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Regional Spotlight on Tianjin – “A diversified economic hub in northern China” 11/18/2011

China Manufacturing Assistance

The federal municipality of Tianjin, China is located an hour and a half outside of Beijing, on the coast of the Bohai Bay. Its prime location has attracted many of the world’s top enterprises including Motorola, Toyota, Samsung, Nestle, and LG.

As the fourth largest port in mainland China, Tianjin is a regional hub for shipping and logistics industries, both of which are supported by its close proximity to the national capital, Beijing. Leading industries in Tianjin include mobile phone, aerospace, alternative energy, and automotive production.

In addition to Tianjin, Understand-China.com includes many detailed investment guides for the top manufacturing regions. Ready to Explore? Start Now! It’s Free!

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Understand-China 2011 Update Complete 7/25/2011

understand-china.com1ChinaBlog is pleased to announce the new and improved Understand-China.com. Through extensive research, the website has been refreshed and updated to provides the most comprehensive and up-to-date information available for businesses and investors looking to do business in the China. Understand-China’s vast network now contains over 250 pages of information with additional features and has taken more than 300 hours and 6 weeks to update.

Understand-China continues to be the only one-stop-shop website providing concise and relevant information for companies looking to do business in China, invest in the Chinese marketplace, set up greenfield operations in one of China’s industrial regions, or understand the Chinese manufacturing industry.  Updates include new data for the 24 top regions including statistics for each of their Foreign Direct Investments (FDI), Gross Domestic Products (GDP), Logistical Data, Real Estate information, Industrial Expenses, Labor Costs and various other categories of data. For several excellent examples of updated data, please view the provincial profiles of Beijing, Shanghai, Shenzhen, Tianjin, Hong Kong. Understand-China also includes twenty other provinces, special economic zones and Chinese special administrative regions.

Please let us know what you think of the update!

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China Builds World’s Longest Sea Bridge 6/30/2011

China Opens Jiaozhou Bay BridgeOn Thursday, June 30th, China announced the opening of the world’s longest cross-sea Bridge. The Jiaozhou Bay Bridge connects China’s Eastern port city of Qingdao with the island of Huangdao and is a mere 26 miles long. Bridges of this size don’t come cheap… even in China. The 110 foot-wide bridge required more than 5,000 support pillars and cost upwards of USD $1.5 billion.

The Jiaozhou Bay Bridge took more than four years to build but is anticipated to cut travel time between the two cities in half. Approximately 30,000 cars will drive over this bridge each day.

Maybe they will even hold marathons across it one day… talk about a nice view.

Photo Courtesy of Associated Press

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Vietnam & India Sourcing: Advantages and Disadvantages 3/2/2011

China India Flags

So you are already sourcing from China…have you ever thought of sourcing from India? What about Vietnam? Are buyers trending away from China? What are the advantages and disadvantages of sourcing from other developing countries like these? Let’s explore!

A survey was recently released by Global Sources reporting on how China’s increasing labor costs and the fluctuation of the yuan have impacted buyers’ sourcing strategies overseas.

Over 380 buyers were surveyed and more than 50 percent of respondents said they have seen higher prices as a result of the yuan’s appreciation. But are they changing their strategy? The answer is yes… somewhat.  More than 50 percent of buyers say they are planning to step up their sourcing from India and Vietnam sometime in the future. (It did not indicate whether or not they plan to decrease their China sourcing however.)

The truth is: Vietnam and India are becoming increasingly attractive for foreign enterprises due to their low-cost and abundant labor supply.

What does this mean to American companies?

Places like Vietnam and India could be a viable option for your company if you specialize in low-end products. Industries that are labor intensive can also be successful in these countries due to the large labor pool (bigger than China’s) and the low cost of labor. Industries like textiles (clothes, shoes, sheets etc) have been successful at increasing savings by moving production to countries like India where the workforce is robust and there is a large percentage of English speaking workers (20% higher than China’s workforce). Also, India’s income tax will decrease this year in order to be more competitive with China.

Although the numbers do indicate an uptick in sourcing from these developing countries, do be forewarned: This is not the ideal plan for everybody. India and Vietnam are still in their youth, and fall short in a number of critical manufacturing areas in comparison to the United States and China. The traditional means to becoming a manufacturing powerhouse no longer stand alone. Not only will a country need to be strong in labor, energy and materials, but the country will also need to have a strong-willed work force with innovative thinkers.

Another critical aspect that must be taken into consideration is the different countries’ logistics infrastructure.  The logistics infrastructure in China for example is much more developed and sophisticated than in India or Vietnam.  We typically find that sourcing from China is much more efficient because of the hundreds of billions of dollars invested over the last 20 years in roads, highways, ports and airports.  With that being said, if quick turn-around and reliable, timely shipping and receiving are a must for your business, China might be a better choice.

China India Vietnam
Total Airports 502 352 44
Major Ports 130 12 14
Railways 77,834 km 64,015 km 2,347 km
Roadways 3,583,715 km 3,320,410 km 171,392 km

It is to be noted however, that although India has the third largest road network in the world, about 2.6 million km or almost 75 percent of their roads are considered rural. Travel by roadway in India is also often times considered dangerous; people do not abide by traffic laws, roads are bumpy and uncared for and traffic is intensely crowded. In fact, the National Highway make up only 2% of the nation’s roadway length, but handles about 40 percent of the roadway traffic.

Beyond logistics, the 2nd most common issue when looking beyond China is your raw material supply chain.  As nearly every major industry’s supply chain has shifted to China over the last 20 years, so have the raw materials companies/suppliers.  When evaluating a move away from China, it’s important to understand whether or not your source of raw material is available in your next destination.  If you don’t, you very well may end up finding out that while you are benefiting from cheaper labor elsewhere, you are offsetting those savings by your increased logistics and duties costs as you ship your raw materials in from China.

