By Shawn He Yuxun

Sourcing from China has evolved from a straight-forward, cost-driven approach to more elaborate and strategic varieties. While the recent product recalls did not seem to have impacted Chinese exports based on overall figures, however we have come across anecdotal evidence suggesting the otherwise.

Undoubtedly the initial sourcing interest was triggered by China’s notorious low costs, both direct (such as those for labor and land or rent) and indirect (rendered under a myriad of government export incentives, such as subsidized fuel costs, export VAT refunds, non-taxation and/or tax reduction).

Over the years the exercise has evolved from a static, per item price-driven modus operandi to more sophisticated ones. For example, many US buyers now employ a vertically or laterally integrated approach, or both. Read the rest of “Latest China Sourcing Trends” or post a comment

By Richard Kaye

The mistake many people make when engaging manufacturers or buying products in China is to think cheap. Lowest cost-lowest price, discount discount discount. There is a much better alternative and one that traders are not currently exploiting.

For example lets take a pair of shoes. Almost 50% of all the shoes sold in the UK originate in China. Now the costs involved in manufacturing a pair of shoes include the cost of materials, ie. leather, the cost of packaging, the cost of the overhead…rent rates electric etc, the cost of labour & management and of course the cost of shipping. However, think of this… the labour aspect of the combined costs is probably less than 10%. Read the rest of “Cheap or value added” or post a comment

By Blake Keller

Much thought and effort goes into the selection of vendors, but how much effort do you put into selecting an audit provider? Many potential clients begin their conversations with “We have tried third party auditors in the past…”

Does that sound familiar? I can’t tell you how to pick one company over another. Your particular industry and needs will determine who is right for you. What I can do, is give you some advice about audits in general.

An audit in general terms is an objective evaluation of product, processes, and/or systems. Most importantly, an audit is a comparison of actual performance to predetermined standards. Note, please the emphasis on predetermined standards, and the means to evaluate your auditor is clear. You must first specify to what standards you desire your supplier to be audited. Feel free to ask your potential auditor to what standard they will perform an audit. Read the rest of “Evaluating your Audit Provider” or post a comment

By Dan Harris

My friend Chris Carr, dean of the CalPoly MBA program and the brains behind the International Business Tour blog has a very thoughtful post, entitled, “Will Paying More Change Behavior And Make Someone More Ethical?” Thoughtful, but wrong.

The post centers on whether paying more gets you better performance and/or better ethics, and Chris pretty much says it does not:

“Some suggested that we could solve the problem of too many defective products coming from China by paying more to the Chinese suppliers that make this stuff. I questioned that assumption, and still do.

One example I gave in that discussion thread was that if paying people more solved the problem, then why does paying most good employees more still result in good performance, but not superior performance? (See Comment No. 29.) And why does paying most bad employees more money still get you bad performance, and not good performance? (If you feel that more money correlates to higher performance, come see me after you have hired, managed and fired more than a few people, and let’s compare notes.)”

Read the rest of “Why Paying More Is Good China Business” or post a comment

In the aftermath of the recent recalls of tainted and toxic China-made products, more than a few have speculated that manufacturers who have outsourced production operations there are no doubt rethinking their sourcing strategies and quality control processes, and, if some of the, shall we say, ‘more aggressive’ pundits are to be believed, even rethinking their continued presence there altogether. However, according to the results of a proprietary survey just completed by the smart cube, the pundits appear to be very much mistaken.

Read the rest of “Survey: Global Manufacturers Staying Put in China” or post a comment >>