1	Buying from China
2	Fact No. 1: An ever increasing number of labour-intensive products made in the West or, increasingly, even Eastern Europe cannot compete with China, where wages are USD 0.60 an hour -and often less:
3	These chaps could be lucky.
4	But don’t bet on these!
5	…nor those.
6	US Cents 60? For the supervisor perhaps!.
7	The Dakota Indians have a saying: When the horse under you dies, dismount!
8	In business, however, our attempts to keep that dead horse going can border the absurd:
9	... we buy a stronger whip.
10	... we change the rider.
11	... we vow that our traditional riding style has not changed -and never will.
12	... we engage consultants specialised in dead horses.
13	... we harness several dead horses together for speed.
14	... we huff and puff when our “stupid bank“ does not bet more money on that dead horse
15	"..we identify our government..." ..we identify our government as the true killers of that horse by not stopping “ all those cheap China imports“
16	"Truth No" Truth No. 2: Globalization is here to stay, and so is China‘s role as the World’s workbench. Where Western manufacturers cannot compete they have to either look to China –or close shop.
17	"Any such move" Any such move, however, immediately begs the question: Should I have my own plant in China or rather buy from third party manufacturers there?
18	"Our reply to all those..." Our reply to all those China pilgrims from the West: Wherever possible, focus on procurement and leave handling of China’s omnipresent bureaucracy, corruption, cronyism, nepotism, etc., etc. to those born and bred there!
19	"At least in China‘s booming..." At least in China‘s booming coastal provinces (Guangdong, Shanghai, Xiamen etc.) there is no shortage of local manufacturers, equipped to pale many a Western plant.
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24	"More and more manufacturers are..." More and more manufacturers are ISO certified, and –where the certifying body is reputable (not all are!)- can be justly proud.
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26	"Rather than modern machinery" Rather than modern machinery, China‘s entrepreneurs often still lack manufacturing know-how and, above all, sufficient understanding for overseas buyers’ uncompromisingly demand that goods ordered be of high and always uniform quality. Some friendly “guidance” from the buyer’s side is then often time and money well spent. Patience pays off –in China too!
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29	"You have neither time nor..." You have neither time nor staff to find and supervise suitable Chinese manufacturers on your own, you say?
30	"Do not despair" Do not despair: There are several reputable procurement agents/quality controllers in China and Hong, of which our full subsidiary SHANGHAI STAR Ltd. is (unfortunately just) one. SHANGHAI STAR‘s speciality: „Made in China“ injection moulds and tools, high in quality and cheaper here than anywhere else in the world!
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39	"Buying agents usually “pay..." Buying agents usually “pay for themselves”, as they know local price levels and are not easily fooled by some mealy mouthed salesman. However, if you do insist on making your own mistakes, the next question is: How to find suitable and reliable suppliers?
40	"Price alone is not everything" Price alone is not everything; equally important: Good infrastructure (transportation as well as energy supply); Easy communication with your supplier (technically and language wise); ISO certification obtained from a reputable institution.
41	"Factories owned by Hong Kong..." Factories owned by Hong Kong or Taiwan Chinese are often more “westernized”. And above all: Go and see the place! The following photos too were taken in China, but may not exactly reflect the manufacturing standard you had in mind.
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47	"Which Contract-" Which Contract-, Payment-, Shipping Terms etc. are Acceptable Standard ? Contracts drafted in English even by big Chinese companies or government related institutions can often be (politely put) confusing. In the interest of a cordial atmosphere, Chinese suppliers often swiftly sign almost any contract…only to happily negotiate its terms afterwards whenever they feel the need. This “sign first, argue later” attitude is pretty common, so better bear it in mind!
48	"Delivery is often FOB" Delivery is often FOB. CIF and C&F too are widely accepted. New customers are often required to make a down-payment for the supplier’s security as well as his purchase of raw materials and components. Do not purchase through state owned import-export corporations. They take up to a hefty 5per cent, although their “service” is quite unnecessary, as import/export licences can nowadays be easily obtained: If your Chinese supplier still does not have his, you could well be his first foreign buyer....
49	"The most important hurdle to..." The most important hurdle to any do-it-yourself approach may also be a strictly insurmountable one: Who is going to inspect my goods before shipment? SHANGHAI STAR‘s quality control begins with selecting a reliable manufacturer; yet just one inspection of their products before shipment is often still not enough!
50	"Where the inspectors has to..." Where the inspectors has to fly in from overseas, costs for this exercise quickly get out of hand. Stationing your own inspector in China may not be an option either, as the relevant red tape can be a time consuming and costly exercise.
51	"Although procurement agents" Although procurement agents, quality controllers -and indeed even SHANGHAI STAR- do not work for free, this is certainly the smarter way to spend your money!
52	Still there? Then here is a quick word for those intent on having their own plant in China.
53	"One sound motive for this..." One sound motive for this move used to be that the foreign party did not want to manufacture just for export to the parent or the parent‘s clients but also for the local Chinese market; thus avoiding the country‘s high import duties. With WTO‘s grace periods coming to an end, China‘s import duties and other hurdles have tumbled since 2005. This could/should trigger a new trend to “Export to, rather than manufacture in, China“; even more so as the initial euphoria of many a foreign investor has meanwhile turned into varying degrees of sobering disappointment:
54	"According to a 1999 survey" According to a 1999 survey, in which 1,500 European manufacturers in China participated, Profitability of 54 % of them was lower than planned; 21 % were within budget; the earnings of just 25 % were higher than planned. In hindsight, 62 % had overestimated demand for their products in China; ! 68 % of those who had entered into joint ventures with local partners, would not do so again ; 50 % felt severely hampered by the country‘s rampant corruption; 61 % faced competition from pirated copies of their products, and just 12% managed to take the culprits to task.
55	"In a nutshell" In a nutshell: Manufacturing in China requires patience, stamina, deep pockets and is generally not for the faint-hearted. All others are better off buying from, rather than investing in, China.
56	"Deutsche Consult (Asia" Deutsche Consult (Asia) Ltd. 6/F Silver Crest, 24 MacDonnell Road, Central, Hong Kong Tel.: (+852) 2522 7099 Fax: (+852) 2522 4766 Hongkong@deutsche-consult.com http://deutsche-consult.com With You All the Way!