World Trade Group and Rogers Towers, P.A. MANUFACTURING & SOURCING IN CHINA.
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Transcript of World Trade Group and Rogers Towers, P.A. MANUFACTURING & SOURCING IN CHINA.
World Trade Groupand
Rogers Towers, P.A.
MANUFACTURING &
SOURCING IN CHINA
Country Background
Rogers Towers BailJones & Gay
China at a Glance
Slightly smaller than the US
1.3 billion people
Population growth rate of 0.9%
23 provinces / 6 special administrative regions / 5 state-governed municipalities
Counties / Cities / Villages
Rogers Towers Bailey Jones & Gay
Rogers Towers Bailey Jones & Gay
Rogers Towers Bailey Jones & Gay
Rogers Towers Bailey Jones & Gay
Rogers Towers BailJones & Gay
Chinese People
Life expectancy – 70 yrsLiteracy rate – 82%Education Requirement – 9 yrs min.Ethnic groups – many … 92% HanLanguage – 7 major dialects /
Mandarin is officialPinyin since 1979
Suffrage – 18 yrs. Old
0
1
2
3
4
5
6
7
8
9
China Aisa-Pacific US World
An
nu
al G
DP
Gro
wth
(%
)
1999
2000
2001
2002
Comparative GDP GrowthRogers Towers Bailey Jones & Gay
Rogers Towers BailJones & Gay
Economic Growth
Major causes of growth: Adoption of “socialist market economy” Emergence of private sector “mixed
ownership” Overhaul of SOE’s Emphasis on export trading Foreign investment zones
Rogers Towers BailJones & Gay
Economic Growth
Primary sectors driving growth Domestic consumption Telecommunications Construction Exports Infrastructure Capital Markets
China Foreign Trade
Rogers Towers BailJones & Gay
WTO -- What and Why
180+ member nationsPurposes: Establish agreements on tariffs, duties, quotas Prevent trade abuses Promote certainty and transparency in trade
and investment Resolution of trade disputes Assist developing nations Promote world peace through trade
Rogers Towers BailJones & Gay
Major WTO – Related Changes for China
Tariffs
Quotas and other non-tariff barriers
Anti-dumping / overproduction
Enhanced IP protection and enforcement
Transparency rules and systems
Accelerated Clean up of banking and securities markets
“Looking glass” effect
Opening up service industries
Rogers Towers BailJones & Gay
Major Exports - 2001
Apparel, clothing & footwear
Machinery, parts & transportation equip.
Textiles & yarn
Chemical industrial products
Furniture, housewares, toys, handicrafts
Food stuffs
Electrical equipment & parts
Rogers Towers BailJones & Gay
Major Imports - 2001
Electrical equipment & parts
Machinery, parts & transportation equip.
Crude oil and fuels
Plastics and plastic articles
Rogers Towers BailJones & Gay
China’s Trade with U.S.($ Billion)
0
20
40
60
80
100
120
140
1996 1997 1998 1999 2000 2001 2002 2003
US ImportsUS Exports
Rogers Towers BailJones & Gay
China’s Leading Markets
US
HK
JAPAN
EU
OTHER
US
TAIWAN
JAPAN
EU
OTHER
China’s Major Suppliers
Rogers Towers Bailey Jones & Gay
Rogers Towers BailJones & Gay
Foreign Corporate Expansions in China
Walmart
Kfc
Heinz
P&G
Pizza Hut
MacDonalds
Office 1 Superstore
Home Depot
Intel
Microsoft
Computer Associates
DuPont
Rockwell
Toshiba
Honda / Mitsubishi
Embraer Aviation
Rogers Towers BailJones & Gay
Beijing / Tianjin
Shanghai / Jiangsu /ZhejiangGuangdong / Shenzhen
Other
China’s Big 3 Trading Centers
Rogers Towers Bailey Jones & Gay
Rogers Towers BailJones & Gay
China’s Work Force Allocation(percentage of work force)
0
5
10
15
20
25
30
35
40
45
50
Industry and commerce
agriculture and forestry
other
Rogers Towers BailJones & Gay
China’s Labor Supply
1998 1999 2000 2001
Labor costUSD / hour
0.41 0.42 0.44 0.44
Recorded Unemployment*
3.10 5.50 7.0 9.0
* Does not include 150 mil. Underemployed in rural areas
Rogers Towers BailJones & Gay
Labor Over-Supply
At current GDP growth rate:
8 million new jobs / yr
Current annual rate of new workers:
12 million / yr.
Manufacturing Wages: China vs. Latin America (USD)
0 2000 4000 6000 8000
China
Guatemala
Honduras
Uruguay
Argentina
Mexico
Rogers Towers Bailey Jones & Gay
Rogers Towers BailJones & Gay
Sourcing Examples
Furniture
Clothing
Giftware
Sporting Goods
Toys
Home Goods
Metal products
Glass products
Ceramics & Plastics
Machinery & Tools
Electronics
Office Furnishings
Building Supplies
25
-8.8
-12.4-15
-10
-5
0
5
10
15
20
25
30
Example – Electronic Exports% Growth (2001-2002)
Rogers Towers Bailey Jones & Gay
Doing Business in China
Rogers Towers BailJones & Gay
Choosing Your OEM
Quality introductions
References (western and Chinese)
Due diligence:
customers / competitors / vendors
government / chamber of commerce
Site visit
Familiarity with Western practices
Rogers Towers BailJones & Gay
Due Diligence in China
OBSTACLES:
Little or no transparency
Poor record-keeping / Actg. practices
Short operating histories
Little government oversight
SOLUTIONS:
Rogers Towers BailJones & Gay
Quality Control
Who ? Manufacturer Local company employee / representative 3rd party QC service
Production samples
Payment terms
Replacement guaranty
Rogers Towers BailJones & Gay
Protecting Your Stuff
Legal Means
Patent & trademark registration
Licensing agreements
Confidentiality agreements
Practical Means
Selective technologies
Control staff / compartmentalize
Rogers Towers BailJones & Gay
Logistics Issues in China
International transport
Inland transport
Aggregation and warehousing
Cold-chain storage
Supply-chain management
IT solutions
Customs issues
Rogers Towers BailJones & Gay
Legal Representation in China
ROGERS
TOWERS, P.A.
World Trade Groupand
Rogers Towers, P.A.
MANUFACTURING &
SOURCING IN CHINA
Rogers Towers BailJones & Gay
Sourcing Examples
Furniture
Clothing
Giftware
Sporting Goods
Toys
Home Goods
Metal products
Glass products
Ceramics & Plastics
Machinery & Tools
Electronics
Office Furnishings
Building Supplies