Archive for October 9th, 2007

International Trade with China

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Politicians have fought their way to upholding the spirit of free international trade. Multilateral agreements like WTO only try to level the playing field for international trade.

International trade with China is an old trend if you remember Marco Polo and the Silk route the Chinese had established. International trade has taken a full circle and is firmly established as an integral for both US and China. US politicians endorse the international trade with China and believe that it could benefit America. Trade with China has earned the distinction of being known as extremely lucrative of international trades.

International Trade Policy

Without going deeper, China offers an example of the collapse of the Cold War era trade preferences —a rigid and straightforward export control policy. If there are any growls today, it is that the trade policy is tilted in favor of China and that the playing field is uneven. Politicians and trade representatives from both Republicans and Democrats besides Congress are the policy makers, and since US signed the International trade relations agreement with China, it has taken care of most of the complaints. In addition to signing the normal international trade agreement US has helped China move towards personal empowerment rather than concentrate on economic agendas alone through adapting a long-run policy to normalize international trade relations. Plainly speaking, an international trade is and must be driven by market trends and demands, rather than iron frames and policies must only be made to facilitate benefits of consumers and safeguard it.

Effect of International trade with China on US

Large scale imports through international trade from China have replaced domestic production and consequently cost close to a million jobs. But in stark contrast, imports from international trade, both in, services and goods has silently contributed in terms of reduced overheads which fact is unfortunately not highlighted. On the positive side, international trade exposes domestic firms to cut-throat competition and forces companies to cut down on premiums they charged for years.

Imports from China aren’t limited to labor-intensive sectors but include high-tech sectors, like office automation, telecommunications and electrical appliances besides household machinery. Statistics prove this point; capital goods surpass import of consumer goods.

As there are voices rising in concern for the domestic players, an expert in international trade and CEO of Five Rivers, Tom Hopson told the Congress that high end electronics from China have definitely wrecked havoc in US which is a fact even ITC agreed that surge of international trade in these items from China had marred fortunes of many US companies, and went on to impose higher duties (23%).



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Tootoo help China suppliers to find Wholesalers

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Nowadays there are very good chances of growth in these areas, wholesale buying and selling, but it has its own merits and demerits. By taking proper precautions you can save yourself from several problems. All these precautions can assist you in getting good amount of business with China suppliers.

If you want that you should get success in both home based internet business and online shopping businesses, then you are required to get wholesale suppliers of product. You also need to work directly with them. As you might know, China is a popular world factory in wholesale sector.  A large number of designers have established their own factories and work place in China. To have an access to these wholesale designers is an advantage and you can proceed further to gain maximum benefits in your business. It is the easiest way to expand your business with China suppliers.

At the same time it is not an easy task to find out wholesale China suppliers. For this you might have to spend enough time and also money. Some wholesale China suppliers do not prefer to work with home based internet business. If you are not taking sufficient precautions while searching and selecting China suppliers, you might fall a prey to some fake wholesale suppliers. 

If you do not want to lose your money, while entering into transactions for bulk with China suppliers, then better follow the guidelines given below:

How to find wholesale suppliers: Although there are innumerable wholesalers in China but the difficult thing is to search them. You can find many China suppliers but ensure that they are legally registered in China. Online directories and trade magazines also provide useful resources.

Payment method: It is advisable for you to avoid unreliable methods of payment. Try to adopt Pay Pal payment method for saving yourself from any fraud and deceit. With Pay Pal Payment you are provided with many protection guidelines which will keep your money safe. The convenience with Pay Pal is that you can file your complaint with them whenever you feel that you have been cheated are do not receive your goods.

Pay heed to factors other than money: Price is always a major concern when you are going to start any business. Do not get grabbed by the attraction of lower prices and neglect other crucial factors like product quality and customer services. Price should not be the sole concern behind the selection of China suppliers.

All the above mentioned factors leave great effect on your choice to select the wholesale China suppliers.


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Catch an Incredible Business Opportunity

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Clean energy technologies have moved to the forefront of energy infrastructure investments in China and India. These two powerhouse economies are seeking to diversify energy sources while reducing carbon emissions in the context of sustained economic growth. Clean energy investments in both nations will be enormous over the next 10 years, so now is the time to enter these important markets.

China aims to double the country’s renewable energy supply by 2020. The Chinese Government would like to increase renewable energy to 10 percent of the country’s electricity consumption by 2020. In 2005 alone, China invested $7 billion in renewable energy capacity.

