International Trade Resource Blog

http://www.businessweek.com/magazine/content/10_21/b4179011091633.htm

Why Factories Are Leaving China
A labor shortage is trimming margins for exporters, who are moving to Vietnam, India, and elsewhere

By Dexter Roberts

As costs climbed in Taiwan two decades ago, Ben Fan moved his lighting factory to take advantage of China's cheap labor. Now, with Chinese wages on the rise, he's moving again. "It's just like what happened in Taiwan," says Fan, chairman of Neo-Neon Holdings, which sells lamps and lighting fixtures to big retailers including Home Depot (HD), Target (TGT), and Wal-Mart (WMT). "Chinese don't want to work in factories anymore."

So Fan is expanding his factory in Vietnam, where wages are $100 a month, one-third what he pays in China. He plans to shift 85 percent of his production across the border, and by December he'll have 8,000 workers in Vietnam—up from 300 a year ago—and just 5,000 in China, down from 25,000 in 2008.

Over the past two years, millions of jobs have moved to China's interior or elsewhere in Asia as factory owners try to cut costs. In Guangdong, the mainland's top exporting province, wages have almost doubled in the past three years, and more than half the factories can't find enough workers. The number of migrants who traveled to coastal provinces for work fell by 9 percent last year, to 91 million. "This lack of labor will only get worse," says Willy Lin, chairman of the Textile Council of Hong Kong, a trade association.

Factory owners complain that the higher wages are devastating profits, especially as their customers continue to squeeze them for lower prices. "Wal-Mart won't raise what they pay us," says Poh-Heng Toh, general manager of teddy bear producer Lovely Creations. Another Wal-Mart supplier, jewelry maker Profit Grand, has cut its staff to 450 from 600 largely because it can't find workers at the rates it's willing to pay, says Chairman Hsu Chi Lin. Wages, Hsu says, have risen from 2 percent of total costs a decade ago to 12 percent today, while net margins have fallen from 15 percent to about 8 percent. Factory owners are also worried about a potential revaluation of China's currency. The yuan is up 21 percent vs. the dollar since 2005, and many economists expect it to rise an additional 5 percent this year.

While China's growth—11.9 percent in the first quarter—is a factor in the labor shortages, they likely won't disappear once the economy cools. The country's one-child policy means fewer people are joining the workforce. Tax breaks for farmers and subsidies for companies setting up in the interior have allowed more people to find work near home. And a growing service sector means greater opportunities lie beyond the factory gate. "The younger generation is trying to get work that is much easier—waiting tables in restaurants or working in supermarkets," says Charles Yang, general manager of Apache Footwear, which makes shoes for Adidas.

Many companies are finding ways to pare costs. Electronics giant Foxconn Technology, which makes the Apple (AAPL) iPhone and handsets for Motorola (MOT), has opened new plants in China's north and west, far from its home base near Hong Kong. Shoemaker Apache has moved simpler work, such as stitching the upper portions of sneakers, from Guangdong to lower-wage factories in the interior. Apache is also expanding a plant in Chennai, India, that will produce at least half its shoes within five years. The company's Chinese workforce will soon drop below 10,000, from 18,000 two years ago, general manager Yang says. "We've been squeezing like hell to get more out of the system," he says.

No one expects manufacturing to disappear from coastal China. The networks of suppliers for industries from textiles to electronics—makers of buttons, zippers, wires, connectors, and the like—can't be easily replicated elsewhere. Many companies plan to keep more sophisticated work in eastern China while moving basic tasks elsewhere. Neo-Neon, for instance, expects to boost production of LED lighting in China even as it expands in Vietnam. Chinese workers today "want easy jobs and higher pay," says Fan. "We can give them that if we make more expensive, higher-margin products."

The bottom line: Rising wages in coastal China are spurring manufacturers to open factories in cheaper places, though more advanced production may stay.

With Bob Chen

I first read about this blog and publication a couple years ago. Periodically, they have email newsletters about different news items concern the US and its relation with China. I think its a great read, even though it is not all that frequent.



http://www.uschina.usc.edu

This part 3 of the last series of Trade Shows - Exhibiting at a Trade Show - Part 3, Follow Up. I will discuss some tips I have found in Exhibiting at a Trade show. I have had experience exhibiting trade shows in Los Angeles, Chicago, Atlantic City, San Diego, Las Vegas, Toronto, Orlando, Taipei, and Hong Kong. I have exhibited Educational Services, Pet Products, Computer Products, Housewares, Vision Care, and Kitchen & Bathroom Products.

I apologize for the long delay between posts. I have been busy with a few things. I need to put this blog on priority. I hope that I can keep this blog as a regular task for myself.

