The Swedish cleantech company OrganoClick wanted to find a Chinese distributor of finishing treatment Chemicals for their environmental friendly functional material and hired Scandic Sourcing who conducted a distributor search in China. After Scandic Sourcing made their recommendations, OrganoClick signed a distribution deal with a Chinese distributor with a large customer base in Shanghai for the sales of OrganoClick’s patented water repellant OrganoTex®.
OrganoClick is a public Swedish cleantech company listed on Nasdaq First North. The company develops, produces and markets functional materials based on environmentally friendly fiber chemistry. Examples of products that are marketed by OrganoClick are the water repellent fabric treatment OrganoTex®, the flame and rot-resistant timber OrganoWood® and bio composite materials. OrganoClick was founded in 2006 as a commercial spin-off company based on research performed at Stockholm University and the Swedish University of Agricultural Sciences within environmentally friendly fiber chemistry. OrganoClick has won a number of prizes, such as "Sweden's Most Promising Start-up" and "Sweden's Best Environmental Innovation", and has also the WWF "Climate Solver" award and has also appeared for two years on the Affärsvärldens and NyTekniks list of Sweden's top hottest technology companies.
“The cooperation that now starts with Shanghai Amazingtex Trading Co, Ltd is a good first step for us in Asia. We will now continue our work to set up distribution networks in Taiwan, South Korea and Japan" - Mårten Hellberg, CEO OrganoClick
OrganoClick has as part of their expansion focused on the Asian markets through co-operation with local distributors in China, Taiwan, South Korea and Japan. About 77% of the world’s total production of functional textiles is produced here; China is the dominant player with more than 15.000 textile factories, the largest concentration of which can be found in Shanghai.
OrganoClick wanted to find a Chinese distributor for their durable water repellent that is used for the production of OrganoTex® and hired Scandic Sourcing to do a distributor search for the Chinese market.
Scandic Sourcing identified over 50 companies according to the specifications made by Organo Click and qualified 12 possible partners.Scandic Sourcing put each possible partner through a detailed survey and scored each one according to a number of specifications and shortlisted the 5 highest scoring candidates.
OrganoClick reached an agreement with one of the distributors on the short-list that was their best fit and also had a broad customer network in China. "This is a first important step for us in our ambition to get a good geographical distribution of our textile products and technologies on the Asian textile market”, says Mårten Hellberg, CEO OrganoClick in a Press Release. “The cooperation that now starts with Shanghai Amazingtex Trading Co, Ltd is a good first step for us in Asia. We will now continue our work to set up distribution networks in Taiwan, South Korea and Japan".
There are many types of visas to China, (C, D, F, G, J1, J2, L, M) etc. according to all circumstances, but if you are visiting on business, you should apply for an M visa. Typically the M-visa is for 90 days, and can be extended to up to a maximum of 180 days without leaving China.
Original passport with at least six months of remaining validity and four blank visa pages
2. Visa Application Form and Photo
3. An invitation letter which contains:
Information on the applicant (full name, gender, date of birth, etc.)
Information on the planned visit (purpose of visit, arrival and departure dates, place(s) to be visited, relations between the applicant and the inviting entity or individual, financial source for expenditures)
Information on the inviting entity or individual (name, contact telephone number, address, official stamp, signature of the legal representative or the inviting individual). These documents may be handed over as photocopies, but in some cases the consulate will require the original document.
4. A copy of the Chinese firm’s business license
5. A business card with your company’s name and contact information (telephone, email, etc)
If you want to go to China on a tourist visa you should apply about at least about a month before departure and the application can be handled either by yourself or through an agency. To complete the application you need a passport valid for at least 6 months, and a photocopy of it, as well as a properly filled out visa application, two passport photos, a return ticket, a hotel booking for at least the first night, and a written travel plan. You can alternatively present an invitation letter from a contact with a Chinese residence permit instead of the hotel booking if you are visiting a friend.
