What it means is that China’s taking another step towards allowing the Yuan to trade freely on the open markets. While the U.S. has been pining for this for years, they should heed the words to “be careful what you wish for; you may get it.”

Why? Because China has been steadily making moves to take the U.S. dollar out of trade. They’ve made agreements with Russia and a number of other countries where trade will be conducted in Yuan instead of dollars. If the U.S. continues to print and borrow money at the current rate, more countries will start looking for an alternative to the dollar – and the Yuan, backed by the 2nd largest economy in the world, would be first in line.

If our government officials have the courage to stop the financial bleeding we could easily reverse this trend, but I fear they’re too deeply entrenched in “kick the can down the road” mode.

China is currently forming policies that will raise wages so that they will boost the amount of money spent on consumer products.  This may have the effect of increasing U.S. exports to China as the Chinese are eager for unique US products, as Apple’s success there demonstrates. This would improve the trade deficit. Exporting products is one of the largest potential sources of growth for our economy. China has become our “third-largest and most rapidly growing export market by a long shot”, according to Stephen Roach.

I’d hate to see what the experts will call “a crash” to China’s economy. +2%?

Here’s an excerpt:
Of Beads and Streams

Imagine:
you get a quote from a Chinese manufacturer and place a P.O. Everything is in
writing; the price, payment terms, every special requirement you can think of to
make the product down to the tiniest detail, and more. Your Chinese supplier
says they’ll deliver the order in 45 days. Everything sounds good, and you move
onto the next thing.

Or not.

A week later, your Chinese supplier comes back and says “we need a little price
increase.”

“What?” you ask in frustration. “We just signed a deal and you’re already changing it?”
“Factory can’t make product to your price; they found X detail in your drawing and it will cost more,” they explain.
“Why didn’t you look more carefully the first time?”
“Factory just now studied the drawing in detail.”
By now, steam is pouring out of your vents; you want to brain them for incompetence.

In our western culture, once we sign on the dotted line we expect no changes to the deal. If our supplier made a mistake in calculating the price, it’s their problem. If it’s a company we’ve dealt with for years we might work something out where we take a little of the increase, but in general most of us expect our suppliers to keep their word.

But what just happened isn’t necessarily about incompetence, but the differences
between East and West.

Roderick MaCleod, a businessman who spent years in China explains it best:
“Westerners are offended when they have signed a contract, sometimes with elaborate ceremony and some Chinese champagne, and immediately after, sometimes over the champagne, the Chinese start talking about bending the terms a little. Apparently, Chinese see life as a flowing stream and we see it as a string of incidents, much like a
string of beads. We finger one, finish with it, and want to have it tidily
counted off so we can go on to the next; they see every incident and personality
as simultaneously blending into each other before and after, and so nothing ever
ends. This view comes out of the whole context of Eastern philosophy—in China,
the Buddhist and Taoist philosophies in particular. With Westerners’ impatience,
individualism, and transaction-focused attitudes—and Chinese patience, familial,
and pattern-focused attitudes—most clashes of these different philosophies end
badly. When the Chinese attitudes prevail, it can be for the best; on three
occasions, I followed my Chinese counterparts’ willingness to continue in an
apparently lost cause, and the perseverance paid off in a retrieved
opportunity.”¹

Recently, I submitted a product for a quote to one of my Chinese partner companies. After
discussing it with several factories, they said they couldn’t source it. I
thought the project was dead, until, a week later, out of nowhere they came back
with a quote…

See the link above for the rest of this article.
Roderick Macleod quote is from his book “China, Inc.”

To do this, you want to engage the services of a domestic graphic arts company that has experience in package design. We don’t recommend asking Chinese companies to do package design because what sells and/or is deemed attractive in China’s culture isn’t the same as what looks good in the U.S.

An attractive company logo is an important part of good package design. You want your customers to indentify your brand with the product so the logo needs to stand out. Again, a good domestic graphic arts company that specializes in logo design is a must.

We can refer you to a company that does both package and logo design, should you need it.

So here’s his first post:

Guanxi, Alcohol, and China’s Business Culture
by Zhizhou Zhu

In China, binge drinking has played an important role in business networking. It is not
rare that a person can build their career on their ability to drink.

One of my friends, Mr Zhu, who works as a government official, used to drink a lot until
one time he was so drunk that he had to be hospitalized. He was not a party
animal, and quite to the contrary, he drank because he was serious about his
career. He didn’t get drunk at a private party, but at dinner with his boss and
colleagues.

In China, social networking often takes the form of having dinner together at a
roundtable and drinking Baijiu, an alcoholic drink which is notorious for its
high alcohol content. There are basic rules in drinking at dinner: 1^st,
there are two group toasts at the beginning and ending of the dinner; 2^nd,
you need to make 1-to-1 toast to show your respect to the one you toast; 3^rd,
you have to drink when you are toasted; 4^th, the more you drink, the
more integrity you are presenting.

