Shanghai Star
Ltd.
Shanghai Star
Ltd.
Shanghai Star Ltd., for legal and tax considerations incorporated in Hong Kong in 1997, started out as an independent exporter of ingredients and concentrates from Shanghai and Guangdong to the Japanese food industry. Word of mouth quickly spread that here was a Chinese trading house, which shared Japan’s stringent views on quality, and as a consequence, our Company was soon urged to also procure a fast growing list of “Made in China” non-food products. Initially these were container loads of relatively simple consumer items like e.g. stationary, computer peripherals, etc. But as China’s technical modernization advances with breathtaking speed, -some, not [yet!] all, Chinese factories are already equipped to make the average European workshop look somewhat obsolete- so does foreign demand for more sophisticated precision items like injection moulds, tools etc., which are now among our specialties.
Today a full subsidiary of Deutsche Consult, we are quite literally the World’s procurement/ purchasing agents in China. Our Chinese-German Team specialises in injection moulds/tooling and over 1,000 light industry products as well as in office equipment. Most manufacturers we work with are ISO 9000+ certified. From the selection of suppliers, negotiations on prices to quality control: We make sure that you get what you pay for, and do not rest before your goods are safely in their containers.
The formula is simple:
Our purchasing know-how + China’s low manufacturing cost =
Your competitive edge!
No more disappointments in China! ( ppt. presentation)
Just contact
Shanghai Star Ltd.
a Subsidiary of Deutsche Consult
16 A Wealthy Heights,
35-37 MacDonnell Rd.,
Central, Hong Kong
Tel.: (+852) 8227 516-0
Time Zone: UTC + 8 hrs.
Fax: (+852) 8225 5615
In Germany:
Hamburg:
Heimburgstr. 2
D-22609 Hamburg
Tel.: (+49) 40-8205-13
Fax: (+49) 40-8226508
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Buying from China: Better be Safe than Sorry!
With its ant-like army of dirt-cheap labour -a factory hand gets take-home wages of USD 50.- or so per month (!)- China's manufacturing industry is rapidly pushing its counterparts/competitors in the States, western Europe, Japan and even Taiwan to the wall: As a consequence, those countries have no alternative but to shift production of labour intensive goods to "The Middle Kingdom", thus often mutating from manufacturers to importers/traders in the process.
Gone are the days when "Made in China" mainly stood for bags, toys, umbrellas, artificial flowers, bikes, kitchen items and handheld tools: As the domestic market for refrigerators, washing machines, air conditioners, TV sets, DVD players, computers etc. is getting increasingly saturated (some 200 Mio. Chinese, who can afford such "luxuries" have them; the remaining 1 Billion paupers not counting anyway) manufacturing giants like Chinese Haier or TCL increasingly turn to world markets. Their products are of good quality, (meanwhile) sleek design, and offer good value for money.
When it comes to consistently good quality, these Alpha males are, however, not the rule: Just a few notches down, China's manufacturers still struggle to keep their standards of production stable. Systematic quality control already in the course of manufacturing (one of Japan's great strengths) is usually slapdash or even absent, and relevant ISO certifications, where from some "lenient" local institution, are often best seen as an ornament to decorate the wall.
Resulting mishaps are far from scarce, and when the end products unsurprisingly have "minor flaws", it is only too tempting to stuff them into the container for shipment to an unsuspecting overseas buyer anyway; -even more so, where the latter has (as often required) already prepaid, made a substantial downpayment or opened a Letter of Credit! Screams and yells from the outraged recipient then usually meet with the manufacturer's promise to replace those 20 or 30 per cent of flawed goods, when shipping the "victim's" next order; more often than not, this next shipment (and the said replacements) being just as flawed.
In such a sadly common scenario, "supplier hopping" is rarely the answer, and realistically the overseas buyer then has just two choices: Either he does his own on-site inspection before shipment (and even that will be too little too late, when the Chinese supplier already holds prepayment or an L/C in hand);
OR the whole purchasing process is, from the outset, left to a reputable procurement agent/quality controller here (we only recently took over Shanghai Star Ltd., specialists in this field since 1997
): The latter then advise on suitable manufacturers, prices, and keep a keen eye on everything until shipment. Furthermore, they can often negotiate "payment upon shipment" terms with the supplier. The buyer, when placing his order, then remits the purchase price to the said agent, who holds the funds in trust and only releases them, when satisfied that everything is in good order.Admittedly, the involvement of an agent is not for free: Some Hong Kong based procurement agents do, however, offer yet another service in the sense that, where their client so wishes, they themselves step into the role of the vendor on record: The invoiced (marked-up) sales price then leaves much of the profit from the transaction in Hong Kong , where all-in tax is a mere 17.5 per cent; the resulting windfall (after deduction of the said 17.5 %, naturally) being discreetly and routinely sent to an account of the overseas buyer's choice.
