When Devon Rivkin first started doing business in China, the South Florida businessman was offered a prostitute during his initial dinner with Chinese associates. He politely declined. Thankfully that didn’t affect the then-Great American Hanger Co., which has since been bought by Austin-based International Hanger.
But there is one thing that Rifkin never refused in China: late-night karaoke marathons. Though he said he hates karaoke, he sang it hundreds of times, understanding that turning down an invitation would be business-networking suicide in China.
The difficulties of navigating business relationships in a foreign culture moved into the headlines this week when Broward businessman Charles “Chip” Starnes said he was prevented from leaving his Beijing factory by workers who demanded severance pay after quitting their jobs. The face-off began after Starnes announced plans to lay off employees as the company moved some operations to India. Some workers currently claim that they are owed two months in backwages.
In China, conducting business has become even more difficult as labor costs have climbed rapidly and workers have begun expecting broader benefits, say experts.
“What happened to Starnes would not have happened 10 years ago when factory workers didn’t have much of a voice,” Rifkin said. “Now, workers are making more money and there are regulations in place for factory conditions.”
To stay abreast of shifting market conditions, Rifkin and other South Floridians who regularly manufacture products in Asia advise making regular visits to suppliers and on-site supervision of factories.
“Get your butt over there and learn about the factory that makes your product,” Rifkin said.
Before he sold his company, Rifkin set up shop in China, Vietnam and Bangladesh, where he worked with multiple factories to make a variety of hangers for high-end retailers, hotels and individuals.
Rifkin made it a point to conduct foreign business face-to-face, which often forced him to learn the history of the country and the customs of its citizens.
“It shows that you care and that you’re not just concerned about the product you’re selling,” he said.
But increasingly, face time has been replaced by cheaper online communication. Without familiarity with the culture, business executives can miss part of the message.
Sam Hollander, managing director of Miami-based Concept One, has been operating overseas for 32 years and still makes multiple visits every year to stay informed. Hollander designs and produces consumer goods such as watches and books for the U.S. mass market. He does most of his business in areas adjacent to Hong Kong like the city of Shenzhen.
“From a businessman’s perspective, I like to look someone in the eye. I like to know exactly what I can produce, what machines I can use and what I need to run a factory,” he said. “Even now, I still go to China two times a year to keep those things in check.”
Still, one of the most pressing cultural barriers between China and Hollander is language, especially as production moves into more rural areas, he said.
“Today the cities are much more developed and most of the people have some command of the English language,” Hollander said. “But as you get deeper into China, fewer people communicate in English.”
A slight miscommunication can be compared to a game of telephone: small, incorrect details travel down a line of people and can eventually result in a flawed shipment of products--like 3,000 shirts that all missed a button, he said.
Once, Rifkin received a massive block of 100,000 wooden hangers melded together by a thick, moist, green mold because of a miscommunication regarding how long it took for the lacquer to dry. The miscommunication cost him a container’s worth of hangers.
To eliminate such errors, Carl Liederman, company president of Miami-based Capt. Harry’s Fishing Supply, hires an on-site representative who inspects his product before it ships. Currently, his agent is a Chinese woman who maintains an office in China that is open 24 hours a day, seven days a week.
His 27 years manufacturing in the region have taught Liederman that factories often try to cut corners to save money. “A factory once reduced the size of a metal component in one of my products, which reduced its rigidity so it didn’t perform the function it was designed to perform.”
He declined to describe the product further, but said he had to ditch that supplier for a more reliable one. His representatives work to make sure things like that don’t happen.
But for Rifkin, cultural literacy still holds more weight than any other factor.
“You literally have to give yourself a history lesson on how a country was born and what their struggles were,” he said. “That way you can go into a conversation and understand who they are and what they’ve been through.”