Also, there are some other rules in drinking. People with higher position or social status
always have privileges when they drink. One example is that they can keep
sitting when others have to stand to drink with them.  Also they don’t need to drink as much. This has rendered young people a big disadvantage at their early stage of their
career.  They have to drink a lot when having dinner with their bosses to show that they are trustworthy and respectful. Another rule is that ladies also enjoy privileges when drinking. In the Chinese tradition, drinking is more of a masculine activity. So ladies
don’t need to drink as much as men do, and men have to drink a lot when toasted
by a lady to demonstrate their gallantry. This gives ladies who are capable of
drinking a huge advantage in the business world. Sometimes these ladies are
treated as “secret weapons” for social networking, due to their ability to make
men drink and ease the atmosphere.

You will be surprised how these drinking traditions could actually work out in terms of
social networking. In the Chinese business world, “treating someone to dinner” often implies that you have a favor to ask someone or a business deal to discuss with someone. People would be much more willing to talk when they are at dinner and drinking in a
friendly and atmosphere.  It is often the case that people are more connected as they are getting drunk. With the friendly conversation full of friendly jokes going on, some of the business deals could get settled unofficially.

All the drinking traditions have featured the Chinese culture of harmony and hierarchy.
Chinese people love to build relationships and make friends. “Guanxi”, the
Chinese word for “relationship”, is of tremendous importance in the Chinese business
world.  The majority of the deals are done by building relationships, one way of which is through having dinner and binge drinking, and cold calls could hardly, if not never, work in China.  However, though this culture of “building relationships and making friends” may sound great, it has been a pain in many people’s eyes. Social unfairness and corruption are often caused by the improper usage of “Guanxi”. Even people who are using “Guanxi” sometimes hate what it takes to build them – drinking Baijiu excessively, which is almost pure ethanol, is not pleasant.

One idea is to give a free business card box made from wood to your customers as a promotional item. We can supply these in all of the woods above. You can have your company logo laser engraved on the top lid or where you see fit.

Another excellent promotional tool is a wood pen. Laser engrave your logo on the barrel, and you’ve got a great giveway that won’t get circular filed.

On a business trip to Indonesia, I bought coffee that was packaged in a wood container. I don’t remember if I ever tried the coffee, but I kept the wood container.

Tools, watches, cutlery, almost any kind of metal part, souvenir items and office products such as pen sets are just a few of the items that do well when packaged in a wood box.

Maybe they cut corners with the quality of the first sample, or, suddenly there is a request for a “new price”… or worst, maybe they disappear. I’ve had customers who’ve worked with vendors they found on “that Chinese e-commerce site” who’ve experienced the last one.

The trick is to get a quality product, delivered on time, at a competitive price. Quality, delivery time and price all have to be taken into consideration when negotiating with a new factory. This means measuring their capabilities, learning about their equipment to do the work, asking questions about the materials they will use, and looking at all the options available. We recently quoted a job for a simple product made from 2 materials. The customer hadn’t originally requested the more expensive material but we provided that option; they ended up going with the better quality product.

Our approach isn’t to scrape the bottom of the barrel, fighting for the last penny so the the factory either doesn’t want the work or they ship junk product. We look for manufacturers in China who can make a product that you and your customers will be satisfied with.

You can:
Trademark the name of your product. You will be putting a lot of time and money into the marketing your product, and, should one of your competitors copy it, you don’t want them to be able to use your name. This is true especially if you’re the first one to market and you’ve established your product as the dominant one. Apple is going to court now with a Chinese firm over the use of the word “Ipad,” which shows how important branding is.

You can also trademark the shape of your product. If there are distinguising features of your product that are proprietary to you, you can trademark them. For example, I believe that Coke has trademarked the shape of the Coca Cola bottle. I’ve also heard that it may be possible to trademark a sound, as Harley Davidson is said to have attempted to trademark the sound of their motorcycles.

Once you’ve decided on a name for your product, the first step in getting a trademark is to have a trademark attorney do a search for names registered for similar products. This is the safest way to proceed. Once you’re in the clear, it’s easy to file a trademark application with the US patent office. I’ve done it myself in the past.

China’s throwing a fit, although they admitted that “At some regional or subnational level there might be some subsidies that might be problematic.” They also threw the fact that the U.S. bailed out the U.S. auto industry in our face.

There are 24 existing orders to increase duties against products made in China that have received subsidies from their government.

I think the Chinese got caught with their hands in the cookie jar because from experience I know that back door deals with government officials… i.e. bribes… are a common occurence.

On the other hand, it’s hard to argue that we didn’t “subsidize” General Motors in a big way when the U.S. government essentialy took control of the company.

China’s sure to appeal to the WTO; it will be interesting to see how this all plays out. In the end I’m not sure the Chinese have a leg to stand on; but I wouldn’t be surprised to see them nail us with a few “duty hits” of their own to remind us that they’re our biggest banker.

Source: Washington Post