In Hong Kong this practice is totally legal, and our government gladly pockets such additional tax revenue. In this sense we may well be one of the very few havens to survive all the pressure brought to bear on other islands and small countries by the USA and EU in unison: Beijing jealously protects Hong Kong from any and all sorts of "foreign meddling", and who in the world would not think twice before offending China?
Your DEUTSCHE CONSULT
Team
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Buying from, rather than investing in, China.
If someone told you that, to get a glass of milk, you have to buy the cow, he would be considered a joker at best. The same, of course, holds true for all those looking to China and its seemingly endless capacity to flood the world with unbeatably cheap goods. Although no few consultants seem to resolutely push clients into building and operating their own factories –with ongoing and duly rewarded professional advice, naturally- the simple fact is that one should only spend money if and when one needs to: Many an ill fated foreign investment in China could have been avoided, if the owner had just kept the money in his pocket and concentrated on buying from China instead. At least in the country’s coastal areas like Guangdong, Shanghai, Xiamen etc. there are quite a few very modern manufacturing plants, technically equipped to make their counterparts in Europe or the States look almost obsolete. But how to find them?
Only too often this is left to chance: One comes across some ad(s) on the internet, corresponds a bit, and is soon most impressed by the one with the best English (forgetting that the search was for a manufacturer, not a linguist). All prices quoted are a steal, compared to what one pays at home, and the only terms this new-found friend really insists on are prepayment or L/C. Everything else, including ridiculously short shipping deadlines, even penalties, is swiftly accepted (and indeed of little consequence, as the foreign buyer will sadly learn when seeking help from China’s courts). So the order is placed, money changes hands, and everything seems fine until that crucial moment, when the goods are in the buyer’s yard: 30 per cent substandard and 20 pc. total rubbish! The vendor, obviously a nice chap after all, apologises profusely and promises to replace the entire 50 per cent when shipping the next order. And indeed that subsequent shipment then totals 150 % -with 30 pc. of total yet again substandard and 20 per cent scrap! In the end, both parties have thus lost money and (after a lot of finger pointing) part company.
The above scenario can, of course, be quite easily avoided through the involvement of a reputable trading house or procurement agency. And the following highlights are indeed mainly for those trying to go it alone in the hope of saving on what would be money well spent:
1.) Not all products are suitable to be made in China: China’s status as the world’s manufacturing Mecca is ultimately all about the country’s low wages and abundance of a well trained and/or easily trainable workforce. Indeed a worker making USD 0.60 per hour is already quite “well off”, but this cost advantage only comes into play when and where the manufacturing process still involves manual labour: Where fully automated machines churn out the goods, their location is determined by issues like taxes, duties, infrastructure, a reliable legal system, etc. (China being not particularly attractive in any) –not labour cost!
Then there is always the real and present danger of involuntary know-how transfer and theft of intellectual property. Just take all those designer handbags etc. made in China: An order of, say 20,000 bags is placed with some Chinese manufacturer and duly shipped to one of those European fashion houses. Within weeks, even days, however, the very same bags find their way into Asia’s bazaars at bazaar prices; “fakes” often so perfect that one cannot help wondering whether the manufacturer of those “official” 20,000 items might have forgotten to stop the production line…
Finally, where a country hits the importer of goods with stringent warranty and product liability laws, it should be borne in mind that, because labour is so cheap, many manufacturers still have processes done manually, which elsewhere are left to machines: As a result the quality of “Made in China” products even where they come from the same factory, are often not uniform. Where the product could be dangerous if faulty, and such risks cannot be covered by insurance (in China they cannot!), better weigh the odds carefully!
2.) Search tools for suitable Chinese suppliers may vary from country to country, and we are certainly not aware of all. One interesting (English & Chinese language) website is the Hong Kong Trade Development Council’s http://www.tdctrade.com/ where one can search and place ads too. The said TDC has quite a dense network of offices the world over (see http://www.tdctrade.com/), so contacting them may be well worth a try.
Also worthwhile, the website of Taiwan’s TDC equivalent: http://www.taiwantrade.com.tw/ Here too, one can search and place ads in English and Chinese. Considering that Taiwan’s manufacturing sector has moved to China in droves, and (just as factories run by entrepreneurs from Hong Kong) is often more “western” and service orientated than genuine PRC enterprises, you could be lucky.
