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I have always said when you buy and run a business — a manufacturing business — there are times when outsourcing is almost a guarantee — as you can triple your profits without tripling your overhead. And if you are going to outsource you have to get your head on straight about how other countries do business. And after 30 years of outsourcing, my favorite country to outsource to has always been — hands down — Mexico, and not China.

Why?

Well, first of all — and this is not a knock of the Chinese people, but an observation of their overall business culture where they play by a completely different set of rules than we do in the U.S. — if you have a proprietary product, in China they’re going to steal it within one hour and they’ll be manufacturing it themselves.

Plus — and this is just my personal opinion from having dealt with outsourcing for over 20 years — they’re very hard to work with in China. I have never had any trouble working with the businesses and managers in Mexico. But in China, you have to constantly watch what’s going on until the contract is signed.

In fact, when I taught seminars, Asians in my class would consider me racist because of what I was saying. I’d say it has nothing to do with race, and it’s just the way the business culture is. Nothing right or wrong about it, it is what it is. And if you insist on doing business there then you’d better learn how to negotiate, because it’s almost guaranteed they’re going to come up with something to get you to change the price — no matter how fair or in their favor the number is.

And I still tell people that if you’re going to go to China then after you sign the contract, make up four or five things (really outrageous things) that will happen as penalty if they change the price. And then come up with little nitpicking ones. And when they hit you with the nitpicking things in the beginning, say, “I’m glad you want to open the door again on this negotiation because as I looked at this last night, I found the following three or four things that we might want to change.”

And as soon as you come back and start doing that, they back off every time.

But again, I always outsource to Mexico, because it’s ten times easier and you don’t have to mess around with all these negotiating tricks and nonsense. But if you do decide to outsource anything to China, be careful and make sure you know what you’re getting yourself into.

Arthur B. Hamel has bought over 200 businesses in the past 50 years, and is a well-known author, consultant, investor, business owner, and dynamic lecturer who has shared the stage with such business greats as Robert Allen of “No Money Down” fame. For the past 20 years Art has taught thousands of people around the world — even so-called “little guys” with no formal education or money — how to quickly and easily buy large, multi-million dollar businesses with no credit, banks or prior business experience. He has recently decided to share his unique business-buying secrets and tactics free of charge at: http://arthurhamel.com