Dealing with Chinese supplier takes significant risks due to different understanding of the business culture. It is important that both parties have a clear understanding of the procedures, government requirements and terms before engaging in a business deal.

Below are the most common misunderstandings together with some basic ideas on how to avoid common mistakes that happens when working with Chinese suppliers.

In dealing with Chinese suppliers, one of the question suppliers asks is their competencies. Will they be able to meet your product specification and delivery schedules? It is expected that Chinese suppliers will give you a "Yes" answer. No supplier, Chinese or not, will give you a customer a negative answer. Most Chinese suppliers seldom express their thoughts and ideas during the first conversation. So it is important as a buyer to lay out your terms on the first meeting and give them time to think over on your terms then schedule another discussion.

Due to cultural difference and language barrier, more often than not, you and your supplier have different understanding of the product specifications. In addition, Chinese seldom ask questions but rather research by themselves instead of clarifying it with their customer to show their expertise. So it is important that you discuss together specifics product requirement prior to the start of manufacturing the product.

Chinese suppliers are open to negotiation in terms of price. Due to the large number of Chinese suppliers, they are open to bidding. In return, they are hoping for a long term relationship with their customer in exchange of that favor.

In China, what considered to be a legal document in your country may not be legal for them. When dealing with Chinese suppliers, it is important that both parties should sign a contract which includes a clear detail of the work scope, price, terms and conditions. This document should be signed and mutually agreed by both parties and could be sent electronically or by paper.

Lack of understanding of tax and payment issues is another mistake buyers should avoid. Tax requirement should be clearly communicated prior to placing an order to your supplier. Most often, tax should be included on the purchase order and should be included on the total amount of payment. Learn the tax type that your supplier has included on your invoice. Remember, Chinese government imposes different invoice total amount and quantity limitation on different suppliers, so it is necessary that you are aware of this information and it is clearly communicated.