Is there anyone here who does business in China?

[JJMcClure]

My wife has a new Chinese client and is doing her first deal with them. Hard copies of designs have been exchanged but the electronic files have yet to be sent. The client is promising payment on delivery.

My question is, would it be offensive to ask for a 50% deposit? Most of what I've read about doing business with the Chinese suggests that personal relationships are paramount and that trust is very important, causing the client to lose face or offending them could hurt this relationship. On the other hand, the Chinese can change terms without warning, apparantly.

Is there anyone with experience of dealing with the Chinese who could give us a little advice?

Thanks in advance.

[grynge]

I have only dealt with them as a client/customer and every company I have dealt with have always asked for payment up front. This includes when I was importing stuff by the container load and had been for a few years there was no 30 day terms.

[benitez17]

I've done business in Taiwan, and it is very difficult in my opinion. They talk about how important it is to trust each other, how much they value your relationship and partnership, and are very complimentary, but are also constantly for a way to get an advantage over you in any way possible. Anything you agree to or offer verbally is seen as good as a contract, and they are more than willing to interpret all statements in the way that benefits them the most.

From what I have been told, pretty much all of Asia does business is a similar manner. I found it to be incredibly frustrating and pretty hypocritical.

You'll have to weigh the risks of upsetting them and completely losing the contract vs. the risks if they refuse to pay your wife after she delivers the files. Is this a large company? Is there a contract in place? Does she feel they are likely to screw her over, or is it just a more general concern?

[JJMcClure]

I have only dealt with them as a client/customer and every company I have dealt with have always asked for payment up front. This includes when I was importing stuff by the container load and had been for a few years there was no 30 day terms.

Thanks. Perhaps that in itself indicates an issue with trust on their part. Have you had long term relationships?

In his email, the client said that he would pay on delivery. I'm concerned that asking for a 50% deposit after his saying that would cause offence and that seems to be a big part of doing business with the Chinese.

[grynge]

Thanks. Perhaps that in itself indicates an issue with trust on their part. Have you had long term relationships?

The relationships lasted about 7 years in total and went from some sample products to a few hundred container loads over the years.

Would it not be better to say that your business terms are a 50% deposit with final payment on delivery.

Personally I deal with everyone the same way, we had a large job going to a resort on an island off indonesia, and I just stated my terms 30% deposit and payment in full before the stock left the factory. I know the people I talked to were asian and they didn't seem to mind. But then again as I said I only have been the customer/client when it comes to china.

[Kay]

JJ, have you seen our latest new member, godsuki? (Intro forum) She might be able to help you.

[eddiebooth]

My wife is Chinese and worked as a lawyer in Beijing before coming to the UK. She says treat your Chinese client the same way you would treat any other client, ask for payment prior to sending the goods. The Chinese are no different to the rest of us in business, if we can avoid/delay payment for as long as possible many will take advantage of this, others would not. By asking for payment upfront you are in a strange way showing them respect, in that you are treating them as a serious business client. As grynge says, tell them you are supplying them as per your normal trading terms and they should understand.

[JJMcClure]

Thanks Eddie, that's really useful.

[Fish]

I bought foodstuffs in China for nearly 3 years, and will say that asking for money upfront will not only not cause offense, it will be expected. Business is business. When I was buying in China, getting credit on a container load meant considerable drinking and entertaining with the supplier. If I was working for Carrefour or Walmart, of course, credit would be easy to come by. But for most businesses, there's no reason to trust each other right off.
Driving a hard bargain does not cause loss of face or hurt your personal relationship in normal cases.
I would ask for full payment and settle for 50%, though it may be too late for you to go that route.

If you have given the impression that payment afterwards is OK, and want to ask for the 50%, invent an invisible partner, accountant or investor in your company. If it's your wife's company, she could even say it's you who is demanding the deposit. I would often say something like "I know my boss/partner/whoever is a pain in the rear, but he's insisting on 50% or the deal's off. I need to work with him on this, so can you help me out?"

Trust is something we talk about in the West - it's far less common in China. Nobody expects to be trusted, and even generous gestures can be seen as having ulterior motives. Just get the money worked out. If business grows, ideally get on a plane and meet the people sometime if you can.

You can easily say you thought payment on delivery meant delivery of the hard copies in this case. Good luck.

[JJMcClure]

I bought foodstuffs in China for nearly 3 years, and will say that asking for money upfront will not only not cause offense, it will be expected.

That's great, thanks mate. We'd actually decided in the end to ask for the money up front so it's very useful, and a relief, to hear that recommendation from someone with practical experience.

Overall, all the advice we received (gratefully) was to get the money up front.

Trust is something we talk about in the West - it's far less common in China. Nobody expects to be trusted, and even generous gestures can be seen as having ulterior motives. Just get the money worked out. If business grows, ideally get on a plane and meet the people sometime if you can.
.

We met the guy face to face at an exhibition and there'll be two trips a year to China. I'll be there just to carry bags, it's my wife that's the talent :P but I'm really looking forward to going.