This part 2 of the last series of Trade Shows - Exhibiting at a Trade Show - Part 2, The Event. I will discuss some tips I have found in Exhibiting at a Trade show. I have had experience exhibiting trade shows in Los Angeles, Chicago, Atlantic City, San Diego, Las Vegas, Toronto, Orlando, Taipei, and Hong Kong. I have exhibited Educational Services, Pet Products, Computer Products, Housewares, Vision Care, and Kitchen & Bathroom Products.


At the Event
A. Manning the Booth
Make sure that you have enough people to properly man the booth. This means that you should have at least two people at all times for a 10x10 booth. Then for a larger booth, you might want to go up with the same ratio - 2:10, 4:20, etc. As a rule of thumb, it is always better to be better prepared than under-prepared. Obviously booth babes don't hurt to help either. If you are choosing to hiring booth babes on a temporary basis - which you can find almost anywhere, make sure you train them properly. Perhaps this can lead to a hire of a sale rep.

B. Offer Giveaways or contest
Another key task that I like when I have a booth is offering giveaways. If you can spend for few cents per item - such as a pen, small sticker, magnet, etc, this can help create the first step in interacting with potential clients. I like to be pro-active in going out to meet people. Sometimes you see booth with people waiting for people to come up to them. But if you are a new and up & coming company with a great product/service - this method can help greatly. By having a couple of people at the front of the booth just hand out these pens or magnets, you get people to say thank you and more often than not, they will ask more about you and your company. These are what you call hooks. And that's your opening! If you can purchase 10,000 logo'd pens, you can find this use to help in gaining the first step.

In addition, contests and drawings also help in building you list of potential customers as well. If you can collect business cards and can scan people in, you can see you list quickly grow. In this manner, you can have you people just talk to passerbys and offer them to enter in a free contest givaway/drawing.

C. Ready to do purchase orders
Offer trade show specials. Offer incentives if they place the order now or within 1 week of the trade show. Make sure when you are at the show that you are willing and able to take new orders. Even if you don't have credit checks in hand for new clients, at least they can fill out orders and fill out other necessary documents when they return home. Make sure you have plenty of your forms, catalogs, line sheets, credit application handy when you are at the trade show.

D. Joint Efforts and Marketing
Consider working with complimentary products and services in your industry. Look for exchange marketing. Perhaps you could put some of your brochures at their booth or during their seminar and vice versa. Maybe one of your staff could be at their events to talk about integrating their products and services together.

Long term deals could include packaging your products/services together. And at the end of the day, this type of agreement or joint effort is something larger than just putting brochures at another's booth.

E. Walk Throughs
You should, personally, walk through the entire trade show, at least once. You and your staff can get ideas about booth design, what to do next year, and how to improve your own message/marketing. In addition, you can also gauge your competition.

Attend seminars in your industry, competitors, and of potential clients/partners.

F. Next Year's Space
Arrangements for next year's trade show should be made at this years. Persuade them to get better booth locations by purchasing advertising and other marketing that they offer. Maybe getting a larger booth space will help in getting better positions on the trade show floor. Trade shows are all about location, location, and location. Secure spots strategically near high traffic areas.

G. Dismantle Arrangements
Often times at these large trade show venues you'll be forced to work with Unions in dismantling your trade show booths. Talk to them early to get them to dismantling your booth carefully. You might have sensitive material and or important images & marketing materials that need careful handling. Tip them in hopes that they will take special care.

Attending a Trade Show - Part 1, Preparation
Attending a Trade Show - Part 2, The Event
Attending a Trade Show - Part 3, Follow Up

Exhibiting at a Trade Show - Part 1, Preparation
Exhibiting at a Trade Show - Part 2, The Event
Exhibiting at a Trade Show - Part 3, Follow Up

Similar to that of Alibaba, Panjiva is a aggregator of many companys' information. Specifically manufacturers in the textile industry. I first read about their company in Businessweek. I think Panjiva's a great resource for new and up and coming clothing designers.



Panjiva works textile manufacturers all over the world. They provide the added value service of internally rating the suppliers/manufacturers. Their official rating system allows themselves to be the recognized arbitrary 3rd party. Alibaba, like amazon and ebay, relies on users/customers to govern the vendors. I think Panjiva's involvement will keep users/customers coming back.

This is part 1 of the last series of Trade Shows - Exhibiting at a Trade Show - Part 1, Preparation. I will discuss some tips I have found in Exhibiting at a Trade show. I have had experience exhibiting trade shows in Los Angeles, Chicago, Atlantic City, San Diego, Las Vegas, Toronto, Orlando, Taipei, and Hong Kong. I have exhibited Educational Services, Pet Products, Computer Products, Housewares, Vision Care, and Kitchen & Bathroom Products.

