Recently, I was able to read your issue from April 5 which contained several articles mentioning the threat of China and Wal-Mart to U.S. companies. I'm an independent consultant, working closely with a Chinese rubber group for over three years. I'm a rubber industry guy, so I won't pretend to know about the challenges that North American plastics processors and resin suppliers face. But I would like to shed some perspective on the overall business situation, as I see it, regarding China.
In my field, and in my experience, the Chinese suppliers take a poor view of Wal-Mart for the same reason American suppliers do, and the financially healthiest ones don't seek that kind of business. Enough said.
Chinese businesses close every day. Chinese workers lose their jobs every day. Globalization has hurt various industries where workers used to be guaranteed jobs by the government, especially in manufacturing and the petroleum industry. Foreigners often don't see this problem while sitting in the hotels, meeting rooms and restaurants of Shanghai or Guangzhou. Agriculture in China is about to take a huge hit. If you think that a business closing is bad for workers in the United States, think about China, where there is virtually no social safety net anymore — no unemployment, no money for retraining — zilch.
Wages are low in China — that's a fact. Why would anyone move production there if this weren't the case? The factory workers aren't slaves — they're glad to have those jobs at $2 a day or less, or whatever (about $2.60 per day in my factories). Their standard of living is low, for sure. However, the food is cheap, excellent and available everywhere. They joke, laugh, enjoy life to the best of their circumstances, and they work hard. They take pride in work well done. In other words, they are just like us.
As Chinese workers gain more jobs and a greater percentage of the world's wealth, their buying power will be unleashed — but not until then.
The competitive edge that China has does not rest only on cheap labor — it also hinges on an enormous, well-trained base of technical workers, engineers, machinists and translators. I think the United States is starting to fall behind in this kind of investment; the next time your local school district needs more money, support them. And everything can be important for business — sciences, math, languages, art, history — everything that makes a well-rounded intellect.
If you want to move your product to China, don't walk in and specify the product without knowing your product thoroughly beforehand, and without being able to clearly discuss every single detail. The Chinese don't understand a lot of things about products we use, and they don't understand what the market wants. Consequently, they may not know what is important and what isn't. They may also tire of your incomplete or confusing information and lose interest in your project.
Business in China is totally personal. The more cold and aloof you are, the more you obviously can't relate to them, the less they will care about you and protecting your business interests. Establish relationships — it may require eating some bizarre foods and drinking more than you want. Your jokes may not translate (so don't bother telling them) but friendly and equal attitudes need no translation. Read up a little on Chinese history and society. Understand that Chinese business practices have a hangover from Communist days. Also understand that many directors of businesses today went through the Cultural Revolution in the '60s and '70s, and they are driven to succeed, to put that legacy behind them. Use that energy.
The Chinese are not our economic enemies, and they do not all have the same goals and interests. Exactly like Americans, some are reliable, some not. Always, in all business anywhere, pay attention. All of my business has been conducted without contracts, based on mutual trust, and it's worked for me. But I get personal, and I only work with people I trust.
With about half of the world's population, it's only right that China should have a bigger share of the pie. It's also inevitable. Britain saw us in the same antagonistic light a hundred years ago, as the United States seized many of its markets and cranked out “inferior” copies of their products. But the British managed to muddle through. We'll do the same.
NorthStar Rubber Specialties LLC