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Thursday, April 12, 2007

The problem of suppliers from China?

Everybody is writing about not trusting suppliers from China – what is exactly the problem? I have had good relationship with China suppliers but I am dying to know the details of the problems others experience –I might be able to help.

These are the problems and personal suggestions I have for the Chinese suppliers:

1. Oversupply - too many manufacturers and suppliers of the same product, causing gluts in supply, high competitiion and a downward pressure on price, compromising the quality of the product.

2. Fragmentation - the manufacturers of the various SEZ need cohesiion and unity, to share information with each other, to work in cooperation and compliment each other.

3. Brand names - China has short history of International brand names.

4. Advertisements - China has conservative ideas about propagating and soft selling their products. Spendings on marketing promotion, and working with US models can help to improve this weakness.

5. After-sales service - International warranty coverage and distribution network has rooms to improve.

6. Shipping and logistic systems has yet to realize to world class.

7. IP law and copyright regulations has to be enforced 100%, especially on software piracy and counterfeit brands.

8. Payment terms need to improve. Work with financial institutions and build up two-way trusts. Due deligence by third party has to be available for big transactions.

9. Transparency. Published company profile, lists of directors and shareholders, account report briefs, and track records have to be current, comprehensive and authenticated.

10. Technology and innovation. The interim measure is to work with imported technology, get licensing from brand names and to foster links between industries and technogy institutions and universities in the country. The long term solution is to have Research and Development centres to the different groups.

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