Why do Chinese providers often make a wrong estimate?
Thanks to your experience producing or importing products from China, you know it’s quite common for estimates to be handled inaccurately.
There are a few perhaps vary basic reasons –and very true nonetheless—why providers in China make a wrong estimate.
In general, providers in China don’t make an estimate with accuracy. Their mindset is that the initial estimate is not something that will determine or not the project, production or sale.
The first estimate is seen as some kind of initial contact, a starting point for the discussion.
In this stage, they don’t consider details and scopes as something solid and important, and they are definitely not set in stone. At first, the provider regards them as irrelevant. He simply won’t take care of them. He will confer more importance and certainty to them as the process moves forward.
During this stage of the process, the provider doesn’t usually pinpoint and confirm carefully all the information or analyzes the details. The data is “inaccurate” and requires feedback. This means asking questions on our side and getting answers from the provider’s end.
The Chinese provider prefers to answer your questions or provide solutions to your problems as they arise.
Is this attitude on his part intrinsically cultural, a business strategy or a mix of both? What do you think?
The Western buyer thinks:
“An estimate should be as accurate as possible. That way I can handle these figures to close the deal and give my client a price without any surprises in the future that may lead to changes and explanations”.
“Let’s do it right from the start and with absolute certainty!”
The Chinese provider thinks:
“I’m sending you an estimate, and if it’s not accurate or you find any mistakes, call me and we will reach an agreement”.
Initial estimate = only a first step.
According to the Chinese providers’ mindset, nothing depends on that first estimate. The fact that you may or may not go back to that supplier is not based –as per their approach—on their method for making estimates. The concept of a close consultation is not a common practice among Chinese providers.
The sales representative of the company or supplier factory you are working with does not spend a lot of time analyzing an estimate, nor does he guarantee that a quote will be accurate according to the desired specifications.
Remember! Most providers in China have a “traditionally Chinese vision” for doing business. If you want to purchase something from someone, you visit them, you get to know them and you sit down with them for tea to discuss the matter. That is how most business has been done for decades in China, and although things are changing and evolving, this is deeply rooted in their culture.
Chinese providers don’t read emails.
You may think this statement is an exaggeration and you might be right, but I pointed it out to grab your attention. It would be correct to say: “Chinese suppliers don’t read emails the way you think they should read them”.
Providers simply won’t read or process the whole inquiry you sent them with as much care and attention to detail. If the quotation request has certain essential points, they will only retain some of them and might not even analyze the rest.
The language barrier is partially to blame, but it’s not the main problem.
In connection with the previous topic of accuracy, providers quickly read, analyze and interpret the email and think they got the essential points; then they act based on the perceived and incomplete information.
The supplier doesn’t think: “This email is in English, I’d better read it very carefully”.
Actually, the fact that the email is in English makes them less meticulous instead of more attentive.
Because of their culture of “ask when you don’t understand something”, the above is not natural or desirable to them.
In our culture, we ask questions whenever they arise, there’s no shame in that. Especially if these questions are related to our job, tasks, goals and responsibilities.
The problem is that when Chinese providers have questions for us, or the situation is not clear to them, in general, they won’t ask. Additionally, if we ask whether they have understood or the situation is clear to them, in most cases, the answer will be “Yes”.
They usually make up an answer for any question and work with it. Moreover, when there are relevant, key problems, the suppliers don’t even realize they should ask questions. This is where cultural aspects might impact the success of the production or purchase.
A silent provider is not fully committed to the project. The fact that the supplier doesn’t have questions about our project, our product or purchase, leaves much to be desired and it must represent a very important warning sign for us.
The provider takes on your request, product or order as something already known, similar or repetitive.
The supplier usually starts by assuming that what you are asking is the same as what all other clients request.
If they normally make quotations for low-cost markets, but you are asking about a high-end product and you give the supplier the specs for that type of product, well guess what happens… they will still make an estimate for low-end merchandize because that is what they normally do.
If your product requires individual packaging and the provider usually goes for bulk packaging, then guess what… your quotation will be based on bulk packaging.
Many times, suppliers get stuck with a long list of pending tasks from the massive amount of quotations they send to importers and direct clients.
These statements lead to my final point.
A correct estimate requires investment.
This is the point on which absolutely everyone, western buyers and Chinese providers, agrees.
Accuracy, close analysis of each requirement or detail and consultation regarding points that may not be clear require the parties involved to invest time and energy.
If you have never worked with this provider before, how does the supplier know that it will be worth it to invest time and energy in giving you a quotation as accurate as possible or in any way you require it?
Have you often requested estimates from a/some provider/s with few chances of closing the deal? Maybe just to make sure?
How important are you and your company as a buyer to this supplier?
Does your inquiry have the necessary drive to prompt the provider to work with you?
In order to reach a successful outcome for your business in China and avoid problems down the road you must determine if your provider is sufficiently interested and committed to your project.
If he can make your product following your requirements and conditions, you must encourage him to make his quotation is as accurate as possible from the beginning.
If that’s not the case, try to motivate him or show him the future benefit he might obtain from your business relationship.
And when you accomplish all of these, set in writing on the contract or pro forma invoice the conditions regarding the product, price, production and delivery time, shipping, payment method, penalties for delays, etc.
Best of luck with your business in China!