Feb 18, 2013

After more than two weeks off, Chinese companies are starting to come back online this week.

That is, some of them.

Many factories will still be closed until the 24th, a few even longer. When they re-open, manufacturers will need several weeks more to get back to full production capacity, due to labor issues. At the beginning of the holiday, an estimated 250 million workers travelled from the East Coast, where much of China’s industrial base lies, to their home cities in the inland territories. Many of these workers take a month to come back

If they return at all. There’s a tug of war going for these migrant workers; companies in China’s central regions are aggressively courting them. China Daily News reports that one shoe manufacturer in Guanzhou polls its workers before they leave for the Chinese New Year, asking them if they will return. Every year since 2009, more than 10% have reported they won’t come back.

This means that factories won’t be into full production mode until sometime in March as their workers return and they make adjustments to holes in their employee base. Please keep this in mind when scheduling your orders.

Economic News …

Did you see that the U.S. Government recorded a surplus of 2 billion dollars in January? In part this was attributed to the 2% payroll tax increase that hit January 1. Undoubtedly, businesses and consumers we’re breathing a little easier after the U.S. Government kicked the can down the road and put off the spending cuts, which might have encouraged them to open their wallets again. U.S. GDP contracted .1% the 4th quarter of 2012. Predictions are that the economy will return to growth in the 1st quarter of this year.

China held 1.202 trillion dollars in U.S. Treasury Bonds as of January 1, making them the largest U.S. Creditor. Japan is #2 at 1.12 trillion. Altogether, major foreign creditors have more than 5.5 trillion in U.S. debt.

The U.S. Federal Reserve recently announced that it would keep “QE3” (a higher-education way of saying money printing galore) going at a rate of 45 billion per month, until the unemployment rate drops to 6.5%.

They’ve been printing trillions of dollars for years and the unemployment rate hasn’t dropped much; maybe they need to print quadrillions to make it “work.”

FAQ

What Protection Do I Have Against Someone Copying My Product?

Our customers often request that we sign a license/exclusive contract or non-disclosure agreement (as provided by the customer or the customer’s attorney) whereby we agree not to sell or disclose the customer’s product line to others. We have no problem doing this. Upon request, we also add exclusive clauses or license agreements in with our negotiations with the factory in China.

In the U.S., Canada, and all other developed countries, realize that patents and trademarks are your only true legal protection. Without a patent or trademark any company – American or foreign – can legally copy and sell your product.

This issue is addressed in more detail in the July 2010 edition of our newsletter.

The China Blog

I have a blog where I post updates and other information on doing business with China on a weekly basis. If you want to sign up to receive notifications of blog posts, go to the Blog Home Page and sign up at the signup box at the top right of the page.

The Exchange Rate

The dollar has been depreciating recently against the yuan at an accelerated rate. If the decline continues it will soon start to have an effect on prices, although we’re only talking about a percentage point or two at present.

Yuan to the dollar, as of today: 6.23 to 1
Rate when the Yuan was depegged from the dollar on June 19, 2010: 6.82 to 1
Change: .59 (8.6%)

About Us

Since 1991, Global Trade Specialists, Inc. has helped companies of all sizes get their products made in China from manufacturers of quality products. We are an American company who works with three trading groups in China with immediate access to thousands of manufacturing companies. We source most products made from metal, plastic, wood, stone, glass or textiles; from prototype to production. Many of our customers are first time importers; we walk you through the entire process.

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Previous Newsletters:
January 2013: Business News and Trends for 2013
December 2012: A Trip I’ll Never Forget
November: 4 Principals for Success
October: China in the News
September: Remembering Nixon’s Visit to China
August: Who’s the Bad Guy Here?

All material copyright 2013 Global Trade Specialists, Inc.
This newsletter may be reprinted as long as the copyrights and a link to the Global Trade home page (www.mgtrading.com) are shown at the end of the article.