Doing Business with China - Part 2

Sometimes, price is more important than quality.

This is not only fit to China, but most of Asia. I think.

Thats why pseudo products spread and fulfilled on the market in the world.

"laden with bribery"

We can do nothing about it. If you want to occupy china market, its a best way for a large company to do . This is our the worst discipline in the history, although every honest chinese people hate them very much!!

But you should believe, honest people is the most in China.

you can take easy to do business with very most of honest Chinese. Count on me.

This russia americn seems to know very much about chinese businese. some of hiw words is right, some is not right.

speaking to car, lots of car transport to america, europe, even german market such car kingdom.

Compare with japan, south korea, our labour has more cheaper price than them, so that our products can be more cheaper at the same quality.

China is graduately becoming manufacture large country, not only argrecultrure.

besides, there are precious digital control machine tool, ship building, large motor and generator, instruments (include music instrument) etc. export to ervywhere in the world.

Chinese cultrue begine to spread and more and more people abroad begine study chinese and enjoy it.

When you can buy a large LCD at 40%, you can change a new one twice as often. Think about it, keep an old one for 10 years or get new one every 5 for less.

Some product you want and need to last. Some you'll like to change every few years or every year. For example, cellphone. Most won't keep their phone for more then a year. This keep phone company busy pushing out new models.

Do you know North America is constantly 2 years behind in hightech "toys" like cellphones compare to Asia and Europe? Think about how much such "low cost", "low quality" product drive the economy. Company make money from selling product, not maintaining them.

It a different consumer - product culture. The slightly lower quality with much lower cost promote consumer to buy new products more often.

And yes I'm Chinese from HK.

Pineapple

Thanks for the comment, Pineapple. I hope you'll register with CR4.

"There is always someone in the world who can make someting a little worse, and sell it a little cheaper. Those who consider price only are this person's lawful prey" (with apologies to John Ruskin).

and yet another NYT article discussing manufacturing and quality in China.

an exceprt, "Over the last two decades or so, American companies have generally followed a two-pronged outsourcing strategy. First, the companies have tried to move as much of their manufacturing as possible to places where wages are just a fraction of what they are here. Second, the companies have distanced themselves from their overseas production. They usually don't own the factories and refuse to say much about them."

Prices of today's China products are cheaper, but with some minor compromise to quality but still work well, the low prices are the contribution of low local worker salary and style of living, lots of manufacturer in China hire workers who lives very far from their hometown and are paid with low price due to job vacancies available, whatever "rights" and wealthfare requested by workers by other developed country etc.

Graduately, their products become recognised and well accepted by others, where the demand of quality due to competitions, then they will need to put more emphasize and efforts in the quality investment which this will add up the cost of manufacturing but by that time, portion of the quality costs will be contra / offset by the familiarization and matual of labour and technologies in that industries. They can learn very fast and innovative. as long as they are able to maintain the low labour and and overhead cost, their prices will still be cheaper but will grow up and other country will produce even cheaper price than them but this take years.

Infact, the prices of China prodcuts has increased quite a lot if compare to earlier years.

It is competition which drives product quality. Price drives a developing competitive market but soon poorly made products lose their appeal in spite of the lower purchasing cost.

Ultimately a competitor improves the quality of a product and soon recieves the recognition of being "the best". Others must compete at that new level or fail to keep their share of the market.

In the early 70's the American auto industry failed to recognize this principal and are still unable to compete with the Japanese products. Toyota essentially holds the title of the world's largest auto manufacturer, a position once held by the now struggling General Motors.

Today Mercedes Benz is being challenged by Lexus as the worlds premium automobile marque. Although Mercedes still dominates this market it is interesting to see there is room for competition.

So far, in the markets for goods and services, competition drives quality which in turn drives customer loyalty. However this can change when the purchase price for "the best" escalates beyond the supporting ability of the market.

Hmm, I don't see Walmart closing its doors in the near future. There is always a market for poor quality cheap products, as long as you don't tell the masses that they are buying poor quality products (they really don't know the difference).

Guest? I beg to DIFFER with you!

People KNOW when they are buying poor quality! Especially women, as my wife knows if she buys clothes at Wal Mart, that they are much cheaper quality than when she buys clothes at Dillards...

Also, I certainly know quality. For instance, we are buying Chinese made plastic keyless sockets from an American, who is buying from China. The product is really good quality because they specified the exact material, and the weight of it, and the way the connections are made, and the way the socket sleeve is fastened in.