Prior to the show you might want to go through this short list to see if this show is right for you.
A. Evaluation of the Trade Show
Take a look at the trade show's website and figure out if this trade show is right for you. This large ticket expenditure may or may not be the right one for you. You might find that regional trade shows might not have the target audience that you are looking for. In addition, talk to some of your customers that attended the trade show prior, they might have good or bad things about the show. Perhaps there is a competing trade show that is better that everyone one goes to.

B. Reasons to Exhibit - Branding
If you find that you did not hit your sales goals last year from a particular trade show. You might be hesitate to invest your time and make that large purchase for that trade show booth. But at the end of the day, the trade show booth helps keep your company and your name in the industry place. Maintains your brand awareness for your potential clients, current customers, and even your competitors.

C. Maintain Relationships
Networking at these events helps you and your company stay abreast of trends, practices, and ideas. You'll get a chance to meet new people in the industry that might be able to help you in the future. You might be able to hire them, or seek them for ideas or a future opportunity.

D. Speaking Engagement Opportunity
If you get the chance to present or talk at a seminar, as an expert, you'll find people seeking you out. This will help you and your business grow. If the trade show organizers inquire about you speaking on a panel or if you can create a seminar related to the trade show - these are opportunities that you should strongly consider.

I've heard of people strictly doing seminars instead of having a booth. They've done more business and gotten more contact in this manner. I'll talk about this idea of becoming a speaker, later.

Once you made your evaluation on exhibiting at the trade show, here are some tips on preparing for the show.

A. Booth Selection
If you are new to the Trade show, you probably won't be able to get the best booth location. But if you plan for it a year in advance, you might be able to get a better selection. When selecting a booth location, look for high traffic areas, near the front entrance, near restrooms, near food courts, and near larger exhibitors. In addition, about a week or so before the trade show, contact the organizers, ask them if there is an exhibitor or two that has dropped out. Ask if there is better placement for your location.

In addition, if you are working with a partner, perhaps a distributor or a regional distributor - maybe you could share the booth with them. You could help alleviate some of the costs. You might be able get a better location with a longstanding distributor who has been there a long time.

Another idea for preparation, is to consider getting a nice Hotel Suite with or without your booth. The Hotel Suite will be location where you can comfortably showcase your products to big customers. This controlled environment allows you to provide VIP service.

B, Marketing Opportunities
Prior to the Trade show, the organizers will often provide opportunities to place ads. Ads will be at the trade show as signage, in the media materials - like trade show program, and mailers. All these opportunities should be considered, at the very least. I believe the mailers are probably the most important and least considered. If you can target attendees, with a mailer, it provides them something physical to hold, lots of media space, and contact information with a call to action, that they can hold on to, even after the trade show.

C. Traveling and Logistics

If you have a booth with lots or little amounts of set ups, you may have no choice but to use the staff and workers at the trade show. Often times, their union workers that give you no choice. But you can save money if you think about what you are setting up. You can find good deals on used trade show display pieces. All you have to do is purchase and produce the artwork on the used sized trade show display pieces.

And rather than traveling with your trade show display pieces, use your discount Fedex or UPS ground accounts. If you plan accordingly, you can save money on logistics. Having them fly with you can cost substantially more.

D. Meetings

Set meeting at the trade show to see current clients. Set meetings with potential clients. And if need be, set up happy hours or lunches with new clients that you met at the trade show. Let your potential clients know that you will be there with your staff showcasing your services and products.

E. Samples and Giveaways
Make sure you have samples of your product that you can give away. You can mark this expense up as marketing expense, rather than potential sales revenue. But, you may want to considering selling them toward the last day of the show, just so you have samples to show throughout the event. This way, you can get your clients to come back to your booth.

Often times, you need a hook to get new clients to talk to you at your booth. I used to giveaway free pens (with our logo and contact info) to everyone who walked by our booth. This way, it gave you an opportunity to interact with someone, rather than wait for someone to walk in your booth. All you need is a couple people and a few thousand pens. Offer a pen or a small inexpensive logo'd item to everyone - EVERYONE, and they will most like offer the opportunity to have eye contact. Once you establish this, you can start your 5 second pitch.

Another incentive to get people to your booth that you need to prepare for - is a giveaway contest. If you scan attendee's badges and/or get their business cards, you can indicate to them that there is a giveaway contest at the end of the trade show. This provides more opportunities for you to build your new contact list. The giveaway can be anything of value - it doesn't matter.

Attending a Trade Show - Part 1, Preparation

Attending a Trade Show - Part 2, The Event

Attending a Trade Show - Part 3, Follow Up

Exhibiting at a Trade Show - Part 1, Preparation
Exhibiting at a Trade Show - Part 2, The Event
Exhibiting at a Trade Show - Part 3, Follow Up