How says that one way of addressing the face-saving problem is to have good technology in place to automate reporting functions. "We want to take out any personal involvement in the system," he says. Using PeopleSoft software "allows us to have good detection if anything goes wrong," How explains.

But Chinese people aren't unique in not wanting to pass on bad news. "Other countries in Asia find it difficult," says John Oska, regional supply chain manager for the Asia-Pacific region at Sealed Air Packaging Co., a Shanghai-based division of Sealed Air Corp. in Saddle Brook, N.J. The company currently has two small plants in China and is building a new plant in Shanghai.

"Sales reps in countries such as Indonesia are reluctant to advise customers that a shipment is late or not to spec until the customer calls to complain," Oska says.

One of the ways around that problem is to give the customer direct access to the information, he says, but many of his company's local suppliers aren't capable of providing that level of IT-enabled visibility. Fortunately, it's a lot easier to demand visibility internally, and Sealed Air is rolling out SAP 4.7 this year to do just that.

Shanghai General Motors Co. is also implementing SAP software this year, and it's making a concerted effort to improve the reporting systems of its suppliers as well. The exploding pace of growth of China's automotive sector makes good systems a necessity, says Chris Gubbey, executive vice president at Shanghai GM, a 50-50 joint venture between General Motors Corp. and a local partner, Shanghai Automotive Industrial Corp. GM first came to China in 1999. By 2005, China had become the second-largest market in the world for the company. "It is the world's fastest-growing vehicle market," says Gubbey, noting that the number of cars GM has sold in China has grown from 30,000 in 2000 to an expected 400,000 this year. That pace of growth puts significant stresses on the technology infrastructure, he says.