Episode #27: 'Guanxi' - Building a Close Relationship With Your Supplier

Welcome to the E Commerce Freedom Podcast with your host, Oliver Denier. Learn the practical steps you need to take to build a business you can run on your own terms. Escape the 9 to 5 and work from anywhere in the world. Hey, how's it going? It's Oli here. Very, very warm welcome to another episode of the Ecommerce Freedom Podcast. So, in today's episode, what I wanted to discuss with you was how to improve the responsiveness and the relationship that you're building with suppliers in China. So let's say you're looking to source a product on Alibaba or AliExpress or Dhgate or any of the websites we use in China to find manufacturers and your you're looking to send out an initial email to get responses. Or let's say you already have a supplier in China and you communicate with them very often. You're dealing with them, you're ordering stock from them, you're asking them to do certain requests. As you can imagine, the better your communication levels are with these suppliers, no matter whether you're just starting or whether you're already have a relationship, this is going to give you so many benefits as a seller. So today I wanted to introduce to you a concept known as guanxi. So what is guanxi? Have you heard of it before? Is it some mysterious thing that you have to work for years and years to obtain? Why is it even important? Well, let me start you off by just explaining the definition of guanxi, and then we'll go into why I think it's just so important for you to know about. So guanxi is a term, I believe it's a Mandarin term right, in Chinese. And what it means is relationships. Now, if you go over to China and you want to do some business there, right? A lot of Westerners experience, experience this. They go to China, they want to start maybe grow a business. One of the first things they'll hear is if you want to succeed in China, you have to have guanxi. And what it gets built up, as in the west is some mysterious force that only exists in the east that's very, very difficult to obtain. And it's almost like this barrier that gets put up for Westerners when they're trying to make it in China. But really all guanxi is, is developing a close business relationship with the other person you're dealing with, right? That's all it means. It literally translates to relationships. So if you can understand the way that Chinese companies expect you to build a relationship with them, if you can develop some level of Guanxi. Your relationships with manufacturers, as you can imagine, this will give you unbelievable benefits and set you apart from all the other people who are looking to import stuff from China if they don't know this stuff. So what I'm going to do in this episode is walk you through a few things. First, I'm going to tell you why you need Guanxi and how to actually attempt to attain it. Then I'm going to tell you exactly what it means to develop Guanxi in the context of building an Amazon business. Right, because it's very different to if you were to actually go to China and build a business in China, right, We're outside, we're in the UK or in US or Europe, wherever. And then I'm going to tell you exactly how to start implementing it now. And then I'm going to give you some action steps so you can get moving and get some results with this stuff immediately. So let's start off with why. Why do you want to develop levels of Guanxi with your supplier? Well, first of all, I want to tell you a story. One of my clients I was working with very recently was in the process of scouting out suppliers for a product that he had found to import on his Amazon account. Right. It's his first ever product and we had established, you know, this thing had very high demand. It was like really selling, well, upwards of 10k a month. Multiple sellers making 10k a month in the niche. Competition was low, Right. And he had found a gap in the marketplace. He identified there was something with this product he knew he could do better than the other sellers were doing. He would be competing with. Right. So this was a real opportunity. So he was going out there and getting quotes from suppliers in Alibaba. I actually hadn't introduced him to this concept of Guanxi yet. So he was just sending out quotes in the way that normal people in the west conduct business. And as you're probably a Westerner listening to this, right, we're not conscious of how we do this because it's just natural to us. This is how he was doing it, right? He was sending out emails to the suppliers, simply asking them bluntly for quotes for X amount of units. So, for example, he'd send a message saying something like, I want 500 units of your product. Please let me know how much that will cost and how much it will cost to get packaging made. And he says sincerely, his name, Right, very blunt, just purely asking for all of that information. Now, of course, this works. And it's fine if you want to just send blank, almost like a template form email to every single supplier, just asking for the blunt facts. But this is a very Western way of conducting business, right? So he was doing it like this, right? He was sending out loads and loads of emails to suppliers and the response was okay. He was getting a few replies back from some factories. They were kind of taking a little while to respond, but he was getting the responses and things were going okay. Then he went into my training portal that he gets, right. As a coaching client. All the clients get something called a platinum portal where they have all these videos. And he actually found the video on communicating with suppliers and Guanxi and he learned about this topic. He put into practice just a few things that I teach, very