Some tips for first time China travelers Pt. 2

Travelling accessories

Make sure you buy a fanny pack for your wallet and passport.  There is very little violent crime in China but pickpockets abound.  I have known at least one person who had their passport stolen and she had to wait two weeks before the US Consulate could arrange a replacement for her. So be careful about this especially in crowded areas.  Fanny Packs are the way to go. Check with your airline regarding luggage restrictions and take over a half-empty suitcase if you can. You will do a lot of shopping in China and will need the extra suitcase for your return trip home.  Also make sure to take an adapter set with you.  You may need to use your hair-dryer or recharge your digital camera. China uses 220v and there are several types of plugs in use in China so you should buy an adapter set instead of a single adapter.

Food & Water

The restaurants in the hotels can be quite good. But they are expensive.  You will save a lot of money if you eat outside your hotel.  The food can be just as good and you will experience the thrill of eating in a real Chinese restaurant.  There are usually lots of restaurants around the hotels and these are recommended as they tend to be a little friendlier and may very well have menus in English, given their proximity to the hotels.  But do yourself a favor and try to get out of the hotel to eat.  The one exception is Breakfast.  The Breakfast buffets in the western style hotels are wonderful and a great way to start your day in China.

The water is fine. Bottled water that is.  But only drink the bottled water that you have bought in a drugstore chain or hotel kiosk. The reason ?  There is fake bottled water in China too.  And make sure not to complain about the water or food when you are in China.  This will not sit well with locals.

Taxis  

Getting around by taxis is cheap.  But trying to hail a taxi in a big city like Shanghai or Guangzhou can be a challenge.  And even more so if you are a foreigner.  Many cab drivers will not pick up foreigners because they know most foreigners cannot speak Chinese and you can easily spend an hour or two trying to hail a cab around rush hour.   So choose a hotel that is near a subway or public transportation line or hire a guide to take you around.

Hire a guide  

If you are going to China for the first time and will not be on a group tour then I would highly recommend trying to line up a guide beforehand.  One way to do this might be to look on Craigslist for the city where you are headed to see if there are some students offering guide/interpreter services.  A quick check of Craigslist Shanghai shows plenty.   You may be able to interview some candidates on Skype and make a decision that way.  Needless to say, you do not want to pay anyone anything before you have met them.  You can also ask the Concierge where you are staying if they can recommend a guide.  But finding a guide on your own on CL is probably much cheaper.

Keep your complaints to yourself  

In China you will encounter a lot of situations that will make you shake your head.  But at no time should you get angry or articulate your dissatisfaction to people.  The one exception would be in the hotel where you are staying. In short, tell yourself not to be an Ugly American when you travel abroad.

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Some tips for first-time China travelers Pt. 1

I have talked to a few people lately who told me they are planning a first trip to China.  Although I have written about first trips to China before these posts are more focused on first-time vendor visits and I have really not written a post about first-time China travel for the general traveler.  Accordingly, over the next two posts I will talk about travelling to China.

Best time to travel to China

I have always enjoyed travelling to China in the Spring and Summer. There are a lot of tourists at this time but generally that means that the service industry is in high gear and you will encounter fewer problems.  There are also no major holidays in China during the summer. The time to avoid China travel is during major holidays because transportation hubs are crowded beyond belief.  Major holidays that come to mind are Spring Festival ( Jan Feb), National Day ( Oct) and May Day ( May).  Don’t make the mistake of looking at the Calendar and thinking these holidays last for a day or two e.g. May Day. In fact, holidays in China can impact local transportation for a week or two, and even longer.  So a good rule might be this:  Don’t plan travel in China that a month before or after a major holiday. Check this list carefully and avoid travel in China around these times. China Holidays

Booking  your flight

The flight to China from overseas is lengthy and can be exhausting. For example, it takes 12-13 hrs from San Francisco to Shanghai and 15-16 hrs from NY to Shanghai.  So do yourself a favor and try to book a non-stop flight.  If you stopover in Tokyo, for example, you will have to get off the plane, go through transit security and then get back on the plane. This is not something you look forward to after having been on a plane for ten hours.  The best carriers are Cathay Pacific, China Eastern, China Airlines.  In fact, you may get better service flying the Chinese airlines than the other major carriers. A case in point: once  I was on a Japan Airlines flight that was forced to wait on the tarmac at the airport in Guangzhou for four hours during a thunderstorm. The pilot complained that some of the Chinese airlines had been allowed to take off but the Japanese carrier was made to wait. After that experience, when travelling to China from Japan I always made sure to book China Eastern.   

