The China Law Blog recently put up this post about why you need to tour the plant in China before you place an order. This brought to mind something that happens in the new book I wrote, Caught Between the Tiger and the Dragon, that is due out in April.
In the book, the main character, Rich (CEO of a lingerie manufacturer) attempts to do his best to plan where to produce and buy products in China. But the people running the show at the private equity firm that his company's involved with won't even pay to let him travel there.
In fact, a lot of problems that Rich encounters relate back to this sight-unseen ordering from half a world away in a place that he has never even been. The private equity firm wants to save money by not sending Rich to China, but it ends up costing them a great deal more money in the long run. Speaking of cost reduction, I recently did a new podcast with Steve Ganster of Technomic Asia on smart and strategic Asian sourcing cost reduction, and you can hear it or read the transcript at http://www.tompkinsinc.com/podcast/transcripts/03-03-09-podcast14_asian_sourcing.asp
Not being able to see the operation at work is a major problem that CEOs in real life face. In this post from the China Law Blog, they cover nine reasons why you need to see the plant for yourself. At the end the question is asked, "Can you think of a 10th reason?" I would like to add a 10th one: To find out how the people running things at the plant communicate within the manufacturing facility and with their customers.
Then in the future, for example, you will know to pick up the phone to clarify an order instead of relying on e-mail. I have heard horror stories from VPs and others in the business world who encountered avoidable problems simply because of miscommunication with China business partners. For example, a VP who just assumed that their suppliers used e-mail eventually found out the hard way that the suppliers hardly ever glanced at it, and the miscommunication really showed in the botched orders they eventually received. Add more reasons to the list in the comments below or see the post from the China Law Blog at: http://www.chinalawblog.com/2009/03/china_plant_tours_nine_reasons.html