2010-03-16 Haggling for Samsomite (Rick post 10)

The weather in Shanghai was beautiful today, warm and sunny... which figures, since we had to leave for Beijing that afternoon. But before we left, we visited Grainger China, LLC.

Grainger is an industrial supply company serving more than 1.8 million businesses in 153 countries. They work with more than 300 suppliers to deliver things like hardware, electrical supplies, plumbing supplies, tools and other industrial items. We met with Grainger's China branch's Director of Operations and IT Brian Lawton and Vice President and General Manager Jeffrey Yin.

Of all the companies we visited, I think Grainger taught us the most about the day-to-day operations of managing a company.

Brian took us on a tour of Grainger's huge warehouse and explained the process of how they gets orders to their customers. As with C-Trip, Brian said most of their customers prefer using a paper catalog to place orders by phone rather than the Internet. I was struck by this difference because many American companies are now trying to phase out paper publications in favor of digital media.

Jeffrey answered our questions about the practical aspects of business in China, such as pricing strategies and typical salaries and benefits for Chinese workers.

For lunch, we stopped at a Persian restaurant. The weather was wonderful and we were able to sit outside and relax after a hectic week.

We also went shopping at one of the many flea markets in China. After an afternoon of haggling amid some of the most aggressive salesmanship I've ever experienced, I think we all learned lessons that apply to the real business world:

1. Always bargain hard. Prices in China (and oftentimes in the U.S., if you're willing to work for it) are negotiable. Bukky, one of our classmates, hails from Nigeria where haggling is more common than in America and was a great help in teaching us the basics. As a general rule, you should try to argue down to about 25% of the seller's original asking price in China. Many Chinese merchants initially will give you a vastly inflated price at first that you are a sucker if you accept (like I was the first time I bought something).
2. Don't be afraid to walk away from a deal. If you aren't satisfied, don't let yourself be coerced into accepting a deal. Just leave. There's a good chance the salesperson will come after you and if not, you can find the same thing somewhere else for a better price. But there's also a chance that you'll have an extremely persistent sales person who will latch onto your arm like a vice and yell at you as you drag her through the market. Again, this was something I learned personally.
3. You get what you pay for. We paid low prices for the stuff we bought, but with good reason. Lots of the merchandise was mass-produced and of rather low quality, or were counterfeit. One of our group members walked away with a piece of "Samsomite" luggage, but she knew it was fake and was happy with the price she paid.
4. Make sure you aren't getting cheated. There's a lot of counterfeit money in China, and some people won't think twice about giving you fake money as change. You should always check to make sure the other party has honestly fulfilled his part of the bargain.

Later that evening, we flew to China's capital city Beijing. Beijing is much older than Shanghai and, unfortunately, was much chillier. In fact, Beijing's weather was a lot like Chicago.

We landed and met with Nelson, our new tour guide. Nelson had some interesting facts about life in Beijing for us. For starters, Beijing's population is about 17 million people, and roughly 75% of these people (12 million or so) work for the Chinese government. I knew the Chinese government was large, but that figure boggled my mind.

Another interesting tidbit about life in Beijing is all residents in the city must have a residence permit with the local police. If a police officer asks for your permit and you don't have, you have two options. If you have money, the officer will take you to a train station and force you to buy a ticket out of the city. If you don't have money (or won't admit to having money), the officer will take you to a government-owned factory where you work until you have enough money to pay for a train ticket. Then you have to leave Beijing.

We were all exhausted after our flight and we had an early morning Skype meeting with SXU's Business Student Association, so we hit the hay shortly after dinner.