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What Is It Like to Produce in China?

What Is It Like to Produce in China?

In continuation from the last post about clothing production, I would like to post an answer I gave in an interview that asked me what it was like to produce in China.

“I can’t speak for the majority of the production methods that are available in China. The following information is purely from my own experiences and what I have learnt from others. Generally, Chinese producers are extremely eager to win your business, and they have can-do attitude which is highly contagious. Most aren’t afraid to consider taking up a business outside of their scope of experience. The upside is that they are willing to experiment together with you, as long as you are willing to foot the cost. When the end result works out as planned, everyone wins. The downside is that sometimes they are biting more than they can chew, and the result can be a spectacular failure. When you are working directly with tailors doing custom orders, or hiring in-house tailors and seamstresses in a private studio, this risk can be minimised but it increases costs of production per piece. Dealing with a factory in a mass production process would bring down costs per piece, but it means involving three different parties – the designers (me), the middleman (salesperson, pattern makers, pattern cutters), and the factory (factory managers, production team, factory workers). Every single stakeholder in each entity has different ways of thinking and knowledge of production, which means that there are a hundred and one ways in which the entire manufacturing process can go wrong – from sampling to final production – especially when making unconventional garments. Some design houses would spend a long time sourcing the right factories to work with by making samples. However, there are a thousand and one factories in China to choose from, each with their own middleman, hence it is necessary to put their works to the test. Very soon the overheads increase exponentially. And in order to recover these sunk costs, it is necessary for companies to either charge higher prices, or increase sales volume.

Once a relationship (commonly known as guan xi) is established, however, it is necessary to maintain it well. Loyalty is very much cherished. We cut each other some slack when mistakes are made, payment terms become more flexible, and our orders are prioritised over others. During important holidays like Lunar New Year, or coming back from an overseas trip, it’s common to bring gifts for parties you’ve established good business relationships with.”

There were of course some things that I left out, because I didn’t want to end up writing a long essay in an interview. It was important to add that laws and regulations do little to enforce the working culture of China. Flexibility is expected when operating in a large grey area. And in many cases, businesses would take it upon themselves to push the limits, which can be good or bad, depending on the situation. For example, if one’s business relationship is good, both parties would be more willing go out of their way to accommodate each others’ requests, improve the quality of production, or do favours for us at the risk of bending the law. The tailor whom I’ve worked with the longest confided that the work and finishes that I demand from him have pushed him to improve his standards and exposed him to more complicated designs. Fortunately he has a good attitude that is willing to embrace such challenges. There are some other tailors who refuse work that goes beyond their comfort zone. On the flip side, shady companies might also decide to cut corners on your products to see what they can get away with in order to save costs. And I’ll tell you why.

The entrepreneurial spirit is common amongst the Chinese, whether we are born in the mainland, or are the fifth generation born overseas. My dad is a businessman, and I’ve followed his footsteps. Many of my relatives did the same, a late uncle sold poultry in a traditional wet market in Jakarta until he died in an accident, some distant aunt has been running a noodle shop for decades – she still makes the best Indonesian beefballs I have ever had. Contrary to common practices in Western countries, Chinese businesses tend to start really small, often with borrowed capital from friends and family. It doesn’t matter the size of the business, what matters is doing it. When mainland China finally freed itself in the late 70s from the utter failure of Mao’s economic reforms, the flames of entrepreneurship were rekindled in full force. The masses were hungry for food, for wealth and for productivity. Informal businesses sprung up next to state-owned enterprises. People worked hard to earn their rice bowls. While this are all very good things, the hunger to survive also made competition much fiercer. Without proper government regulations and watchdogs in place at the beginning of the economic reforms, some unethical businesses resorted to underhanded means to increase their profits. Bear in mind that unethical business practices can occur anywhere in the world – one simply has to look at the financial collapse less than a decade ago – but how and why they manifest differ. As the government constantly tries to play catch up, Chinese business laws and regulatory framework have to be revised every so often, so much so that it becomes difficult for companies to keep up, especially when many of them are small, family-run businesses. They continue to operate within what they think would be within acceptable boundaries, until they are warned or fined not to do so.

This is why there is a common adage in China that it’s easier to ask for forgiveness than to ask for permission. It is with this mentality in mind that flexibility can be a risky factor. Hence it is important to find business partners that have moved beyond simply trying to make money on a one-off basis and evolved into the type who are keen to develop a working relationship based on integrity and creating a win-win situation for both parties involved. Thankfully as the market is maturing, most producers are now realising that they cannot simply rip someone off because keeping long-term customers happy has been proven to be more cost-effective. Not only that, the business relationship that has been fostered often transcends to loyalty and personal friendships, which is a valuable advantage for running a business for reasons outlined in the beginning of this essay.

While the payoff can be great, not everyone can tolerate the ambiguous nature of Chinese business culture, especially not for those who are more comfortable with conformity and clear boundaries. The acceptance and ability to navigate through these cultural differences are some of the most important key factors in determining the success of a foreign business in this country.

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