The Chinese Productivity Revolution, And How It Affects Your Sourcing Plans

By Michael Wong

To do business in China, you have to understand the Chinese.

Specifically, you have to understand why for the last twenty years and well into the foreseeable future, the world looks to China for business opportunities.

Much of this can be summed up in one word — Productivity.

Sure we talk about productivity in the West. And for every self help book and productivity hack website like Lifehacker.com there is there are 10 more people being decidedly un productive. It is all just talk.

In my short time in this wonderful city of Shenzhen, China, I have discovered that productivity isn’t a hack or a social bookmark, it isn’t even a frame of mind.

Productivity is a cultural attitude.

I work for Chinavasion, a hardworking Chinese company with higher quality standards than most. Monday to Friday I start work AT 9AM. That’s 9AM, not 9:15AM but 9AM on the dot. I don’t make coffee or chat with my co-workers for 20 minutes before settling down to work at 9:23AM. I begin right on time.

Next, my day ends around 7PM.

Officially, the work hours are from 9-6, but no one leaves on time. The high unemployment rate helps us appreciate our jobs very highly.

According to the CIA World Factbook (cia.gov/library/publications/the-world-factbook/geos/ch.html), unemployment in China was between 4% and 9% in 2008.

When Chinese office workers consider this they are usually very thankful that the company is doing well and that they have a job.

If the company does well, the country does well. And if the country does well, we prosper.

So we all stay late to do extra work. We don’t receive overtime pay. We don’t complain about not receiving overtime pay. Our reward is having a job in the first place.

So let’s put all this in perspective:

Your average North American or European office worker works 5 days a week, from 9am to 5pm. That’s an average of 2700 minutes a week.

Now take out the 15 minutes they arrive late each day, the 65 minutes they take for lunch and 2 coffee breaks of 20 minutes apiece and you’re left with 1800 minutes that are actually dedicated to work each week.

Your average Chinese office worker employed by a private company works 6 days a week, from 9-6 and 10-6 on Saturday or 3090 minutes of work each week.

From that you subtract 90 minutes for lunch with no coffee breaks. This means Chinese office workers dedicate 2640 minutes to their employers each week.

That’s 840 minutes more. Percentage-wise that equates to 47% more productivity in China each week.

And that doesn’t even begin to take into account all the wasted time Western employees spend surfing non-related websites and sending instant messages to friends and family throughout the day.

Mathematially-speaking, the Chinese are almost 50% more productive than the West from a cultural perspective without all the fancy gadgets.

Now do you see why China’s economy is so strong?

Chinese workers work very hard for their money. So they treat money matters especially commerce and trade very seriously.

If you’re looking to do business or source products in China it may do you well to be aware of this.

Self-discipline, being organized, being clear about what you want or don’t want, and of course negotiation is a fact of doing business here. If you haven’t done your homework by finding out the cost of raw materials or looked at competitor prices then you will pay much more than you need to.

At Chinavasion, it’s not uncommon to see a 30-40% price difference between similar products from two manufacturers.

To do well in China, you really have to up the level of research and preparation you do.

Ignorance is expensive in life and all out exorbitant in the Middle Kingdom because the Chinese economy has become incredibly competitive as there is a huge population and not enough jobs and resources for everyone.

The flip side of course, is that all this competitiveness and productivity translates to inexpensive labor and products — in short, great business opportunities.

So next time you are thinking of doing a little bit of sourcing in China do your homework first. The result will be a profitable and productive use of your sourcing trip.