ANSWER:

I am happy to report that we have a comprehensive answer for you at the following blog post:

How does one actually return defective product back to China?

http://chinasourcinginfo.org/2011/09/23/how-does-one-actually-return-defective-product-back-to-china/

I hope you find it useful.

Wishing you successful China sourcing!

Question ...

[Continue Reading]]]> Can I send defective materials or wrong items back to China? What are the regulations?

ANSWER:

I am happy to report that we have a comprehensive answer for you at the following blog post:

How does one actually return defective product back to China?

http://chinasourcinginfo.org/2011/09/23/how-does-one-actually-return-defective-product-back-to-china/

I hope you find it useful.

Wishing you successful China sourcing!

Question answered by Mike Bellamy, host of “Ask the Experts” at the China Sourcing Information Center.

Mike Bellamy is an Advisory Board Member & Featured Blogger at the not-for-profit China Sourcing Information Center (www.ChinaSourcingInfo.org). He is also the author of, “The Essential Reference Guide to China Sourcing” (chinasourcinginfo.org/book) and founder of PassageMaker Sourcing Solutions (www.PSSchina.com )

Depends. My personal opinion is that it depends a lot on what kind of business you are doing.  If you want to sell something in China, of course you have to know something ...

[Continue Reading]]]> Is it very important to know Chinese culture and protocol to be successful in doing business in China?

Depends. My personal opinion is that it depends a lot on what kind of business you are doing.  If you want to sell something in China, of course you have to know something about Chinese culture, because you need to understand the market and buyers.  But if you are buying from China, I don’t think it’s a “must”.  After all, culture is a very complicated phenomenon, especially for China, a nation with more than 2000 years history and more than 50 ethnicities.  Difference between different regions, such as north and south, coastal regions and inner cities are also gigantic.  There are some items to avoid. No talk about politics and religions during dinner, neither should you talk about sensitive topics, such as Taiwan or Japan issues in China.

Keep in mind that if you are the buyer, then the money and power is in your pocket and it is the selling side (Chinese factory) that probably needs to be more worried about culture and protocol than you do. So relax.

Written for CSIC by Sophie Mao

China based lawyer at www.Chibridge.net

Are you “seen” in China or are your links just an error messages?

Your site would obviously work ...

[Continue Reading]]]> In this article, sourcing veteran Helmut Maertin gives an overview of China’s online business culture and offers strategies for businesses wishing to leverage the internet to communicate effectively with China-based staff, suppliers and potential customers.

Are you “seen” in China or are your links just an error messages?

Your site would obviously work well in most parts of the world. All videos and social media integration probably functioned seamlessly last time you checked, but is it seen from over the “Great Fire Wall”?

One the first things people do, to get an understanding and background on a prospective business contact is have a look at them on the internet. Suppliers are no different to customers in this way. If they get an enquiry about big order, or want to know if a client or enquiry may be more trouble than it is worth, they will get online.

Whether you hope to build brand awareness in one of the world’s largest markets, or want to ensure that suppliers you contact can “check you out” and be impressed. You may want to know more about what is affectionately known as “The Great Fire Wall”.

I will not pretend to be “the web expert” with instructions on how best to address the issues, there is a lot online that someone better suited can look at. This article is mainly to draw your attention to some points that I find many in the West have no real idea about. First let’s put it in context.

China’s Online Population Exceeds the whole of the US live Population

Most of internet, especially the English content has traditionally been somewhat US centric.

More recently, IP and usage tracking is diluting the bias with more location specific content, however traditionally the bulk of English online content and activity is driven by the USA.

That is fair enough. USA has the largest native English speaking population of any single country. It has traditionally had some of the highest penetration and usage of any country at about 78%, leading to about 245 million users. The USA has also long been one of main drivers of all commerce and especially Ecommerce both through high usage and generally greater online spending.

None the less, it is worth considering China!

The penetration is still much lower at about 36% in 2010 leading to a very significant 485 Million users! The figures released end of 2011 are 513 Million online users, 356 million of which are online users.

China surpassed USA as the largest online population around 2009. Considering it has steadily grown from a penetration of about 2% in 2000, there is every reason to expect that it will continue to grow at a faster rate than nearly any other country. That more so now, as China recently officially tipped from a rural to urban society with that trend continuing to grow.

The number of Chinese speaking users is already greater than the combined total of USA and UK. It is expected to eclipse the total number of English speaking users over coming years. Further the average wage for most people in China is increasing, both of which makes China a more relevant online market.

China as a nation and the population as a whole has eagerly embraced technology.

For the nearly 10 years that I have been regularly in China, nearly everyone in small villages, all factory workers, cleaners and others that would not be viewed as “affluent” or “trend leaders” have had a mobile phone.

A very high percentage have moved beyond talk and text to “feature phones”. In 2009 there were already 155 million people mobile internet users many via feature phones. Sometime around 2010 that figure was 318million via feature phones and smart phones and by end of 2011 there was a reported 365 million mobile internet users in China.

In 2010 alone there were an estimated 30million Smartphone’s sold domestically and Smartphone sales in China have just overtaken the US with 24million shipped in the 3^rd quarter of 2011 alone. Obviously that will lead to more time online as distinct from more users, though it demonstrates the eagerness for technology and online access.

Bear in mind that a good smart phone would be cost someone a few weeks – a month of their salary in China.

Nearly every public facility, such as gyms, saunas, and even some train stations and airports have terminals for the public to get online free.

Most cafes, hotels and some restaurants will have Wi Fi as do most airports. Many Wi Fi locations provide free access, some are provided by phone companies and require payment.

Access to the internet in China is prevalent and easy.

The big question is will your website, blog and tweets be seen, heard and understood in China?

Online Shopping

This is one area where the US still the leader, however most people are looking at when, rather than if China will overtake. The sheer number of very active Netizens in China along with the growing affluence is expected to push China into the overall lead globally over coming years.

There are strong, well established local online shops such as Taobao, which has both C to C and B to C functions, though Amazon and others function here too.

Less language barriers than you may expect

You probably do not have a Chinese version of your site and that may or may not be worth considering. Certainly if you do, get it properly translated!

There is a massive potential audience in China, though it may or may not be sufficiently accessible and relevant to you.

Obviously if Chinese is available most will read that in preference, however if you have a message that will be of interest to people in China it will get read even in English. Provided the sites and links can be seen, rather than blocked.

A significant percentage of Chinese internet users can read and often write English with some fluency.

The Chinese people as whole have certainly grown adept at researching and learning often very technical information from English language sites, before that from English text books and journals.

There are a number of contributors to support them in accessing information on English language sites.

Pinyin

Pinyin is a standardized way of using the Roman alphabet to write Chinese.

It has been widely used in education since the late 1950’s and almost obligatory for computer use. Some scribe the Chinese characters on an electronic tablet with a stylus, but the vast majority, type in pinyin, using a keyboard and interpretive software provides the Chinese characters.

…so the vast majority of Chinese, especially Netizens are very familiar with the “western alphabet” as a start.

English is the Lingua Franca

For most of the last three decades, China has been focused on developing export business.

While you may not be able to strike up an English conversation with many people in many factories, they view English as the language of business.

Virtually every business in China will have a number of people can read and write, if not speak fluently!

Most people visiting China will use English in business, even if they are from a non English speaking country.

English at School & afterwards

The three core subjects taught at schools in China are, Chinese, Math and English. Obviously with all curriculum, what is taught and what is retained will vary widely from student to student.

Many Chinese see English as something that will assist their career path, so they will pro actively look for opportunities to improve.

English TV shows are popular in China. Normally with spoken English accompanied by Chinese and English subtitles. Nearly every office girl in China can tell you all the main characters from Friends, Sex In the City, Desperate House Wives, Gossip Girl and more.

The shows are seen as entertainment, a way to look at the world, follow trends, but also very much as an ongoing English learning tool!

They also often need to engage in English in international trade with people all over the world, many of whom also have English as second language. As part of that process, they will search English sites and post English content on their own sites.

Online Translation

There is wide idiomatic gap between English and Chinese.

Translating programs are still “clunky” at best. They still give people support with the content. Especially when used in conjunction with some prior understanding of English.

The Great Fire Wall

Knowing that the largest and fastest growing internet population can converse in English more than you expected, may be exciting with the subsequent prospect of getting 400 million friends on face book, or followers on Twitter. Unfortunately the Great Fire Wall stands in your way.

China generally has a desire to choose their own course. Some of their policies may seem odd or out of touch to many outsiders however that is beyond this discussion.

Suffice to say China has decided it is in their best interests to place certain restrictions on the internet. That is not expected to change any time soon.

Porn is illegal in China, and that is obviously blocked. A decade ago many completely innocent sites would be inaccessible, and it would generally be because they were hosted on a large public server many of which may also host a porn or similar site.

Now days the blocking techniques are more refined so most websites will be accessible, provided their content is not contentious, thought it worth checking on your own site!

The most notable site that is blocked, is Facebook, despite the origins of Marks girlfriend and his apparent interest in learning Chinese.

None the less most Chinese know or have heard about Zuckerberg and Facebook.

Others major sites blocked are any that link directly to Twitter and YouTube, though again most Chinese web users know of them and there are some local alternatives.

If your video content is an integral part of your online message, you may want to consider alternatives if you want it seen in China! Certainly post material on You Tube, but if any video material is intergeral to your site, consider building it in something that can be seen in China, rather than just plugging in a YouTube link.

Also many of the URL shortening sites are blocked. That of course means if you put a Bit.ly shortened URL in your Profile, Blog, or on your site most people in China will not be able to follow the link and read that content.

Some download sites for large file transfers are also blocked.

There is a lot of information on the web about sites that are blocked and how to test if yours will be affected.

Some of that information is of course blocked from within China, so again I am not as well placed to advise on that as your local “web wizard”. I am happy to check for you, or you can of course also ask your contacts in China if check. Sites being blocked is fairly routine, so it is nothing to be embarrassed about, it is just an inconvenience.

