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Mar 15, 2010
China Law Blog, In addition to good contracts, I think people also miss the necessity of meticulous quality control. So much time and money could be saved if people would have their goods inspected by credible inspectors BEFORE they accepted them and had them put on the boat. Try getting a chinese supplier to take goods back for rework after they've already arrived in the States and you've paid for the goods. It's not a position I like to start negotiating from.
China Dream, Thanks for the comment. Good questions. I personally haven't seen any stats on the success rates of China ventures. I think ChinaLawBlog gave a good estimate/analysis. Of the ventures that are successful, I'm sure they have their war stories as well. The bottomline is it's going to be a challenge. For some reason, it seems that every time I fly to Asia, I'll meet someone going over for the first or second time with the plan of getting off the plane and finding a partner or factory. After talking to them a little bit, it becomes apparent that they have no idea of what they'll most likely run into. They say they know about the tricks and scams, but I think the majority of knowledge comes from a few Businessweek or WSJ articles about such things taking place and how much money corporation XYZ spent to get out of it. Smaller companies usually don't have those kinds of resources to spend their way out of the problem over a long period of time. I think people underestimate the differences in the environment their working in. Perhaps the first step when going into a situation like that would be to acknowledge that "I don't know what I'm doing". Then, you can start from scratch to build your understanding, rather than trying to apply a western perspective to what you're dealing with. If you pursue the latter course, you'll apply the same strategy but be baffled when you get a completely different outcome. So the first issue is probably the attitude/arrogance that people carry over there with them. And the second, is that as a result, they don't do enough due diligence before they really get going.