The 4 Types of Factories in China

David Dayton over at Silk Road International has an excellent article detailing what he terms the “Three and a Half Kinds of Factories“. For someone new to China or a company looking to break down their search for factories into segments, this article gives some insight into the nature of the factories based on the types of customers they currently service.

Understanding what type of customers your factory currently services can help understand what types of issues you may face in working with them. It will also help you to overcome issues as they arise because you will know why the issues may be occurring. Also, in general it will let you compare prices among factories and see why one factory might be more expensive (or less) for what on the surface may appear to be the same product.

The 4 different types of factories are: ‘Purely Domestic’, ‘Mostly Domestic, Partly International’, ‘Purely International’ and ‘Limited International’.

David does a great job of breaking them down. For more details, have a look at the original post: Three and a Half Kinds of Factories.

March 31, 2008 | Filed Under Factories | 3 Comments

The Holy Grail of Risk Taking Entrepreneurs: Brits Get Rich in China Part 3 of 3

As we conclude our series with this 3rd installation, for those new to the risk taking posts please see part one of the “Brits Get Rich in China” documentary series to get some background on the players and their individual goals and challenges and then go to part two since each of these videos are a must see. Sit back and relax as we get into the final episodes of this fascinating documentary with some dynamic risk takers.

Fascinating food, to say the least, is the menu item of the day for Vance and he is not going to have any of it. As we walk with Peter and his new business partner Sessel and then get into the back seat of their car, we are told of the potential for millions in profits that Peter’s product could reap in China.

However, we are also posed with the reality that is China today in terms of Intellectual Property protection and ownership as the commentator so quickly identifies the potential for Peter’s new partner to copy Peter’s product and take the profits himself. Many of you could probably relate to the commentator asking Peter questions about “did you check him out” and of Peter’s answers when so much is at risk.

Working late with Tony as we learn another lesson of doing business - that of focus. That is what Tony does and relentless he must be to get his business up and running. As he interviews potential employees, you may understand the magnitude of his challenges and opportunities in finding the right people to help him build his business.

Back to Vance and his “Olympic Inspection Committee” bus - make sure to listen to why he takes the risk to “counterfeit” his authority. It is fascinating to say the least.

Back to Vance and the village he literally employs. He made it safe with his “Olympic Inspection Committee” bus. When you talk about going to the “source”, Vance and his village represents the essence.

Jump into the car with Tony and off we are to his new shining factory with a welcome like no other! Can you say “WOW” and we can tell you something from our experiences in China that stuff gets done - period. Not to go into the much publicized issues of quality or with ingredients as in the Heparin Scandal, we can tell you that if the Chinese are focused on something they want, it will get done and almost nothing will stop it. It is this determination and resulting execution which has made the “Made in China” a mighty force in the realms of business all over the world.

Sitting in the KTV Club with Peter’s business partner, Sessel, we watch how business unfolds and many find this far different than Western countries, but is it really? Sessel gets down to business with a very connected business man and secures a commitment over drinks and entertainment China style. Change the language and this may be the same in South Korea to Japan if not in the clubs of Vegas or the private rooms in Europe. Business gets done and another day passes.

Now with Vance we realize yet again that business just gets done as his factory close to the borders of North Korea is humming along and bringing in the money. One important citing not to miss here is Vance’s new showroom. Vance, and many others, realize that China is just not the source but also the destination for his business and he realizes that Chinese consumers have both the money and interest to buy buy buy!

Getting paid - that is the question as the commentator so rightly notes and for the now optimistic Peter, that will be his next challenge and opportunity. Finally, as we walk in the streets of New York with Tony and then get a $3 million dollar order in a party where even the attendees are fascinated by China, we get to ponder the series once again and find that in these three men that risk taking is what they did and what they continue to do.

As we wrap up this series, let’s not forget these are real men with real lives. Many have made fortunes in China and many more have lost everything. Search on stories all over the internet and/or published books on China and you will find this to be true. The opportunities are everywhere and they are nowhere, but for those who are willing and those that have a taste for adventure, China just may be the right place to pursue your “Holy Grail”.

