China

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China Manufacturing
Larry Butz P.E. Global Engineering Associates
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Agenda

• Why Manufacture in China
• Types of Manufacturers
• Finding a Manufacturer
• What to Expect
• Prepare for the Unexpected
• Risks Rewards
• Experiences

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Larry Butz

• 25 years with Trane specializing in
• Product Development
• Technology Product Globalization
• Technology Transfer Factory Start-up
• Environmental Sciences
• Headed Intl Service Division
• Five Years as Engineering Manager for Trane
  Europe/Middle East (France)
• Technology Director for Trane Intl
• Environmental Technology Spokesman

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China 1982-84

• Two Shanghai Factories
• Customized Products
• Equipment Selection
• Process Optimization
• Quality Standards
• Training
• Supplier Qualification
• Factory Layout
• Product Testing Capabilities

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China 1995 - 96

• Large Chiller JV
• Ligang, China
• Customization
• Technology Transfer
• Training
• Lean/Simple Processes
• Supplier Development

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China Asia 1997 - 2002

• Technology Globalization
• Environmental Spokesman

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Why Manufacture in China?

• Lower Cost Product
• Access to China Market

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What to Expect

• Lower labor costs
• Lower raw material prices
• Lower component/sub-assemblies costs
• Range of quality levels available
• Fewer constraints (regulations) on factories

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Types of Manufacturers

• State Companies
• Wholly Owned Locally
• Joint Ventures
• Wholly owned Foreign
• Your Own Build or Buy

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Where to Find
Heavy Industries
Light Industries
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How to Find

• Government Agencies
• Industry Directories
• Web Bidding
• Networking
• Shows Exhibitions

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Be Prepared for Change

• Longer Pipeline
• Reduced Flexibility
• Change Control
• Cultural Differences
• Societal
• Value Systems
• Business Customs
• National Laws

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Be Prepared For Change

• More Administrative Personnel
• Logistics-Import/Export
• Banking/LC/Currency
• International Law
• Communication
• Time Difference
• Language

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Insight Advice

• The relative cost of equipment vs. labor is
  significantly different in China. Expensive labor
  saving equipment used in the US will not be the
  best choice in China.
• Be prepared to make minor changes in your design
  specifications to obtain best results.

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Risks

• Currency Variations
• Proprietary Design Info
• Political

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Environmental Considerations

• Fewer Regulations
• Reduced Use of Coal
• Clean Air Clean Water
• Water Shortage
• Green Beijing Olympics

Environmental Costing
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Thank You for Your Time
Questions?

• Larry Butz
• GEA Consulting, Inc
• 2420 N. Pine Creek Rd.
• LaCrescent, MN 55947
• Tel [phone]
• Fax [phone]
• Email LButz_at_gea-consulting.com
• www.gea-consulting.com

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