Are there really Special Chinese Methods when it comes to purchasing?

Yes…and no.

I spend most of my time training sales teams in Shanghai. Lately there has been more and more pressure for companies to adopt what I refer to as international standards of value added sales. It is not coming from western sales managers or even expensive MBA-type consultants. It’s coming from Chinese buyers. They are simply too busy for traditional Chinese relationship building.

Let’s do a quick role-play. Your name is Bill Chen. You’re running the Shanghai branch of a midsized MNC based in Europe. You’ve got 15 client calls to return, 3 sales positions to fill, 2 budgets to complete and a new marketing plan to approve. You also need to find a vendor for a new computer network.

Pop quiz – How much time do you want to devote to finding a new vendor? Simple answer: As little as possible.

If you are Bill Chen or any of the tens of thousands of Chinese managers in a similar position, the last thing you want to do is run the yan-hui (banquet) circuit with a bunch of different systems integrators and hardware companies – drinking toasts and smoking cigarettes until the wee hours. You may still have to do that with some of YOUR customers, but you’ll be damned if you are going through that on your own dime (mao).
The odds are that you would rather spend the time at home in your new apartment, watching the big flat screen TV with your wife and child.

A couple of years ago you might have pushed the decision down to a subordinate and just gotten involved at the final stages. That approach got you into trouble as mission creep and guanxi took their toll and resulted in your company paying too much for inappropriate and/or low quality merchandise.

How are you going to handle this? You’re probably going to have a subordinate put out bids and build a list of vendors that you will narrow down to a short list based on key business factors. You’ll assign someone to coordinate and gather data, and take part in the final decision – weighing cost and functionality– with the help of your purchasing people or knowledgeable engineers.

Are there Chinese characteristics to the process? Yes, there are. These business meetings may focus on discussions about teams and personnel more than western meetings — where the conversation centers on sales terms and contracts. The purpose, however, is the same – making sure that the buyer is actually getting what he is paying for and will get support down the line. In the west, we tend to use legal agreements to do that, while in China it is more effective to secure good relationships.

Chinese buyers are adapting the guanxi idea to value-added sales in another way as well. Where once a Chinese purchaser would rely on his extended network of contacts to find someone he already knew who could fill his needs, the modern Chinese executive is more likely to comb his outlook address book for someone who works at Honeywell or Microsoft or some other specific brand-name to solicit a bid.

From the outside, the process may still a little opaque and “connected”, but now local and international buying strategies are starting to converge.

Should international managers and MBA instructors pop the champagne and declare victory? No, not really. This is simply an econo-Darwinistic response to the 3 Pressures of market economies: Time, Profit and Competition. The fact that both western and Chinese systems are being prodded in the same general direction when it comes to purchasing doesn’t necessarily mean that one style is winning while another is fading away.

China’s market economy will continue to evolve into an effective system built on both Western and Chinese traditions. The point that we’re making is that the only way to analyze China’s new economic trends is to take a forward-looking view. That old adage: “Those who forget history are condemned to repeat it”, may be true, but we’d like to add a new one. “Those who won’t let go of history are condemned to work for low wages.”

ChinaSolved