Don’t forget to share your stories and may fortune find you!

March 25, 2008 | Filed Under Success Stories | 1 Comment

Share Your Expertise: David Anderson on the China Granite Industry

In a follow up to Dylan Blankenship’s article Let’s Talk Granite - Pre-fabricated Granite Import Guide, we attempt here to help readers better understand the structure and makeup of China’s granite industry. We explain where China’s main granite suppliers are located, the types of granite found in these locations, and give a brief introduction to the uniform numbering system used in the country.

Whether you are looking to purchase high quality, finished granite countertops (slabs or prefabricated), granite tile, dimension stone or granite sinks, they can all be found in China at competitive prices. According to the General Administration of Customs, China exported over 1 million tons of granite in the first 10 months of 2007 at a value of approximately $157 million US dollars. It is estimated that Chinese granite accounts for around 17-20% of the world’s granite production.

The main production centers are located in the provinces of Fujian, Guangdong and Shandong. These three provinces account for 85% of China’s stone production. Smaller production centers can be found inland in Sichuan, Shanxi, Anhui, Hebei, Guangxi, Inner Mongolia and Xinjiang. Have a look at the map below for a more visual look at China’s granite production areas.

With over 80 varieties of granite, Fujian is China’s largest granite producing province. It employs 15,000 manufacturers and is home to over 5,000 granite quarries and as many importers and exporters. Shuitou is the largest production base in the province with over 3,000 manufacturing facilities operating, including the majority of Chinas top granite suppliers.

Guangdong is a large province in the south east of China. It has more than 700 granite quarries scattered throughout the province in the cities of Lianling, Xinyi, Chaoyang, Jieyang, Gaozhou, Yangjiang, Taishan, Huizhou, Zengcheng and on the outskirts of Shenzhen. There are around 4,000 manufacturers mining some 30 varieties of granite.

In Shandong, the cities of Rong Cheng, Laizhou and Linyi are responsible for the majority of the 40+ varities of granite found in the region. Shandong’s most famous granites are Jinan Green which is very dark and also called Jinan black G3701, Isle Red, also called Peninsula red G3786, General Hung, also called Piyi General red G3752, Liu Ports Red, also called Laizhou oriental cherry red G3767 and China ash, or Laoshan grey G3706.

Have a look at the table below for a clear overview of the types of granite found in China, by province:

Types of Granite Located in China

Granite found in Fujian	Granite found in Shandong	Granite found in Guangdong
Jinjiang Bacuo white G3503	Laizhou sesame white G3765	Puning big white flower G4439
Quanzhou white G3506	Wendeng white G3760	Guangning east white sesame G4422
Haicang white G3523	Pingdu white G3755	Guangning rosy spots G4421
Xiaocuo white G3516	Zhaoyuan pearl G3783	Xinyi thin twists G4419
Hongtang white G3514	Mengyin pink G3778	Xinyi black stars and clouds G4416
Nanan snow plum G3508	Shanyuan flower G3757	Xinyi spindrift G4418
Jinjiang white in black G3516	Mengyin spindrift G3777	Guangning dark blue stars G4420
Luoyuan oriental cherry red G3563	Laizhou oriental cherry red G3767	Xinyi black G4417
Zhangpu red G3548	Piyi General red G3752
Anxi red G3535	Zeshan red G3764
Wuyi red G3528	Rongcheng Jingrun red G3784
Nanping Minjiang red G3559	Laoshan grey G3706
Nanping black G3539	Jinan black G3701
Pucheng Baizhang black G3577	Wulian leopard-skin G3742
Fuding black G3518	Rushan black G3770
Dayang black (A) G3538	Mengshan flower G3776
Shaowu green G3599	Pingyi peacock green G3791

In order to help buyers and sellers more accurately identify and trade different types of granite and other stone, in 1998 the China State Administration of the Building Materials Industry devised a uniform numbering. The system gives each variety of stone a letter and 4-digit number. For example, Fuding Black is denoted as G3518. The letter represents the type of stone, G for granite, M for marble, etc. the 4-digit number consists of 3 parts. The first 2 numbers specify the province or municipality the stone originated from, for example, Fujian is 35, Guangdong is 44 and Shandong is 37. The 3rd digit relates to the colour, characteristics and patterns on the stone and the final digit associates the stone with the specific quarry from which it originated.