VPN’s do open the internet up, however they are mainly used by Expats. Some VPN’s are free, many have charges associated with them. So far it appears that the more popular ones (paid and unpaid) stop working sooner or later, particularly once they become more popular.

If you are considering having your message seen and heard in the Middle Kingdom, you may want to consider some alternatives so your content can be fully accessed from within China.

Sites that do work in China

As social media is growing especially in the business realms it is worth considering media that works well in China. I am not suggesting you abandon your Facebook or Twitter account but perhaps it is worth ensuring you have a feed of content into Linked In or Google +.

Linked In, is a good example of sites that are working within well in China. It was blocked briefly in February 2011, but is widely regarded as the main western social site functioning in China.

Linked In is very popular for Expats in China and Chinese working for foreign owned companies. It appears to be gaining traction with the wider Chinese business community.

Earlier in 2011 when Linked In broke the 100 million barrier, there were already well over 1 million users in China. While 1 million is a minuscule number, especially for this part of the world, from what I have seen Linked In is becoming more widely used and accepted in China.

Though business online in China is still very much focused on and populated in the B2B sites, such as Alibaba, Global Sources, etc

In fact many companies in China use a B2B profile as their main company website.

Google Plus is working quite well, despite the very public fall out between Google and the Chinese government, with regards to the search engine.

Yahoo products are generally quite reliable in China and gained some ground here when Google fell from grace with the authorities, though most people here use local search engines.

MSN and skype are both very popular in China especially for communicating with people in “the west”. There was talk about China banning or blocking Skype, however that has not eventuated to date.

If you connect on Skype or similar, you can expect most Chinese will want to text chat, rather than use VOIP. Partly for logistical reasons and again, most Chinese are far more proficient with written English compared to spoken. Normally once they know you and feel more comfortable they may be keen to VOIP or video conference.

There are many very popular Social Networks. Including Ren Ren, Qzone, QQ, Sina, Kaixin and the list goes on.

Traditionally one of the most popular in China is Tencent QQ, or simply “QQ”. Users get a 9 digit “QQ number” as their user name and email address. It is primarily used on computers though many also access QQ via 2G / feature phones while in transit. Pretty well everyone I know in China as a QQ number.

Reports of the number of QQ users registered varies widely, from about 200 million to about 1 billion, but it is safe to say there are probably well over 300 million people that are registered and very active on QQ normally most of the day, or at the very least once per week.

In March 2010, QQ attained the milestone of 100 million users online at one time. That is 100 million users simultaneously online, about a year before Linked In had same number of registered users.

QQ now has “QQ International” which works well for those of us who do not speak Chinese. It should be considered by anyone interacting with China and Chinese on a regular basis.

Your kudos goes up in leaps and bounds with the locals if you have a QQ number. It is nearly as impressive as speaking Chinese, but a lot easier to achieve!

Micro Blogging is very popular in China.

QQ recently added micro blogging to its product.

Sina, has long been a leader and has often been referred to as “Chinese Twitter”, now WeiBo, which is pinyin for “Micro Blog”. The is also 163 and others.

Most of the content is Chinese however it is certainly possible to engage in many English conversations on these platforms. Again a gauge of the degree of English literacy online in China.

It is also possible to feed / link your blog to the Chinese micro blogs. If you feel you message would have an audience in China it is worth considering. As with all social media it will take both time and effort, and will probably have a long gestation period. Again it is an individual decision if it is worth it for you.

Ren Ren started as a blatant copy of Facebook and continues to be one of the most popular Social Networking Sites.

China online is large, growing and open, but not completely open

Bottom line is that China’s online population is now roughly double the size of USA’s which has for many years been the clear leader.

The number of online users in China is growing an exponential pace.

The internet in China is very accessible, and that trend is growing.

Chinese users certainly prefer to read Chinese content given the choice, however they are very adept at accessing English online content and will certainly do so if needed for work or to pursue an interest.

Most of the online content on the web can be seen in China but some sites, especially certain shortened links, video and Social Media are blocked.

Social media is widely embraced in China, though you should not assume that what you can see on your PC will be seen in China.

If you feel there is merit in your content being seen in China you should check your links work in China, and ensure some of your content feeds into Social Media that is seen in China.

China vs. India

As a side note the next most populous nation is India.

India is also famous for embracing technology, with many well educated people there offering offshore IT services, manning call centers, etc, etc.

The two BRICS nations are often compared.

While the total human population of India is very close to China, the online population is only about 100 Million less than a quarter of China.

The Indian online population is also of course more homogenous with many western countries as English is more prevalent and to the best of my knowledge sites there are not blocked.

Checking You Site

Ask your local Chinese contact, or connect with me on Linked In.

Consider raising the question of access in China with your web developer. Again there is a lot of material online about this and more of that is accessible outside of China than from here within China.

Helmut Maertin
Managing Director – Quality Products International Limited

Helmut, grew up in a production environment of his father’s successful printing and manufacturing business. The invention of Floaties Learn to Swim products by Helmut’s father brought the family business to the orient in the 1960’s. In those days China was still closed and Taiwan’s fledgling manufacturing industry was developing capabilities such as inflatable’s. QPI Ltd was later established to offer OEM product to 3^rd party clients, that expanded to product development and quality control services. Though originally from Sydney, Australia, Helmut has been living in the Shenzhen area since about 2003. Helmut Maertin can best be contacted via Linked In where he is happy to welcome new connections.

ANSWER:

You are wise to be thinking about import duties and taxes.  Too many new-to-China buyers ...

[Continue Reading]]]> Where can I go to find out about import tax and duties so that when I purchase from China I will be able to obtain an overall cost anaylast with all taxes and product prices combined.

ANSWER:

You are wise to be thinking about import duties and taxes.  Too many new-to-China buyers focus only on product price and then get an ugly surprise when they learn there are applicable taxes which they didn’t plan for in the budget.  Another mistake is to ask the supplier in China to confirm the taxes and duties in the destination market.  Suppliers may not be knowledgeable about how your government would classify the given product and what taxes apply. So I find it best to ask an expert. Because the regulations and taxes can change on short notice, you would be wise to develop a working relationship with a freight forwarder or customs broker based at your local port, who has experience dealing with China imports.  They also go by the name “3PL” for 3^rd party logistics service providers.  These companies are the experts in this area and they make a living arranging shipments. A big part of their job is to stay current on the import taxes and duties.   Not only can they quote on the costs of moving your goods, but they can also confirm if there are any import taxes or duties.

Read the article at http://chinasourcinginfo.org/endorsed-service-providers/#3PL to learn how to find a quality a 3PL.

Also, let me know where you are based, I will be happy to make a recommendation if I know any reputable customs brokers in that area.

Wishing you successful China sourcing!

Question answered by Mike Bellamy, host of “Ask the Experts” at the China Sourcing Information Center.

Mike Bellamy is an Advisory Board Member & Featured Blogger at the not-for-profit China Sourcing Information Center (www.ChinaSourcingInfo.org). He is also the author of, “The Essential Reference Guide to China Sourcing” (chinasourcinginfo.org/book) and founder of PassageMaker Sourcing Solutions (www.PSSchina.com )

businesses in the export oriented Guangdong province are having difficulty in finding enough workers following China’s Lunar New Year holiday.

 This is not really a surprise to anybody that has been doing business with China, as we all ...

[Continue Reading]]]> A recent article in the China Daily, “Lost staff prompt a headache”, explains that

businesses in the export oriented Guangdong province are having difficulty in finding enough workers following China’s Lunar New Year holiday.

 This is not really a surprise to anybody that has been doing business with China, as we all know that the turnover rate of factory staff is high after Chinese New Year because annual bonuses are usually given just before Chinese New Year. So if you are going to leave, leave with your bonus.  In past years, even if some staff didn’t return from the holiday, there were always new people eager to take their place.  This year is very different. For example, in one manufacturing town here in the Pearl River Delta,

the local labor authorities forecast that the city needs 200,000 more workers this year, but at least 85,000 workers have still not returned after the festival. 

That means there are 285,000 jobs to be filled, yet the seats remain empty, despite a massive increase in wages being offered.

Why are things so bad this year?

1. 2012 is the year of the dragon. Chinese people feel this is a prosperous year to start a family.  For example, my Sr. accounting team has 8 people. 5 of the girls are on maternity leave this year! 
2. Many of the workers in the cities are from the rural country side. Beijing planners are actively encouraging the development of the rural interior and the plans are working. More and more people are happy making a decent living back home and no long desire to travel 100’s sometimes 1000’s of kilometers for a job away from family. For example, at my (former) favorite restaurant next to the office in Shenzhen, the level of service and taste of the food has taken a nose dive because the chef and most of the staff didn’t come back after the holiday. Overnight, the place went from good to bad.
3. If the wages for these 285,000 open jobs were increased significantly, simple supply and demand would find a way to fill the seats. But with the increased costs of doing business in the cities and with the compressed margins from this “new normal” global economy, Chinese suppliers simply can’t afford to pay more. But in the long run, factories will move or find ways to operate more efficiently and the supply and demand of labor will come back into balance. Check out my blog post “China’s manufacturing slowdown. Why it’s GOOD news for us buyers.”

What does this all mean for us buyers?

1. In this economy, suppliers are making all kinds of promises about lead times to get the orders. Then later using the excuse of “not enough staff” to push out your lead times. Do you due diligence and get a handle on your suppliers true capabilities and labor position.
2. Be real careful if you are planning to ship orders around the other major holidays this year. I think it is safe to say that there may be smaller exoduses of staff at each of the holidays, not just Chinese New Year. You can find the 2012 holiday schedule here: http://www.psschina.com/resources/passagemaker-2012-trade-show-holiday-schedule/
3. It’s not too late to start thinking about 2013 Chinese New Year’s plans. Get your orders in early.  At maternity leave is a matter of months, 2012 Year of Dragon births will have an impact well into 2013.
4. Sourcing is no longer about visiting HK and a few coastal cities. With factories moving into the interior where the labor is still available, buyers like us need to take a pan-China approach.