To our knowledge there is no such equivalent in the PRC for now. http://www.sw365.com/ makes a (privately run?) effort to become a Chinese based B2B portal, but the site is relatively recent.
Again: We cannot possibly know all the sources, and if you have a better lead, please share it our editor@deutsche-consult.com .
3.) Once a promising manufacturer has been found, your correspondence should ideally be in Chinese, of course, otherwise in polite but simple English: Describe the desired product in detail and offer to send a sample thereof (samples speak louder than words). Give the approximate quantities you have in mind (for the year and for the first order). Ask whether the Chinese factory is ISO certified and by whom, as some certificates issued by accommodating local entities are little more than wallpaper.
Where you cannot identify your prospective supplier’s location, ask for his nearest international air- and seaport. In China’s inner and western provinces the infrastructure is often rather dismal, and even getting the goods to you might prove difficult.
(Not only) Chinese manufacturers prefer to quote their prices in US Dollars on FOB or C&F basis. Avoid requirements like “Duty paid” or similar less usual clauses: You can deal with your country’s import duty etc. more easily from your end anyway.
Payment terms for new buyers in China as elsewhere are usually prepayment or, where the goods can easily find another buyer, at least down payment of 30 per cent or so (with the balance then due prior to shipment); alternatively a Letter of Credit.
4.) It is an absolute must that before placing the first order you, or someone you trust, visit the Chinese factory, where seeing is believing! You may still be fooled by the old trick, where your new friend gives you a tour through a factory, which is not his. But at least you will see whether those premises are in the line of business that you are looking for. Where this is not the case, and it turns out that your goods are to be made at an “uncle’s” plant, insist on being immediately taken to that “uncle”. Where this, your demand meets with evasiveness, close the door on your way out, as this one is definitely not your “Mister Right,” and restart from paragraph 2. above.
5.) And even if everything so far seems fine, money has changed hands and production is now under way, one final hurdle looms, which is of crucial importance but in reality can be the most difficult to take: A final inspection of the goods (and quite often repeats thereof until everything is shipshape) immediately prior to shipment is every buyer’s unalienable right, yet hard to do where that buyer has nobody on the spot, and the cost for sending someone from abroad would be out of proportion.
Omnipresent quality controllers SGS have some twenty offices in China (see http://www.cn.sgs.com/), but their services come at a price; nor does Germany’s renowned TÜV, in China or elsewhere, work for free, and neither may be overly interested in inspecting some walk-in customer’s smallish shipment.
Indeed even our own small subsidiary Shanghai Star Ltd., procurement agents and quality controllers since 1997, nowadays mostly caters to the needs of Deutsche Consult’s Clients and tends to turn down strangers asking them to do only (!) quality control, which, unless all liability for the controllers’ oversight is waived, can mean taking “big risks for small bucks” on board.
But this would not be Hong Kong if some of the procurement agents & quality controllers here had not turned the aforesaid dilemma into an opportunity: Rather doing just the inspection work, they offer to step in as sellers of the contracted goods. The buyer then finds himself with a reputable party, located in a jurisdiction, where justice is swiftly and impartially served, whereas the new vendor can pocket at least 3 per cent for his services. Indeed even those 3 % are, where the buyer so wishes, “compensated” through the following trick: The sales price invoiced by the new step-in vendor is marked-up to leave much of the buyer’s profit from the transaction in Hong Kong , where all-in tax is a mere 17.5 per cent. The resulting windfall (after deduction of the said 17.5 %, naturally) is then discreetly and routinely sent to an account of the overseas party's choice.
In Hong Kong this practice is totally legal, and our government gladly pockets the additional tax revenue. In this sense we may well be one of the very few havens to survive all the pressure brought to bear on other islands, small countries and indeed even Switzerland by the USA and EU in unison: Beijing jealously protects Hong Kong from any and all sorts of "foreign meddling", and who in the world would not think twice before offending China?
6.) Those interested to see our Powerpoint presentation on the issues highlighted herein (and a number of photos taken in Chinese factories too) are most welcome to visit
http://www.deutsche-consult.com/ppt/Purchase_in_China_files/frame.htm
We are also happy to assist with addresses of Chinese suppliers, where we know them. Please do not hesitate to contact our Hong Kong or Cologne office (see http://deutsche-consult.com/profile_eng.html ) in case of need.
With
kind regards
Your
DEUTSCHE CONSULT Team
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