Here is an extensive list of Chinese granites and marbles and conversions for the updated and original numbers. When dealing with Chinese granite suppliers, be sure to use this numbering system in all documentation and correspondence. it will save trouble down the road and can help ensure you get what you ordered.

Granite and Natural Stone Tradeshows in China

If you’re interested in starting or expanding your granite or other natural stone business, here are some of the largest trade shows for you to attend:

STONETECH SHANGHAI
Date: April 8-11, 2008 (every two years)
Location: Shanghai New International Expo Centre
Description: This exhibition takes place every two years and includes exhibitors from international stone processing, machinery and equipment and stone products.

CHINA STONE
Date: October 21-23, 2008
Location: Yunfu International Stone Materials Centre, China
Description: This fair is promoted as an international stone materials science and technology fair.

XIAMEN STONE FAIR 2008
Date: March 6-9, 2009
Location: Xiamen International Conference & Exhibition Center, Xiamen, China
Description: A fair exhibiting stone and stone machinery

ABOUT THE CONTRIBUTOR

David Anderson is Managing Director of GMC Group Ltd, a China-based
business services firm specializing in business and market development
programs for international companies seeking new or revitalized growth
in global markets.

Show Me The Money! Searching for Investment For Your Import Venture? Part 1 of 2

Have an idea for a new product? Got a sale, but no operating capital to import the goods? Finding the players that can help get your new import venture off the ground with financial backing and investment is a game in itself. Sourcejuice has the stats you need to get playing on a major league team.

Specialty/Boutique Investment Shops
When faced with a temporary liquidity “crunch”, the first call many companies make is to traditional factoring firms and asset-based lenders only to be told “you must first finish and ship the order to create the receivable before we can lend”. There are a number of commercial financing firms that specialize in the high-risk arena of providing “gap” financing to small manufacturing companies or importers, helping them fulfill purchase orders. Such “gaps” in the working capital necessary to pay for the materials and labor involved in producing the “finished goods” often occur because a small manufacturer has already exhausted existing bank lines and does not have other capital availability, or because it has been “swamped” with more orders than it can handle with its existing credit lines.

For a step-by-step run through of how “purchase order” financing works, check out Cameron Addair’s article in the “Share Your Expertise” series.

Traditional Bank Loans
Credit is the name of the game here and as soon as you walk into that branch (doesn’t matter which) you know the drill. If you have the credit score, open/available credit and believe in your ability, the sky is only limited by what they will loan you on a “personal” or “business” loan/line of credit. Don’t expect any special lending for importers as it is not there. A personal loan is going to run you, with good credit, starting at 14% APR. This option is risky and expensive, but with $25,000 you can import about whatever you need/cover all your expenses. Check into your options in regard to membership opportunities at your local credit union. Don’t forget to check the home equity line option with lower interest rates.

Bank of China Trade Finance
The Bank of China is marvelous, point blank. With over 90 years experience in international banking they are a vital asset for doing business in China. Their New York branch provides a plethora of investment options for the importer. Stay Tuned to part 2 of this SourceJuice thread for these options in their entirety. In the mean time here are some links to get you started.

The Bank of China

Main website

New York Branch website

410 Madison Avenue (on 48th Street)
New York, NY 10017
Tel: 212-935-3101
Fax: 212-593-1831

Services: A wide variety of products and services to facilitate your international import and export activities. Experienced professionals that know how to balance risk and pricing and provide you with the best financial services possible. Credit lines ranging from $1,000,000 to $30,000,000 can be structured to customers with at least three years’ satisfactory operating history.

Angel Investment
It is all about who you know. If you know one or many angel investors, the sky is only limited here by your investor salesmanship.