India has set a goal of electrifying 18,000 remote villages and meeting 10 percent of its energy demand with clean energy by 2012. The Indian market for clean energy is estimated at $600 million with an annual growth rate of 25 percent. The current 8,000 MW of installed capacity is expected to reach 20,000 MW by 2012.

World companies have the chance to initiate or expand sales in these booming markets  on this trade mission to China and India.



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Chinese Manufacturer: Ways to Succeed

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Manufacturing in China is described by three models - professionally managed companies, Dongguan model and Wenzhou model. These models help you develop your plan for manufacturing a new product. It forms the basis of the development and introduction of new products in the market.

China's manufacturing models can be identified in three main categories - the professionally managed companies, Dongguan model and the Wenzhou model. All of these connect the numerous business activities of China with the rest of the world.

  Professionally Managed Companies: This type of manufacturing model is controlled by persistent scientists and engineers, mostly from U.S., many of which (companies) were formerly State Owned Enterprise. These companies are involved in various viable technologies that flourish the market on a large scale.

  Wenzhou model: This model works by manufacturing a product identical to the most appraised product in the current market, introduced by some other company. This model increases the competition in the market, thereby, reducing the price of the product many times below the original cost value. It is a hit and trial model that does not involve any proper planning and technology.

  Dongguan model: This manufacturing model is controlled by businessmen through various channels, who are very good in utilizing the opportunities provided by the ever rising market demands of China. But the problem with this model is that the competitors also have same competitive edge as yours and any weak link from your side in the production, distribution and marketing can cost you a lot in the market.

  You can use the information of different marketing models and can plan your way to success according to the below given factors of competitiveness:

Developing a Product: The Dongguan model is used to develop the plans, for new products, by keeping the current R&D infrastructure in mind. This helps in developing a low cost product at a much faster pace. The ingenious strength to develop new products is amazing and it severely decreases the production time of a product.

  Variations in markets: The products are developed keeping in view the budgetary issues as well as targeted group of customers, whether you are targeting the domestic customers or the international customers. This is done by developing two or more products with slightly different features, thereby decreasing the price for domestic customer and providing high version of products for international customers.

  Packaging ideas: Success of your product is also estimated by its presentation to the customers. A product that has very good features will fail in case it is not nicely packed and presented.


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5 Steps to Reduce Risk in China Sourcing

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China sourcing has hit the international trade very hard. It started out as a strategy which has now become a must if a company wants to compete with its contemporaries. But many companies fail to realize the need to protect itself against the risks due to lack of planning and analysis of the market tradeoffs. When such companies are to face problems, they are left with no back up plan and ultimately get doomed. And then, the blame comes on to sourcing which is certainly not the case. Yes, the problem people face is that all the problems need to be solved under the Chinese legal system. It can get tough to do so but, since the success story of Sourcing even the Chinese legal system has become more liberal. It only requires a few basic steps to safeguard from the risks. The investment for such legalities is much less when compared to the consequences of the risks involved.

Here, are five steps which can help to reduce the risks involved in China sourcing,

Form intellectual property rights and register the intellectual property rights properly. This is because if one does not do the above, it actually fails to have a firm basis required for the IP rights. This can leave a company with nothing to protect against, when in China. This emphasizes on the need of intellectual property rights and its proper registration. Also one should protect its brand identity by forming and enrolling the slogan, trademark and logo of the brand. All of this is should be done in the home country before landing up in China.

Now register the brand in China. This gives the rights to access the Chinese markets in the future, prohibiting the export of fake goods and also impedes a competitor from registering your mark in China.

In China sourcing, if a company wishes to have confidentiality and non- competition protection then a written agreement really is a boon especially for small and medium level companies. The written agreement should preferably be in both Chinese and English.

The payment rules are very simple. Do not pay until one is very sure of the on-time delivery and the ordered product quality.

Make sure to use comprehensive agreements of OEM with each individual manufacturer. Many small and medium sized businesses do transactions via a straightforward purchase order. But this is wrong as it protects the manufacturer only. A company's protection depends on it having the written agreement of OEM. Such an agreement should be with each and every Chinese manufacturer with whom the company works. It should ideally take care of all the issues discussed above and in addition also the basic legal issues like dispute resolution and jurisdiction. Such an agreement should also be in both Chinese and English languages.

