Avoiding Three-Card Monte at Chinese Suppliers

Benjamin Jurken

It is tantalizingly simple…find the queen and get paid. For years, unsuspecting marks have stepped-up to test their luck at this classic con in hopes of scoring a quick buck, only to be fleeced by a dexterous dealer and smooth-talking shill. Today, our global economy, while vast and sophisticated, can at times seem even more treacherous than the seediest alleys. It is no surprise then that many importers often feel as though they have fallen victim to a new form of Three-Card Monte upon leaving their Chinese suppliers.

“I went to resolve quality issues and ended up discussing pricing and orders before needing to leave for a two-hour lunch.”
– Director of Quality Assurance for an automotive manufacturer

“I specifically visited my supplier to address late delivery and associated air freight charges and was told new measures would be put in place, only to return to the US facing the same problems.”
– CEO of a consumer goods manufacturer

For even the largest and most veteran importers, the challenge of identifying, correcting, and controlling issues at Chinese suppliers can be daunting. This battle, which is difficult under normal circumstances, quickly becomes a Sisyphean effort when on-site meetings stray from objectives and key issues go unaddressed.

In turn, US importers are forced to assume the high cost of frequent international travel, wasted time on the ground, and worse yet, unreliable supply chains. By adopting the following measures, however, many of these pitfalls can be minimized or avoided all together, rendering even the most experienced avoidance artist powerless.

Distributing meeting agendas prior to departure is an extremely simple and obvious procedure that immediately helps frame your time on-site and creates a paper-trail of all discussions. An effective meeting agenda should include: previously outlined action items, a list of personnel and departments who are responsible for resolving open issues, and mutually agreed upon deadlines for implementation of corrective action plans.

Once drafted, this document should be distributed to all parties in advance of scheduled meetings to ensure all supporting documents and data can be collected and fully analyzed. With a clear agenda in place, it will be significantly more difficult for a Chinese supplier to dodge addressing vital issues affecting your business, but this is just the first step in avoiding a potential shell game.

Ensuring the right personnel are in attendance at these meetings is just as important as drafting an agenda, but is so often overlooked. Usually, the most successful meetings with Chinese suppliers are a collaborative process wherein various departments can interface with their counterparts to specifically address areas of concern. This can only happen if these players are present on both sides of the table.

While it is true that sending multiple engineers, designers, or operations personnel is costly, having key decision makers on-site will actually result in issues being resolved quicker. This will also provide a better understanding across your entire organization as to a supplier’s true capabilities, which in turn results in fewer issues and less travel. But having essential personnel at suppliers’ locations is still only part of the battle…

Holding your Chinese suppliers accountable for their performance is ultimately the only way to avoid being taken advantage of. This of course is far easier said than done, but by documenting communication and KPI’s, you can more objectively evaluate a supplier’s performance to determine whether or not they should be retained or replaced. With well-defined expectations, quality suppliers will seek advice and support in their quest to be a valued supplier, while those that do not should be quickly replaced. Remember, China is a massive country with countless suppliers that could possibly meet your expectations if given the opportunity.

And just as we all learned at various points in our lives that Three-Card Monte and carnival games alike, while seemingly simple, were rigged against us. Armed with that knowledge, we have avoided parting with our hard-earned money. Perhaps now it is time to apply similar scrutiny to your Chinese suppliers.