Partnerships & Consulting Practices
There are other ways to get your products imported without any capital at all. Find a company to partner with or from which to consult. You can get someone else to pay for your time and import costs. Cut a deal where, for a reduced consulting cost to them, they let you set aside some inventory for yourself. The key is to keep your eyes open for companies such as yourself for which you can market your services. You might have to get into bed with the competitor to do it, but better to get in the game than sit on the sidelines and watch.

Dylan Blankenship signature
dylan@sourcejuice.com // Dylan Blankenship

March 19, 2008 | Filed Under Currency & Finance | 2 Comments

The Holy Grail of Risk Taking Entrepreneurs: Brits Get Rich in China Part 2 of 3

Risk taking continues in part two of this three part posting of the “Brits Get Rich in China” documentary series. If you haven’t yet seen our first posting on Brits Get Rich in China, Part 1 of 3 be sure to have a look before continuing on to part 2. Part 1 introduces you to the players and their individual goals and challenges.

We start off by getting to go with Peter Williams as he pitches his product to several parties in Hong Kong as a one man company. He is not successful but keeps to his belief and notes that “one has one’s setbacks but it’s like anyone in business will tell you..you either go on and overcome them or you give up…some of us weren’t made to give up.”

Back to Tony Caldera who stakes a large investment at a Shanghai trade fair to secure major orders. He brings his portfolio of cushions with an abundance of new designs. Concerned about people stealing / copying his products, he mentions the camera phone strategy used by competitors taking pictures of his products at the fair. Since it is so easy to copy (he shows how pictures are being taken by camera phones) it is difficult to protect new designs. Gets a big order at a trade fair and stress is the least of his problems now that he has an order and getting the factory up is now mandatory.

The skyline of Shanghai and back with Vance Miller as he takes us on a trip to the borders of China and North Korea as he describes how he is able to take advantage of the changing face of England’s decline and China’s rise in manufacturing capabilities and resources. How you might question? “Snapping up the carcasses” of English businesses laid to waste by China’s dominance in manufacturing is what Vance does as he buys multi-million dollar machinery in England for literally pennies on the dollar from bankrupt factories and ships them back to his factories in China.

As we have a drink with Peter in a suburb of Shanghai, we are told of his new business partner who has a track record of having access to power and more importantly relationships. As this new business partner, named Sessel Pih, talks of China as the “Wild Wild West” and how it’s life and death, he explains and this is a pivotal piece for those not acquainted with both the opportunity and the potential for absolute loss in China. A fascinating and very insightful strategy session is revealed in the exchange between Peter and Sessel – a must for all our readers even if you don’t plan on doing business in China for you are given an education that is very elemental about doing business in China but that is lost so quickly, if not overlooked. While you’re viewing this video, definitely replay Sessel’s explanation of the Four “C’s” that are “must haves” in China to be successful along with how to close the deal which will shed some humorous light on the realities of China today and those of America in the past.

Sessel’s Four “C’s” are”

Connections
Clout
Cash
Culture

Back to Vance and the intro of his son as well as something we at SourceJuice hold to be true – China is a capitalist country like no other. China is hungry, China is dynamic, and China is fast. As Vance describes “move over China is coming through big time”. Vance takes us on a ride to visit a supplier and what you may gleam off this visit is some fascinating dynamics of how “control” is both a necessity in managing your money as well as managing your supplier. Don’t forget to look at the “pen”.

March 15, 2008 | Filed Under Success Stories | 2 Comments

Share Your Expertise: Cameron Adair on Purchase Order Financing

Purchase Order Gap Financing as applies to U. S. Manufacturers sourcing Contract Manufacturing at Facilities in China.
By: Cameron Adair

Many small manufacturing operations in the U. S. have sought “gap” financing from private (non-bank) “factoring” firms and asset-based lending firms in order to complete and ship a contracted order to a customer. Such “gaps” in the working capital necessary to pay for the materials and labor involved in producing the “finished goods” often occur because a small manufacturer has already exhausted existing bank lines and does not have other capital availability, or because it has been “swamped” with more orders than it can handle with its existing credit lines.