Wishing you successful China sourcing!

Mike Bellamy

About the blogger

Mike Bellamy is an Advisory Board Member & Featured Blogger at the not-for-profit China Sourcing Information Center (www.ChinaSourcingInfo.org). He is also the author of, “The Essential Reference Guide to China Sourcing” (chinasourcinginfo.org/book) and founder of PassageMaker Sourcing Solutions (www.PSSchina.com)

ANSWER:

Reader later wrote back having found an answer to her question.  Posting here for reference to other readers.

“If a manufacturer ...

[Continue Reading]]]> If our supplier fails an FDA audit for a USP product, would the FDA put restrictions on that specific product or ALL THEIR OTHER PRODUCTS AS WELL, blocking them from export?

ANSWER:

Reader later wrote back having found an answer to her question.  Posting here for reference to other readers.

“If a manufacturer fails an FDA audit, the FDA would only put restrictions on the product in question, not all their products.”

BTW, for our reader’s information, USP stands for U.S. Pharmacopeia which sets the standards for the quality of medicines and food ingredients in USA.

Wishing you successful China sourcing!

Question answered by Mike Bellamy, host of “Ask the Experts” at the China Sourcing Information Center.

Mike Bellamy is an Advisory Board Member & Featured Blogger at the not-for-profit China Sourcing Information Center (www.ChinaSourcingInfo.org). He is also the author of, “The Essential Reference Guide to China Sourcing” (chinasourcinginfo.org/book) and founder of PassageMaker Sourcing Solutions (www.PSSchina.com )

Even before my clients start to source from China, I always advise them to first register their trademark ASAP.  China has a “first-to file” system that requires no evidence of prior use or ownership, leaving registration of ...

[Continue Reading]]]> Rule #1: Register your logo even if you don’t plan to sell in China.

Even before my clients start to source from China, I always advise them to first register their trademark ASAP.  China has a “first-to file” system that requires no evidence of prior use or ownership, leaving registration of popular foreign marks open to third parties.  That means if you don’t register your trademark in China, someone else (like your supplier!) will do it and you are not allowed to use the IP again, unless you buy them back.

Written for CSIC by Sophie Mao

China based lawyer at www.Chibridge.net

No matter how well drafted, after all, NDA is a piece paper and can’t enforce itself.  So do not expect too much ...

[Continue Reading]]]> I was recently asked by a client if I thought a NDA (non disclosure agreement) with their supplier would protect their intellectual property in China. Here is my response.

No matter how well drafted, after all, NDA is a piece paper and can’t enforce itself.  So do not expect too much protection from NDA.  However, I still think NDA is necessary if any IP is involved. Beyond the obvious desire to state directly that IP infringement is forbidden, and thus letting the supplier know you are serious about IP, an NDA is a good tool to protect yourself if the following item is included in your NDA.

The NDA should specify the legal consequence of breaching the agreement. In other words, as long as the penalty is reasonable, liquidated damages provisions are enforceable in Chinese court and it will save you lot of trouble as it is hard to prove how much loss you have suffered when the IP is breached. So a pre-agreed remedy makes it easier for the judge to give a ruling in your favor.

Written for CSIC by Sophie Mao

China based lawyer at www.Chibridge.net

ANSWER:

There are two sides to your question. One aspect is about how to Import into ...

[Continue Reading]]]> I want to import used laptops from China, and I’d like to know how many pieces I can bring in at one time. I am a reseller of used laptops in India. Thanks and best regards.

ANSWER:

There are two sides to your question. One aspect is about how to Import into India and the other is how to find sources in China of used laptops.

1. I afraid that the China Sourcing Information Center doesn’t have information about the rules and regulations of the Indian government for these products, but I suspect that if you contact a freight forwarder in India who is well versed in these products, I am sure they could answer your question about the Indian laws. For your reference, here is a link to an article I wrote about how to find a good logistics partner to help you with the importation: Qualifying 3rd Party Logistics (3PLs).  You may also want to contact the service desk of an Indian airline as they may know as well.
2. Now let’s take a look at the sourcing side of your question.  I know there are Indian buyers who make a living bringing small quantities of laptops and other electronics from China into India. BUT, they tend to fly to China on a buying trip and bring the goods back to India as part of their luggage (perhaps to avoid paying import duties).  It is very hard to buy online in China a used computer, without inspecting the goods first in person, because generally the suppliers are going to ask for full payment in advance and if something goes wrong, you the buyer don’t have much leverage. That is why going to China in person to buy your used equipment appears to be the popular mode of operations for small Indian buyers.  BTW, if you are going to make the trip, go to HK rather than mainland China because there is less tax on electronics there and you will most likely find better products and more reliable quality.   Don’t rule out Dubai either. Every time I am in that airport I am amazed at the number of computers and even large flat screen TV’s heading to India as luggage. It makes sense because places like HK and Dubai have low tax on these items and are just a short flight away.

Wishing you successful China sourcing!

Question answered by Mike Bellamy, host of “Ask the Experts” at the China Sourcing Information Center.

Mike Bellamy is an Advisory Board Member & Featured Blogger at the not-for-profit China Sourcing Information Center (www.ChinaSourcingInfo.org). He is also the author of, “The Essential Reference Guide to China Sourcing” (chinasourcinginfo.org/book) and founder of PassageMaker Sourcing Solutions (www.PSSchina.com )

ANSWER:

I am sorry to hear of your problems but I thank you for writing.

Could you give me the ...

[Continue Reading]]]> Shenzhen Corporate Factory Industrial Xingye Co LTD has stolen from me. They took my money but didn’t supply the product. I would like to know if you can help.

ANSWER:

I am sorry to hear of your problems but I thank you for writing.

Could you give me the web address of this company so that I could list it on my blacklist of under-performing suppliers and help other buyers avoid this company?

Unfortunately, the situation you describe is not uncommon- factory ships low quality goods, then disappears rather than deal with the problem.  The good news is that you have options, even if you are on the other side of the world.  I would like to direct you to two recent articles on have written which explain your legal and strategic options to get your money back.

1. Resolving a dispute: Demand letters and legal options

2. “They took the money and ran!”

After you have read the two articles, if you would like to be introduced to an English speaking Lawyer in China, I would be happy to make an introduction to the lawyer who has helped me in similar situations.

I have also included my co-worker Mr. Whit Kelly at PassageMaker in on this conversation. He has been in similar situations as you describe above and if you need support to find a better supplier on your next order, please keep Whit in mind.

Please let me know how this situation works out for you.

Wishing you successful China sourcing!

Question answered by Mike Bellamy, host of “Ask the Experts” at the China Sourcing Information Center.

Mike Bellamy is an Advisory Board Member & Featured Blogger at the not-for-profit China Sourcing Information Center (www.ChinaSourcingInfo.org). He is also the author of, “The Essential Reference Guide to China Sourcing” (chinasourcinginfo.org/book) and founder of PassageMaker Sourcing Solutions (www.PSSchina.com )

NICHT ERST SEIT EINE REIHE CHINESICHER FIRMEN NACH BÖRSENGANG IM AUSLAND FINANZIELLE AUFFÄLLIGKEITEN BEIM JAHRESABSCHLUSS AUFWEISEN, STEHT BUCHHALTUNG FÜR UNTERNEHMEN, DIE SICH IN CHINA ENGAGIEREN STARK IM BLICKPUNKT. DIE FINANZEXPERTEN CHRISTINA FUNG (CHF) UND JEANETTE JI (JJ) VON FIDUCIA BESCHREIBEN, WORAUF ES ANKOMMT.

CF: Was gehört ...

[Continue Reading]]]> Christina Fung | Fiducia Management Consultants

NICHT ERST SEIT EINE REIHE CHINESICHER FIRMEN NACH BÖRSENGANG IM AUSLAND FINANZIELLE AUFFÄLLIGKEITEN BEIM JAHRESABSCHLUSS AUFWEISEN, STEHT BUCHHALTUNG FÜR UNTERNEHMEN, DIE SICH IN CHINA ENGAGIEREN STARK IM BLICKPUNKT. DIE FINANZEXPERTEN CHRISTINA FUNG (CHF) UND JEANETTE JI (JJ) VON FIDUCIA BESCHREIBEN, WORAUF ES ANKOMMT.

CF: Was gehört zu den größten Herausforderungen bei der Buchhaltung in China?

CHF: Da gibt es eine ganze Reihe, aber sicherlich ist es besonders schwierig mit den häufi gen Änderungen der Bilanzierungsund Durchführungsbestimmungen Schritt zu halten. Da die Behörden alte Standards modernisieren und neue Regeln einführen, müssen Unternehmen sicherstellen, dass sowohl das Buchhaltungspersonal als auch das Management ein umfassendes Verständnis und regelmäßige Updates bekommen.

CF: Was sind die Besonderheiten der chinesischen Buchhaltung?

CHF: Die Unternehmen müssen eine monatliche Steuererklärung abgeben und natürlich muss die Buchführung entsprechend dieser Frist vorbereitet sein. Verglichen mit Hongkong, wo Unternehmen ihren Abschluss nur einmal jährlich vorlegen müssen, ist das natürlich ein grosser Aufwand. Zudem ist der Prüfungsumfang in China grösser als in Hongkong und sich als Neuinvestor in Chinas bürokratischem Labyrith zurecht zu fi nden, ist eine Herausforderung für sich. Für die sogenannte annual consolidated inspection müssen Unternehmen bei bis zu sieben Behördenstellen Dokumente einreichen.

CF: Chinesische Unternehmen sind bei ihren Finanzdaten häufi g nicht sehr transparent, was Fälle wie u.a. Sino-Forest bewiesen haben. Wie können Sie sicherstellen, wertvolle und verlässliche Informationen zu bekommen?

