Doing Business in China For Dummies®

Building Your Building

Constructing the factory may be the single hardest part of manufacturing in China. You have to pay attention to a lot of details throughout the entire process. Being overcharged and/or having quality issues with the construction aren’t uncommon.

Some foreign businesspeople believe that there’s a fine line between making sure you’re not getting ripped off on your factory and pushing too hard on cost control. Their thinking is that the builders are going to make some extra margin one way or the other. Therefore, if you fight overcharges too much, they’ll just cut corners to make it up. A good project manager (see “Protecting yourself by hiring a project manager” up ahead) can help you control costs while ensuring quality, but you may still be dealing with builders who are determined to beat you.

Identifying the players

By law, you have to hire at least three different types of companies, all of which must be licensed in China:

✓	A design firm, which designs the facility
✓	A general contractor (GC), which is in charge of overall construction; some large GCs can finance the construction
✓	A supervisory firm called a jian li (pronounced jee-en lee)

The jian li’s role is technically to oversee the construction work. Some firms are reasonably decent about this; others wouldn’t even notice if the structure collapsed. In other words, you’re required to have a jian li ...