Selecting a hotel

Hotels in China age fast. Travelling to Guangzhou for the Canton Fair, I used to stay at the Ramada Plaza.  Unlike the Ramada chain in the US which is tacky, if nothing else, the Ramada hotels in China are first class, five star hotels.  And the Ramada Guangzhou was no exception.  It was a beautiful hotel, first class all the way when it opened in 2007 and I looked forward to staying there over the subsequent 3-4 years whenever I traveled to Guangzhou.  However, after a few years I started to notice that the hotel was beginning to look run down; tiles were coming off the floor, the gym which used to be open 24 hrs a day was now open just a few hrs a day,  chain smoking locals seemed to outnumber sophisticated international buyers in the lobby etc etc.  The transformation was noticeable.   So see how old the hotel is. If it is more than 10 years old there are likely issues..  The newer the better.  Opt for a Western Chain, Sheraton, Hyatt, Holiday Inn, These hotels are much nicer than their American equivalents. They are all western managed and the services tend to be extraordinary. You will also profit from the use of an airport shuttle. Arriving in China for the first time after a long flight can be overwhelming and you will appreciate the airport shuttle. Don’t overlook this.  Regarding Chinese hotels you will not get nearly as nice service in a Chinese managed hotel, the exception being the historical Chinese hotels  e.g. Peace Hotel in Shanghai,  Peking Hotel in Beijing. 

Finally, one more tip is to choose a hotel that is within walking distance to a metro or bus. In this way, you will not have to rely on taxis to get around.  The metros in China’s big cities are very user-friendly and have announcements in English. .

Applying for your visa

Once you have your itinerary planned and tickets and hotel booked you need to go to the Chinese Consulate or Embassy in your area and apply for a visa.  There are many categories of Visa so you have to make sure you apply for the appropriate category.  Citizens from certain countries are exempt from visa requirements so be sure to check all this carefully.  Visas are valid only for a limited time so make sure you have looked at your schedule carefully.  A visa approval generally takes no more than a week and there is an expedited service. You should also run your itinerary by a local travel agent.

Here is the link to the visa page of the China Consulate in San Francisco. All visa categories are listed here.  China Visa types

Learning some Chinese 

Don’t make the mistake of going to China not being able to speak some Chinese.  If you are planning this trip well in advance, as you should, your preparations should include a course in Chinese, whether that is online or at your local adult school. Your trip will be so much more enjoyable if you are able to communicate, even at a very rudimentary level, with your Chinese hosts.  And you will probably enjoy better service all around if you attempt to speak some Chinese.    At the very least learn how to say thank you and perhaps some weather terms. And if you really want to impress your hosts learn how to write a few characters.

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The need sometimes to take a break from an idea

An entrepreneur from Singapore, Mark, has been emailing me over the last two months with an idea for a new product. This is a piece of furniture and I think would do very well in the industry he has targeted it for, the hospitality industry.  However, the product design is so complex that I have advised him this would only work if he simplified his design, not only to reduce the burden on factories for sourcing parts and contracting out parts of the manufacturing, but also to minimize shipping and end-user assembly.  I told him that only a large company with extensive manufacturing and distribution resources could pull of the product as it is now. He agreed and has spent the last month trying to simplify his design.  The other day though he emailed me and told me the project is on hold because he has realized there are too many issues.  He said he is focusing his time now on an apparel project and is headed over to China this week.

I was glad to hear this and think this is a good lesson for entrepreneurs. Building a product in China and then getting that product to the US and in the stores here are two different things.  As I told Mark, all it takes is one defective rivet on a unit bought here in the US and he may have a very expensive return on his hands. This is after all a big piece of furniture. So he had better wait until he has 100% confidence in his product or until he has the means to process returns at minimal cost to himself.   And these are the hallmarks of big companies that profit from economies of scale.  Not small ones.   Just look at IKEA and how easily they process returns.  You can return anything to them and they still make money.  Small business, on the other hand, can lose a lot of money if they don’t handle product sourcing correctly.

But as Mark said he has not given up. He is just going to focus on something else for the time being. Who knows but maybe the apparel project will go so well that he will be able financially to revisit the furniture project.  Or just stepping away for a while may lead him to look back at the furniture product to see ways it can be improved and made feasible, what he was not able to do when thinking about it night and day.