We inquired for some samples, and my employee failed to tell this factory that we needed "American Quality", and they sent this piece of JUNK, that was SO thin, that I just squeezed it a bit, and it broke into many pieces!!!

I don't know what planet YOU live on, but the Americans that I know, certainly DO know when the quality is POOR..

Donald

Julie - you are correct to some degree. The factories are usually joint ventures, because Chinese laws prohibit foreigners from opening their own.

I'm an ardent supporter of human rights. My hope is that Chinese economy reaches a level where the average Chinese worker can live in relative prosperity. The boomerang effect of course is that with rising Chinese wages our goods will cost more. Hopefully by that time we'll be making more money and the balance will be reached.

It is too difficult to sell to China. My prices are too high because of political currency manipulation. Also, I cannot make anything which a Chinese company can not instantly copy and sell back to me. My business went under because of Chinese competition, so I have no money to buy from China, or anybody else. Not that I am complaining....this is just the way the world works.

Feel good articles like this one overlook this inconvenient fact.

I wouldn't say this is a "feel good" article, Yusef1. Rather, it's one man's perspective. Yours is another and I thank for contributing to this discussion.

It is hard to compete fairly in the market when some of the countries uses near slave labor, produces poor quality and unsafe product, violates patents, etc.. while others have laborer unions resistant to progress or competitive wages, quality standards for products, health and safety codes. and are litigious about any apparent violation of patents (but still allows these foreign products in under free trade). The chinese make less in a week than the avergae american or european makes in a hour. What kind of products could we seel to people who would need to spend a years income to buy something that cost 3 hours of US/European labor to make. China represents simply a cheap source of labor for corporations to use until the chinese start wanting more. This is the same type of corruption people always associate with oil companies, only difference the oil companies can not just pick up and move when the political wind is less favorable to slave labor.

Yusef1,

Sorry your business went under!

I agree with your comments, but has anyone on here REALLY considered WHY North America is being beaten to the market place by Asian manufacturers?

I know ONE reason..

TOO HIGH LABOR...

Don't get me wrong, I like to make as much money as I can, just like the other guy!

But just bear with me a minute, and let me explain...

Years ago, I saw it coming, and there was nothing anyone could do about it.

As a personal example, I was with a particular trade union, and we were on this "time and material job".. The Foreman told me to Go up and hide, or go to sleep in the beams, as he didn't have any work for me to do, but he still wanted to get paid for my labor, BECAUSE it was a T&M job!.. (Then this idiot had the GALL to try and tell ME how to vote,, )

I blame the trade unions for companies outsourcing products..

I mean, in a open market environment, you can only get just so much money for a product. The materials all cost a similar price, world-wide, (shipping costs may vary some), but the Labor is the determining factor as to the end user price..

Now if all of us had protection, like the Damn OIL companies, we could all make double our profits from gouging the helpless public...

I will admit, I am doing business with China..

However, it only happened AFTER I got sick of making other Americans RICH, from buying their products, that were also made in China... last resort to keep my business going...

Donald

Hey, I was not complaining! I am a blacksmith by profession, and the last major (well, major for ME!) project I bid on was a group of park benches, and trash bins in wrought iron for a small town here in Canada. I costed out the materials, and calculated the labour, and was beat out by the Chinese products. The final price for the finished product was 8% less than my materials cost. Even if my labour costs were reduced to zero, I would have still lost the contract. This happened on a few more contracts until I realized that if it can be made in a factory anywhere in the world, I won't be able to build or sell it. So now I do "art metalwork". And like all artists, I am not even making subsistence wages, but hey...its better than putting hours and hours into bids for contracts which I KNOW are going off shore. And its not like the products are sub standard...they are not!

I can hardly wait until Chinese cars are being sold here in Canada for less than the cost of materials. By then, of course, it will be too late for the auto workers of America.

When the Chinese Chery automobiles reach the US, The success of their product will depend on quality. Look at what happen to the Yugo automobiles The quality was poor and so went the Yugo. The same thing will happen with the Chineese cars sold in the US, if quality is poor , then the the Chinese cars will fall flat on their face. A car is very different than a throw away $20.00 Toster. When you spend thousands of dollars on an automobile and it is riddled with problems combined with a short life span, people will stop buying the product, because it is not a good value if it presents daily quality problems and short life span. Not to mention below average depreciation.

This remains to be seen.