simple things I'm going to share with you on this podcast. Immediately, the people he was communicating with became much more attentive to what he needed. They started replying faster. They were more willing to work with him. And in the end, he actually realized that one of them had a design that they hadn't released yet that they were willing to work with him on and not only allow him to import, but they allowed him to import a smaller number than the Moq they were advertising on Alibaba, right? So they had actually gone out of their way to do him a favor, to help him out because he had implemented this Guanxi stuff. It's very simple stuff that we're going to be talking about today. So, long story short, if you apply this stuff, your relationship with your suppliers will dramatically improve, right? It will set you apart from other sellers who don't know about this kind of thing, right? Because when an Alibaba manufacturer sees a message from someone who understands the way they like to be communicated with, like, obviously they're going to be more responsive, right? This stuff can lead to you getting better prices. I've actually had better prices because I've built such a good connection with the supplier. Like, they feel like they're my friend. They feel like they're my friend. We've known each other for ages. We've got rapport. They give you better prices to give you better treatment, right? You can get things like payment terms, right? Once they trust you, supplier trusts you, you could pay for a shipment over several months. Imagine how amazing that would be for cash flow if you wanted to launch, like, a huge import of products. I've had suppliers agree to actually design all of my packaging for me because we're in a good relationship. I'VE had suppliers message other suppliers in China to source complementary products for me to bundle with my products because we've had such a good relationship. And just the list of benefits for tapping into this stuff and really implementing it properly is never ending. So I think once you really take this stuff on board, it's just going to help you so much. So now you know a little bit about why guanxi is so powerful. Let me dive into exactly what it is. So, as I mentioned in the beginning, guanxi directly translates to relationships. It's actually very simple. All it means is it's like having a feeling that you've known somebody for a very, very, very long time and you really trust them. So that's the end point. This is what we're really trying to achieve through developing guanxi, right? Getting the feeling with your supplier that you've known them for a very, very long time and. And you trust them. And of course, we have this exact same concept in the west, right? It's just simply knowing and feeling like you trust somebody because you've worked with them for a long time. The only difference is we don't really have a word for it and it's not quite so heavily focused on as it is in China. In addition to that, actually it's a level of respect that you have for the person you're doing business with, with, right? And China is a big concept known as keeping face, right? As keeping face. It's a very big, strong concept in Chinese culture. So, for example, to maintain face with someone, you might do them favours to keep face, to keep that level of respect. And really there's like a mutual understanding that there'll never be any hard feelings, right? Like, no matter what happens if a deal doesn't go through or, you know, something doesn't work out, there's no hard feelings, you still respect each other and you just have that level of respect between parties. Now, another way that a lot of business people in China maintain levels of guanxi is through connecting outside of the realms of business. For example, one thing you might do is invite somebody out for a meal and not talk about business at all. Just discuss family and discuss other matters and just get to know them on more of a personal level to increase the amount of guanxi you. You have, right? So this is what guanxi is. It's just developing that relationship, developing that level of respect and really getting to know somebody closely. So. So when you do have a business relationship, everything just runs more smoothly and the whole Thing is just much more, it runs on an easier level. So we talked about why you want Guanxi, we've talked about exactly what it is. Now let's talk about how you can implement this stuff in your Amazon business. Because a lot of the things that people do in China to increase their levels of guanxi, obviously you won't be able to do online. You probably won't be taking out your supplier for a meal because it's unlikely you're going to be traveling to China anytime soon. Although that's something you could potentially do in the future if you really do start to up level your relationship. But let's talk about some of the easier things you can do right now just to improve your levels of Guanxi. So number one, this is one of the most important things to do. Start developing your relationship with your supplier from the very first interaction. So when you're sending out those messages to get quotes from suppliers for maybe a new product, from the very first message you send out, connect with them on their level, right? So rather than just sending them a blunt message saying, you know, I want 500 units of a product, let me know the prices, can you provide packaging? Can you do me a logo? Thanks, Ollie. Right, that in the west is a very, very, you know, normal way of messaging somebody in the beginning to start a business relationship, right? How many products can you sell me? How much is it going to cost? When can you get me the invoice? Right? It's perfectly normal. Well, if you want to