The Global Trade Blog

The Associated Press is reporting that a firm in China, named Proview, who won a court ruling there that they own the Ipad name, is now asking the Chinese government to ban all imports and exports of the Ipad in the country.

I don’t know anything about Proview, but one would think the Chinese government would take into consideration the fact that Foxconn, the company that assembles Apple’s products in China, employees hundreds of thousands of workers there (close to 1 million). If the Chinese government rules in favor of Proview and bans the import and export of Ipads (I can’t see them making such a dumb move) this would be akin to shooting themselves in the foot – and then slapping the golden goose.

The February newsletter is up here:

http://www.mgtrading.com/Newsletter-February-2012-China-Business.htm

The main article is “It’s All About the Relationship.” Here’s an excerpt:

A few weeks ago, while everything was shut down in China for the New Year holiday,
I attended an event at the World Trade Center in Denver. As one of the speakers
spoke about importing, she bottom-lined her presentation by saying that
“International Trade is all about relationships.”

I couldn’t have said it better.

Importing sight unseen from an unknown company in China is dangerous. Last year,
Businessweek reported that 2,300 vendors from one of China’s largest ecommerce
websites scammed their buyers. While I’m sure some good comes from these sites,
I receive calls from first time customers who tried to make contact with a
vendor on a Chinese e-commerce site and didn’t receive a response, or received a
quote and then the lights went out… or worse.

Learning Chinese culture takes much time and expense in the form of costly, week-long
business trips, making mistakes, and learning how business works over there.
Just understanding the sociological concept of “face” is a challenge. “Face” is
somewhat similar to our view of reputation; if a man’s reputation is of good
character, honesty, and efficiency, he will be respected; he has “face.”
However, “face” has more weight in China than mere reputation; a person can
“lose face” just from making a mistake.

Conflict can ensue between East and West because saving face comes before transparency in China. If a company makes a mistake, they are more liable to withhold the truth
and say “we’re sorry, production time is delayed” without an explanation. Here
in the U.S., we want to know what happened, what the company is doing to fix the
problem, and when it will be resolved. The Chinese will fix the problem, but in
a way that doesn’t cause them to lose face, which means we may not get all the
details.

Over the years I’ve learned that a “face issue” can be lurking if there’s no reply to
a request for an update on delivery time… or if I receive an answer that is
inconsistent with the original query. (For example, if I ask “Did the factory
use the new package design?” and the answer comes back “Factory is boxing the
order.” Uh oh.)

I’ve been transferring my files to a new computer which is why I didn’t make any posts last week. That’s something I don’t want to have to do again. Am thoroughly enjoying the upgraded speed of the new machine.

As of this week, the Chinese are back from their 2 week long holiday. One factory we work with took the entire month of January off. Yeesh.

China saw it’s consumer price inflate by 4.5% last month, but this is attributed to the Chinese New Year when consumers had time off to spend. Inflation is expected to drop this year.

U.S. Manufacturing companies reportedly added 50,000 jobs in January. This should be great for the U.S. economy.

After spending weeks looking for the right website developer, we’re now working on an overhaul to the Global Trade website that should be done in the next two months.

On January 22, the New York posted an article “How the US lost out on Iphone work.”

Several highlights:

Apple sold 70 million iphones and 30 million ipads last year.

After President Obama asked Steve Jobs “why the jobs (of making Apple products) couldn’t come home to the U.S. from China,” Jobs replied that “those jobs aren’t coming back.”

The “central conviction” of Apple is that “the flexibility, diligence and industrial skills of foreign workers have so outpaced their American counterparts that “Made in the U.S.A.” is no longer a viable option for most Apple products.”

Apple employs 43,000 in the U.S.

The story is told of when Apple did a last minute design change on the Iphone. As soon as the parts came in, 8000 Chinese workers were immediately called in at midnight to start a 12 hour shift. An Apple executive is quoted as saying that the “speed and flexibility are breathtaking.”

The semi-conductors for the iphone are imported from Germany and Taiwan, the memory comes from Korea and Japan, display panels and circuitry from Korea and Taiwan, chipsets from Europe and rare metals from Africa and Asia. The assembly is done in China.

Timothy Cook is quoted as saying the decision to turn to Asia for their products “can scale up and down faster” and “Asian supply chains have surpassed what’s in the U.S.”

In my role as your sourcing agent for manufacturing in China, this provides more evidence that having your product made there is a good choice. It isn’t often when we’re not able to locate or source a product at a competitive price.

As an American, it’s upsetting that we’ve allowed our place as the manufacturing king of the world fall apart. Some of this is because our government treats business like an unwanted stepchild. Part is because our culture derides “working for the man,” even as they demand that “the man” provides an over the top benefits package, which will eventually bankrupt “the man” who pays their way. The government’s answer, print and borrow money until we’re Greece, isn’t going to work – we need to get behind our manufacturing base.

We’re in a global economy so the U.S. isn’t going to make every product that’s out there. However, changing the rhetoric and how we treat business will go a long way towards rebuilding our manufacturing base. I read that the president of Intel said the U.S. is the only nation in the world where it would cost him a billion dollars to build a factory. Not smart. It blows my mind that we can’t figure this out.

Through our partner companies in China, we have access to thousands of factories making product of every kind. This gives you the ability to expand your product offering and increase sales and profit.

In today’s economy, product diversification is a great way to hedge against a future recession.
As you consider your marketing plans, research products that would be a smart addition to your current offering. Ask your customers if there’s anything out of the ordinary you might look into for them. One of our biggest customers has us supply them with parts that they do not manufacture, for one of their biggest customers.  Look for hidden opportunities… you never know when one of your customers needs an item that we can competitively source for you.