China Relationships and their Impact on Global Tra

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China Relationships and their Impact on Global Trade: 

China Relationships and their Impact on Global Trade Presented By: Seth Becker VP Global Sourcing, Southland Metals

Establishing a Business Relationship : 

Establishing a Business Relationship Trust is the most critical Issue 3rd Party or Direct Relationship US vs China Based Visit the source if possible

Product Quality : 

Product Quality Local Representation at the source is the key to success Design specifications MUST be as black and white as possible…very different than US Go slow in beginning if at all possible… sample/pilot run process is a start, but does not guarantee success. Suppliers will take short cuts to improve margins 3rd Party Inspectors can help, but are not the panacea that you might expect

Slide4: 

Larger facilities often charge a higher price than smaller facilities….opposite the US where economies of scale often dictate Suppliers most often take the short term approach. Back charging suppliers can be extremely difficult, especially if you are dealing direct due to the legal framework and currency restrictions

Environmental Concerns: 

Environmental Concerns Water - Lack of fresh water reserves on a per capita basis to start -40% of the water is too polluted for human, industrial or agricultural purposes -190 million people drink water that is so contaminated it makes them sick -25% is wasted/lost due to leaks, compared to 8% in US -Bottom Line: Two-thirds of the cities do not have enough water to support their needs today.

Slide6: 

Air Quality -5 of the 10 most polluted cities in the world -Suspended particle matter loads are twice the levels that World Trade Organization considers safe -400,000 deaths annually are attributed to air pollution Energy -300 to 500 Million people will migrate from the countryside to the city over the next 12 years -Consumption in the city on a per capita basis is 2 ½ times that of the countryside -Shortages are most severe in Shanghai and the south

Environmental Impact…What is being done?: 

Environmental Impact…What is being done? $100 Billion over the next 3 years will be spent to clean up Laws have been established with 5 times the amount of EPA inspectors than the US… the issue is implementation…local officials are more responsive to the business community than they are to the government or local population “Guanxi” (your relationship) will remain critical…a foreign entity can expect to play by the rules vs the local Chinese businessman “Dirty businesses” are being down played and taxed differently than the those that are clean

Other Factors to Consider: 

Other Factors to Consider Health Care/Aging population…far worse than the US due to the one child policy implemented 30 years ago Intellectual Properties…how to control? R&D…Think vs Report/Copy

Keys to Success: 

Keys to Success CHINA Side Education Management Skills…accountability with responsibility Tame corruption and balance growth US Side Expectations…understand that “Rome was not built in a day” Consistency in business dealing Understand that Social Stability is paramount to every else

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