The Silence of the Suppliers
International business has its positive and negative aspects. Encountering different cultures and how said affect business etiquette and procedure can be wonderful or horrifying or somewhere in-between. One big aspect has to do with communication or lack thereof -- namely, the Silence of the Suppliers!
Western business norms, reinforced by strict contracts and Rule of Law, dictate communication -- whether salubrious or bad. In parts of East Asia, however, there seems to be a cultural proclivity to go silent when bad news occurs. This can create problems large or small for Western buyers and their Supply Chain Management strategic plans. There may be cultural reasons that drive Asian suppliers to cease communication; some posit that Confucianism and harsh educational environments that eschew guessing and free expression drive those in crises to clam up. Others point to the emphasis on face in East Asia and the opprobrium of loss of face outweighing the benefit to everyone's bottom line of communicating early and often issues (as it seems Westerners are more wont to do). Your vendor, Joe Jones in Georgia will probably alert you about issues; your vendor, Joe Chen in China may not. In no less than five (5) instances over the years, I have experienced Asian suppliers (usually those that are small- or medium-scale) becoming completely incommunicado. In three instances, suppliers experienced financial and cash flow issues and went MIA -- doing so created extreme confusion and worry for my Western procurement partners. Over time, we determined that if these suppliers had communicated their issues with their buyers, a team approach could probably have been utilized to overcome the suppliers' financial issues. However, in all three instances, the lack of communication exacerbated the impact of the suppliers' issues.
In two cases, arbitrary implementation of environmental protection laws and regulations devastated supplier production and lead to extensive delays. Fearing anger and loss of future business, these suppliers failed to alert foreign buyers of the impact -- which in one case did lead to the buyer turning to other markets.
As such, given that the probability of Asian suppliers becoming silent is not insignificant, I suggest considering tactics such as the following to reduce your risk exposure to the Silence of the (Bad) Suppliers:
In your bilingual Supplier Agreements or Purchase Orders, relate your concern about the lack of communication in supplier emergencies. Perhaps outline penalties for such silence. Demand, in a positive way, that bad news be communicating early and often.
Literally mention during visits and over other forms of communication, that you know of such instances and that any supplier who wants a long-term relationship with you should embrace a Western mode of open and frequent communication.
Consider beforehand ways your firm could alleviate any unforeseen financial or cash flow crises with suppliers. These tactics can be very tricky and should only be implemented in coordination with your local partners, lawyers and other consultants. Tactics might include prepayment or extending financing or introductions to these suppliers.
Overall, although we must be cognizant of cultural differences and how those affect business operations, we must be aware of -- and ameliorate against -- cultural differences that, if they occur, create havoc for our global supply chains. One such salient issue is the potential Silence of the Suppliers. I hope this analysis and incomplete list of tactics is useful.