As we read and see more and more in the news that Chinese exports to ‘developed’ countries are considerably reducing it is a time to be very wary about quality. While there is still strong growth from ‘emerging’ markets such as Africa and South America, the reduction in exports from the larger Western markets creates a pressure and strain on all the factories that rely on these orders to maintain their budgeted and normal business.
If Europe and US demand decreases further there will be steep competition between these factories. With this competition comes reduced price margins and this will likely mean compromise on quality as these factories fight to survive. When your products become secondary to the factory’s survival, it is time to spend extra attention to make sure you are still getting the quality you expect.
When the bottom line is threatened, this is when quality problems arise. Instead of focussing their energies on maintaining the standards of your product, factories will be trying to get as many of your products completed as fast as possible so the next order can go through. Factories will likely also attempt to bolster their profits by blaming wage increases and raw material costs. Short-sightedness being a regular player in Chinese business, many factories will let all this happen at the detriment of your relationship with them as a customer. Read more…
Recently I wrote about a little tree cone I found in my Mengniu yoghurt and how it bugged me to the point of never wanting to buy that product again. Today I read about how Wang Xiaoshan, a columnist, published a microblog post calling for Web users to boycott all Mengniu products. This was because it was found in October of this year that some of Mengniu’s products were contaminated with over double the national permitted level of Aflatoxin M1. This substance is reported to cause severe liver damage and liver cancer.
How did this carcinogen get in the products?
Reports are formulating that cows were given Mildewed feed which caused the high levels of this toxin in the milk. If the levels were twice the acceptable amount then surely the feed is allowed to be somewhat mildewed (mouldy) anyway. If your animals eat crap, then why would you not expect the product from them to also be crap? Did no one hear of the adage, you are what you eat?
The following is an article that was on the back cover of the Irish Times Business News Section, Friday December 23rd 2011. It was interviewed and written by Joanne Hunt. To view the full article on the Irish times website, click here.
WILDGEESE: EMIGRANT BUSINESS LEADERS ON OPPORTUNITIES ABROAD Shane O’Neill – Co-founder, Enter the Panda, Beijing
As seen in the Irish Times
“I WAS so sure I’d be back, I didn’t even visit the Great Wall,” says entrepreneur Shane O’Neill of his first visit to China in 2006.
Now a Beijing resident for more than five years and co-founder of Enter the Panda, a company that assists Irish and British SMEs doing business in China, the Dubliner says it was the country’s sense of scale and possibility that drew him in.
“I arrived in Beijing before the Olympics and there was massive development and great hype in the city. It reminded me of Ireland at the start of the boom, but on a much bigger scale,” he recalls.
“I just fell in love with the city and the idea of working here, so I came over and started studying Mandarin.”
Training in film in Ballyfermot College of Further Education, followed by a Fás course in new media and design, had led O’Neill to set up as a freelance web designer and strategist in Dublin. While business was good, he felt the work had become repetitive and so, aged 25, decided to take on a new challenge. Moving to China and learning Mandarin was just that. Read more…
The following is an excerpt from a China Daily European Weekly cover story entitled “Little to Cheer About”. It deals with the effects of the economic downturn on consumers, retailers and Chinese suppliers. David Bartram of China Daily spoke with Enter the Panda about our experiences on the ground here in China. To read the full article click here.
“There has certainly been a notable tightening of the purse strings this past year,” says Shane O’Neill, co-founder of Enter the Panda, a company that helps connect overseas businesses with Chinese manufacturers. “But from the retailers, distributors and small business owners we’ve dealt with, their focus has been on cutting costs without reducing the overall quality of their products.”
This will come as welcome news to Europe’s consumers this Christmas. One way consumers are looking to save is by doing their Christmas shopping online. In Ireland, 82 percent of shoppers will do at least some of their Christmas shopping online this year, spending an average of 155 euros ($205) each, according to research by Visa Europe.
“China has always provided online retailers with opportunities to undercut the bulk distributors,” O’Neill says. “To add a competitive edge, some online retailers now want to deal directly with factories in China. This gives them access to an infinite range of goods and services that allow them to develop new and exciting products for their home market.”