When faced with a temporary liquidity “crunch”, the first call such companies make is to traditional factoring firms and asset-based lenders only to be told that, “We can lend against your receivables from your customers, but you must first finish and ship the order, and create the receivable. We can’t help you with the funds you need to complete the manufacturing process; we can only help you after the goods are finished and shipped.”

This is the prevailing “norm” as most factoring firms and similar asset-based lenders can only lend against receivables, and they are looking at the creditworthiness of the customer as their collateral, and not to the manufacturer. They cannot lend against “work in progress” or “purchase orders” for goods that have not been finished and shipped. This, of course, does not help the small manufacturer who still needs temporary cash availability to complete the purchase order and ship the goods to the customer.

There are a number of commercial financing firms that specialize in the high-risk arena of providing “gap” financing to small manufacturing companies to help them fulfill purchase orders. These “purchase order factoring” operations range from a handful of firms with a national footprint, to various regional firms and some finally to some very localized operations. There is no easily-defined industry group of such firms, and most small manufacturing companies have a difficult time finding out who to call, and what few firms there are that may even take a look at their “gap” financing needs in order to complete purchase orders.

Typically, “gap” financing firms will advance funds for raw materials and direct labor to get a set of goods covered under a purchase order completed and shipped. In general, most such lenders will only advance a portion of the funds needed, and the manufacturing company must have as much of its own working capital employed as possible (rarely can 100% of the cost of materials and labor be financed). These lenders will usually disburse directly to the materials suppliers, and wire funds to the payroll account on payday, in order to minimize risk, and will take a lien on the “work in progress” and finished products until the goods are shipped. At the point of “shipment”, when an invoice is sent to the customer and a “receivable” is created, the “gap” lender is typically paid (and the lien released) by an advance from the factoring firm that will “kick in” and lend against the newly-created “receivable” from the manufacturer’s customer.

“Gap” financing is expensive, usually 50% higher (on an annualized APR comparative basis) than the costs imposed by “receivables” factoring firms. It should only be used to the minimum extent necessary to complete and ship an order, and only be “drawn” upon for the least amount of time while the “interest meter” is ticking. A manufacturing company must have sufficient margins in the goods being produced to be able to “afford” such gap financing, and it can only be viewed as a temporary “means to an end”. Nevertheless, purchase order “gap” financing can make the difference between a company completing and shipping an order, and thereby keeping a good customer, as opposed to losing the order entirely. It can also provide temporary “relief” during periods of increased demand by customers when a manufacturer is unexpectedly “swamped” with orders and does not have the bank lines to meet these needs.

The need for purchase order financing gets more complicated for small U. S. manufacturers who, more and more in recent years, wish to contract to have their goods (or components of their finished goods) manufactured for them in China. Chinese manufacturing plants require advance deposits and payment in full prior to shipping. The cost of shipping from China and landing the goods in the U. S. must also be paid “up front”. For a U. S. company that has the capital, this process can tie up funds for a significant period time. But, for the U. S. company that must borrow some of these funds, the interest costs can become very expensive, especially while the meter is “ticking” during the overseas shipping process. Chinese manufacturing firms and shipping lines do not extend credit to smaller, “foreign” companies, and for a U. S. company, final payments are due when the goods are delivered “FOB” at the shipping port.

There is no easy answer to this dilemma. Larger, credit-worthy U. S. companies can arrange bank lines and letters of credit to handle their contract manufacturing and shipping costs in and from China. But for the smaller U. S. manufacturer with a limited capital base and bank credit facilities, the “mission” may be very difficult to achieve if not impossible.

Our affiliated commercial lending firms have provided “gap” financing to some smaller U. S. manufacturers in recent years to help fund contract manufacturing in China. This has been done on a case-by-case basis, and whereas our results have been favorable (i.e., as a lender, we have gotten repaid with the interest due), the costs to the borrower have often exceeded what was originally expected due to unforeseen delays and other “snags” in the process.

To be of help where possible, our affiliated lenders have recently organized a central “clearing house” to “field inquiries” from small U. S. manufacturers who need “gap” financing for contract manufacturing in China in order to “vet” each inquiry and see if we can match the manufacturer with a gap financing source that can meet their needs. To date, our affiliates have been able to work with only about one-third of the companies that have inquired; however, this still provided a source of much needed financial help to some companies who otherwise may not have been able to source such financing elsewhere.

