Oral vs. Written
Most Chinese can read and write a LOT better than they can speak. A few years ago I had an employee correct me on my use of the subjective tense. I had to admit, my subjective tense grammar rules were a little rusty! Many Chinese have had multiple years of schooling in English (nowadays most start around 5 years old), but they probably spent very little of that time practicing speaking. Like most education in China, the lessons are focused on rote memorization.
Whenever possible, use written communication. The other advantage is that written communication is recordable. Make sure you are persistent about documented your conversations if they are in Skype or other media for future reference. If you are in China and things are not being communicated orally, try going to a computer and typing them in. Almost everyone in China has software that will automatically translate from English to Chinese when you move the cursor over the word.
Perhaps the easiest way to improve communication is with correct (and multiple) phrasing. Going back to the cultural differences, if you ask, “did the product turn out well?”, then most suppliers will answer yes. There isn’t a supplier in China that wants to tell you “no” and there may be small problems that are difficult for them to communicate. “Yes” is the easy answer and most likely what you will get in response to that question. But, if you rephrase it, “what were some of the difficulties you had with the last production run?”, you will likely get a very different answer, particularly if you say it in a way that you expected some problems (which is reasonable in many cases). That way, the factory owner does not lose as much face by describing the problems and he can’t get off with an easy yes/no kind of answer. NEVER ask questions that can be answered with a yes or no if you can help it. The recipient may have no idea what you said and just throw out a “yes” to see if that gets them by. Instead, ask the question in a way that requires a detailed response.
Another, more subtle tool, is to ask the same question multiple times in multiple ways at different times. If a factory is trying to hide things, they will likely forget exactly how they answered your question a few days ago and you’ll get a little more insight by asking it again in a slightly different way. If the answers are significantly different, then you know you should start digging deeper. This is also true about asking different people, which is why most factory owners won’t allow you access to other English speaking people in their company (besides a trained sales manager). Having someone that can speak Chinese is very helpful in this step as they can ask anyone in the company and know that they will be understood.
So, in general:
1) Phrase your questions in a way that are meant to bring out the negative (they will give you all the positive on their own accord), but make it inviting so that they don’t “lose face”
2) Never ask yes or no questions
3) Ask the same questions in multiple ways to multiple people
Many times, you will have communicated perfectly well, but when things don’t go according to plan, language is an excellent scapegoat. “Oh, you meant laaast Saturday. I thought you were talking about next Saturday.” In this situation there is not a lot you can do except to look at results. Miscommunication should count against the factory performance just as much as not performing for other reasons. If you are communicating in English, it is their job to insure they can handle it. Make sure you get across that you are focused on results and their inability to understand has significantly affected their performance. Give them an out, “do they need a better translator, do you need to provide one”, but at the end of the day, make your supplier decisions based on results. If they know this ahead of time, you might have fewer “miscommunication” issues.