With these issues in mind, it is quite safe to plunge into the China sourcing market. These issues cover almost all the anticipated risks involved in China sourcing. So, addressing them will surely make your risk of diving into global sourcing, a successful effort and will surely make a name for your company in the international trade.



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China Sourcing - On Solid Principles

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US manufacturers are rushing to China to cut costs, building their own plants.The China sourcing strategy is based on solid grounds of core business principles which are apparent in every aspect. Over the decade, China sourcing has evolved and carved a niche for itself as being strategic business partner to large corporations.

Contrary to the fading notions China sourcing is cheap due to cheap labor; true reasons are evident in its modern approach to quality and productivity.

Role of Cheap Land Cost on China Sourcing

Land cost being one of the major cost components in manufacturing has been the top contributor to the success of China sourcing till date. The logical extension of this is driving industries to setup shops in China as an alternative to China sourcing. Even after China Ministry of Land and Resources set minimum selling prices (7.7USD/square meter in northwestern Xinjiang to 107USD/square meter in the suburbs of Shanghai) for industrial lands, the prices still remain very attractive.

Emphasis on Vocational Training Driving China Sourcing

Unlike yesteryears, emphasis in technical training is on improvement of efficiency in enterprises. Introduction of innovative training methods like elements of competitive market economy are paying back emphatically. Vocational and technical education and training (VTE) is gearing up to take on the future skilled labor demands. China is allowing foreign investment and involvement in industrial training which not just helps meet demand for skilled workers but brings in western perspective which ultimately benefits the economy and China sourcing.

Tighter Inflation Control to Boost China Sourcing.

No points for guessing how inflation control contributes to improve China sourcing. Lower inflation augments the overall economic situation besides complementing low input costs and labor costs, which is what exactly China sourcing is actually thriving upon. To China’s luck, both inflation and ‘Whole Sale Price Index’ have been kept low consistently.

Outsourcing

The fact that China sourcing is taking different shapes to suit to situations is evidence that it is prospering. China sourcing global or American company will better equip to take on competition even by embarking on China manufacturing. Several reports, including from Americans, predicts manufacturing jobs shifting across the globe with increased China sourcing activities. To make the story short, all the previously perceived risks of China sourcing or outsourcing to China are only hot air, given that the China sourcing companies conduct due diligence.



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Risk Factors in International Trade

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Managing international trade risks is harder than ever before. However, certain risk mitigation mechanisms are available to international trade which needs serious consideration.

Although process automation facilitates better managementinternational trade risks, latent risks still exist. Implementation of technologies not withstanding, international trade risks need to be managed in real time and on a totalitarian basis. The first of such risks is ramifications the slump in US economy can instill due to housing market crash. Volatility of financial markets with renewed oil market threats could trigger inflation and hikes in interest rates. The third most significant risk is the heightened scrutiny of exports due to security concerns, which makes managing international trade risks harder.
On the other hand, exporters' risks include insolvency of the importer, protracted default in which the importer fails to pay off the due within the legal period after the due date and risk of rejection. On a far sight, export ban, possibilities of war, changes to the law/tariff or even confiscation of importers' properties also count as major possible risks in an international trade.

Possible Steps to International Trade Risk Mitigation

International banks provide with expert support and service to conduct international trade and international transactions rather safely.
Getting paid in an international trade is a different thing due to a number of factors that influence it. One must note that no amount of planning can entirely eliminate the payment risks in international trade and carefully resorting to your preferred mode of payment and hedging the risks besides securing proper credit insurance and credit checks on your customers before engaging with your trading partner is the safest way out.


Regional Trade Organizations
International trade related disputes are resolved by the World Trade Organization which is a multilateral agency because it sets the rules that govern the global trading. There exist a few regional trade organizations but regulative powers are limited with them. Some quarters have raised fears that regional trade organizations can be used against them, which on the contrary has contributed to a messier situation.


Availing Credit Can Help Mitigate Some Risks
One way to safeguard international trade is via credit insurance policy with multiple covers such as the potential insolvency through which the customer provides reimbursement, although to a limit. Products like Bills for Collection (BC) and Letters of Credit (LC) come in very handy in international trade situations. An LC is a bank-to-bank commitment of payment favoring the exporter and guaranteeing the payment against presentation of certain compliant documents. Both BC and LC are governed by regulations from ICC.

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