If you stop over in China for three days or less, it’s possible to do so without a visa. This is only possible in the following cities and if you stay within the city limits:
Beijing (Beijing Capital International Airport);
Shanghai (Shanghai Pudong International Airport or Shanghai Hongqiao International Airport);
Guangzhou (Guangzhou Baiyu International Airport);
Chengdu (Chengdu ShuangLiu International Airport);
Chongqing (Chongqing Jiangbei International Airport);
Shenyang (Shenyang Taoxian Internatioanl Airport);
Dalian (Dalian International Airport);
Xian (Xian Xianyang International Airport);
Guilin (Guilin Liangjiang International Airport);
Kunming (Kunming Changshui International Airport);
Hangzhou (Hangzhou Xiaoshan International Airport).
Besides a valid passport, you’ll have to have a visa for your destination country (if required) and an airline ticket – with a departure time within 72 hours, – for the country you are traveling to.
Note that the countries of origin and destination cannot be the same. For this reason a ticket Rome-Shanghai-Milan won’t allow you an exemption; you’ll need a ticket such as Rome-Beijing-Tokyo or Rome-Shanghai-Seoul. The final destination can also be Hong Kong, Macau or Taiwan.
How do I request the 72 hour exemption?
You can forward your request for transit to your airline in advance, so that the airline can declare this to the Immigration Inspection prior to your visit. You will be granted a transit permit at the airport if you meet all requirements. NOTE: Beijing Capital International Airport has now changed this procedure; passengers can apply directly for 72 hour free transit permit after arrival at the airport.
Managing Chinese employees and managing Western employees differ in key areas. Higher turnover rates, the concept of ‘face’, teamwork that only extends to one’s social group and a heritage of Confucianism are some issues that are quite unique to China and as an Expat Manager coming to China to lead a Chinese team, you’d best be aware of them or risk becoming a bull in a China shop rather than an efficient manager.
Teamwork in China: You are either in our out
The concept of teamwork in China cannot fully be understood without understanding the concept of in-group / out-group. Chinese people tend to relate to one another as part of an ‘in-group’ (members of their social network) or the ‘outgroup’ (everyone else). The difference in the treatment you might expect if you are part of the in-group or the out-group is usually much different. Generally speaking, one has much higher confidence and trust in ‘in-group’ members than ‘out-group’ members and as a result, will typically offer little support or help to anyone not part of the in-group.
This social dynamic is deeply engrained in the Chinese social fabric and most importantly: extends to the work place where different “cliques” that have developed strong relationships with each other work well together, even better so than Western teams according to some research. But the problem is that the co-operation between different teams and departments that belong to different in-groups is usually less than optimal. There have also been occurrences where Chinese staff provide sales leads and other confidential information to competitors because members of their social network, or ‘in-group’ work there!
Tip: Try “team-building” exercises aimed at making people work more comfortably across team barriers. Also consider job rotation where you break up the cliques within the company by moving team members around to break down the social barriers that affect your company’s performance negatively.
The cultural legacy imparted by centuries of Confucianism has imbued the Chinese with an extremely hierarchical culture with strong roots in formality–which in the workplace means that individual employees need to be strongly encouraged to speak their minds.
For the typical Western employee, achievements and success are deemed more important than seniority, or any type of social standing or class, but this dynamic is different in China due to the cultural heritage of Confucianism.
“The over-emphasis on social hierarchy imparted on Chinese culture by the values of Confucianism has stifled free exchange of ideas between people of different positions in the hierarchy” according to Professor Cai Hongbin, dean of the Guanghua School of Management at Beijing University. In other words, ideas are only viewed as valid if the people involved in the discussions are viewed as equals, and as such, there is generally more emphasis relationship building and moving up within the social hierarchy than the free exchange of ideas. "Too strong on building social connections while weak on idea exchanges," as Cai put it. Also, silence is still considered a virtue and is preferred by many Chinese employees over voicing one’s opinion, also based on the assumption that the decisions are anyway taken by the senior management.