When the Chinese Chery automobiles reach the US, The success of their product will depend on quality. Look at what happen to the Yugo automobiles The quality was poor and so went the Yugo. The same thing will happen with the Chineese cars sold in the US, if quality is poor , then the the Chinese cars will fall flat on their face. A car is very different than a throw away $20.00 Toster. When you spend thousands of dollars on an automobile and it is riddled with problems combined with a short life span, people will stop buying the product, because it is not a good value if it presents daily quality problems and short life span. Not to mention below average depreciation.

This remains to be seen.

i agree , i had aservice center in a small town 4 -5 years back , but with chinese entering the market it affect my bussiness to doldrums , even our labour chrages were far greater than the same finished product ready to use ,even though cheap in quality , non warranty , non recyclablity they were accepted with still so many rejecting such products .i hade to change the system of my environment to accept such facts but ultimatly i had to close down. use and throw policy started to stabilise . i have noted certain aspects like, china is world factory ,most of the worlds best companese are manifacturing or out sourcing ancellary components to there products,china has redifined economics there products are within reach for most of under previlaged section of society , these section of society can atleast have access to new technology for some time .

china is a huge country with already blasted population , to feed them they have to manupulate the economics , steadily it is rising. with time made in china will be expensive (competetive) and that to sooner , we are forgeting other parts of basic economics like infrastructure ,oil ,power ,education ,standard of living ,this all need money to build and maintain .we rest of the world should not fear this onslaught , even our local bussiness is running wildly that co ordinate with chinese part thanks to china.

lots of technologies & products did`t make in world market for shear quality that is basic need for there efficiency , workability , reliability ,revalution , etc

asia is too big continent to compare even japan russia australia are geographically closer , but are too different to there neibhours ,personally i will go with western perticularly american way of economics it is the best!

I agree that Chinese products are cheaper and usually consist of poor quality. Most people know the difference between junk and quality. Just remember one thing. The standard of living in China is beginning to increase and will continue to increase, which will result in slowly increased labor rates. Also low wages combined with almost non existence enviromental laws, the Chinese factories do not incur the expense of enviroment protection. At some point in the near future, China will be forced to deal with the polution problem created by the factories in there cities . China uses more coal for fuel than any other country in the world. In short, you will see in the next decade or two, manufacturing will begin to move to other parts of the world with lower labor rates such as Africa, when China and India are no longer considered cheap labor. IT WILL HAPPEN, THE ONLY QUESTION IS WHEN.

Don't complain low quality produced in China, sometimes people hope to spend less and less money to get a thing, when the thing' s price is lower than its material cost, it must be a junk.

sometimes people neednt good quality things, say, like a deposite pen, its very cheaper and can only use once. of cause its not as good as Park pen.

if you pay a reasonable price you can get more good quality goods in China than in norther america. its true.

The level of quality of a product is usually specified by the party contracting to have the goods made.

I'm guessing that the number of contractors requiring the highest available quality are extremely few among those who have gone 'offshore' to benefit from lower labor rates.

It might be a good niche to offer highest quality at an intermediate cost? Seems more attractive to me than low/low.

I agree with you CNPower....the problem of low quality from China is not caused by the Chinese, but by the suits that run the big companies like WalMart who have the power to say "Good product. Now, If I get 10 containers instead of one, what is your best price?" Most companies in ANY country would be foolish to do anything other than lower their quality in order to fill those 10 containers, especially when they know that if they don't do it, the guy in the next province, city, state, or country surely will! And its not like they will ever use these products themselves....its all for export right?

I could go on and on about the legendary quality of Chinese products, (or lack of quality), however place the blame where it belongs....on the importer. CNPower has offered to help people here to find good quality companies that produce good quality products. This is a wonderful offer, and I thank CNPower for being prepared to help.

Yes, that was a noble effort on CN Powers part, and as I have discovered in doing business with China, most any company will help you source product.

However, they will strangely NOT give you the e-mail addy, or the home page of said company, or, they will say that the company doesn't speak English, or doesn't have an english written site.

That's WHY I have Chinese Employees... They visit the factory, help negotiate better pricing for good quality product, visit tradeshows for me, etc..

Up until recently, a large percentage of business was done through traders in China. I will admit, I have done business with traders. However, when we want the VERY best price on quality products, we always deal direct with the factory!

Donald

if you have any problem to deal with chinese products, I could be helpful at the room now.

Im not a specialist, but I can solve a simple question at hand and introduce you more about our China. in order that, you have goal and know how to deal with chinese.

In fact, you can find easily our oversea chinese everywhere, especially big city in the world, not difficulty to do business with china. most of them can speak good english than me.

