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Chinese Backdoor Trot

How do you trust someone to manage your business thousands of miles away, when they can’t even manage their own business?

I took an angry phone call from one of our new clients.  Stuart’s the head buyer of the Australian retail chain Bed Shed, and he wasn’t a happy bunny.
He wanted to know why we’d one pricelist for him, and another [cheaper one] for everyone else?

I’d met Stuart at a furniture show we were exhibiting at in Birmingham, he’d seen our products again at another show in Singapore; I’d been to meet him at his offices in Perth, W.A. and he’d come to visit me at our office in Hangzhou.  We had a good relationship.  And he was placing orders.

Not a happy customer

But now we had a big problem.

Stuart was calling us from the floor of a trade show in Kuala Lumpur.  He was standing in front of a display of our furniture, pricelist in his hand, and everything was much cheaper than we had quoted as our best FOB price.

But we weren’t exhibiting in Kuala Lumpur?

My partner, Bob, went berserk, because not only did the product on display in KL look like our product – it was our product.

This furniture of ours was manufactured under license.  We arrived unannounced at the factory gates (they don’t like that), and we effectively kidnapped the factory manager and forced him to drive us about the city until he would take us to the source of this piracy; but the bewildered manager claimed to know nothing.

Not letting it lie

Shafting the ‘white-guy’ is a sport for many Chinese businessmen, and our only lead wasn’t giving anything away.  I was convinced that the manager honestly didn’t know anything about it.  But Bob made it very clear to him that we weren’t going to let it lie.

The next evening we received a call from the manager.  He’d had a chat with the factory owner, and had learnt the name and business address of a friend of the owner’s whom he suspected might be able to help with our investigation.

In a neighbouring industrial district of Hangzhou the next morning, Bob waited in the car park (he was too angry to feign ‘pleasant’) while I made an unannounced visit to this associate of the factory owner.  I walked into the spacious eighth-floor offices, gave the receptionist my card, and asked to see Mr Yin.  I was shown into a showroom to browse their products while I waited – it all seemed fine: nice products, reasonable quality, and I recognised some pieces from a range of furniture of one of our French competitors.

Mr Yin appeared, and I described the type of furniture I was interested in buying.  He very helpfully returned with a nice new brochure and pricelist for our products.  He explained that he had excellent manufacturing capabilities, and furthermore his company was dependable because it was financed and part-owned by the Chinese government.

Just as the tea arrived

We sat down together at a boardroom table to discuss my potential purchase [of my furniture], and just as the tea arrived, as pre-arranged, Bob entered the room wearing a big Texas smile, ready for the kill.
The amazing thing was that Mr Yin was perfectly open about the whole affair.  Sure, he was a cheat, of course he knew he was selling someone else’s products; but he’s in the business of making money, not friends.  He wasn’t even mildly embarrassed.  We told him we’d like to arrange a meeting with him and the factory owner, which he willingly agreed to.

So the next morning we were all sitting together in the factory owner’s plush office facing each other across the tobacco smoke.
The sneaky little scheme had been the factory owner’s idea:

  1. In alliance with Mr Yin’s organisation, the factory owner had smuggled pieces from our production out the back door without even his managers knowing about it.
  2. They had shipped the products to KL to win orders from international buyers.
  3. They were asking for a 50% deposit payment to secure these orders.
  4. And then buggering off without any attempt to fulfil the contract.

This make-a-fast-buck attitude is very common in China. So much so that Mr Yin remained openly unrepentant. I wanted to throttle the guy.

The meeting ended with the factory owner shamefully admitting his guilt, but Mr Yin stood up and extended his hand to shake with Bob.  Bob’s natural instinct was to shake before he realised who he was shaking with.  Mr Yin then turned to me and presented his hand, and I didn’t even make eye contact, and ignored him completely.  I know this sounds petty, but loss of ‘face’ in China is taken very seriously, and insulting a Chinese businessman like this is the Western equivalent of pulling his underpants over his head (and to be honest, he’d probably kick my ass if it had become physical).

A serious Piracy Problem

The result of our Australian client’s whistle-blowing was that we quickly got to the bottom of a very serious piracy problem that could have destroyed our business reputation, and stolen money from a lot of trusting buyers to the Kuala Lumpur exhibition. (Of course I told the organisers of the KL show what had happened, and I wrote to Anti-Copying in Design organisation in England, and the American Society of Furniture Designers asking them to spread the word.)

Bob and I visited the factory a couple of days later.  We took crowbars and hammers.  And a large crowd of stunned factory workers watched as we took great delight in smashing to small pieces all the samples and templates that had anything to do with our production there.  The workers knew nothing about the crooked plot of their employer, and we left promptly before these workers became angry at our open act of destruction of their hard work and craftsmanship.

Westerners are fish out of water in China.  We’ve been active in China since 1980, but thirty years experience counts for nothing if you become momentarily complacent or demonstrate weakness.
DUH by name, but not by nature.