This general lack of free communication and exchange of ideas is potentially a big loss for the company as many valuable ideas never reach senior management. As a Western Expat Manager, it is important to be aware of the legacy of Confucianism and to take efforts to mitigate it and encourage free discussions and input across social ranks or positions within the company.
Chinese employees expect a faster career path than contemporaries in the West and the turnover is higher in China’s private companies (about 20% per year) and this is potentially a big problem. Solving the key to retaining employees should thus be a key concern for a Western manager coming to China.
A 2012 Retention Survey by Hays by over 900 Chinese employees shows that lack of career progression is the main reason why someone leaves a company. Similarly, having “a clear path” was considered an extremely important factor why to keep a job by almost half the respondents. Another find by the Hays Survey among the respondents was that they have a strong desire to be recognized. In fact, “recognition for a job well done” was the #2 thing that kept Chinese workers in their jobs. It was rated “extremely important” by 48.6% candidates, second only to the “clear career path”.
Other things that increase the turnover risk for a company and losing its integrity is mixed messages: claiming to be one thing but then demonstrating another. When an organization communicates a certain message about what it’s like as a place to work, but this message doesn’t match the reality of their workplace, it’s both disappointing and unsettling for the employee and increases the turnover risk for the company.
Retention tactics: Continuous training, consistency with the company’s image and its practices, onboarding, building a good relationship with the employees, regular training and advancement, recognizing the employee’s efforts and communicating a clear career path are all ways to retain Chinese employees which can potentially save you both time and money.
The concept of “face” has already been discussed a lot so I won’t delve too far into it here, but it is worth briefly rehashing. ‘Fear of losing face and damaging guanxi’ are often cited as reasons for Chinese unwillingness to deal with problems openly and directly. Negative answers and open disagreement are avoided as they cause other people to become embarrassment and tend to ‘strip off’ their ‘face’.
Thus when your staff tell you ‘Basically, no problem’, you should be extremely careful - there might be a big problem, according to one Scottish manager.
Conclusion: Patience & Persistence
Knowing about these typical patterns of behavior among Chinese employees in the work place is a good way to becoming an effective leader in China. This understanding helps you keep your temper even, (since losing your temper is always a big mistake in China), and to mitigate negative trends in the Chinese workplace. A common mistake is to come from the outside and wanting to change things overnight, behaving like a bull in a china shop. Such expats tend to get resented by the Chinese staff, rather than embraced as a good leader.
Learning a little Chinese and being willing to use even basic sentences when talking to employees immediately sends a signal that you are willing to bridge the gap between the two cultures. It’s a quick way to bring a smile to your employees face and is a fairly easy way to improve the relationships with your staff.
When you go to China for an important business meeting it helps to know a little about Chinese business culture and how to act and appear during the meeting.
Arrival & Greeting
I China it's important to be on time, as not doing so might insult the hosts (although you might be forgiven if the traffic is exceptionally bad). If you arrive in a group, the most senior member should be the first to enter. A slight bow is a common greeting but a simple handshake is also accepted. You might be greeted with applause and should in such cases reciprocate.
Avoid: Kissing anyone on the cheek.
Present your business card immediately upon meeting your Chinese hosts. Business cards are often exchanged so make sure you bring plenty and that your title is printed on the card. When you hand over the card or receive the card, take it with both hands and make sure that your information is facing upwards when handing over the card. Whenever you receive a business card, make sure to take a moment to study it before putting it down in your pocket or preferably on the table in front of you.
Avoid: To receive or hand over business cards with one hand and putting them straight into your pocket without looking at them, and having your own business cards in the back pocket. Also make sure to not take notes on anyones business card whenever that person is present.
Clothes for men: Dress in a suit in conservative color choices,
Avoid: Colorful ties, gray suit and jeans.
Women: A formal dress is preferable.
Avoid: revealing clothing is deemed innapropriate at a business meeting.