Thanks CNPOWER

While making business transactions from distant part of the world, when we can not visit to see the reliability and credentials of the manufcaturer, we have always fear of getting cheated.

The cheating can be in terms of money or in terms of quality. Can you help us in this matter? What we need is knowing about the quality credentials of the manufacturer, before placing the orders, however small.

This service can be on chargable basis. If it is possible, please inform personally.

Regards,

Doing business with China will be done one way. We will buy and they will sell. It will never change

It is not only one way when do business with China. They buy many goods from

America.

Such as?

China is able to make things as good as you expect provided you have given the clear and defined requirements with supervision. But one things most probably true in general is with the same or equivalent standard of goods made from American / Europe and China, it is still cheaper in China (add in supervision cost as well). But you can get better quality goods more expensive than quality compromise goods in China itself, but most people may just think about the cheapest price during tendering and forget about quality compromising that has took place and blaim on bad quality later with comparing to the expensive American / Europe made products, this is not fare as this didn't compare exactly aple to aple.

I have been there monitoring, guiding them when work as Company representative and which they are committed and promised (even if lost in business) in order to deliver. That i thing is one of the strategy of part of the giant company moving their manufacturing arm into the Country with proper supervision organisation and structures.

Business; is the needs / supply and demand, quality of China products has improved a lot compare to old days and lots of conciousness in quality requirements. That's one of the reason the goods become welcome to others in relation to their price tag. They are able to built oil & gas rig, platforms etc but with some expertise from Client side (infact they have their own).

Here's a fascinating slide show of endless assembly lines in China.

Link

Thanks for posting that Julie, Very Interesting...

Donald

Thank you julie, this is the first time I have seen the truth shown. Industry is investing millions od dollars in new machinery in China rather than in their home country. Textiles is not a highly labor intensive industry. How many operators do you see in this picture. Now in contrast the sewing end is labor intensive. In the US for years the sewing has been done in Central America and some US protectorates that have cheap labor and no regulations. Who is making the money About a year ago Business Week had an article abour US shirt companies moving from Thailand where shirts were 12 US dollars a dozen to China at $10. per dozen. These are the major shirts that cost from $25 to $40 each in the local stores. You can pack a lot of shirts in a container.

I thought I'd feedback to some of the feedback. The main points to glean from my original interview are not related to how well the Chinese work or if there's an underlying economic explanation to what's going on there. They are cautionary remarks regarding our consumer habits and optimistic thoughts on how to engage with China.

I've worked with many wonderful Chinese businessmen and women as well as engineering and manufacturing professionals both in Taiwan and China and can say that at the individual level people are everywhere the same. However, systemic differences exist and those need to be understood to make the best of any international relationship.

Welcome, Leo! It's great to have the person whom this interview is about involved in the discussion. Regards - Moose

The factories are usually joint ventures, because Chinese laws prohibit foreigners from opening their own.

I'm an ardent supporter of human rights. My hope is that Chinese economy reaches a level where the average Chinese worker can live in relative prosperity.

Hi, LeotheRussian,

Now, chinese law allow foreigner running their own enterprise in China. There are thousands of foreign sole investment enterprise or corporation running now. most of them get better benefit.

Its not difficult to open your own corporation, just regist.

But some field like broadcast, tv station still dont allow any foreign capital in.

There are also many agent to help you to open it. every places welcome this enterprise as I know.

for example, not far from us there is a foreign capital factory who produce all sorts of gift light and fixture. they employe more than ten thousands of workers, products export to USA every year.

and clothes factories etc.

some of them dedicate to Hi-tech, cultural, education, health architecture and advertisement etc.

if you are interested in I can offer materials. no problem.

I like to add one more,

now more and more chinese enterprise begin to entry other countries to oopen their own corporation. there are clothese, cultural, education, hi-tech, architecture as well.

You are correct in stating that the Chinese law allows for wholly foreign owned corporations(my apologies to Julie), however, as with Russia it's not as easy as the law states. We've gone that route in the past and found that partners are very effective in circumnavigating Chinese bureaucracy. It also depends on whether you are manufacturing or consulting. Services seem to have more flexibility than manufacturing facilities. We manufactured in Singapore and US and imported through our partner.

Hi, LeotheRussian,

you neednt appologies, every thing is changing fast in China, some times, even our chinese dont know how situation developing.

now services business is more welcome now than lower manufacure.

for exampl, cultrural, education and ad etc. include It.T