It makes me feel better to see that someone as successful as you has the same frustrating quality issues as the rest of us. And you are even flying over there.

    I am opposite of you and have never met a supplier face to face except one German supplier who has since sold off my product line to a different com

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