JJ: Zwei Dinge sind entscheidend: Einerseits gibt es gesetzliche Meldepfl ichten, die regulieren, welche Informationen wie oft und an welche Behörde übermittelt werden müssen. Auf der anderen Seite steht die Qualität der publizierten Daten und die Frage, ob die Daten in verlässlicher Weise die fi nanzielle Situation des Unternehmens widerspiegeln. Es wäre sicherlich falsch zu sagen, dass es allen chinesische Unternehmen grundsätzlich an Transparenz und entsprechender Reportingqualität fehlt.

CHF: Allerdings treffen wir bei unseren Financial Due Diligence Untersuchungen sehr häufi g auf Ungereimtheiten, beispielsweise, wenn wir die Bücher eines potenziellen Übernahmekandidaten für unsere Mandanten prüfen. Ein typischer Fall ist, dass chinesische Unternehmen über zwei oder mehrere Bücher verfügen. Die externe Buchhaltung ist optimiert für das Steuer-Reporting, während die interne Buchhaltung, die viel eher die tatsächlichen Zahlen zeigt, dem Management oder Eigentümern vorbehalten ist. In solchen Fällen ist es wichtig, ein Projekt mit den richtigen Prozessen gepaart mit entsprechender Erfahrung anzugehen.

CF: Was gehört zu einer Prüfung?

JJ: Wir gehen eine lange Liste zu untersuchender Bereiche durch, einschließlich Bilanzen, GuV und Bank- und Kreditkartenabrechnungen oder Kreditverträge, um nur einige der Problemfelder zu nennen. Wir sehen uns auch Verträge mit Lieferanten und Kunden an, um zu prüfen, ob die aufgeführten Preise wirklich deckungsgleich sind mit dem, was bezahlt oder empfangen wurde.

Die zentrale Herausforderung ist es, Zugang zu allen relevanten Daten zu erhalten und diese mit einem strukturierten Ansatz zu analysieren. Manchmal ist es fast wie Detektivarbeit: Wir versuchen, Zusammenhänge zu erkennen und suchen nach auffälligen Mustern in den Daten. Der Erfolg und Massstab liegt für uns letztlich  darin, dass wir ein klares Bild der fi nanziellen Situation und Risiken aufzeigen und damit zu einer fundierten unternehmerischen Entscheidungsfindung beitragen.

Все больше и больше компаний в мире смотрят в сторону постоянно растущей экономики Китая, но  смогут ли они совладать с корпоративным миром Китая? Эта статья ― попытка дать вам некоторое понимание легальных аспектов такого соприкосновения.

Компания из Дубай (“Dubai Co.”) нашла через интернет-каталог производителе торговую компанию, ...

[Continue Reading]]]> Lynn Li | JunZeJun Law Offices

Все больше и больше компаний в мире смотрят в сторону постоянно растущей экономики Китая, но  смогут ли они совладать с корпоративным миром Китая? Эта статья ― попытка дать вам некоторое понимание легальных аспектов такого соприкосновения.

Компания из Дубай (“Dubai Co.”) нашла через интернет-каталог производителе торговую компанию, имевшей адрес в Шэньчжэнь, Китай (“Shenzhen Co.”) и намеревалась купить у Shenzhen Co. оптом товар. Перед тем, как разместить заказ  представители компании Dubai Co. просмотрели веб-сайт компании Shenzhen Co., посетили их офис вживую, сделали фотографии их приемной для отчета. В последствии обе стороны вошли в стадию ЗП (заказ на покупку или PO по-анлийски), на котором представитель компании Shenzhen Co. поставил свою подпись. После размещения заказа компания Shenzhen Co. Отправила несколько образцов в соответствии с ЗП, и образцы прошли проверку в компании Dubai Co. Затем компания Dubai Co. Отправила деньги компании  Shenzhen Co. на их счет в банке HSBC (Hongkong and Shanghai Banking Corporation) в Гонконге. До отправки товара компания Dubai Co. сделала полную предоплату за товар, однако, по получении его, Dubai Co. обнаружила бракованную продукцию. Компания  Dubai Co. много раз, но безрезультатно, пыталась уладить этот момент с компанией Shenzhen Co. и поэтому им пришлось обратиться к юристу.

Что обнаружил юрист:

Юрист просмотрел ЗП, фотографии, веб-сайт и другие материалы предоставленные Dubai Co., провел поиск на сайте местных властей и проверку на месте. Было обнаружено, что так называемая Shenzhen Co. не была легально зарегистрирована в Шэньчжэнь, а ее офис был арендован только для временного использования, но так и не был использован и был пуст. По счету в банке HSBC компании Shenzhen Co. юрист предположил, что должно быть эта компания зарегистрирована в Гонконге. В соответствии с законодательством Гонконгская компания не является Китайской компанией, и следовательно должна рассматриваться в качестве “иностранной компании”. Китайский юрист не обладает правом подачи иска в Гонконге, и это бессмысленно: подача иска против иностранной компании, не имеющей адреса или какой-либо собственности на территории Китая. У компании Dubai Co. было только несколько вариантов:

Нанять юриста из Гонконга для подачи иска против упомянутой Гонконгской компании в Гонконге. Гонконгский юрист мог бы найти адрес и информацию о директорах упомянутой компании через офис Регистраций Компаний в Гонконге. Однако, благодаря тому, что компанию в Гонконге очень легко зарегистрировать, и часто у Гонконгской компании нет никаких активов, подача иска приведет, вероятнее всего, к пустой растрате денег.

Заявить в Гонконгскую или Китайскую полицию о подозреваемом мошенничестве. Но так как преступник расположен в Гонконге, место, где произошло преступление, – Китай, а само место, где было обнаружено мошенничество – Дубай (где товар проходил контроль и был обнаружен брак) – все эти три места расположены в трех разных странах и юрисдикциях. В данном случае трудно разрешить случай и проводить преследование, и обычно полиция не будет тратить так много сил на такого рода случаи.

Нанять частное детективное агентство, для решения данного случая своими способами. Этот путь становится более известным среди людей, благодаря недавнему  росту бизнеса частных детективных агентств в Китае. Сам частный детективный бизнес в Китае находится в серой зоне закона, а цены достаточно высоки.

Советы:

Чтобы не стать жертвой в подобных ситуациях, необходимо изучить и проверить подлинность Китайской компании или так называемой Китайской компании до того, как начинать взаимоотношения.

В Китае все компании должны быть зарегистрированы правительством и иметь соответствующие сертификаты и документы, лицензии еще до того, как им разрешат любые легальные операции по бизнесу. Прежде чем делать ЗП с китайской компанией, сперва вы должны запросить копии их лицензий, которые должны быть на Китайском и иметь название компании на Китайком, и имена/названия их легальных представителей. В Китае требуется только чтобы фирма регистрировала Китайское название компании, и не требуется никаких названий на Английском. Поэтому, если дело дойдет до суда, то имея только английское название нельзя будет однозначно идентифицировать компанию. В следствии этого очень важно иметь китайское название компании и, если позволяют обстоятельства, иностранная торговая компания, может поручить китайскому юристу провести расследование подлинности лицензии и надежности китайской компании на основании информации в их лицензии (стоимость услуги примерно от $500 до $1,000 США).

В Китае велика важность печати, такой важности печати не придается ни в одной другой стране. Печать компании должна быть зарегистрирована в комитете публичной безопасности. Документ, на котором стоит оттиск печати, считается легальным документом одобренным компанией, в соответствии с которым компания несет ответственность по закону без необходимости в доказательстве каких либо еще улик. В Китае подпись не имеет большой силы, и иногда подпись директора или даже законного представителя компании, необязательно будет иметь законную силу без оттиска печати компании. Поэтому вам надо удостовериться, что контракт или ЗП имеет китайское название компании и английское, и в тоже время на контракте или ЗП должен быть оттиск печати вместе с подписью представителя.

В Китае существует два типа печатей: внутренняя печать компании в Китае это круг, в котором содержится название компании на Китайском и пятиконечная звезда; у иностранной китайской компании имеется овальная печать, в которой содержится имя компании (в некоторых случаях еще и на Английском), но без каких либо пятиконечных звездочек.

В Гонконге компания из Китая не может открывать счета в каком либо из банков Гонконга. Поэтому, если вы обнаружите, что в контракте или в ЗП китайской компанией указан счет в банке HSBC в Гонконге для целей  получения платежей, в то время как ее адрес на территории Китая, то в большинстве таких случаем компания является гонконгской, а не китайской (пожалуйста, обратите внимание, на то, что некоторые инвесторы могут организовывать гонконгские и китайские компании, используя одно и тоже название на Английском. Несмотря на одно и тоже название это разные компании). В таком случае как этот, вы должны настоять на получении китайского названия и бизнес-лицензии китайской компании, и удостовериться, что на документах (контракте/ЗП) стоит печать китайской компании, и что китайское название компании на печати, и указанное в документах, – одинаковы. Если вышесказанное в наличии, то Гонконгская компания будет выступать только в роли стороны принимающей оплату по поручению китайской компании, а все контрактные обязательства ложаться на китайскую компанию, и если возникнут притензии, то вы сможете подать в суд на китайскую компанию в Китае.

I have been to Chinese factories a few times for solving problems. In one case, the factory pretended the goods really couldn’t be made as intended by the importer (that was true). In another case, the QC inspector found many defective goods that seemed to ...

[Continue Reading]]]> Renaud Anjoran | Asia Quality Focus

I have been to Chinese factories a few times for solving problems. In one case, the factory pretended the goods really couldn’t be made as intended by the importer (that was true). In another case, the QC inspector found many defective goods that seemed to come from the same issue, production was still running, and the manufacturer was incapable of finding a solution.

I recently read about the steps usually followed in the Toyota group for solving a problem, and I think it is a very valuable approach. Make sure you come back to this page when you have some on-the-ground troubleshooting to do!

1. Identify the problem

What is causing a problem? How bad is it? What are the consequences (delays, scrap, poor quality…)?

The problem is certainly hurting the manufacturer financially in one way or another. Remind them about it, to get some buy-in on their side. You’ll need their patience as you go through the next steps.

