Apr 25, 2012

The New China Blog

In November I kicked off a new blog at the Global Trade website called “The China Blog.” Here you will find posts on current events, manufacturing in China and the U.S., importing, business stories, and more. I also provide a bit more commentary than I do in the newsletter, some which can be… a little pointed.

To give you a taste, here are several excerpts from the blog:

March 1, 2012: The Chinese New Year Labor Hangover

Much of China’s manufacturing base is located on the east coast. As there aren’t enough workers living there, these factories rely on “migrant workers,” persons whose homes are in the center of the country or in other remote cities who then relocate, sometimes temporarily, to the east coast.

At the start of each Chinese New Year holiday, migrant workers return to their home town. In today’s economy, factories are springing up all over China fewer workers are returning after the CNY – putting east coast manufacturers in a bind for labor.

According to China Daily, in 1985, there were 60 million migrant workers. Today there are 250 million+, and factories are still facing labor shortage. This is placing upward pressure on prices by wage inflation.

After last year’s CNY holiday, when China’s economy was on fire, factories on the east coast saw a huge drop off in returning labor, squeezing production times from February through April.

Although the decline of returning migrant workers has been an issue this year… the good news is that so far we haven’t see production delays. This may be because China’s manufacturing sector started contracting the end of 2011.

February 9, 2012: Here is the News

I’ve been transferring my files to a new computer which is why I didn’t make any posts last week. Am thoroughly enjoying the upgraded speed of the new machine.

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

China saw its consumer price index rise by 4.5% last month, but this is attributed to the Chinese New Year when consumers had time off to spend.

U.S. Manufacturing companies reportedly added 50,000 jobs in January. A great sign 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.

January 26, 2012: Why Apple is Manufacturing in China

On January 22, the New York posted an article “How the U.S. 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 “they’re not 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.”
  • The article recounts the story of when Apple did a last minute design change on the Iphone. As soon as the parts came in, 8,000 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.”

Timothy Cook is also quoted that 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.”

As an American, it’s upsetting that we’ve allowed our place as the pre-eminent manufacturer of the world to 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 is paying 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 businesses 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.

The China blog is located at: /chinablog/.
You can post comments there, and sign up to receive notifications of new posts and comments and/or the RSS feed. I look forward to seeing you there!

5 Tips for New Product Development

  1. Have your product thoroughly engineered, prototyped, and tested. You don’t want any unpleasant surprises when the production shipment arrives.
  2. Show your product to as many of your potential customers as possible. They will have good feedback on possible improvements to the product and/or how it should be packaged. Get their input on the price your product would sell best at.
  3. Have a U.S. graphics company design attractive, professional looking packaging. The packaging reflects the quality of the product.
  4. Packaging and assembly are cheap in China, so have the complete product made and assembled over there.
  5. Learn all you can about every possible sales and marketing niche for your product and industry. This includes websites, direct marketing, telemarketing, advertising, social media, strategic relationships, press releases and search engine marketing.

The Exchange Rate

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Change: .52 (7.6%)

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