develop a little bit of Guan Shi, then take things to the next level on your very first message. So just start to think about how can you increase the levels of respect between you and the supplier? How can you build a better relationship from the beginning? How can you get closer to them from your very first message? This could be things like saying, I very committed to building a long term relationship with your company. This is a line I actually write at the bottom of my initial messages that I send to Chinese suppliers. Something like, I'm looking to build a long term relationship with your company. That very simple sentence instantly proves to a supplier that you really are in tune with the way they like to work. Right? You want to build level respect with them, you want to get to know them better and you actually do want to work with them long term. This immediately sets you apart from a seller who just says, you know, I just want to place one order with you and then I'm never going to deal with you again. Right? So that's one thing you can do. Another thing that really helps is to position yourself as an employee. Now, a lot of the time when we're messaging suppliers and you know, we are looking to maybe invest in something for our business, we'll let everybody know that we are the boss of the company. Say we are the owner of the importing company, the Amazon business, whatever it may be. When you're messaging suppliers in China, it actually helps to just position yourself as perhaps the senior purchasing manager or perhaps as somebody in the company who isn't the boss. Now, a lot of the time this is kind of a little sneaky trick, but it seems to really work in Chinese culture if you have somebody above your head who's making the decisions and something's out of your control when it comes to asking them for a favor or saying that you can't agree on the price or something like that, if you say, yep, I'm so sorry, I would love to do this, but my boss won't allow it at this time. Something happens where you. It increases the level of understanding that it's not in your hands, right? If you think about it from their perspective, if you're the boss and you're saying, no, I don't want that price, then perhaps they could perceive that you're just maybe being cheap or you're being harsh. But if it's your boss saying that, you know, we just can't do that price, then as an employee, it's out of your hands and quite often they can be more willing to work with you on giving you a lower price. So position yourself as not being the boss. That's something that has actually helped me secure better deals as a seller. Another thing is to be what I would probably describe as being overly nice, right? So rather than being super blunt and say, you know, I want 100 units, let me know the price, give me an invoice, etc, etc, in your first email. Be really, really nice in every single one of your emails. What you'll find is a lot of suppliers in China use words like kindly say, would you kindly send me your logo for the packaging or would you kindly let me know as soon as possible how, how many you want and what date and what port you want to use for the shipping, etc. Etc. Etc. They might call you dear. They might use the word dear to show that they, you know, care about you and that you're someone they care about. There's lots of kind of seemingly overly nice language that suppliers will use with you in your messages, their messages to you so what you can do is almost mimic this and be overly nice in your messages. So when, you know, perhaps a price isn't exactly as you would expect, or maybe it's too expensive or to, you know, the MOQ is too high, instead of just saying, no, that price won't do for me. Right? Which is perfectly acceptable business communication in the West. Maybe you'd like to say something like that price is great, but I would really appreciate it if you would kindly lower it, as that would help me do XYZ in my business, right? So just being overly nice can really help develop a better relationship. Because what we're doing here, we're not looking to be fake, right? We're not looking to speak in a way that we don't normally speak to people or try and manipulate. But, for example, you wouldn't speak in the same way to your best friend as you would speak to, for example, you know, an elderly relative, right? There's a very different form of communication you would have between different people you interact with, right? You'd speak very differently to a judge in court for. Right. If you're ever in that situation, as opposed to maybe one of your best friends down the pub. So what we're doing here is we're just tuning our method of communication, the state in which we communicate, so it works with the way suppliers in China expect you to communicate. Therefore, what you end up doing is building tons more rapport. And because of that, you can get loads more benefits that I mentioned before, such as, you know, getting better prices, such as better treatment, such as getting more corporate cooperation from suppliers. Then finally, in addition to, you know, starting from the first interaction and being overly nice, positioning yourself as an employee, I'd recommend trying to build some kind of connection with your suppliers on a personal level. So, yeah, you might not be able to take them out for a meal and talk about your families, but you could just send them a message out of the blue, completely unrelated to anything to do with business. You could say something like, hope you're having a fantastic day today, and I just wanted to thank you for everything you've done for me up until this point, and I really look forward to working with you in the near future. Completely out of the blue, completely unrelated