2. Clarify the problem

Go on site and see what happens:

• First, make sure you know what should be happening if all were running fine
• Second, see what is actually happening, and identify what goes wrong
• Look for the point of cause, and observe it

It is important to be disciplined and to follow this process. Looking for the point of cause (i.e. where things go wrong and cause the problem) can take hours, but it s time well spent.

3. Investigate causes

• What is the direct cause of the problem?
• Launch a 5-why investigation, until you get to a cause that, if addressed, will prevent recurrence of the problem.

Spend time until you full understand what is going on. Get the factory technicians’ suggestions, but only after you have observed the process first hand.

Again, most of the factory’s employees will try to come up with solutions, and will be tempted to skip this step. It is a mistake. Solutions are obvious if you are very familiar with a problem, so spend time to understand the situation first.

4. Test countermeasures

• Address the root cause, by changing only one factor at a time (to keep cause & effect relationships clear)
• Test new approaches until the problem stops

This is the time to implement solutions and to test them. Again, if you have followed the first 3 steps meticulously, this should be easy and obvious.

5. Follow up

• Confirm the problem is solved for good
• Make the countermeasure part of the standard operating procedure

If the manufacturer is not well organized, chances are that you will have to train the operators (not just in the day shift!) to do their job correctly. Troubleshooting is done, but is never really over in China…

Here are my questions:

ANSWER:

Let’s ...

[Continue Reading]]]> Could you please confirm if VAT applies to tooling and tooling modifications for customer owned tools that are purchased from & located at a supplier in China? These tools are used to manufacture plastic components that are shipped to our facility in the USA and used for further production purposes.

ANSWER:

Let’s assume you are dealing with a tool and die shop or a factory that
“opens the molds” in house rather than outsourcing to another company.
According to China tax law, the seller should be paying VAT to their sub
suppliers (tool house buys raw metal for die for example, then adds labor to
finish the die and sells to you as the buyer) and the taxes paid are built
into price at which the tool and die maker sells you the tooling. So in this
case there should not be some kind of invoice for “Tooling Cost + X % VAT”
for the tooling and/or tooling modifications.
However, if your supplier is outsourcing the tooling to 3rd party and
passing on the bill to you, then VAT
does apply and the supplier may even present you with a bill for “tooling
cost + X % VAT = total amount due.”
However, the VAT system is long on loop holes and short on transparency.
More often than not, the suppliers are using confusion over VAT as a smoke
screen to inflate costs.
Here are just a few examples.
1. Supplier charges you a “cost plus VAT” but never pays the VAT to
the taxman and keeps it in supplier’s pocket. Ask your supplier if they can
provide official receipts (“fapiao”) if they ask you to pay the VAT. And
get ready for some slick moves as they dance all around and never really
explain why they can’t give you a fapiao.
Unfortunately, as items 2 and 3 below explain, even if you get the receipts,
it doesn’t mean you have transparency into pricing and taxes.
2. Supplier says “I don’t make any profit on the tooling, I pass on
all costs to you with no mark up.” Sounds fair enough, UNLESS you understand
that the supplier may be taking the “VAT tax paid receipts” and submitting
them to the local government to get a rebate or tax refund at a later date.
Kind of like when the car dealer sells you “at cost” but there are a bunch
of hidden kickbacks from the factory to the car dealer that are not laid out
on the table.
3. It is not uncommon for collusion to take place been the supplier
and sub suppliers. Your seller says that he paid X RMB to sub supplier for
raw materials and simply asks that you cover his costs and is willing to
show receipts. Sounds fair enough, UNLESS you understand that what is
written on the receipt from the sub-supplier is not always what the supplier
actual paid to the sub. For example, if the true cost for the tooling from
the sub supplier to your supplier was 100. The sub and supplier would both
make money if the supplier told the sub to write up an invoice for 300, 1000
or 10,000 but payment to sub supplier would be for only 120 to cover taxes
on the big number + the 100 + a “little something for the effort.” Everybody
wins except the buyer. Even the taxman gets paid. Yes, official receipts
with taxes paid can be purchased independent.
Bottom line
Chinese factories often run three sets of books. One for the boss (what is
the real profit), one for the tax man (keep tax exposure low) and one set for
operations team (what needs to be made by when). So suppliers have become
very creative accountants and as foreign buyers we would be naive to think
that with a bit of understand about how the tax system works, we can out
maneuver our suppliers and benefit by what appears to be a win-win
situation. (“Win Win is a panda in Sichuan” I like to say.)
Factory bosses run circles around the Chinese taxman, confusing a foreign
buyer with some VAT smoke and mirrors is like taking candy from a baby.
The only way to win this game is to not play the game. While we can’t out
negotiate our suppliers, we can certainly out research them. Even when I am
buying tooling, I get a bunch of reference quotes and use this to negotiate
what is a fair “all in final price” for a given set of tools.
Sorry for the long answer, but it takes a bit of explanation to open the
bamboo curtain for you. If you need support with research to find the going
price of a set of tools in China and/or have somebody take a closer look at
your VAT planning, just let me know, I would be happy to introduce my
colleagues over at PassageMaker who specialize in these areas.
BTW, since you own tooling in China, check out the “tool and die steward” at
this link if you have not done so already. Could save you a bunch of
money and headaches down the road.
Thanks again for your questions!

Wishing you successful China sourcing!

Question answered by Mike Bellamy, host of “Ask the Experts” at the China Sourcing Information Center.

Mike Bellamy is an Advisory Board Member & Featured Blogger at the not-for-profit China Sourcing Information Center (www.ChinaSourcingInfo.org). He is also the author of, “The Essential Reference Guide to China Sourcing” (chinasourcinginfo.org/book) and founder of PassageMaker Sourcing Solutions (www.PSSchina.com)

ANSWER:

Cool product! Let me know if it works well. I’d like to get ...

[Continue Reading]]]> Can you advise me on how to figure value added tax from China?  Purchasing one electronic item (iRobot) listed as $78.36 US.  Is there some sort of formula I can use?  The supplier arranged delivery to my door.

ANSWER:

Cool product! Let me know if it works well. I’d like to get one too.

Since freight it paid by the seller, this most likely means that you are taking title to the goods after the goods have left China. That means the supplier, rather than you,  is responsible for getting the China VAT paid and collecting any potential VAT rebate upon exportation. In other words, the supplier has most likely built the VAT into the cost and you need not worry about VAT.

BTW, just as a head’s up, I was under the impression that IRobot could only be purchased from an IRobot designated distributor rather than factory direct from China. There are a lot of scams out there offering to sell famous brands, direct from China factory.  I don’t know the details of your case, but you may find of interest the following blog post I wrote about this kind of China scam at http://chinasourcinginfo.org/2011/08/22/genuine-products-from-china/

I am very concerned you are falling into a scam because I saw the product you wanted to buy on sale at a local electronics store here in Shenzhen and the price was 50% higher than if it was purchased back in the USA at retail level. So if you are buying one unit and the price to you is so low, I fear it is too good to be true.

Let me know how this order works out for you.

Wishing you successful China sourcing!

Question answered by Mike Bellamy, host of “Ask the Experts” at the China Sourcing Information Center.

Mike Bellamy is an Advisory Board Member & Featured Blogger at the not-for-profit China Sourcing Information Center (www.ChinaSourcingInfo.org). He is also the author of, “The Essential Reference Guide to China Sourcing” (chinasourcinginfo.org/book) and founder of PassageMaker Sourcing Solutions (www.PSSchina.com)

Когда меня спрашивают каковы ключевые элементы, на которые нужно обратить внимание, начиная новый проект по производству для обеспечения качества в ходе всего проекта, после начала производства, то я всегда упоминаю три критических фактора успеха/неудачи:

Проведите аудит качества у того производителя, с которым вы ...

[Continue Reading]]]> Помогая сэкономить ваше время и деньги до начала производства

Когда меня спрашивают каковы ключевые элементы, на которые нужно обратить внимание, начиная новый проект по производству для обеспечения качества в ходе всего проекта, после начала производства, то я всегда упоминаю три критических фактора успеха/неудачи:

Проведите аудит качества у того производителя, с которым вы думаете работать, чтобы посмотреть может ли он в принципе обеспечить качество нужное вам.

Проверьте, чтобы ваша спецификация была полной и надлежащим образом оформлена, чтобы производитель точно знал, чего вы хотите от них, что производить для вас.

Спецификация должна быть составлена в соответствии со стандартами вашего рынка.

В этой статье я хотел бы сфокусироваться на вариантах создания спецификации, чтобы ваши производители точно знали, чего вы хотите. Процесс по созданию спецификации иногда называется “Design for Manufacture” (DFM – дизайн для производства). DFM обеспечивает проверку правильности идеи/концепта, наличие правильных материалов и процессов производства, чтобы обеспечить не только качество, но также и планируемую цену и выдержать сроки производства. DFM является критическим шагом в процессе производства в случаях, если ваш продукт имеет особенности или производитель его никогда не производил в прошлом.

Каковы плюсы нахождения фирм по предоставлению услуг макетирования близко к месту производства в Китае?

Расположение инжиниринговых услуг и снабжения в месте близком к производственной базе доказало свою эффективность, ведущей к значительному сокращению стоимости продукции, особенно если дизайн выполнен до того, как выбраны производители. Найм производителя, который может выполнить работу по хорошо подготовленной технической документации приведет к снижению цен за единицу продукции, в отличии от случая, когда потребуется корректировка дизайна под возможности производителя.

Прототипирование и лабораторное тестирование обычно гораздо дешевле в Китае, чем на Западе.

Расположенные в Китае инженеры лучше поймут доступные технологии производства и материалы. Это обеспечит наивысшую возможную эффективность производства.

Дизайн на местах снижает стоимость за счет уменьшения расходов на посещение фабрик для коррекций/тестирований и улучшает общение.