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How to deal with rising costs when sourcing overseas

I was reading another sourcing blog this morning and author, Mr. A. whom I know and respect, was talking about how to deal with rising costs from your suppliers in China, what every importer grapples with sooner or later.   His solutions were as follows ( with my response in in italics) :

  • Sell a product with higher margins

Disagree. I don’t think one can just switch products like this.  I would say most small companies or start ups have unique products that they have spent time developing (the reason they have gone into business in the first place). They are married to their designs and they simply cannot jettison them.

  • Smart product design

Somewhat agree.  This is the importance of working with a good supplier.  A good supplier will help you to look at and improve your product to hit target costs. But at the same time this is easier said than done because some product changes result in less than expected cost savings. And unless you have significant order QTYs you are probably not going to see substantial savings.

  • Remove excessive packaging

Disagree. Packaging is so important and unfortunately can be a major cost. In fact, I would prefer to err on the side of having more packaging than not enough packaging which can lead to damages in transit.

  • Produce in other countries

Disagree. I have talked to many companies who produce in other countries.  Apparently countries like Vietnam, Mexico, Indonesia are no better than China.  And in many cases e.g. Mexico they are worse.

  • Pay your suppliers in their own currency

Disagree.  This involves more hassle than it is probably worth and many vendors want the USD. I would add that the costs of setting up a foreign bank account, what you need to do in order to pay vendors in their own currency, will probably offset any savings you will get.

If Mr. A, whom as I said I respect, cannot come up with a good solution about how to deal with rising costs in China and in other countries, then there probably are no solutions.

But # 1 on the above list got me to thinking.  If you can’t change your product, and I really don’t think you can, maybe you can change your customers.  In other words, let’s say instead of trying to sell at  Wal-Mart, you simply focused on selling on your own website and on Amazon Marketplace, for example. This is known as multi-channel eCommerce selling. Of course your orders would be smaller but your margins would be  greater.  And you would not have to be overly concerned about rising costs, shipping deadlines, inspections etc etc.  In fact, I think your only concern would be meeting MOQs.

A case in point. I visited a local company last week.  They  were established 15 years ago and seem to be doing quite well.  They do mostly online sales ( a children’s product)  and have several hundred independent brick and mortar accounts nationwide.  I got the feeling from my visit that business is good and the owners of the company are already planning years ahead for their brand.  And as I was heading back to the car I  thought back to a discussion I had with one of my former clients last month who told me that after years of targeting big box retailers, where he has sold with some success, he was going to scale down and focus more on sales from his own website.  He told me he has burned out with Wal-Mart where sales in some stores are great and in other stores not so great.  And not only does one have to tackle fickle consumer demand but they also face compliance guidelines, delayed payouts, chargebacks and  imperious buyers.  I have worked on many of these big-box programs and they are a headache. Pure and simple.

However, the icing on the cake is a blog post from a former retail buyer that I came across yesterday.  She says that accepting an order from a big box retailer can actually be a strike against you with that same retailer.   If you are considering doing orders a big retailer then read this first.A Buyer’s perspective

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If you want to do business in China, you need to spend money. Period

Last month someone emailed me asking me if I could help her source a promotional product in China.  This lady runs a small non-profit here in the SF Bay Area.  She said she had contacted some vendors and agents on alibaba but, having never done business overseas, was nervous about moving forward with them.  I told her I could help her and quoted my fee, which is not substantial.  She seemed to waiver and then told me that the Chinese  agents had quoted her a lower fee.  I generally don’t advise using Chinese sourcing companies for reasons I have written about here, and I told her so.  After a couple weeks of going back and forth and answering her questions as best I could I finally decided to give her the name of very reputable French sourcing company in China, for I had come to the realization that she was very reluctant to spend money on this project.   The French company charges less than the Chinese company and although they are staffed with locals they are owned and managed by a French national with many years’ experience in China. They have a good reputation, are responsive and I think their sourcing fee is very reasonable, although things can get expensive, in terms of the costs associated with follow up,  once they locate a factory for you.

About a month passed and the lady emailed me telling me she had had some discussions with the French company and was “weighing her options.”  She asked me to advise her.  I told her that with her QTYs and target costs, neither of which is substantial, she is going to need all the help she can get in finding a vendor in China who is willing to take her order.  And if she is serious about doing this she needs to see that she will have to invest some money. In spite of the seductively low costs one sees advertised on B2B sites like alibaba and Global Sourcing, sourcing  overseas requires serious investment and demands a serious, long-term commitment.  In other words if you want to source in China, but are not willing to spend the time and money to do so, my advice is simple:  forget it.

