Category Archives: China Sourcing Insights

Exhibitors of Canton Fair Express Confidence on Export Market

Chinese export reportedly increase 18.4% over the same period of last year. There’s a very apparent feeling on behalf of the exporters that there’s a significant increase of visitors and potential sales agreements, according to a Sohu reporter.

As shown by the statistics as of the end of the first phase of Canton Fair, the total of visitors totaled 100,000, an increase of 10.5 on the same phase of 2012.

Many export enterprises said that they feel the export demand has bounced back. Since February of 2013 they have received more orders than the previous year. However, there’s still very fierce international competition.

“The supply chain of our industry has been improved.”, said a tablet manufacturer, “More components than before are now purchased locally. This significantly reduce our costs.”.

According some of the exporters interviewed at the trade show, the increase of raw materials has slowed down but the labour cost is still having an annual increase rate of 10%. A electric switch factory from Fujian said, China’s export business can no long rely solely on labour cost advantage but we should invest in equipment and train our workers with more advanced skills.

A bicycle manufacturer from Suzhou spoke about the impact of the currency fluctuation on his business, not long ago the exchange rate was 6.22. It has now dropped to 6.17. His profit was reduced resulting from the depreciation of the USD against CYN the Chinese currency.

China Customs’ Intellectual Property Right Protection: Passive and Active Mode

For those who outsource the manufacturing of their products to China, there’s a daunting worry.  What if the manufacturers, without the permission, ship the products and become their competitors?  What if some other factories copy the products?  This issue becomes even more harmful if the brand or design owner’s products become popular in the market and run in the most beneficial period of the product life cycle.

Sourcing from reputable manufacturer is undoubtedly the first step in your IPR strategy as they would tend to refrain from acting against the agreement.

The most important official resource to leverage is China Customs’ IPR protection measures. It is called the “border measures”

This measures has two modes, the active mode and the passive mode.

If suspiciously infringing import or export activity is about to take place at the border, the holder of the IPR can report to the Customs. The Custom may carry out seizures on the goods being imported or exported. However the premise of this type of seizes is dependant on the filing with the court of law, which means that prior to the seizures, the holder of the IPR must sue the infringing company. In this scenario, the Customs is taking the border measures in the Passive Mode.

According to the rules of China Customs, holders of IPR who meet the below criteria can file their rights and property information with the Customs so as to enable the Customs to protect their right in the Active Mode.

–        Holder of trade mark registered with the State Administration for Industry and Commerce of China
–        Holder of trade mark registered with the World Intellectual Property Organization designating China as within the cover of protection.
–        Patents granted by the IP Bureau of China
–        Holder of copyrights of literature

In the Active Mode, the China Customs can be proactively seize suspicious cargoes according to the information filed with them, in addition to the holder’s self conducted investigation.

It is a important tool for IPR protection for companies sourcing from China.

Visit the website of China Customs and Sourcing Spectrum for more information.
www.customs.gov.cn www.sourcingspectrum.com

Take Every Enquiry as an Opportunity to Develop Relationship: New Supplier vs. Existing Supplier

When you have a potential order to place, remember to consider it as a good opportunity to develop new or current supplier relationship.   The suppliers in China have a lot of enquiries sent from prospects around the world, some are taken very seriously and other regarded as junk. Enquiries getting better attention will be attended with responsive support while some buyers only get only inefficient or even irrelevant replies.

There are a few automatic filters on the suppliers mind, clarity of business requirement, his company’s chance of winning the business, size of the opportunity and sincerity of the prospect in attitude, track record of the prospect. With ourselves put in the shoes of the suppliers, which would grab more of our attention if we received the below two enquiries?

Enquiry One

“ Dear Sir/Madame,

My name is Edward Jordan, and I work as a procurement manager for Excellent Gadget Inc from the US.  My company is looking to develop a private label power bank product in China and would like to start with 500 units as a trial order and increase to 2,000 in subsequent orders.

I came across your company in Cantonfair and I would like to request a proposal of your most up to date unique models that range from 10,000 MAH to 12,000 MaH.

Our plan is to become the exclusive seller of one or more of your private models for our mutual benefits. We look forward to your reply.

Edward Jordan
Excellent Gadget Inc
Website:
Phone:
Mobile

Enquiry Two

“Dear Sir/Madame,

I will buying 5,000 power banks, please send all of your models and pricing. I need the lowest prices and all specification.“

Obviously the first enquiry would catch more of your attention and you would provide the most accurate information to him and will allocate more of your working hours to provide continuous support to this prospect until the deal is close and will proactively seek deeper cooperation with the potential customer.

For all businesses, competent suppliers are very important resources and the relationship with such suppliers is the company asset. Among a long list of techniques to develop supplier relationship,  selectively sending the right enquiries to the right candidates is a starting point tool that sourcing professionals utilize skillfully to their benefits.

Most likely new supplier is less patient and know about your company less than companies who have done business with you in the past. You would prefer to send them enquiries that are more defined so that the preliminary communication doesn’t have to be too much back and forth. However you may not want to send very critical orders to them because just as the new supplier doesn’t  know about you, you don’t know the service and quality of them in the beginning.  You would select to send new enquiries that are more likely to close e.g. your existing business or your internal purchases.  This way, the new supplier will be very motivated in your requests and in the series our communication and the following order, you and the supplier will get to know each other as a foundation for future cooperation.

Suppliers with existing relationship with your company would be much more patient and supportive to less defined enquiries.  They are more willing to proactively guide their customer through the development of new business. Furthermore orders that are critical success factors for your project or customer relationship should go through them because they have proven their reliability in the past.  Enquiries that require a lot of support and development should go through your existing suppliers.

As your supplier base grow in numbers and complexity, you should develop your own stable set of criteria so you can allocate your scarce resources, the potential orders, to the continuous development and maintenance of your supplier relationship.

Visit our website for sourcing advice and information on our services. http://www.sourcingspectrum.com/

China’s Export Credit Insurance Subsidy Program Eases Trading Risks

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Sourcing Spectrum’s View: Discuss with your China supplier on their willingness to offer open account trading terms. Suggest them to background check your company’s financial rating. If you financial rating meets Sinosure’s requirement, your supplier will be enabled to secure their a
account receivable with your company and tend to be more willing to trade with you on open account terms.

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Source: http://news.xinhuanet.com/english/business/2012-10/06/c_131890320.htm

BEIJING, Oct. 6 (Xinhua) — A subsidy program to facilitate domestic small- and mid-sized traders’ purchases of trade credit insurance has markedly eased trading risks, according to the Ministry of Commerce (MOC).

China has channelled a total of 260 million yuan (40.6 million U.S. dollars) from the central budget to the program since its creation in 2009, the MOC said.

Under the program, small- and and mid-sized commercial businesses that meet certain conditions can receive a subsidy equal to 50 percent of the paid-in premium to be covered by credit insurance, which can protect them from insolvency on the part of their domestic customers.

The program has allowed subsidies to be extended to 1,613 enterprises and benefited 35,843 traders indirectly, driving credit sales worth 337.9 billion yuan, according to MOC official Wen Zaixing.

In addition to offsetting risks and facilitating financing for small- and mid-sized traders, the policy has also removed obstacles for export companies that wish to tap the domestic market at a time when external demand has faltered, Wen said.