Australian billionaire Clive Palmer, a mining magnate, recently announced plans to build a replica of the Titanic at a Chinese shipyard. Government owned CSC Jinling Shipyard Co in Jiangsu won the contract.
Titanic II will be built to the same dimensions as the original vessel, and will have 840 rooms on nine decks, gymnasiums, libraries, swimming pools, and luxury cabins. The ship will be powered by a diesel engine, as opposed to the coal version of the original ship. The vessel will have four non-functioning, decorative coal stacks to give it the look of the original model.
Titanic II’s maiden voyage will be from London to New York, and is planned for late 2016.
I never in my wildest dreams expected to see a news release like this. You would have thought the second version of the Titanic might be built in the U.K., Australia, or even the U.S. My guess is that the UK and Australia no longer possess the resources to manufacture large vessels, and the U.S. was too expensive. Many of today’s container ships are made in Korea.
Thus, China has another feather in its cap as the world’s manufacturer. Assuming there are no problems, Titanic II will provide them with more recognition as the place to go for production.
According to Bloomberg News, China’s foreign reserves now stand at 3.3 trillion, an increase of 700% since 2004. For comparison, the combined total of Brazil, India and Russia are at 1.1 trillion.
China’s sitting on a massive pile of cash; their holdings are enough to purchase the gold bullion holdings of every central bank in the world – twice.
With all of this cash, I would expect to see China continue its path of quietly purchasing U.S. and other assets around the world. There has also been talk of Chinese companies opening up factories in the U.S. like Toyota does and hiring U.S. personnel.
The other issue that sometimes flies below the radar is that China has been diversifying some of its foreign reserves, which includes some 1.3 trillion dollars in U.S. debt instruments, into gold. This could have implications in the future if the U.S. continues to spend, borrow, and print, and the Chinese lose faith in the dollar.
Can I Order Small Quantities from China?
I get calls every week from clients, many who are just starting their business, and want to order a small or trial run of product from China that might be worth several thousand dollars. We’re not able to source orders this size as most Chinese production factories won’t quote a small order. A factory will need to spend time and resources tooling and setting up production for a new item; if their profit margins don’t justify the expense involved they won’t touch it.
Because of the way the concept of face works in their business culture, some factories may not tell you the quantity is too small and they’ll sit on a quote… or not reply… or disappear. Others might make promises they can’t keep.
For this reason, our minimum production run is $10,000.00. Some factories have minimums that are higher.
If you need to do a small run of parts, we recommend that you work with a short production run company in the U.S. There are many prototyping and short run factories out there who can help you put together a small order. The price won’t be as low as you want, but at least you’ll be able to get started and test the waters. Then, once you’re ready to purchase a higher quantity, we can get involved.
We have a U.S.-based short run production company we refer our clients to, should you need one.
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: 6.22 to 1
Rate when the Yuan was depegged from the dollar on June 19, 2010: 6.82 to 1
Change: .60 (8.79%)
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.
Read testimonials from some of our customers.
Email us for a free quote.
February 2013: They’re Back… Sort Of
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.