Gifts used to be a must during business meetings but are currently under scrutiny after Chinese President Xi Jinpings crackdown on corruption in China. Modest gifts unique to your home country or region is still very much appreciated; fred wrapping is preferable. In China it's common to refuse the gift many times before finally accepting it.
Avoid: Clocks (represents death), and gifts in sets of 4 that also represents death.
During the meeting
Chinese people rarely get straight to the point but rather spend some time chit-chatting first. Once the meeting started, it's considered rude to interrupt anyone. You should not single out any one person's misstakes either as that will make him or her loose face. In general, Chinese people appreciate moderation in how you speak and in your body language.
Avoid: Strong gestures, pointing at anyone or patting anyone on the shoulder.
A large number of foreign companies are subjected to fraud when purchasing goods or parts from China, especially when the payments are made before the gods are delivered. Common frauds are to receive damaged and useless goods and the losses inflicted on small and medium sized companies are often in the millions.
To avoid trouble it is important to select the right suppliers to begin with; and equally important is to evaluate your supplier before doing business with them. The choice of supplier is the most important step during your purchasing from China to avoid fraud and receiving poor quality goods. Despite that, a survey from the University of Gothenburg that interviewed small- and midsized Swedish companies who are conducting trade with China showed that supplier selection is often guided by coincidence, rather than careful selection and evaluation, even among companies who traded with China for many years. This lack of evalutation greatly increases the chances of encountering fraudulent suppliers. Moreover, many Western companies choose their suppliers online or on trade shows (which many times takes place in Hong Kong), where you might in fact be dealing with a trading agent or middleman that is falsely claiming to be a supplier or factory representative. Thus, many companies add unnecessary costs via middle men who will muddy the waters and add to the margins to make a buck!
Getting the full picture of the state of your suppliers operations requires a presence in China or a reliable partner.
In China, paradoxically as it might seem, the suppliers with the best websites and flashy presentation might be the worst options; and many of the best suppliers rarely have an English website (some are still lacking a working email address!), nor do they send English speaking representatives to trade shows – you have to dig deeper to find them.
Quality Control – requires a presence on the ground in China
Trading with China is made severely more difficult by the long distance to China and the expensive and time consuming trips over several time zones required and the general difficulty of communication. To achieve the quality you want you have to specify the details of the project – often in Chinese. Fluid communication is important to get the quality you want. The best way to buy from China is to have a contact in China who can communicate with your supplier or manufacturer in their native tongue.
Many companies use Chinese sales agents as middlemen, and even though that might work in the short term, it’s far from a stable solution for your purchasing in China. According to the dissertation from the University of Gothenburg, many sample companies couldn’t even identity all their suppliers, not to mention the trading agents and middle men in the way between them and the supplier adding margins. More shockingly, many purchasing departments don’t even have a contract with their suppliers. Order placement is often handled via email with trading agents, which is not a great way to communicate (if you want to be clear about the details to get the quality you want). Furthermore, there are ethical considerations to take into account regarding not knowing who you are dealing with and what went into making the products, not to mention the huge PR backlash it could potentially lead to.
Many Western companies deal with middle men rather than directly with their suppliers when purchasing in China and does not even issue a contract.
Scandic Sourcing's Procurement Solution
If you want a safer and more reliable solution for your purchasing from China, Scandic Sourcing has developed a procurement solution where we handle your purchasing from China in a cost efficient and transparent way. Scandic Sourcing evaluates your supplier pool to identify potential risks and prevent interruptions in your supply chain and assigns a dedicated project manager. We make sure to communicate directly with the factory owners or the management to circumvent costly middlemen and third-party agents. We can communicate directly with all layers of the supplier’s organization to get you the best price and conditions and build transparent and long-term relations with the suppliers in the process to ensure favorable working conditions.
We also handle quote requests and organize the bidding process for new orders. We also do continuous research to keep you updated on the cost structure for your industry in China, including raw material /material costs and market price.
Page 4 of 10