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Q: Protecting your business rights
I know - stupid question!
But, for those of you who have successfully negotiated a business here, what sort of things do you have to do to ensure you don't get ripped off by the locals?
What can I do to 'ensure' that the people I'm dealing with actually pay me what I'm supposed to get? Currently, I'm thinking I need a contract that stipulates I can have an independent auditor go through their books to ensure the numbers they're telling me are correct, and to send in 'mystery buyers' for the same (ie, they're not just giving my product to everyone (and taking the money from them), without passing the money on to me.. and penalty clauses for when they do!
I know - sounds like they'd never accept this (red flag already?). And, even if I did have such clauses in the contracts, what are the chances they'd be held up in court?
8 years 36 weeks ago in Business & Jobs - China
The Chinese are adept at this system. Do as they do: Don't invest time in an idea that is easily copied by locals. If you have a product with secret recipe/process/source, keep it strictly secret, and make sure no employees can steal the idea. Even your machinery might be robbed if employees see no other way to steal your secrets. Do most stuff yourself, and trust only family.
The biggest sacrafice/con of doing business in China is that you're going to get ripped off and most companies accept this because the pros (cheap labor) still outweigh this con.
Accept it. The best you can do is try manage/minimize it but you need to weigh the cost/benefit of action vs. no action.
Right, audits or inventory counts. You or your rep must be able to come in and count your inventory, and account for any discrepancies. Ie you stocked 100 widgets at Zhou's store, he says he sold 20, but has only 50 in inventory. You're on the right track.
I have no idea how much shoplifting goes on around here but you must hold them liable for inventory shorts. IE perhaps a 10% 'damage' allowance, more than that, they pay you.
But all that makes some assumptions. Sound like you're selling wholesale. You better get paid up front.
etc. ...
And labor ain't that cheap any more.
The Chinese are adept at this system. Do as they do: Don't invest time in an idea that is easily copied by locals. If you have a product with secret recipe/process/source, keep it strictly secret, and make sure no employees can steal the idea. Even your machinery might be robbed if employees see no other way to steal your secrets. Do most stuff yourself, and trust only family.