to any orders that you want to process. Completely unrelated to your business. Right? Purely sending a message just to up the levels of respect, up the levels of guanxi with your supplier and just to build that relationship and that connection, you'll actually find that Chinese suppliers do this to you a lot. Right. I often get in my inbox tons of messages from suppliers that I've messaged just once from suppliers I'm working with very closely. And they'll tell me about all of the things that are happening in their life. They'll say thank you for, you know, the connection, and they'll send me messages out of the blue unrelated to our business dealings. And this just strengthens the connection, increases the level of Guanxi. And again, it's like if you had a supplier in the UK that you were really good friends with, I mean, you would be much more inclined to do each other favors, right? It's exactly the same thing. Only in China, this stuff is almost purposefully focused on and it's kind of expected, right? So now in this episode, we talked about why you want to use Guanxi. We talked about exactly what it is, what it means to have high levels of Guanxi. We talked about how you can do this stuff in the Amazon business. What I want to finish on is actually to give you some action steps. I want to give you a few things you can implement today to get the ball rolling up your levels of Guanxi and see some visible benefits from implementing this stuff in your communications with suppliers. So at this point in your Amazon business, you're probably either one of two stages or you might be at both. Number one, you might be at the point where you haven't imported a private label product yet and you're thinking about doing it, or you might already have products in the warehouse and you already have suppliers and you're just looking to grow the business. Either way, you could probably implement either one or both of these action steps. So action step number one. This is probably really helpful. If you haven't imported a product yet, I would recommend you go to Alibaba. Find a product that you're looking to import, or maybe even if you don't have one yet, you haven't landed on a product yet. Find any random product. I want you to send six messages to suppliers. Okay? So find six individual suppliers selling the same product and I want you to send a message to each one of them. Three of those messages. I want you to be super blunt, okay? Just be really blunt and just ask them for whatever it is you want. Can I have 500 units of this? Can you give me the quote? What other designs do you do? Something like that. Super blunt. Don't use any of the stuff I told you about in this podcast episode. Just be blunt. Then send another three. Okay. To the other three Suppliers and use everything that I've told you here. So when we talked about how to use the Guanxi stuff, start from the first interaction, right? So from this first email, we want to implement the things here. Position yourself as an employee. Okay? So at the end of the message, don't write, you know, owner of xyz Amazon company. Write senior purchasing manager or something like that. Be overly nice, okay? Write words like dear. Kindly write that little sentence, I told you. You know, I would love to build a long standing relationship with your company and build a connection on a personal level. Maybe put something in there a little bit personal, a little bit out of the blue. Something not related to to business. For example, maybe a little line about how is their day? Hope you're having a fantastic day today. Something like that. And I want you to split test this, right? So three messages that are blunt, three messages using the Guanxi, see which suppliers come back to you with more responsiveness. Who replies faster and I bet you will see that the ones where you use the Guanxi get a better response. Now you might get unlucky. It might be that you sent three messages using Guanxi to suppliers who, you know, have just gone out of business. That would be unfortunate. But honestly, in most cases, this stuff works so much better than just being blunt. That's action step number one. Action step number two, maybe you already have some suppliers you're working with, maybe you're in talks with them, right? Maybe you have some products and you want to reorder. Action step number two is to send them a message completely out of the blue, completely unrelated to business. Okay? So just send them a message thanking them for being so helpful. Just tell them that you really look forward to working with them long into the future and you really hope that this week brings, you know, lots of prosperity, lots of happiness and lots of success into their lives. Send them a message like that, see what kind of response you get. All right, thanks so much for listening to this episode of E Commerce Freedom podcast. Hope you've learned a lot of stuff that perhaps you haven't come across before. These are hidden secrets that a lot of the time Amazon sellers really don't know about. And this is just stuff I've learned from over years of trying to trying stuff and learning things from a lot of American sellers who I learned from in the beginning in 2015, and I only share with you the stuff that has genuinely improved my business and my life. And this stuff all really works and I pass on to my clients all the time, and they always get results from it. So if you want, shoot me a message. SupportCommerceFreedom.com Let me know how these little action steps went for you. Let me know how Guanxi is affecting you and how it's increased your relationships with your suppliers. And I can't wait to catch you in the next episode of the podcast. All right, take care, keep believing, and we'll talk soon.