Forming a successful relationship with your Chinese suppliers takes constant work.
Australia is China’s sixth largest trading partner, with 25 per cent of our manufactured imports originating from China. With the recent free trade agreement signed between the two countries, knowing how to establish and maintain fruitful business trade relationships with Chinese suppliers has become increasingly important for many Aussie small-business owners going forward.
But what factors should business owners be focusing on in order to foster this kind of relationship? Over the past seven years, I’ve seen strong buyer and supplier relationships form through the Octet platform, such as B Seated, an Australian commercial furniture company. Working with Daniella Menachemson, co-founder of B Seated, I’ve pulled together some recommendations for start-ups to consider when sourcing suppliers from China.
Do your research
This might seem like common sense, but it is crucial for businesses looking to establish a fruitful relationship to first do their due diligence, and make sure that their chosen supplier is everything they claim to be. Take the time to visit the supplier on the ground, and inspect their facility in person. There is no substitute for meeting your supplier face to face.
For many new business owners, the concept of travelling to a foreign country without knowing the language or the region can be a daunting prospect. Employing local help can be a great way around this. Locals will have a lifetime of experience dealing with business owners in the region, and can provide pointers on the best suppliers for the product you seek.
In a world where sustainable and ethically sourced goods are becoming more important, going to the factory and seeing the working conditions for yourself can help to avoid unfortunate surprises further down the track.
“People buy from people,” says Daniella Menachemson from B Seated. “Establishing a personal relationship with your supplier is fundamental to long term success. Visiting the factory in person not only allows you to meet and greet you supplier but also provides an opportunity to inspect the factory and talk to the workers. Asking a factory worker when they last got paid can be a great indication as to the health of your supplier’s business.”
Communicate early and often. In the modern digital age, communicating with your supplier has never been easier, and it’s also essential for staying in the picture and securing the best possible service from your supplier.
Australia is a relatively small market when compared to the rest of the world. For the biggest Chinese factories the profits to be made from Australian businesses can look pale, in comparison to those in other countries. As such, it can be a challenge for Australian companies to stay relevant and secure the best prices from Chinese suppliers. Frequent communication helps to mitigate this, keeping your business at the front of your supplier’s mind.
“While some companies may not have the resources for this, B Seated takes supplier communication very seriously.” Menachemson says, “We have taken the time to build a team on the ground in China, specifically to liaise with our suppliers. This allows us to constantly monitor and track our products and ensure that all our goods are ethically sourced.”
Be punctual and reliable
This might go without saying, but punctual payment is key to long-term success. You might be best mates with your supplier but if you can’t pay him on time, every time, then your business relationship is doomed to failure.
“Innovations in financial technology have made punctual payment of suppliers far easier than when banks had to be involved at both ends of the deal.” Menachemson says, “Removing the need for a paper trail and digitalising the process has drastically increased the efficiency and convenience of the supply chain payments process.”
Forming a successful relationship with your supplier takes constant work and maintenance. Treat your supplier with respect and they are likely to do the same in return, resulting in a lasting, mutually beneficial partnership.
Brett Isenberg, General Manager, Octet