Great entry today over at China Law Blog:

There’s a story I often tell clients regarding China pricing. Co-blogger, Steve Dickinson, is a long time friend of a very successful Chinese factory owner in Shandong Province. Steve visited his friend at his factory one day and his friend complained about how his fans were so noisy and were always breaking down. Steve commented on their incredibly poor quality and the owner noted that they cost about USD$10. A few months later, Steve returned to the factory with a gift: a $250 top of the line American fan. A few more months later, the factory owner told Steve that the fan had increased worker productivity because they could now hear their music. And every few months for years, this factory owner brags to Steve about how well the fan is working and how long it has lasted. It is not an exaggeration to say this one fan taught this factory owner the benefit of not buying strictly on cost.

Lot’s more there as well. How Americans v. Chinese view each others currency. Competing on value. Treatment of employees. Can’t recommend Dan’s site enough if you’re interested in doing business in China.

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