Presented by Judy Huang President - PowerPoint PPT Presentation

1 / 19
About This Presentation
Title:

Presented by Judy Huang President

Description:

High labor content ... Starting from blue prints or off the ... Risk Management Quality Control. Clearly specify the inspection requirement to the supplier. ... – PowerPoint PPT presentation

Number of Views:34
Avg rating:3.0/5.0
Slides: 20
Provided by: leslie59
Category:

less

Transcript and Presenter's Notes

Title: Presented by Judy Huang President


1
Presented by Judy HuangPresident CEO889
Global Solutions Ltd.
2
Why Consider Sourcing in China?
  • To be more competitive!!
  • By incorporating sourcing of higher volume or
    difficult margin products to supplement your own
    manufacturing process.
  • By taking advantage of the lower labor costs and
    the growing sophistication of Chinese
    manufacturers.

3
(No Transcript)
4
(No Transcript)
5
Chinas Unique Environment 3D
  • Legal/regulatory legal infrastructure, body of
    rules, application of rules, enforcement of
    rules, transparency.
  • Structural economic entities/behaviors, banking
    systems, post, media, transportation.
  • Social/cultural ethics, language, psychology,
    human resources, demographics.

6
Why the rapid development of world-class
suppliers in China?
  • Abundant, well educated, cheap labor
  • Stable, mature government and infrastructure
  • Increasing domestic Chinese and world market
    demand
  • US Tier One and Tier Two suppliers began to
    follow their
  • customers to China and each multinational
    company would
  • pull 10 international suppliers to China

7
Chinas General Information
  • Population 1.3 Billion
  • GDP Growth 9.1
  • 4th Largest Trader in the World!
  • China is expected to have the worlds largest
    economy by 2040!
  • Great export performances and rising foreign
    investments forecasts a positive outlook for
    Chinas economy!

8
Best candidates for China sourcing
  • High labor content
  • Require secondary operations such as assembly,
    surface plating and chrome plating
  • Low cube/weight
  • High volume and quick sellers
  • Troublesome profits
  • Infrequent engineering changes
  • Castings subject to environmental control

9
Poor candidates for China sourcing
  • Specialized products
  • Engineering intense
  • Frequent modifications required
  • New products
  • Low volume products

10
Potential pitfalls of sourcing direct
  • No relationship, no business.
  • Qualityqualityquality becomes an issue when
    communication and mutual understanding of quality
    standards fail.
  • Legal recourse and product liability insurance
    issues arise if taking a direct approach.
  • Payment and shipping terms

11
Special Considerations
  • Western managers tend to look at suppliers as
    business partners with common goals and long term
    relationships.
  • Many Chinese suppliers are salesmen first and
    tend to over-promise in order to get the
    business.
  • Dont be wined and dined into a partnership.
  • Get professional help and advice.

12
Determinants of Sourcing Fees
  • Labor needed to staff the project
  • Special technical skills needed for QA work
  • Number of sub-suppliers that need to be
    coordinated
  • Location of suppliers
  • Difficulty of production
  • Starting from blue prints or off the shelf?
  • Frequency of orders
  • Consolidation of shipping location
  • Coordination of export and banking documents

13
Risk Management Intellectual Property
  • Trade secrets and the competitive edge
  • Keep the Crown Jewels safe at home
  • Separate manufacturing process of the whole
    product into several different manufacturers

14
Risk Management Quality Control
  • Clearly specify the inspection requirement to the
    supplier.
  • On-site inspections and monitoring
  • Samples
  • Pre-approval of changes
  • Set per shipment failure tolerances

15
Risk Management -- Currency
  • Pressure of currency devaluation has caused
  • Increase in raw material cost therefore raising
    cost production costs
  • Increase cost in commodity items
  • Decrease of trade rebates to Chinese
    manufacturing factories
  • Devaluation of currency have taken place of 2
    last year and plan to further devalue in 2006 by
    another 2-5

16
Risk Management -- Arbitration
  • Choose arbitration over litigation
  • Internal arbitration in China subject to nepotism
    and inadequate arbitrators
  • Hong Kong Arbitration is well respected and
    likely to be enforced.

17
Transportation Infrastructure
  • 16 major shipping ports in China
  • Capacity of 5 million tons per year
  • Combined total national shipping capacity 1400
    million tons.
  • Major upgrades to Port of Shanghai
  • Shanghai Model Port Alliance drives many of the
    upgrade
  • Improvements include
  • automate port facility
  • minimize loss of goods and transit times
  • help Customs collect more accurate tariffs.
  • If successful
  • program will be repeated in other parts of the
    China.

18
  • ?? ni hao How are you ?
  • ?? zai jian Good-bye .
  • ?? xie xie Thank you.
  • ?? hao chi Delicious !

19
889 Global SolutionsYour China Connection
Write a Comment
User Comments (0)
About PowerShow.com