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3-D printing: An alternative to expensive prototyping.

I was talking with my friend Hank yesterday.  Hank is an old friend from my “China days.”  We lived in the same Guest House at Jiaotong University in Shanghai way back in the day.  Hank, like I, has a lot of China manufacturing experience, although for the last ten years or so he has been working in a role completely unrelated to China, as a Senior Manager at a well-known Silicon Valley co.  We were discussing sourcing in China and I mentioned to Hank the high, often prohibitive, cost of molds for plastic injection molded products.  These molds can easily run into the tens of thousands of dollars.  And, believe me, the high cost of a mold has stalled many a promising product launch.

Hank mentioned 3-D printing which is a new technology for making prototypes and which is much cheaper than the old technologies. 3-D printing is also known as Additive Manufacturing, Desktop Manufacturing, Rapid Manufacturing, Rapid Prototyping  etc etc. The best way to think about this is as follows;  In traditional prototyping when you make a metal or plastic part you cut that part from bar stock or plates. You are basically subtracting a part from the whole and for this reason traditional prototyping is also known as Subtractive Manufacturing. Another term you often hear is machining. A good analogy for traditional prototyping is chiseling a statue, which is labor intensive and expensive.

With 3-D printing, on the other hand, you are developing a product from nothing. After your computer makes a 3-D rendering of your design you send this design to your printer as you would a normal document.  Instead of ink, however, a 3-D printer contains glues, powders, resins, molten plastics etc etc and these are fashioned via a nozzle into a prototype according to the CAD design. Materials are then cooled to harden. This is why 3-D printing is also known as Additive Manufacturing.  In fact the term “printing” can be a little confusing because nothing really is being printed, but is being built instead.   I like to call it “Organic Prototyping.”  And whereas a good analogy to subtractive manufacturing is chiseling, a good analogy for additive manufacturing is baking a cake, where you pour successive layers of batter into a mold and then harden the whole in the oven.

Some vendors in China have 3-D printing capabilities but as 3-D printing is more suited to prototyping samples and very small production runs, I think the technology has only limited application in China right now.  Injection molding is still the way to go for big production runs.

Hank sent me a link to a company in New York that specializes in 3-D design.  I am pasting that link here as it might be helpful to inventors who have a great idea but lack the resources to get expensive prototypes  or molds made in China. 3-d molding company .But ask your vendors in China as well if they have these capabilities. As I said, some do and some don’t.

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How to source apparel in China: The Basics

I don’t take on a lot of apparel projects even though I get inquires from small apparel companies a few times a month.  The reason is that I don’t have a lot of experience with apparel and it is outside my comfort zone. A few years ago I somewhat reluctantly agreed to do an apparel inspection in China for a company I know.  I found it very challenging simply because I did not have a lot of experience in garment sewing, which is very different and far more complex than home textiles sewing, where I do have a lot of experience. In fact I spent a few years in Home Textiles production in China and in that time I learned how difficult textile production can be, from achieving the right colors on fabrics to the intricacies of CMT ( Cut, Manufacture and Trim).  But even my experience in home textiles did not prepare me for the severity of inspecting a 30,000 pc apparel order in China. Just the notion of stitch geometry or the myriad handling strategies when sewing a garment depending on the shape of the fabric is enough to scare one off.

Yet, even though I don’t generally take on apparel products I do know some basic things you need to consider when you are sourcing apparel in China.  And these are the things so few people include when they approach me with a project request:  Accordingly here they are:

  • Pantones for all fabrics, logos etc. Pantone books are very expensive but if you are sourcing apparel overseas having a Pantone book is indispensible.  And the best Panton book ( and there are many) are those with multiple pantone chips of the same color – so you can send a vendor one pantone and have extras for yourself.   Do not think your project will go well if you don’t provide your vendor with a specific pantone.
  • Sizing in CM, find a sizing chart online showing differences between US/European and Chinese. Don’t just assume that your vendor knows US sizing charts because they have manufactured for US customers before. You would be surprised at the stories I hear e.g. medium sized garments coming in from China that fit like XS here in the US.
  • What kind of fabric you need. Be very specific here.  Type of fabric e.g. if cotton what kind of cotton. Is it Gingham, Flannelette, Pima etc etc  ; Weight. Usually measured as the weight per one meter of fabric/weave  g. plain, satin, twill etc etc  etc.  It is not to be expected that you will know all this info off the top of your head but you need to know it. The best way is to go down to your local fabric store and ask them to tell you what the fabric is. And then go to another fabric store to double check the info you have been given.
  • Detailed patterns done on CAD. Check with the vendor to see which format they need CAD in. There are several formats.
  • Components (if applicable) buttons, zippers etc. Specify these as best you can. The more info you give your vendor, the cheaper your cost will likely be. Not only does it project to the vendor your knowledge of your own product but it decreases the likelihood that they will source a more expensive component for you than you actually need.
  • Labeling requirements. These are important and will impact cost. You need to include all fonts.
  • Testing requirements. Never to be overlooked with any product and essential for any apparel product being imported from China.

Be prepared to have to meet MOQs per design/color and even size.  The reason is that the factories that sew your garments are are ordering fabric from 3rd party suppliers.  The CMT factories do not make their own fabric and therefore they face MOQs as well from their own fabric suppliers. I see so many people who have a new apparel line and they want to have as many SKUS as possible because it makes their line more attractive. But they don’t understand where factories in China get their own fabric and that  there are very stiff MOQs for fabric.   So you have to always think the fewer SKUs the better. At least when you are starting out.

Finally, make sure you have plenty of fabric on-hand so you can send prospective vendors fabric swatches. There is no substitute for providing the vendor with an actual sample of the exact type of fabric you want to work with.  And, once again, the fabric store is the best place to go.

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Podcast: How to source in China

I was the guest on a Podcast recently.  The program is hosted by Indie Brands a popular website for independent start ups.  There is a lot of useful information here for small businesses, whether sourcing in China or not.  Enjoy

Indie Brands Podcast Feb 2016

Required reading for anyone thinking about sourcing in China

I was thinking this morning how many times over the years people have told me how they were cheated when they sourced in China. One of the better articles I have read on this subject appeared in 2013 in Inc Magazine.  The article describes the trials and tribulations of one entrepreneur from Ann Arbor Mi who learned the hard way that doing business in China is not easy. It is such Ona good article, in fact voted one of the best business articles in 2013, that I usually send the link to prospective clients who are approaching me to help them.  I see it as required reading for anyone who is thinking of doing business in China. INC Magazine article

 

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An American CEO who is jaded by China

I sat down yesterday with a local entrepreneur. He owns a chemical products company that he established ten years ago and the company has grown from 5 to 10 employees over the last year.   He wanted to talk to me about China or, more aptly put, he wanted to complain about China.  He detailed for me some of the challenges he has faced there over the last ten years.  Among the things he told me:

  • He hired a Chinese employee only to have that employ take his formulas and set up his own company in China. And then this ex-employee had the gall to approach his former boss and offer to be a supplier. Because the prices were good the American could not resist and he is now buying his own product from someone who stole that product from him!  I have heard these outrageous but true stories so many times before.   There is no way to avoid situations like this but by making sure you vett the people you are employing as thoroughly as possible. I should have asked about his hiring process but I didn’t. But a good tip is this if you are protective of your IP you should never hire anyone but a US citizen or permanent resident who can be held accountable under terms of an NDA.
  • As a side venture the entrepreneur tried to export California wine to China, under private label, only to find that he had to register his designs with the Chinese govt. and was forced to have a Joint Venture (JV) partner. He seemed to think this was just opening the door to getting ripped off again. Of course it is. But as I explained to him if you are making a good profit off of China, it shouldn’t bother you if your JV partner in China is making a good profit off of you.
  • He attempted to learn Chinese believing that it is very important to speak the language of the country where you are doing business. I couldn’t agree more.  He mentioned what a hard language it was to learn.   But he said that he was forced to give up his studies when the SARS epidemic broke out, believing that he would not be able to spend time in China to practice. I don’t know what to say here but it does not sound like he made a sustained effort.  And that is what it takes to learn Chinese, a sustained effort. It is a hard language. He is correct.
  • He wanted to know how I had avoided becoming jaded when dealing with China over the years. I told him about George Kates, an American antiquarian who lived in China in the 1930s and wrote a book about his experience entitled “The Years That Were Fat.” George Kates, The Years That Were Fat  Kates spent seven years in China and he said that in order to live in China the one thing that is most important is patience. So, yes, patience is the most important thing when you do business in China.  Another key to succeeding in China is that you have to like China.  If you don’t like China, don’t like the food, the people, the history or culture, it is probably not a place you should locate your business. You will get jaded quickly as I sense he has.

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