Если вы делаете что-то новое или  адаптированное под вас — перекладывание процесса дизайна на Китайского производителя не лучший вариант.

Почему бы не дать самому производителю сделать работу по дизайну?

К сожалению, делая что-либо новое или адаптированное идея передача работ по дизайну Китайскому производителю – не лучший вариант, по следующим причинам:

Вопросы Интеллектуальной Собственности. Неразглашение/Соглашение о Недопущении Конкурентных Действий трудно держать под контролем и добиваться их исполнения от Китайских компаний. Даже если вы заплатите производителю за работы по дизайну, у них будет ощущение собственности. Это очень опасно, если вы решите сменить производителя или прибегните к одностороннему прекращению производства. Некоторые производителя даже попытаются снизить свои расходы за работы по дизайну, предложив ваш товар другим своим клиентам, которые могут быть вашими конкурентами.

Предвзятый Дизайн. Производитель будет стараться сделать дизайн с точки зрения наибольшей выгоды для себя, а не для вас. Это означает дизайн в соответствии с Китайскими стандартами, а не Европейскими. Технически все будет подогнано под методы производства той конкретной фабрики, что может быть, а может и не быть наиболее оптимальным для данного дизайна, его эффективного производства с использованием наиболее современных доступных в Китае технологий на территории страны. Ко всему прочему дизайн может быть расчитан на минимальный объем заказа (Minimum Order Quantity — MOQ), которое желательно для фабрики,  а не под тот объем, который желателен для клиента.

Каковы мои варианты найма фирмы для производственного дизайна (DFM)?

Если вы попали в ситауцию, когда вы не хотите доверять эту работу Китайскому производителю из-за вышеперечисленных причин, то и в этом случае для вас есть выход — нанять фирму в Китае, но принадлежащей Западному владельцу.  Это означает, что цена на данную работу будет немного больше, чем взяла бы местная Китайская фирма, но даже в этом случае цена будет значительно ниже, чем та, которая у вас дома. Плюс еще они могут ограничить максимальную сумму своего гонорара и, в идеале, у них есть политика отказа в получении любых компенсаций от производителей. Потому что последние чего бы вы хотели — чтобы вас незаметно подвели к заранее согласованному методу производства или месту, где они получают откаты. Давайте оценим и другие возможности.

В Индии цены немного ниже на услуги по CAD/дизайну, чем в Китае, но если производство будет в Китае, то они, возможно, не смогут пакет документации для DFM подогнать для Китая в сточки зрения правильных материалов и методов производства. Экономия полученная от хорошо сориентированного на Китай производственного дизайна (DFM) легко перевесит экономию на Индийском инженерном труде.

Не только в Северной Америке/Европе/Австралии инженерный труд гораздо дороже, чем в Китае, но также существуют общие недочеты:

Западный метод использует больше автоматизации из-за дороговизны труда, в то время как в Китае больше гибкости благодаря более низким ценам на труд. Западная фирма может не иметь полного понимания реалий производства в Китае. Как результат вы можете переплатить за оборудование и пресс-формы, которые не так эффективны на Китайской производственной линии.

Западные инженерные фирмы работат как адвокатские фирмы в том, что они берут с вас за почасовую работу, иногда и по плавающим тарифам за отработанные часы. Также они используют младших сотрудников, не офиширую этого, чтобы те выполняли как можно больше работы и таким образом максимизируют прибыль.

Самое наихудшее в этом, что Западные инженерные фирмы считают свою работу выполненной, когда дизайн уже закончен, в противовес компаниям на Китайской территории, которые помимо приготовления дизайна включают еще и работу по пробным пускам оборудования и даже поиску и устранению проблем в  производственном процессе.

Из-за того, что инженерный труд так дорог на Западе многие фирмы в США и Европе выставляют заниженную цену в обмен на получение процента или авторского гонорара, когда начнется производство. Это очень опасно, так как если инженерная фирма связана с производителем, то они создают дизайн для своей выгоды, а не клиента. Плюс ко всему это часто встречающаяся практика выставлять заниженные цены, чтобы позже их поднять, когда клиент уже на крючке инженерной фирмы/партнера-производителя.

Одно из неудобств найма расположенной в Китае, Западной фирмы в том, что трудно организовать личную встречу из-за разницы во временных зонах. Если вы обратитесь к такой фирме, то убедитесь в наличии у них хорошей истории обслуживания клиентов, так как вам потребуется хороший коммуникатор, если уж вы решили разместить заказ на DFM в другой части мира. В завершение еще несколько советов для нахождения партнера по DFM и различным инженерным нуждам:

Посетите он-лайн Информационный Центр, где есть список одобренных фирм расположенных в Китае, которым можно доверять, как, например, Venture Tech (www.VentureTech. info). Или проведите поиск по фразам  “Engineering” + “DFM” + “China”. Это скорее всего даст вам большой список для начала.

Следующий шаг — связаться с фирмой и посмотреть, подходит ли она вам. Мне нравится, когда фирма имеет как минимум 5-ти летний опыт в DFM в Китае.

Являются ли они легальной компанией с надлежащими лицензиями?

Имеется ли у них успешная история выполнения заказов? Если они не могут предоставить вам ссылки на клиентов — бегите. Это очень большой красный флаг.

Как только вы сузили круг проспектов до горстки претендентов, основываясь на первоначальных переговорах и референсах (прежн. Клиентах), запросите оценочную стоимость работ по DFM. Великолепную компанию от хороших отделяет время и формат их коммерческого предложения.

Сфокусированы ли они на наборе конкретных услуг или же они делают все подряд для всех?

Как только вы сузили круг проспектов до горстки претендентов, основываясь на первоначальных переговорах и референсах (прежн. Клиентах), запросите оценочную стоимость работ по DFM. Великолепную компанию от хороших отделяет время и формат их коммерческого предложения. Если на составления коммерческого предложения у них уходит более нескольких дней, то скорее всего у них нет хорошо отработанной системы. Попытайтесь избежать ситуации, когда дизайн вашего изделия станет первой пробной попыткой инженерной компании делать DFM для Китая.

Я люблю платить инженерным фирмам поэтапно: оплачивать за сделанную работу и только тогда, когда согласованные стадии/результаты достигнуты, а не разом за всю работу.

Не бойтесь задавать вопросы! Лучше задать их сначала, чтобы позже не получать сюрпризов – неожиданных счетов.

ANSWER:

While I have purchased entire production lines and large amounts of raw materials in various products, unfortunately, I don’t personally have experience with ...

[Continue Reading]]]> I want to manufacture MicroSD cards in my home country. Please give me the information about where we can purchase the manufacturing machines & raw materials in China.

ANSWER:

While I have purchased entire production lines and large amounts of raw materials in various products, unfortunately, I don’t personally have experience with the equipment used to build your particular product- MicroSD cards.

However, I looked at www.GlobalSources.com and believe there are many suppliers of microSD cards are fair prices. But if you must manufacture the card in your home country, then I would like to offer you some options:

1. Make a list of the equipment needed and raw materials then search those items one by one. If you need support from agents to manage this RFQ process for you, you can find a list of sourcing service providers at http://chinasourcinginfo.org/endorsed-service-providers/
2. Contact a supplier in China and offer to buy their entire production line. This sounds like a one stop shop and if their business is not doing so well, they may be happy to sell you the entire line.  If their business is strong, perhaps you could pay them a consulting fee to help you set up your production line or at least tell you the steps involved. But they may not be willing to help if they view you as competition.
3. The last option I can think of would be to hire a 3^rd party consultant.  This person would be an expert in MicroSD cards and could help you list the equipment you need as well as offer suggestions on how to set up the line in your home country.

Wishing you successful China sourcing!

Question answered by Mike Bellamy, host of “Ask the Experts” at the China Sourcing Information Center.

Mike Bellamy is an Advisory Board Member & Featured Blogger at the not-for-profit China Sourcing Information Center (www.ChinaSourcingInfo.org). He is also the author of, “The Essential Reference Guide to China Sourcing” (chinasourcinginfo.org/book) and founder of PassageMaker Sourcing Solutions (www.PSSchina.com )

ANSWER:

First off, congratulations on your new ...

[Continue Reading]]]> Hello – we are starting up a new business venture around toy action figures. We are looking for a manufacturer and are considering China. How do we narrow down the best candidates? Are there local intermediaries who can work on our behalf with the manufacturer?

ANSWER:

First off, congratulations on your new business.

As you are dealing with toys, you know by now that the standards for quality and safety are substantial. So before we get to the heart of your question, I would like to take the opportunity to remind you that as the importer of record, despite what the factory in China may say, you are the party responsible for making sure your imports conform to your country’s standards.  And you’ll be the party the lawyers go after if anything goes wrong. I highly recommend working with testing labs that are up to date with latest standards and compliance issues.  If you need to get in touch with some labs, I would be happy to make an introduction to the labs I use for toys and children’s products.

Now back to your main questions.

1. How to narrow down this massive list of potential suppliers down to the right one single supplier.
2. Are there intermediaries who can help.

Let’s answer #2 first as that is easy to answer. Yes, there are plenty of intermediaries in China.  Some are professional, a lot are poorly run (not so different from the headaches of finding factories).  I’d love for you to consider PassageMaker ( www.PSSchina.com ) which is the sourcing services firm I founded over 10 years ago. But in the interest of giving you options, here are some tips from my book “The Essential Reference Guide to China Sourcing” (chinasourcinginfo.org/book/) about how to select the right agent:

Are they a legitimate company with proper business licensing?

Do they have a clear track record of performance? If they can’t give you some client references, run away. That is a very big red flag.

Do they have their own infrastructure or do they leverage another company’s staff, skills sets, office space, licensing..

Are they focused on a certain set of services or do they try to everything for everybody? Yes, even the 3rd party service providers have been known to outsource to others just like some factories outsource production without telling the buyer.

Is their pricing structure and service agreement well defined and transparent? It is a major pitfall to do business with a 3rd Party service provider without a clear contract in place that outlines the service, costs, time frame and other desired attributes of the partnership.