As well as online retailers, the economic slowdown this Christmas offers low-budget retailers in Europe an opportunity. High streets across the continent are seeing an increasing number of low-budget stores appear, and many source a lot of their goods from China.
The Incoterms rules or International Commercial terms are a series of pre-defined commercial terms published by the International Chamber of Commerce (ICC) widely used in international commercial transactions.
A series of three-letter trade terms related to common sales practices, the Incoterms rules are intended primarily to clearly communicate the tasks, costs and risks associated with the transportation and delivery of goods.
The Incoterms rules are accepted by governments, legal authorities and practitioners worldwide for the interpretation of most commonly used terms in international trade. They are intended to reduce or remove altogether uncertainties arising from different interpretation of the rules in different countries.
As an overview, we’ve taken the incoterms and simplified them. Call it a cheat sheet for anyone less familiar with international trade! Read more…
By this point, the overseas purchaser has been let down dreadfully by the supplier and had to compromise their margins in order to have their goods released. But it got worse. When the CI (Original Paper Commercial Invoice) and COO (Certificate of Origin) were requested from the supplier, they refused to do even this stating that it would cost yet more money to produce these documents and therefore not worth it.
We explained that in order to export the products these documents were required from the manufacturer. This was met this time with abuse and a refusal to have anything else to do with the matter. The aggression showed by the supplier at this point was typical to a kneejerk reaction by a lot of suppliers when their back is at a wall and they have gone so far that even though they are wrong, they don’t want to lose face by admitting it or even compromising.
Luckily my time in China has allowed me to meet some influential individuals in the export and customs world here and we were able to get some documentation to push the order through customs and onto the ship for our client. This documentation was also enough to comply with import, customs and duty purposes when it arrived at its destination port. Doing it this way should of course always be a last resort.
Recently I was contacted to assist in a case whereby a Chinese supplier had decided to change their mind about delivery terms on an order. This was post-production and while it was held at a 3rd party shipping agent. Initially, a quote was supplied to a European purchaser that was priced for FOB, Chinese port. These terms were accepted and the ordered processed.
Somewhere between ordering and before loading onto the vessel at the port, the supplier decided to change their mind and claim that this was no longer FOB and were only prepared to pay a small courier fee to the shipping agent. Not only did they do that but they also refused to offer a Commercial Invoice and Certificate of Origin – two documents that are critical when exporting from China and importing into your own country. Read more…
Mengniu Yoghurt, they certainly use all natural ingredients, I just hope it came from a tree above a blueberry bush…
My former favourite yoghurt (and friends)
Almost every morning on my way into work, I stop at my local Jingkelong (Chinese Supermarket Chain) to buy a Yoghurt. It’s usually a Blueberry one with real blueberries in because I am a great believer in the health benefits of Blueberries. I also am careful about which brand of Yogurt I buy since the melamine scandal and various food safety and quality scares. Now I know this is scandal was mainly related to powdered milk but after reading, one cannot be too careful with any processed food they buy.
So to make myself feel safer and more at ease with my purchase, I buy Mengniu brand which has taken the moral high ground during the melamine crisis and done very well out of it. However, this morning after taking several scoops of this tasty yoghurt I felt something slightly harder than the normal soft, skinned blueberries (shame, because the skin is the healthiest part!).
To my relief it wasn’t any insect or part of an animal but a small pine cone from a tree commonly found in China. Now of course you or I don’t expect to find this in our food but what does it mean for their quality or the size of particles they allow to go in their yoghurt? I am happy that it was something natural and not artificial or (part of) something else! Nevertheless, I can’t help thinking what else might have made its way into this mix. Read more…
Sourcing from China for the first time can be a daunting experience.
There are many cultural and language differences as well as huge differences in business mindsets. These combined issues can put you on the back foot from the start and put the supplier at a much more advantageous position.
This can easily negatively affect the result of your negotiations, both in terms of price and product quality.
Consider appointing an agent for you in China, who has local knowledge, experience and connections that can put you at an advantage over your new suppliers and your competition.
For a more detailed look at sourcing from China, take a look at some of our earlier articles, including:
