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February 8, 2010
Doing Business With Asia
It’s All About Building Relationships
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Grant Taylor, president of
Asia Pacific Products, and
chairman of China Pacific Holdings.
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Once a place that was all but a mystery to most North Americans, the Asian Pacific area is now a major force in manufacturing and exportation. At some point in your business, China will have an impact. The key is forming established and trusting relationships with Chinese companies, according to Grant Taylor, president of Asia Pacific Products, and chairman of China Pacific Holdings.
His company manufactures tires in its own molds in China; in addition, it represents those factories in Canada as their agent, and markets the factory flag label.
Relationships and due diligence
“Doing business in another country is not like doing business in Canada,” he says. “It’s a very long process, beginning with the opening of a relationship, followed by a lot of due diligence. There are many factories, not only in China but in other developing countries, that don’t really understand the laws within Canada. Part of the relationship is one of cooperative spirit, to ensure that the products made there are engineered and tested properly, and then tested properly back here in North America, and conform to our laws.”
Taylor travels to China at least three times a year, and has been making the long trek regularly since he began his business venture in 2000. He warns that there isn’t really much point in buying small quantities of tires from China, as the cost of insurance and testing would quickly wipe out any profit. If you’re serious about dealing with China, consider it a major, long-term endeavor. “O.K. Tire is a shareholder in Asia Pacific,” he says. “Asia Pacific has had a very long, rewarding and mutually beneficial relationship with O.K. Tire, and they made this move to better access the tire manufacturers in China.”
Ignore the horror stories
Cultural differences are not a problem, Taylor says; ignore any horror stories of how a fumbled chopstick or mispronounced word could sink your venture. “I speak a little Chinese and can get by, but only with the basics,” he says. “At factories, English is spoken by virtually everyone in the export department. English is learned in the school system.”
But China does operate differently on other levels. Goods must be paid for in full before they leave the factory, and prepaying even prior to that will help build a relationship, which is a cornerstone of Chinese commerce. “If you have no relationship, you have nothing,” Taylor says.
Protect yourself and your products
Layers of insurance are also essential: marine cargo, in case something happens in transit, as well as product liability insurance. North American manufacturers carry that themselves, but Chinese vendors don’t necessarily have it, or unforeseen circumstances may crop up, such as a company that goes out of business, or lets the policy lapse without warning. “It isn’t that China is neglectful, but that it is emerging,” Taylor says. “I went through this in the tire business 30 and 40 years ago, with Japan and South Korea. It’s an evolving process that will never stop as long as countries around the world become industrialized.”
The U.S. dollar is the global standard in China, and that’s what you’ll use for your transactions; local currency is used only for products sold domestically.
“China is a wonderful country, and the people are very friendly and considerate,” Taylor says. “Be prepared to visit and to work hard there. And one of the nice things is that every day, no matter how difficult the business day has been, at the end, there’s always a wonderful meal, good humor, and laughter.”
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Jil McIntosh