Five Steps for Overcoming the Challenges of Supplier Management

Managing your suppliers successfully is a critical part of doing business. The China Desk has effectively implemented a solution that overcomes the challenges of working with suppliers in China. This blog will explore the importance of face-to-face relationships, communication preferences and cultural differences when working with suppliers in China.

The challenges of working with suppliers in China

Some of the challenges at the forefront of supplier management in China are different social landscapes, language barriers and cultural differences. This blog discusses the key aspects to consider in order to craft beneficial supply chains, especially in China.

  1. Legal – The Chinese legal system is different and not compatible with English common law used by most Western countries. The reliability of a strong contract is always in doubt, as companies grapple with contract law unfamiliar to them.
  2. Language barriers – Many suppliers in China do not speak English, so it is essential to have someone on your team who can communicate effectively in Mandarin or Cantonese.
  3. Social and Cultural differences – For example, Chinese suppliers can find it difficult to say no or report problems, whereas western companies are very open and frank with problems. It is essential to be aware of these differences and to adjust your approach accordingly.
  4. Technological and Information flow challenges are more specific to China, but can have a large impact on strategy. Google, Facebook and many other platforms that we use every day are forbidden in China, which raises an essential question. How do you get the right information to the correct person in real-time? Navigating this can be difficult, and this is where having someone who knows how to openly communicate with both sides rears its valuable head. Having personnel on the ground in China can be game-changing for all the right reasons.

Despite these challenges, they are not impossible to overcome and create a successful supplier management strategy. By building strong relationships, understanding cultural differences, and establishing clear communication channels, you can successfully manage your suppliers in China.

How to overcome the challenges of supplier management

Navigating the challenges of supplier management in China can be daunting, but remember, the supplier is your friend – when you do well, they do well! So it must be important to have frank conversations with them for the benefit of both sides. By following a few simple steps, you can create a successful strategy. The China Desk’s solution includes a number of steps to ensure effective communication.

The first step is to build a strong relationship with the supplier. As we have touched on in previous blogs, crafting business relationships in China requires a few cultural considerations. Building bridges is done most effectively by in-person meetings, (where possible), and getting to know the supplier. It is also important to establish clear communication channels and protocols. 

To add to this, it is important to get a lawyer who is qualified to advise on Chinese contract law. Make sure you have the right contracts in place as early as possible, so you can focus on the projects. It is much better for the relationship and your bottom line, if you prevent issues with a sound contract, rather than mitigating issues later down the line!

The second step is to understand the supplier’s business model and how they operate. To do this comprehensively, you need to become well acquainted with their strengths and weaknesses, as well as their areas of expertise. 

To further understand the organisational structure, two key questions to ask yourself would be:

  1. What resources do they have in each department?
  2. How do they allocate resources to projects? 

It’s also good to have direct contact with personnel from each department, sometimes the account manager will only paraphrase and not provide the detail you want.

Below is a visualisation of the relationship between the Client and the Supplier in China and all the facets involved. In particular, The China Desk by Kinyu helps businesses manage those relationships on behalf of the client.


The China Desk by Kinyu: Managing Suppliers on behalf of Clients

The third step is to develop a shared understanding of the company’s objectives and how the supplier can help to achieve these. A key step in working towards these  is agreeing on mutually-beneficial targets and KPIs.

The fourth step is to create a system for monitoring and managing the supplier. This system should include regular reviews, established escalation procedures, and defined roles and responsibilities. Speaking with Benjamin King, Kinyu’s Founder and Director, he gives some key advice to Clients on monitoring and management.

“I suggest a two-pronged approach to communication with a supplier. You need to have a good relationship at the account manager level, the day-to-day stuff, so they feedback information timely to you. However, you also need to have a senior level relationship. Things rarely get taken upstairs by the internal account managers, therefore you must have that access to the senior management/directors of the business.”

The fifth step is to continuously communicate and engage with the supplier. This ongoing open communication channel includes maintaining regular contact, providing feedback, and addressing any concerns. This is time-consuming, especially when done remotely from the US or Europe. This is often solved by having your own supplier account manager on the ground.

By following these steps, The China Desk has been able to overcome the challenges of working with suppliers in China and create a successful supplier management strategy. Face-to-face meetings have much more impact than video conferences, which is why The China Desk has been working with clients who have not been able to visit China due to Covid-19.

If you would like more information about setting up, managing your suppliers, or getting your own mascot on the ground in China then please contact us by emailing info@kinyu.co.uk.