Critical impotance of relationships in international trade

Gene Rostov, president of General Resource Corporation, is the third generation in a family doing business with third generation business partners in Japan and China. He tells a compelling story of the importance of personal relationships in overcoming unanticipated obstacles.

The story here – the story about building relationships – is one I will never forget.

We had received a big order from an important customer and it was a rush order, as many are. In discussions with my people in China, I decided to work with Mr. Liu, a factory manager whom I had known and worked with for several years. He had the greatest flexibility, it seemed to me, and he was a responsive and responsible businessperson.

So we talked with Liu and he was reluctant to take on the assignment because – mind you he runs a factory way out in the countryside two hours outside of Beijing – he would have to drop the work he was currently doing, tie up a lot of his money in raw material, bring on more staff and essentially turn his factory upside down for us. Finally, after several lengthy discussions we convinced Mr. Liu to take on the business.

Eight weeks passed, all the while Liu was working feverishly to make our goods for us so that he could ship on Week 10. In the middle of Week 9 I received a telephone call from the customer telling us they needed to postpone delivery of the order for six months. Thirty-six hours later I was on a plane for China. After 24 hours of flying, I got into a car at the airport and drove another two hours directly to Liu’s factory.

We arrived and, unaware of the real reason I was there, Mr. Liu greeted us with his big toothy smile and meaty handshake and offered us tea. He was very proud of the great work he had done and wanted to show us the manufactured goods. I said we needed to talk first. And I gave him the bad news.

Well, I’ve rarely seen such an abrupt change in a person’s demeanor as I did that day in Mr. Liu. He let me have it. And he went on and on, my people translating his tremendous upset and anger.

When he was done, I said to him, “Mr. Liu, I could have stayed behind my desk in the United States and written you a fax to tell you this news. Instead, in honor of our relationship, I got on an airplane and came over here to meet with you face-to-face so that we could have a frank and honest discussion and see how, together, we will solve this problem.”

To his great credit, Mr. Liu understood my point right away: I had not come there to cut and run; I was there to stay and build.

So we talked the balance of that day. I got some rest that night and went back the next day and by the end of that afternoon together we crafted a solution.

More importantly, we cemented a relationship.

As a postscript, two years later Mr. Liu suffered a stroke. He lived but had some permanent paralysis. His son took over his business. And without missing a heartbeat we have developed the same relationship as I had with his father. And every time I am in that little village to visit that factory, I make sure to stop in at Mr. Liu’s house to say hello.