Posts

Let’s have a trade war! Or, what to do when you tire of chicken…

So we now have a brewing trade row over Chinese tires and American chickens:

“China announced dumping and subsidy probes of chicken and auto products from the U.S., two days after President Barack Obama imposed tariffs on tires from the Asian nation.

Chinese industries complain that they’re being hurt by ‘unfair trade practices,’ the nation’s Ministry of Commerce said on its Web site yesterday. The dumping investigation relates to poultry alone, a spokesman said in Beijing today. The ministry didn’t specify the value of imports of the products.”

This is something of a daring move on the part of the American administration, given that China is the largest buyer of USA debt, and thus underwrites Washington’s spending. And the Chinese are none too comfortable occupying this space these days. Ditto for the rest of the USA’s creditors. I am sure there are plenty of valid arguments on both sides of the issue (Chinese tires don’t exactly have a sterling reputation), but the timing is curious. The Obama administration has based its agenda on deficit spending and has to know that the PRC government is mighty uncomfortable providing the financing. A more conciliatory American posture would be expected.

That said, sourcing in China will continue – it has to, with the so many USA firms no longer in business – and if you need to source in China, you need a partner who can help you navigate the waters and protect you from shoddy product. PassageMaker acts as a “Black Box” to protect your Intellect Property and a “Quality Gate” to make sure you get the product you ordered.

Ghost Fleet = Great Time to Source in China!

From the Mail Online, “Revealed: the Ghost Fleet of the Recession”. This is the most stunning evidence yet that things will not be back to normal any time soon. 12% of the world’s cargo fleet sits idle?! One-in-eight ships tied at anchor out in the middle of the ocean!? And the shipyards continue to produce more…

“A couple of years ago these ships would be steaming back and forth. Now 12 per cent are doing nothing.

You may wish to know this because, if ever you had an irrational desire to charter one, now would be the time. This time last year, an Aframax tanker capable of carrying 80,000 tons of cargo would cost £31,000 a day ($50,000). Now it is about £3,400 ($5,500).”

“Aframaxes are oil bearers. But the slump is industry-wide. The cost of sending a 40ft steel container of merchandise from China to the UK has fallen from £850 plus fuel charges last year to £180 this year. The cost of chartering an entire bulk freighter suitable for carrying raw materials has plunged even further, from close to £185,000 ($300,000) last summer to an incredible £6,100 ($10,000) earlier this year.”

I have been very skeptical of those saying the worst is past. I certainly don’t see it my USA businesses, both in manufacturing. I see a slight uptick coming as some businesses replace inventories, but nothing like a return to the boom years in the near future.

However, for those wishing to do business in China, this is a time of opportunity. Freight is at all-time lows. Chinese factories have massive over-capacity. If you can secure financing and know you market well enough to move the goods, now is a great time to buy. Through PassageMaker’s Endorsed Service Provider network, we can introduce you to resources that can help make your project a success. By conducting a Sourcing Feasibility Study, we can shop a number of vendors and establish a true ‘China price’.

Even in a terrible recession, people make money if they play their cards right.

China’s Fuzzy Math…Who do you trust?

China’s growth figures fail to add up” says the headline. And the sky is blue, you say?

“China’s gross domestic product figures are among the world’s most closely watched since they can move markets or boost hopes of an imminent recovery.

But the latest set of first-half numbers provided by provincial-level authorities are far higher than the central government’s national figure, raising fresh questions about the accuracy of statistics in the world’s most populous nation.”

China has made great strides (herculean is a better word) over the past three decades catching up to the rest of the world, but its statistical reporting, shall we say…lags. Just a bit. The USA’s is laughable at times as well, so I am not picking on the Chinese.

So what does one do when you can’t trust the official numbers from the Chinese provinces? The same thing you do when you are skeptical of numbers posted in other countries (did I mention the USA “unemployment rate”?). You go and have a look for yourself; you do your own research; you dig around for the truth. But what with the cost and indignities of international travel, how much better to have an “office” in China to do such looking and watching for you. That is precisely why PassageMaker developed the idea of the Sourcing Feasibility Study. If you could trust everything you read on a sourcing website, getting your products made in China would be a snap. But of course just as the “official” numbers are rarely accurate the first time out, you have about an equal chance of finding a fully qualified vendor on a typical sourcing website as you do finding true love on an internet dating site. And are you gullible enough to give your credit card number and banking information to that lovely lady you just met online? Think before answering…

Excellence is the consistent execution of a good plan. PassageMaker’s Sourcing Feasibility Study allows you to see a range of qualified vendors, not just somebody’s cousin’s stamping factory or their best friend from high school’s plastics shop. In this way, we help you establish the true “China price” from solid supply chain partners, without hidden mark-ups. By controlling which vendors see your design, we protect your IP, and by acting as a “Quality Gate” we make sure you only pay for good product.

Combining PassageMaker’s services with those of our friends at China Quality Focus (factory audits) and GloBIS (financial due diligence), and you can get a very clear picture of your Chinese supply chain.

Our motto is TRUST & TRANSPARENCY, so you know you can count on our figures!

Father of the Green Revolution dies

Norman Borlaug – the man who enabled the growth of the globalized world more than any other – has died.

“Borlaug was the Father of the Green Revolution, the dramatic improvement in agricultural productivity that swept the globe in the 1960s. For spearheading this achievement, he was awarded the Nobel Peace Prize in 1970.”