ABOUT THE CONTRIBUTOR

Cameron Adair is Chairman of ADG Group in Atlanta, a merchant banking firm with interests in specialized commercial financing companies and consumer financing companies.

To make an inquiry, please fill out our contact form.
Sourcejuice is not paid or affiliated with Cameron Adair or the ADG Group, but is assisting readers to navigate the possible necessity of contacting or inquiring such a firm for their respective services.

March 11, 2008 | Filed Under Currency & Finance, Share Your Expertise | 1 Comment

Sourcing from China Over the Internet, Part 1 of 2

More and more we’re receiving inquiries from readers who are interested in purchasing product for import to the United States over the internet. It seems most people are interested in using either Global Sources Direct or Chinavasion, although there are likely many more companies offering this service.

Since you don’t need to work with factories directly, can order from the comfort of your own home or office, and use a credit card for payment, this can be a reasonable way to begin an importing venture, particularly if your initial quantities are low enough to use air shipping.

Fundamentally it’s important to understand that even though you may be purchasing in small quantities and using air shipping, you are still IMPORTING! There are rules and regulations involved when importing and it’s important you know the details of your transaction or you may be surprised at your final cost. For example, it’s easy enough to purchase food items or clothing made from certain materials online, but if there are import restrictions or quotas in place for this type of item, it may be seized or levied a high duty by the US Customs and Border Protection (CBP) once it hits the dock. If this happens, it’s your responsibility as the importer and not the responsibility of the company you purchased the product from.

All shipments arriving from outside the US must include certain information required by the CBP. While a U.S. Customs and Border Protection Declaration form is obtainable at most foreign post offices, declaration forms do vary from country to country and don’t always have all the information necessary. It is important to know that foreign shipments that are not accompanied by a U.S. Customs and Border Protection declaration form and an invoice may be subject to seizure, forfeiture or return to sender. You should make sure the seller is providing the following information, regardless of whether it is asked for or not on their own paperwork.

1. Seller’s Name and Address - Self explanatory.

2. Description of the item(s) in English - This is a legal requirement. You need to be as thorough as possible on the description. It is this description that determines the classification number (HTS Code) for the duty. It’s important to include all the main materials that are being used in the product. For example, ‘Scarf’ is not sufficient. You’d want to specify that it’s a ‘Silk Scarf’, or an ‘18-karat gold rope necklace’ instead of just ‘gold necklace’. If your description is not accurate, you could end up paying the wrong duty rate. Even worse, if you’re deliberately misleading (or the CBP thinks you are), inspected packages could be seized, you’d receive a fine, and you’d still be liable for the total cost of your packages, not the company you purchased from.

3. Quantity of Each Type of Item Being Shipped - For example, two watches (14-karat gold, 17 jewel), one leather purse.

4. Purchase Price in US Dollars - You’ll need to convert the cost into US Dollars and provide both the unit price, and the total cost for all items purchased. Many sellers will offer to understate the true cost to help the purchaser avoid duties, but this is illegal. Sometimes sellers will also understate the value of the goods to avoid package handlers stealing the goods. Therefore, you should always insure your goods, as this is the best way to protect yourself.

5. Weight of the Item(s) - Self explanatory.

6. Country of Origin - Seemingly self explanatory but it’s not. This is the country the product itself was produced in. For example, let’s say you’re purchasing gold necklaces from China but the clasps are actually made in Cambodia, you need to specify that.

March 9, 2008 | Filed Under Sourcing Guides | 1 Comment

The Holy Grail of Risk Taking Entrepreneurs: Brits Get Rich in China Part 1 of 3

SourceJuice is always on the scout for informative and uplifting stories and experiences to share. This YouTube series ‘Brits Get Rich in China’ is just that, and an excellent watch for all those with the entrepreneurship bug! In the first video in the series, we’re introduced to 3 business men, all with their own interesting story.