No code of Ethics

I would like to add that you need to be very concerned about the “double dip.” It is not uncommon for agents engaged in China sourcing to charge the client a commission only to also have a hidden payment from the supplier behind the scenes. The result is that the agent works for the supplier when you think they are working for you.

Now let’s answer your other question about how to find a supplier.

Here is a behind the scenes look at how the research to find a factory direct relationship can be conducted.

The single most important factor in determining the success or failure of your sourcing program will be finding the right supplier. It sounds obvious, but making apples-to-apples comparisons of vendors at a national level can be daunting.

Step One “Defining”

The “right supplier” is unique to each buyer. Force yourself to list all the desired attributes and rank them. Beyond the holy trinity of price/quality/leadtime also think of attributes like location (do they need to be near a certain port or in area where you have other vendors), Capacity, Service Attitude, Language, Intellectual Property, Ownership, Equipment, Export Experience and so on.

Step Two “Measuring”

Initial research generates a list of 50-100 potential suppliers using web directories like www.GlobalSources.com (focus on their verified suppliers) and industry/trade show directories.

1.         Assume the vendor is a middleman until proven otherwise, not the other way around.

2.         Avoid factories that refuse to list the name or location of the production facility- they probably don’t own the PRC factory and are a middleman of some sort.

3.         Focus on those factories that can clearly show production experience with your particular product or production method.

4.         Be aware that polished English skills do not reflect production skills. Often the most polished websites are set up by trading companies.

Review the 50-100 candidates’ websites and brochures against client’s desired attribute list (but hold of on price until later) and narrow the field down to 15 to 20 candidates. At this point, “first contact” is initiated in the follow ways:

1. Send an e-mail to ask for a quote.
2. Are samples available? If they don’t have samples readily available, they probably don’t deal in your product on a regular basis.
3. Granted the sales team will be the most polished in terms of English skills, but how is their understanding of your basic requests? If you ask for information on a red umbrella and get sent a sample of a blue shoe, you are going to have problems with communication down the road!
4. Confirm the actual production location and ask for ownership papers of the factory. Be explicit that the production location may be audited and that this location cannot be changed w/out approval of buyer. (You would be surprised at the number of middlemen who will take the buyer on a visit of a factory only to change the location to a less expensive and poorer quality option after the buyer leaves)

The above research should narrow the field down to about 5 highly qualified candidates. At this stage, Quality Auditors (www.AsiaQualityFocus.com for example) are engaged for a few hundred USA to verify the factory has a sufficient quality control system in place to make the desired product.  It is also wise to conduct due diligence (www.CBIconsulting.com.cn is a CSIC sponsor and leader in this field) to confirm the factory has a good reputation, no legal problems and is sound financially. In other words, verify they are not going to disappear with your deposit and will be around long enough to complete your order!

Due to the massive number of trading companies and aggressive China sales staff who will say almost anything to get your business, visiting the production line in form of an audit is the only way to confirm the real situation.

Based on the results of the factory visits, the next phase is sampling, trial order or even Purchase Order placement with the top vendor or two.

Sorry for the long answer, but you asked about a topic that is very close to my heart and I even wrote a book on these subjects. BTW, if you are interested in the book (“The Essential Reference Guide to China Sourcing” (chinasourcinginfo.org/book/)  know that I am clearing out stock to make room for the next print run and will be giving a deep discount in September.

I hope the concepts above get you pointed in the right direction. Let me know how things work out!

Wishing you successful China sourcing!

Question answered by Mike Bellamy, host of “Ask the Experts” at the China Sourcing Information Center.

Mike Bellamy is an Advisory Board Member & Featured Blogger at the not-for-profit China Sourcing Information Center (www.ChinaSourcingInfo.org). He is also the author of, “The Essential Reference Guide to China Sourcing” (chinasourcinginfo.org/book) and founder of PassageMaker Sourcing Solutions (www.PSSchina.com)

ANSWER:

It appears there are two questions.

Your first question is about where to find Apple products ...

[Continue Reading]]]> How do I buy a new Apple iPhone from China that is compatible with cellular networks in France? Also, where are the best factories and the best prices for household LEDs (220v) and 120v for cars?

ANSWER:

It appears there are two questions.

Your first question is about where to find Apple products in China is often for us these days. Here is the link (http://chinasourcinginfo.org/2011/08/22/genuine-products-from-china/) to the blog post that explains why you won’t be able to find REAL Apple products in China at a price lower than in France. It also explains why you will be a target of scams if you try to buy these products.

The second question is about LED for home and car.  LED is a large classification, if you could specify the specific products you wish to buy, I will do my best to get your pointed in the right direction.

Wishing you successful China sourcing!

Question answered by Mike Bellamy, host of “Ask the Experts” at the China Sourcing Information Center.

Mike Bellamy is an Advisory Board Member & Featured Blogger at the not-for-profit China Sourcing Information Center (www.ChinaSourcingInfo.org). He is also the author of, “The Essential Reference Guide to China Sourcing” (chinasourcinginfo.org/book) and founder of PassageMaker Sourcing Solutions (www.PSSchina.com )

ANSWER:

I don’t know of an online government site (let me know if you find ...

[Continue Reading]]]> Can you confirm or dispel a rumor about China pulling the plug on VAT refund of battery products (namely those exported under headings 8507.1000 or 8517.7030)? Is there some official government site I can get this information?

ANSWER:

I don’t know of an online government site (let me know if you find one), so I for your reference I asked around among licensed customs brokers in China as well as with relevant government offices in Shenzhen.

Here is what I found.

For HS code 8507100000, in the recently two years, the VAT rebate rate is 0%. There were not any recent changes.

For HS code 8517703000, in the most recent two years, VAT rebate rate has been 17% with no recent changes.

Sudden VAT rebate policy changes can be made on short notice with no warnings, but the HS codes you have listed are not officially slated to change in the near future and the people we spoke with at the customs office and VAT office were not aware of any rumors to the contrary.

To be safe, are you buying FOB rather than ExW? And how are your payment terms?  A change in VAT policy would have big ramifications for the industry, but if you are buying FOB rather than ExW, then there is less likelihood you will be the one stuck in a jam if the rate changes over night while you have an order being processed.

Wishing you successful China sourcing!

Question answered by Mike Bellamy, host of “Ask the Experts” at the China Sourcing Information Center.

Mike Bellamy is an Advisory Board Member & Featured Blogger at the not-for-profit China Sourcing Information Center (www.ChinaSourcingInfo.org). He is also the author of, “The Essential Reference Guide to China Sourcing” (chinasourcinginfo.org/book) and founder of PassageMaker Sourcing Solutions (www.PSSchina.com)

Very ...Sorry, you need to login or register to view this content.]]> In this series of blog posts,  CSIC volunteer and sourcing expert Renaud Anjoran of AQF offers a review of  various China business books and gives his opinion on their relevance to the typical international buyer.

Very ...

ANSWER:

Unfortunately, I get a lot of ...

[Continue Reading]]]> Can I get reimbursement for 2 shipments from 2 different Chinese factories that contained very high percentages of reject products? Both containers were fully paid for including freight and customs. Going forward, we are interested in a QC program in China to avoid these issues.

ANSWER:

Unfortunately, I get a lot of emails from buyers in similar predicaments to your situation. Here are some recent posts from my blog that outline your options.  I hope you find them useful.

• Resolving a dispute: Demand letters and legal options
• Faulty products have ruined our reputation. What should we do?
• learn from this foreigner buyer’s experience with Chinese courts
• China’s Legal System

In summary, you have a decent chance of recovering losses if you have a clear contract and the seller listed on that contract matches the bank account which received your funds. Many more tips and strategies given in the 4 links above.  You can find the 4 articles and many more by doing a keyword search of “lawsuit” or “legal options” at www.ChinaSourcingInfo.org

I am glad you are considering 3^rd party QC for future orders.  Here are some companies for your reference, if you would like a personal introduction, I would be happy to put you in touch with their management.

1. www.AsiaQualityFocus.com (AQF) specialize in inspections and auditing of factories.
2. www.PSSchina.com (the company I founded many years ago) compliments the services of AQF by providing day to day vendor coordination services.
3. If you feel the relationship with this supplier is worth trying to salvage, US owned- China based www.SouthernPerspectiveSZ.com provides a dispute resolution service similar to a marriage counselor.
4. If you are feed up with this supplier and have no desire to do business with them again, as mentioned in the articles above, you may want to get a local lawyer involved to issue demand letters and litigate if necessary to recover your funds.

BTW, for my reference, how did you initially find this suppliers? I have had good luck using the verified suppliers from www.GlobalSources.com

As this supplier has done you wrong, please consider letting me post their name and your story to the supplier black list I am creating. In this fashion, we can warn other buyers.

Thanks again for your questions and wishing you successful sourcing. Please let me know how things develop on your project. Hoping I have helped in some way to get you pointed in the right direction.

Wishing you successful China sourcing!

Question answered by Mike Bellamy, host of “Ask the Experts” at the China Sourcing Information Center.

Mike Bellamy is an Advisory Board Member & Featured Blogger at the not-for-profit China Sourcing Information Center (www.ChinaSourcingInfo.org). He is also the author of, “The Essential Reference Guide to China Sourcing” (chinasourcinginfo.org/book) and founder of PassageMaker Sourcing Solutions (www.PSSchina.com)

Very ...Sorry, you need to login or register to view this content.]]> In this series of blog posts,  CSIC volunteer and sourcing expert Renaud Anjoran of AQF offers a review of  various China business books and gives his opinion on their relevance to the typical international buyer.

Very ...

]]> In this series of blog posts,  CSIC volunteer and sourcing expert Renaud Anjoran of AQF offers a review of  various China business books and gives his opinion on their relevance to the typical international buyer.

This isn’t a business book but as it gives good ...Sorry, you need to ...

[Continue Reading]]]> In this series of blog posts,  CSIC volunteer and sourcing expert Renaud Anjoran of AQF offers a review of  various China business books and gives his opinion on their relevance to the typical international buyer.

This isn’t a business book but as it gives good ...

by Alexandra Harney

Excellent ...Sorry, you need to login or register to view this content.]]> In this series of blog posts,  CSIC volunteer and sourcing expert Renaud Anjoran of AQF offers a review of  various China business books and gives his opinion on their relevance to the typical international buyer.

by Alexandra Harney

Excellent ...

ANSWER:

Thanks for your question about importing UK products into India. Unfortunately our “ask the expert” service is geared towards helping people arrange export out of China and our group of ...

[Continue Reading]]]> We want to import products from the UK to India. Can you describe the proces, such as import duties, customs, etc?

ANSWER:

Thanks for your question about importing UK products into India. Unfortunately our “ask the expert” service is geared towards helping people arrange export out of China and our group of experts have little experience dealing with UK exports. But we do have experience exporting Chinese products to India and here are some suggestions.

Perhaps the most important thing for you to do would be to find a good 3^rd party logistics (3PL) firm who can walk you thru all the steps.  Here are some suggestions on how to find such a partner in India.

A lot of 3PL will say they have global coverage in their marketing, but I have found that when you dig deep into their experience you will find they focus on certain shipping routes or destination ports. And the giant freight forwarders that do have offices around the world are usually not interested in smaller accounts. So if you are moving less than 20 containers per year, they may not be a good fit anyway.

The role of your 3PL will be to orchestrate the movement of your goods from the suppliers’ port to your destination point.  In most cases this means organizing ocean freight or express air for the international leg of the journey then customs clearance in your national plus local trucking for domestic delivery.  As such, you should be looking for 3PL that have experience importing product from UK into the specific Indian port you have in mind back home.

1. Pick up the phone book or do an internet search with key words such as “3PL” or “Freight Forwarder” + “name of port”.  This will most likely generate a significant list.
2. The next step is to contact them and learn if they will be a good fit for you.  I like 3PL’s that have at least 5 years of experience importing product from UK into the given port.
3. And as I have mentioned a few times before, it is worth saying again, if a service provider can’t give you a list of client references they probably aren’t worth doing business with.
4. Once you narrow it down to a hand full of option based on initial talks and references, ask for an estimate on freight.  What separates the great companies from the good ones will be the format and timing of their quote.  If they more than a few days to get back to you, it probably means that they don’t have well developed shipping channels and  are trying to set something up just for this order. Try to avoid having your order serve as some 3PL’s first attempt at doing business with India. Pay special attention to the formal of their quote. It should be an actual form based on a template, not just a few sentences or pricing sent via email.  If they don’t have a set format for estimates or quotes, that is a real bad sign about the level of their professionalism.  The quote should be easy to understand and if you are unclear about a particular line item on the quote, then the 3PL should be able to explain to your satisfaction. Don’t be afraid to ask questions! Better to ask in advance before getting hit with surprise charges later.
5. Shipping rates change on a day to day basis, and unless you are ready to ship immediately after receipt of the quote, most likely the quote will be an estimate.  So we like 3PLs that will hold their quote valid for a certain time or at least offer to re-quote closer to the actual ship date so that the buyer knows the exact costs in advance.
6. On countless occasions I have had shippers send me invoices after delivery which were much higher than the agreed estimate.  So as you are confirming price,  ask the powerful question “Does this price include everything to get the product from X to Y, even taxes, duties?”, “Is there anything that is not included?” and “Will you put in writing that the amount to be invoiced will not exceed the agreed estimate?”.
7. It also helps to negotiate your terms with the shipper so that the goods are paid upon delivery, as opposed to paying them upfront. But actually, you don’t have a lot of leverage because the shipper has physical control of your goods and could choose not to immediately release them if there are any confrontations about pricing at the last minute. So it is very important to find a professional company upfront and negotiate the terms and pricing well in advance.

Hope these tips help your shipment from UK to India.

Question answered by Mike Bellamy, host of “Ask the Experts” at the China Sourcing Information Center.

Mike Bellamy is an Advisory Board Member & Featured Blogger at the not-for-profit China Sourcing Information Center (www.ChinaSourcingInfo.org). He is also the author of, “The Essential Reference Guide to China Sourcing” (chinasourcinginfo.org/book) and founder of PassageMaker Sourcing Solutions (www.PSSchina.com)

Good ...Sorry, you need to login or register to view this content.]]> In this series of blog posts,  CSIC volunteer and sourcing expert Renaud Anjoran of AQF offers a review of  various China business books and gives his opinion on their relevance to the typical international buyer.

Good ...

Like most western countries, China largely follows the Gregorian calendar that sees 1st of January to be the start of each year.

However most of the traditional Chinese holidays follow the ...

[Continue Reading]]]> The following tips for dealing with Chinese New Year come from my good friend Helmut Maertin, who is based in Shenzhen.

Like most western countries, China largely follows the Gregorian calendar that sees 1^st of January to be the start of each year.

However most of the traditional Chinese holidays follow the lunar calendar so actual holiday dates oscillate over a roughly two week window.

Chinese New Year is the largest holiday event in China, and many parts of Asia, here are the dates for a few years so you can plan ahead and refer back to the site in years to come.

Year       Date                      Symbol

2012       January 23           Dragon

2013       February 10        Snake

2014       January 31           Horse

2015       February 19        Sheep

2016       February 8          Monkey

2017       January 28           Rooster

2018       February 16        Dog

2019       February 5          Pig

Most people go “home” for CNY. Almost all factories and offices will be closed in the days leading up to “CNY” and will typically stay closed for about a week, or sometimes a month.

That has a massive impact on China and leads to the largest human migration in the world, with well over 200 million people going “somewhere”.

Effects leading up to CNY

Factories will be rushing to get orders complete before the holiday.

If you were hoping to ship something around January, you need to book it well in advance.

Typically for product to meet the start of the Northern Summer, it needs to ship prior to CNY!

Consider closer QC scrutiny during the busy time. The factory will be less inclined to store product as their warehouses will be full, so they will also be reluctant to hold product back or rework defective items.

That may mean that you need to conduct DUPRO or inline inspections to reduce the reliance on Pre Shipment Inspection and mitigate the need for rework.

Shipping companies will often charge a premium in the lead up to CNY as they will be heavily booked.

Ensure shipping bookings are made early! Nothing worse than pushing the factory to complete on time and then pay demurrage in the shippers warehouse waiting for a place on a ship.

If you are considering travelling in the week leading up to CNY take a little more care about booking and confirming bookings.

Domestic flights will be at peak pricing on many routes and many trains will literally be standing room only. Even on three day journeys!

Areas like train stations that are often busy and bustling will be packed to capacity. Many people will be sleeping at stations for a day or two before their train. Especially if the end of the dorm accommodation and the start of their train journey is out of sync, and or they have a long trip from the factory town to the train station.

Obviously petty criminals will look for opportunities in these areas, and foreigners are always seen as good targets.

So as the announcements will all say….”take care of your personal belongings”.

Finally if you are making appointments to meet factories, confirm and reconfirm, especially if you will need to travel to make the appointment.

Most factories and suppliers welcome visits throughout the year, so if you ask for a meeting many will say yes, before thinking about the dates for the holiday.

….again it is not as clear a 1^st of January is for us.

Effects during CNY

Basically China will be closed for business, typically for about a week – two weeks.

Depending on the exact day that CNY falls, factories will normally close two to three days before CNY as the workers will need that long to get to their home town.

During CNY itself different areas will be a very different experience.

Many people will be in their home town, the 200 million + transient workers in China will go back to their rural and regional towns.

Sometimes whole families will travel to a holiday area such as Hainan in the south, but typically people stay home, and do the rounds of friends and in-laws.

The factory towns often become veritable ghost towns, with much less traffic on the streets and many hotels and restaurants scaled back to skeleton staff.

If you are staying in bigger city like Beijing or Shanghai that has a solid local population base you will get a great experience. All the local park areas will be full of people letting off fireworks, and if you are light sleeper do not expect a peaceful night for about three nights around CNY.

Effects after CNY

The travel impact after CNY is a little less intense as the end of the holiday is a little less definitive.

Many people will feel comfortable at home and stay a little longer.

Many people will take the New Year as an opportunity for a job or career change.

This is will reflect heavily on factories who typically scramble for workers after CNY.

Often factories that would normally send cars to collect you for a visit will either tell you not to bother coming, or suggest you take a taxi. The drivers and managers will be at local bus and train stations trying to recruit workers as they arrive.

Especially in medium to large factories 800 workers and up, much of the workforce from factory floor to middle management will be new!

Many of the people that last year, got your dress shirt order right three shipments in a row are now making hand bags, and of course the people making your mobile phones after the new year may have been making had bags last year, and so the story goes.

Again, over 200 million of Chinas work force is transient.

This means both that you need to be alert for QC issues in the months after CNY, and you should not expect that simply because the holiday is past, that shipments will start to flow immediately.

About the guest blogger/author: Helmut Maertin

Managing Director – Quality Products International Limited

Helmut, grew up in a production environment of his father’s successful printing and manufacturing business.

The invention of Floaties Learn to Swim products by Helmut’s father brought the family business to the orient in the 1960’s. In those days China was still closed and Taiwan’s fledgling manufacturing industry was developing capabilities such as inflatable’s.

QPI Ltd was later established to offer OEM product to 3^rd party clients, that expanded to product development and quality control services.

Though originally from Sydney, Australia, Helmut has been living in the Shenzhen area since about 2003.

Helmut Maertin can best be contacted via Linked In where he is happy to welcome new connections.

Toyota Production System: Beyond Large-Scale Production by Taiichi Ohno

]]> In this series of blog posts,  CSIC volunteer and sourcing expert Renaud Anjoran of AQF offers a review of  various China business books and gives his opinion on their relevance to the typical international buyer.

Toyota Production System: Beyond Large-Scale Production by Taiichi Ohno