Western companies are facing problems in their procurement in China, not very much different from their Chinese peers in China, in both strategic sourcing and daily purchasing processes, in terms of corruption.
This topic should not be a fresh one as you may simply overlook it. Things are getting better over the years yet still not fundamentally improved. Let me tell you why and how you could avoid.
I’ve heard two different stories quite recently convinced me corruption has not been gone far away, in their procurement of western big companies when they are buying products in or from China.
I have a friend who has been doing sourcing specifically for her American clients for industrial consumables for 20 years in Shanghai. She told me a real case that she encountered not long ago. A famous American brand of welding machine had been sourcing parts from China for many years, and the volume was going up steadily, consequently a plan to open a sourcing office in Shanghai is in dire need to fully take over the work from headquarter. Improving the productivity of communications and work itself, and extra cost reduction are very reasonable wish by implementing the localization. However, that is only a beautiful wish from one side. The fact is sourcing managers got kickbacks from their suppliers, and that was eventually added up to the final price of going to US. This is why my friend was invited from HQ to jump in to help towards healthy sourcing.
Another story is about a distinguished European company in Suzhou, who has just fired a senior sourcing engineer last month for her bribes taking from a newly developed supplier in Shandong, for the localization project of its sister company in Czech. A meeting covering all sourcing and supplier quality team was urgently called on to emphasize the policy of anti-corruption and value. We should clap our hands for its courage and determination.
How can you make sure quality of delivery to you is in full accordance with your requirement, cost is really optimal, and most critically the sustainability of supply chain, if your sourcing manager takes kickbacks from your suppliers?
It is a long enduring fight, not a single solution will fully solve this problem. However, we can still do something towards a better and cleaner sourcing.
Firstly, you need a clear policy in force, which is widely and effectively and frequently communicated at company level. Some bigger companies both western and Chinese are doing very well in this respect, not the smaller ones as far as I understand.
Secondly, a direct reporting line is installed; open for external suppliers and internal employees whenever they need to report employee’s misconduct, with available email and telephone. Make sure there is a dedicated person or team takes care of it.
Thirdly, a trustworthy sourcing agent could help you to minimize the risks. They can provide you one stop services, procurement outsourcing in another word, or full-fledged sourcing services at buyer’s cost, usually an acceptable commission of fixed portion based on order value is paid. This option especially works for small and medium companies when their resources are limited.
We set clearly when PINTUU was born our value of holding high ethical standards of doing business, and our vision of serving our clients better by getting commission from our customers only, not from the suppliers, in order to keep our position to defend our client’s interest in daily work or when something goes wrong at worst case.
PINTUU is a sourcing service provider for industrial products, and we focus on metal parts sourcing for our clients in Europe and America from China. We’ll be very happy to answer your any questions related to China sourcing.