Which is INCORRECT according to Jacob Yount about his business in China?

W: Jacob Yount, along with his wife and business partner, Leeds, are the founders of JLmade, a Suzhou-based company that helps manufacture promotional items for major Western brands. Hello, welcome to our show, Mr. Yount. So you graduated from university in the U.S., and almost right after, came to China. What encouraged you to make such a drastic move? Did you know a lot about China before you left?
M: I think you might have known more than me, Tom. I had commencement ceremony, graduation, and the next day I was on a plane to China.
W: My biggest questions are not so much about opening up your own business, but about doing it in China. Are you a wholly owned foreign enterprise or do you share the business with a Chinese business partner? What is it like opening up your own business in China?
M: We’re not a wholly-owned foreign enterprise. We’re a Hong Kong company and a Chinese company. I am partners with my wife, who is native Chinese. (1) The Chinese ends of the company deals with the administration while the invoicing and profit are done from the Hong Kong end. Representative offices in China are getting tighter and tighter, it’s not as easy to hire and fire people, and set up your administration. (1) When we first registered, it was tough. It was Leeds, my wife, who went around from office to office figuring out what papers to get. It was a headache, but it wasn’t impossible. There would be whole days where we would just try to figure out how to get the internet hooked up. Everyday was almost a little mountain to climb, small administrative tasks turned into things that were probably a big waste of time. (1) I wish social media would have been available in 2004 when we started as it is now. Back then I didn’t have Twitter, and Linkedln, and blogs to network with the Western side of the world. We used fax back then. I remember meeting a lot of clients just by cold faxing them. The fact that my wife is Chinese made all this possible. I couldn’t imagine being a foreigner and trying to do it all myself. (1) But, registering the Hong Kong company was a piece of cake. You just have a meeting with an accountant and you can get incorporated. Most foreigners have some kind of Hong Kong incorporation if they are doing business in China.
W: What does your company, JLmade, do?
M: We work with distributors, mainly in the promotional product industry. The distributors then sell to the big brands. So for example, we sell a lot indirectly to Canadian Club. But we don’t work with Canadian Club, we work with their suppliers. Some big famous brands that we have served are Universal Pictures and Sol Beer, a Mexican beer company. A big company in the States doesn’t want to be up late at night dealing with a Chinese factory and making payments abroad; so they hire a distributor, who hires us to make manufacturing in China possible. We set up manufacturing for things as big as a surf board down to a winter cap. We’re industry specific, we work a lot in the alcohol and entertainment industries, and even some pharmaceuticals.
W: (2) Do you have any advice for someone considering opening up their own business in China?
M: The one thing is to have solid, solid, solid people on your team. I can’t stress that enough. I know it sounds like the obvious, but nothing over here is obvious. Don’t assume anything. It is so hard to find staff that are loyal, has your vision, and will stay with you the whole time. Let’s say you’re a foreigner starting your own business in China. You’re going to need a Chinese business partner. You are going to need Chinese people to help you do all your work. And it’s crucial, direly important, to have solid, solid people. If it wasn’t for Leeds, I don’t know what I would be doing. Keeping a solid staff, one that is really on your team, isn’t easy. I think when foreigners come to China they know it’s going to be a different culture, but they don’t realize to the extent how different the mindset is. The thinking about authority, the thinking about respect, is just completely different over here. Even how Chinese employees interact with their boss on a daily basis is different.
W: Chinese is a tough language. Did you know any Mandarin before you left? How much do you use Mandarin for your everyday business dealings? Have you ever had any misunderstandings that have caused problems?
M: I did not know any Mandarin before I left. In everyday business dealings, I use Mandarin close to zero. It’s not that I am lazy speaker; it’s just that when money is on the line and I am getting ready to make a deal, it’s not time to get cute and start practicing my Chinese. When I go to a Chinese factory, I’ll use Chinese in the introductions and to make some small talk. I mostly use Chinese when I am out by myself, or I am in my wife’s hometown, in which case I have to use all Chinese. (3) I think I speak more than survival Chinese. I just can’t sit there and talk about the ins and outs of a plastic mold with a Chinese factory. But I can go out and have a general conversation in Mandarin. In terms of miscommunication, I see lots of miscommunication Chinese to Chinese. When you use proverbs to talk about things in a round-about way, and not the straight facts, things don’t always come out as expected. One thing I’ve learned is that you need to pick and choose your battles. You are not going to win every argument.
W: Overall, how has your experience been working with Chinese factories?
M: For the most part I would say you need to be very alert, very cautious. (4) You can’t necessarily trust them to do the right thing, or at least the right thing from a Western point of view. They make choices based on what benefits them. You are never as big as you think you are to your factories. You can’t scare a Chinese factory by saying you are going to take your business elsewhere; they don’t really care because there is so much business here.
W: Moving forward, do you expect to stay in this business, this industry? Where do you see yourself next year?
M: (5) So our goal is to move to the States and open an office, so we can go visit our buyers. We do everything over here with social media, blogging, telephone, but we’ve hit a glass ceiling because we can’t visit our customers in person. I think trust has always been one of the shortcomings because I have always just been in China. I want to be able to get on a plane and go visit a buyer in Boston, for example. We’ll still have the Chinese office open; we just want to make a more fluid supply chain in service from China to the U.S.
W: Nice talking to you, Jacob. Thank you so much for sharing with us your business experience and views.
M: My pleasure.