Tony Caldera - Tony was in the Cushion Business in England; and very successful as he was the #1 Cushion maker in Europe! However, his business was ravaged by Chinese Importers and he could not compete. Tony is headed to China to salvage his business, borrowing 2 Million pounds to restart his business.

Tony chooses the city of LinPing in China because it is famous for its textile industry. He proceeds to find a business partner (Chinese) which he turns over 30% of the company to for help managing and navigating China. He tasks her with building the factory.

As you can expect, most of the time when your partner or supplier provides information on status, quality, capability, etc there is a gap in expectations. You must discount what is said to ensure you expect issues and delays. Tony realizes this when he sees the status of his factory – not what his partner told him it was.. and not close to being completed.

Peter Williams – Peter is a former Colonel in the British armed forces and is now 7o years old. Instead of enjoying retirement he is embarking on selling to the Chinese. Hit product? Energy Savers for Air Conditioners (saves 20 to 30% of energy), which he has collected awards for in England.

Peter feels selling his device will be easy and invested all of his savings and last decade of life to do this business. Moving to Hong Kong he believes his box has unlimited potential due to the number of people in China. Peter believes he will make $500 Million USD in the next year.

Peter is optimistic but has never done business in China and doesn’t speak a word of the language. He is also very concerned about his intellectual property (IP). His box will be copied. He believes time is the enemy and needs to get his product out fast.

Vance Miller – Vance has a notorious reputation for selling cheap Chinese kitchen equipment in the UK, where he has ‘single handedly’ destroyed the UK’s domestic manufacturing base with his ultra-low prices. Vance is going to China to fix his supplier network.

42 year old Vance has made a fortune. He goes far off the beaten path to find suppliers and goes to the source to avoid middlemen. “Got to go right where it begins”, Vance says. Vance is an extremely interesting and passionate individual and you might be interested in seeing an excellent interview done by The China Business Network.

Vance goes to MaDu - a remote mining village, where there is a treasure trove of granite. He goes to personally inspect why he’s been having quality issues and it’s very interesting to see how Vance challenges the factory to show certain cartons, bypassing the factory’s “plan” for what he should see. If you’re interested in importing granite from China, check out the SourceJuice article Let’s Talk Granite - Pre-fabricated Granite Import Guide.

Vance drives around many towns and rural areas, showing how so many towns/cities in rural areas of China are focused on certain product lines. There is “Condom City”, “Zip City”, “Bra City” and ends up “Tap City” to meet a supplier called “Black Horse”, who is known for undercutting everyone in the city. Vance has some great price negotiation skills, breaking down a high end faucet into pieces to arrive at a much lower cost than initially quoted.

Continue on to The Holy Grail of Risk Taking Entrepreneurs: Brits Get Rich in China Part 2 of 3.

March 5, 2008 | Filed Under Success Stories | 6 Comments

Responsibility for Quality Lies with Importers - The Heparin Scandal

Paul Midler of The China Game has a blog post titled Heparin Case: China Says Responsibility For Quality Lies With Importing Nations which introduced us to the Heparin scandal. For those not yet in the know, Heparin is at the heart of a scandal where an unlicensed factory in China is reportedly responsible for causing 4 deaths and over 300 allergic reactions.

Heparin is a drug made from hog intestines and is vital when used in the dialysis process. There are two companies making Heparin, ATP and Baxter. Baxter has been outsourcing part of the production to China and it turns out this factory was unlicensed. Watch this video by Today’s Machining World explaining the situation.

The FDA has been tasked with inspecting the factory involved in Changzhou.

Karen Riley said that the agency’s inspection team has completed their inspection of the China facility and a “number of potentially objectionable conditions” were identified relating to the firm’s manufacturing process.

While it’s terrible that people died and that others were injured in this unfortunate incident, there is a lesson to be learned here. As the global economy has grown so fast, it’s clear government agencies have not kept up, neither on the China side nor the US side. While government may play a role, it’s up to the purchaser and importer to ensure safety for the products they develop and sell. Only personal responsibility, sometimes even at an additional cost, will provide people with safe products. Read more

March 4, 2008 | Filed Under Quality Control | 2 Comments