China’s Southwest – up and coming

What people are saying about Mulberry Fields
“Your blog speaks to the many issues I have experience with when doing business in China.” – a California company

I have read some interesting articles recently that highlight Southwest China’s development, in particular Sichuan Province. Apparently cities like Chongqing and Chengdu nowadays are as much a go-to destination for overseas companies as were cities like Shanghai , Shenzhen, Xiamen twenty or thirty years ago. Whereas in 1985 you might have found just four or five US companies with offices in Chengdu, nowadays there are probably several hundred. And there are about 200 Fortune 500 companies that now have offices in Chengdu.

This is very interesting to me because when I lived in China in the 1990s Sichuan Province was regarded as a backwater and often mentioned as being among China’s most impoverished provinces. And this is the image I have always had of it until recently as it comes up more and more in the news.

One indication of how much importance overseas business leaders now attach to Sichuan Province is the fact that the Fortune Magazine Global Forum was recently held in Chengdu. Chengdu was chosen because it is regarded as China’s marquee city for the 21st Century. I have never been to Chengdu but apparently the city has solid infrastructure – in spite of notorious urban congestion – and its local talent pool is large owing to the fact that there are over 40 universities there. Many of these are technical universities and for this reason Chengdu is now seen – both in China and abroad – as a leader in innovation. Figure in the low cost of labor in Southwest China and cities like Chengdu become desirable strategic locations for big and small companies alike esp in the machinery, automotive, IT and pharmaceutical industries. As you go further south to areas like Yuanan and Guizhou light consumer goods figure in the equation as well.

Southwest China (in short the Provinces of Sichuan, Guizhou and Yunan) is definitely an area to watch in coming years. Depending on your product you may do very well in a city like Chongqing, Guiyang, or Kunming all of which may one day rival Chengdu.


The meaning of the fake Apple store

I enjoyed the story about the fake Apple stores in Kunming, China. My first thought was what them took so long to find out about these stores ( it turns out there were a few of them in Kunming). The story was initially brought to light by a local blogger who just happened upon one of the stores while out and about on his bicycle. This gives you an idea of how insulated from the outside world some of China’s big cities still are. Kunming, after all, is not exactly off the beaten path. The story also brings back fond memories of my early days in Shanghai and a fake McDonald’s restaurant that sprang up on Huai Hai Rd in Shanghai in the summer of 1993. It became something of “must –see” attraction for all the ex-pats who lived in Shanghai then ( FYI the first McDonald’s actually opened in Beijing in the summer of 1993). The Golden Arches had been slightly altered so that the M looked more like an N and the official name of the restaurant was “Nancy’s” But there was no mistake about what effect the owner was trying to achieve.

The fakes though are something you really have to watch out for if you do business in China, whether as a big multi-national company or a small importer in the Midwest.

A case in point is YKK zippers. According to YKK’s official website fake YKK zippers are a big problem worldwide nowadays. YKK even has a separate page on their website which addresses the issue.I know about this because I am working now on samples for a customer who wants YKK zippers on her product. She has used generic Chinese zippers up until now but they break easily and, for this reason, she wants to move to YKK zippers. A couple of vendors had quoted me extremely high costs for YKK zippers & pullers – $ 3.00-4.00 which has me asking myself how can you be sure that what you are paying a premium price for is, in fact, the real thing ? Sometimes Chinese fakes are so good that it is virtually impossible to tell the difference between the authentic and the counterfeit. So how does one deal with a problem like this? There are 2 ways I think:

1.) Provide the vendor with your own YKK zippers. One can buy from YKK directly or source within China from an accredited YKK distributor. You can also tell the vendor to buy directly from a source you provide them with.
2.) Discuss the problem with the vendor and ask them to provide receipts from their zipper supplier. You can then check to see if their supplier is a verified YKK supplier.

In short, this is just another reason is why doing business in China can be so challenging and why it is very important to have a relationship with your vendor in which you can discuss these issues in an open and friendly manner.