Whether you think the Green Revolution was a good thing or not, it is impossible to make the case that the world could have developed as rapidly as it has in the last 40 years without a revolution in agriculture. China would still be spending 50% of its time (as many in India and Africa still do) just trying to meet its daily caloric needs, were it not for the new strains of rice and wheat Borlaug pioneered. The result is a China that has risen from gruesome poverty and overcome crippling political orthodoxy in less than 30 years to become the 4th largest economy in the world. However, such rapid growth creates a system that is anything but systemic. China for all its success is barely-controlled chaos. This is where PassageMaker’s core services – Sourcing Feasibility Studies, Vendor Coordination, Assembly-Inspection-Packaging and Factory Formation – allow our customers to find safe harbor in the storm.

China’s Fuzzy Math…Who do you trust?

China’s growth figures fail to add up” says the headline. And the sky is blue, you say?

“China’s gross domestic product figures are among the world’s most closely watched since they can move markets or boost hopes of an imminent recovery.

But the latest set of first-half numbers provided by provincial-level authorities are far higher than the central government’s national figure, raising fresh questions about the accuracy of statistics in the world’s most populous nation.”

China has made great strides (herculean is a better word) over the past three decades catching up to the rest of the world, but its statistical reporting, shall we say…lags. Just a bit. The USA’s is laughable at times as well, so I am not picking on the Chinese.

So what does one do when you can’t trust the official numbers from the Chinese provinces? The same thing you do when you are skeptical of numbers posted in other countries (did I mention the USA “unemployment rate”?). You go and have a look for yourself; you do your own research; you dig around for the truth. But what with the cost and indignities of international travel, how much better to have an “office” in China to do such looking and watching for you. That is precisely why PassageMaker developed the idea of the Sourcing Feasibility Study. If you could trust everything you read on a sourcing website, getting your products made in China would be a snap. But of course just as the “official” numbers are rarely accurate the first time out, you have about an equal chance of finding a fully qualified vendor on a typical sourcing website as you do finding true love on an internet dating site. And are you gullible enough to give your credit card number and banking information to that lovely lady you just met online? Think before answering…

Excellence is the consistent execution of a good plan. PassageMaker’s Sourcing Feasibility Study allows you to see a range of qualified vendors, not just somebody’s cousin’s stamping factory or their best friend from high school’s plastics shop. In this way, we help you establish the true “China price” from solid supply chain partners, without hidden mark-ups. By controlling which vendors see your design, we protect your IP, and by acting as a “Quality Gate” we make sure you only pay for good product.

Combining PassageMaker’s services with those of our friends at China Quality Focus (factory audits) and GloBIS (financial due diligence), and you can get a very clear picture of your Chinese supply chain.

Our motto is TRUST & TRANSPARENCY, so you know you can count on our figures!

Father of the Green Revolution dies

Norman Borlaug – the man who enabled the growth of the globalized world more than any other – has died.

“Borlaug was the Father of the Green Revolution, the dramatic improvement in agricultural productivity that swept the globe in the 1960s. For spearheading this achievement, he was awarded the Nobel Peace Prize in 1970.”

Whether you think the Green Revolution was a good thing or not, it is impossible to make the case that the world could have developed as rapidly as it has in the last 40 years without a revolution in agriculture. China would still be spending 50% of its time (as many in India and Africa still do) just trying to meet its daily caloric needs, were it not for the new strains of rice and wheat Borlaug pioneered. The result is a China that has risen from gruesome poverty and overcome crippling political orthodoxy in less than 30 years to become the 4th largest economy in the world. However, such rapid growth creates a system that is anything but systemic. China for all its success is barely-controlled chaos. This is where PassageMaker’s core services – Sourcing Feasibility Studies, Vendor Coordination, Assembly-Inspection-Packaging and Factory Formation – allow our customers to find safe harbor in the storm.

Tips on Attending Trade Shows in China

If you are seeking a Chinese supplier to manufacture your goods in the PRC and have made plans to attend a trade show in China to find a supplier then PassageMaker has the following suggestions to make the most out of your trade show experience:

Do Your Homework Before Attending the Show

Since there are so many Chinese suppliers, research qualified suppliers before hand online and email them to see if they are exhibiting at the trade show. If they are, arrange an in-person meeting during the trade show. If possible, visit the potential supplier’s facility while you’re in China so that you can ensure that the supplier actually has the infrastructure and know-how to manufacture your product.

Consider the trade show an opportunity to collect market intelligence instead of forcing yourself to sign a deal with the first supplier you meet at the show. Therefore, ask important questions about the supplier’s financial health, sales turnover, quality control history and so forth.

However, if your goal is to sign an agreement with a supplier while attending the trade show, then bring along pertinent information such as, common terms of trade, pricing information, lead time requirements, shipping costs, etc and discuss them in detail with suppliers. Keep in mind that many reputable suppliers exist in China that do not attend trade shows so don’t fret if a qualified supplier that you found online is not attending.

Some Things to Keep in Mind…

One: Be wary of disclosing drawings with exact specifications of your, especially with new-to-market products to with suppliers while at the trade show because the suppliers can turnaround and be your biggest competitor a few months later. Therefore, make sure your product patent and trademarks are in place.

Two: Beware of increased tooling and/or shipping costs from the supplier to compensate for their low promotion price on products at the show.

Three: To present your product more articulately to potential manufacturers, make sure to bring product materials written in Mandarin to the trade show.

 

Open Lines of Communication

Arrange a translator before the show begins. While many English-speaking students will offer to be your translator outside the trade show grounds, it is advisable to arrange an interpreter that is familiar with the products and technical terms (in both English and Mandarin) in the industry you are researching. Make sure the translator is knowledgeable about your goals and products before attending the Fair. Remember that many qualified reputable suppliers do not have good English speaking skills but they have the know-how to manufacture your product. Try not to judge suppliers solely by their English language skills.