China also excels at supporting large-scale investment projects – something that Vietnam and India struggle with due to their infancy in the manufacturing arena as well as the large government bureaucracies that you must deal with.  If a company wanted to expand and build a new facility to ramp up production in China, it could take 6 months, whereas in India it could take 2 to 3 years.

In conclusion, China is still the manufacturing powerhouse for most, and will remain so for quite a few years to come.  However, we are likely to see a shift in the type of manufacturing China is involved in. They are now encouraging investments in high tech industries and research and development enterprises. Their goals is to move towards a more sophisticated manufacturing region that can garner higher wages and eventually propel more and more people into the coveted middle and upper classes.

We would love to hear how your company’s overseas buying strategy has changed (or hasn’t changed)!

Sources:

http://www.globalsources.com
http://www.2point6billion.com/news/2011/02/17/china-india-compared-by-al-jazeera-8606.html
https://www.cia.gov/library/publications/the-world-factbook/geos/in.html
http://online.wsj.com/article/SB10001424052748703800204576159410421853214.htmlhttp://www.business-in-asia.com/ports_in_vietnam.html

http://understand-china.com/?manufacturing=logistics-4

http://indiatoday.intoday.in/site/Story/110495/Cover%20Story/wealth-does-not-create-roads-rather,-roads-create-wealth.html

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When is Chinese New Year 2012? 3/1/2011

chinese new year 2012The start of the 2012 Chinese New Year is January 23, 2012. The celebration typically begins on New Year’s Eve with a large party in which family members that have moved away return home to celebrate with traditional food, games and story-telling. The festivities last two weeks and end on the 15th day with the Lantern Festival.

The traditional Chinese Calendar is based on lunar activity and is always the first day of the first lunar month. Because it is based on the moon’s activity, it typically falls on a different day every year.

A good rule of thumb for determining when the next Chinese New Year will fall, is to find the second new moon after the winter solstice. Winter solstice is the shortest day of the year and always falls on December 21. The second new moon after that will mark the next Chinese New Year.

This next Year, 2012, is the year of the Dragon. The traditional Chinese zodiac is comprised of a 12 year cycle of 12 different animals related to the Chinese Calendar. People born during the year of the Dragon are said to be brave, honest and trustworthy. The last year of the dragon was 2000.

Want to learn more about the history of the Chinese New Year? View our previous Chinese New Year post with more about how to celebrate and where to go!

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10 China Facts You May Not Have Known 2/2/2011

China Facts Skyline and Flag
1.       China is the second largest economy in the world.

2.       China is the largest exporter in the world.

3.       China is the second largest importer in the world.

4.       China currently accounts for nearly 10% of world trade.

5.       The United States’ 2010 estimated GDP is $14.7 trillion.

6.       China’s 2010 estimated GDP is $9.8 trillion.

7.       The Chinese government indicated in January that its companies signed contracts worth $45 Billion with American businesses. This increase in United States export business is expected to support an estimated 235,000 U.S. jobs. (The Boeing Airplane order for 200 planes is the largest portion of this deal, valued at $19 Billion.)

8.       Before this year, the last time that an American President hosted China’s president for a dinner was 13 years ago during the Clinton administration.

9.       In 2009, China’s economy was one third the size of the United States’ economy.

10.   China’s population is approximately 4 times the size of America’s population.

*Note: Ok, so number seven is only about America, but I wanted to show the comparison. The facts listed above are to the best of my knowledge the most accurate as of today. There is no guarantee they will stay true in the future.

Sources:
1. http://www.nytimes.com/2010/08/16/business/global/16yuan.html
2. http://www.cbc.ca/world/story/2010/01/10/china-exports.html
3. http://www.chinadaily.com.cn/business/2011-01/29/content_11937210.htm
4. http://www.china.org.cn/business/2010-11/19/content_21378120.htm
5. https://www.cia.gov/library/publications/the-world-factbook/geos/us.html
6. https://www.cia.gov/library/publications/the-world-factbook/geos/ch.html
7. http://www.whitehouse.gov/the-press-office/2011/01/19/fact-sheet-us-china-commercial-relations
8. http://news.yahoo.com/s/ap/20110118/ap_on_re_us/us_us_china_state_dinner
9. http://www.state.gov/r/pa/ei/bgn/18902.htm
10. https://www.cia.gov/library/publications/the-world-factbook/geos/ch.html

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Test Your China/US Knowledge 1/31/2011

China Knowledge QuizThis week’s Time Magazine had an interesting short quiz testing readers’ knowledge of China, as well as the United States. Do you know all the answers?

1. When did China become the second largest economy?
a. 2010
b. 2009
c. 2008
d. it hasn’t yet

2. Since 1999, the proportion of researchers (out of all employed persons) int he U.S. has risen 8%. How much has the proportion of researchers in China increased?
a. 11%
b. 50%
c. 102%
d. 111%

3. In 1994, china’s secondary-school enrollment rate was 48%. What is it now?
a. 65%
b. 96%
c. 51%
d. 76%

4. The average trade balance as a percentage of GDP in the U.S. is 6%. What is it in China?
a. -5%
b. even
c. 7%
d. 14%

5. In 1995, China was 14th in the world in thh publication of science and engineering papers. Where does it rank now?
a. 1st
b. 2nd
c. 3rd
d. 4th

6. In what year is China projected to overtake the U.S. in number of patent applications?
a. 2011
b. 2015
c. 2020
d. 2025

How did you fare? Here are the answers:

1. A; 2. D; 3.D; 4.C 5. B; 6. A

Source Time Magazine: January 31, 2011 Issue

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