The China Sourcing Blog
An information platform for the procurement and trade industries in China
China's Housing Market Drags Down Growth
The following is a contribution to the ChinAfrica magazine produced by The Beijing Axis.Amid a sustaining decrease in the value of the housing market, several Chinese cities have abolished household registration restrictions on property investment. Chengdu, the hub of development in southwest China, has notably proposed and then revoked its offer of a 3-percent housing loan subsidy for first-time buyers. Amid fears of building modern "ghost towns," Chinese municipalities began to enact restrictions on property investment from as early as 2009. The property market is considered one of the most profitable and stable investments, thus this policy was difficult for many hopeful homebuyers. However, Chinese policymakers are now afraid of the repercussions of the rapid decrease in activity in China's property development sector. The slump in the property market has been strong enough to bring the China Services Index to a record low. Some analysts suggest that this may indicate that the g...
Fighting modern slavery with ethical procurement
This piece was produced in collaboration with CIPS
In a guide produced in collaboration with Traidcraft
and the Walk Free Foundation
, CIPS defines ethical procurement
(also known as responsible procurement) as procurement that respects fundamental international standards against criminal activity including bribery, corruption, fraud and modern slavery.
The Walk Free Foundation estimates that roughly 30 million people live in slavery today in a number of sectors, countries and cultures around the world.
Effective procurement professionals are not only able to spot signs of unethical practices in their supply chains, but they are also capable of acting immediately to eradicate these practices and create improvement in the lives of those in their supply chain. Holders of the MCIPS certificate understand that they must not only walk away from any corrupt practices, but that they must take action to free those enslaved in the supply chain.
Sustainable procurement includes the environment...
Food scandals amplify need for MCIPS procurement professionals
This piece was produced in collaboration with CIPS, the Chartered Institute of Purchasing and Supply
Food scandals are shaking confidence in food supply chains around the world. While food safety was once assumed to be paramount in the minds of food retailers and buyers, it has become clear that consumers have been deceived into consuming foods strikingly different from what their religion, preference or cultural values allow.
Both McDonald’s Corporation and KFC parent Yum recently suffered brand damage when Chinese authorities closed down a local meat supplier after evidence of old and contaminated meat was found in their products. More recently, a Taiwanese company, Chang Guann, has been fined for selling old oil, unfit for human consumption, as food-grade cooking oil.
McDonald's and Yum Foods have stopped using the maligned supplier, Shanghai Husi Food Co Ltd, found new suppliers and publicly apologised to consumers.
China is the third largest market for McDonald’s with Yum close b...
When the "African Tigers" compete
This piece was originally produced for the ChinAfrica Econometer
As costs increase in China and other Asian manufacturing countries, the "African Tigers" are competing to absorb displaced manufacturing capacity and become the next leaders of low-cost manufacturing. Recognizing the success of export-led manufacturing growth in bringing the Asian Tigers (Hong Kong, Singapore, South Korea and Taiwan) out of poverty, African business and political leaders are seeking to mimic this success at home. The leading East African economies of Ethiopia, Kenya and Rwanda provide competitive manufacturing environments with unique strengths.
In addition to low labor prices, low-cost African economies benefit from key duty-free and quota-free trade agreements, such as the United States' African Growth and Opportunity Act and the EU's Everything but Arms pact. However, these East African nations face a host of challenges in absorbing Asian manufacturing capacity. For example, many are unable to provide...
LETTER FROM CHINA: IPOs Bring Chinese E-Commerce Opportunity to the World
This editorial was produced by The Beijing Axis for Business Day by Kobus Van Der Wath. JD.com, China’s answer to the American online retailer, Amazon, released their initial public offering (IPO) on the Nasdaq Exchange in New York in late May. Based out of Zhongguancun (China’s technology centre in northwest Beijing and answer to California’s Silicon Valley), the Chinese e-commerce platform peaked at a market capitalisation of US$28 billion by the close of the first day’s trading, 2.4 times last year’s sale of US$11.5 billion and almost twice as large as Amazon’s market capitalisation.
This offering, the largest of a Chinese web company ever, exceeded expectations and demonstrated faith that the level of Chinese economic activity online will boom, even as China’s GDP growth rate stabilizes around 7.5%.
Though JD has yet to record a profit, investors remain confident that this simply reflects investment in growth. In recent years, JD has, for instance, expanded it logistical capabilit...
LETTER FROM CHINA: IPR Developments Will Catalyse Innovation in China
Inadequacy in China’s
intellectual property rights (IPR) protection regime is one of the key
challenges faced by foreign firms operating in and considering entry into
China’s market. The world’s second-largest economy has a “first to file” system
and is notorious for protecting local firms over foreign ones in disputes.
However, recent developments
- such as a deal with the Motion Picture Association of America (MPAA), the
central government’s creation of a slew of IPR courts, and the emergence of
intellectual property (IP) financing techniques - demonstrate China’s
intentions to foster the innovation-oriented business environment it sees as
leading future economic growth.
The MPAA, the key enforcer of
film copyright issues in the US, signed a deal with Shenzhen Xunlei Networking
Technologies, a Chinese video hosting website to “prevent unauthorized access”
to MPAA member copyrighted works.
The two groups have a history
of involvement. In 2008, MPAA sued Xunlei for supposedly pr...
LETTER FROM CHINA: Foreign Automakers are scrambling for China
This editorial was produced by The Beijing Axis for Business Day by Kobus Van Der Wath.In recent weeks,
global automakers have announced their intentions to increase their focus on
China. For example, General Motors stated that it would invest USD 12 billion
from 2014 to 2017, and VW recently announced plans to invest USD 25 billion
from 2014 to 2018. These statements are unsurprising when one looks at the progress
China’s auto market has made up to now, and the room it still has to grow into.
Since 2000, when 1.8
million automobiles were sold in China, until 2013, when 21.98 million units
were sold, sales growth reached a compound annual growth rate of over 20
percent. China’s auto market exceeded 25
percent of the global automobile market by 2013 and is expected to become nearly
a third of the world’s total auto sales by 2020 with roughly 34.7 million
units. Furthermore, taking into account the fact that China’s projected car
ownership rate (number of cars owned per 100 of the d...
Growth Stabilizes in China
This article was originally produced for the ChinAfrica magazine.
Despite continued distortion in trade data evaluation due to the propensity for fraudulent “over-invoicing” in the first half of last year, trade figures surprised analysts by rising in April.
Trade growth focused on the U.S. and EULargely as a result of trade with developed markets, both exports and imports increased in April. Exports increased from $170 billion in March to $188 billion in April, a 9-percent year-on-year increase. Imports, on the other hand, experienced 8-percent growth from $162 to $170 billion.Much of the growth in exports was directed toward developed countries. Exports registered to the United States, for example, jumped 12 percent in April from the previous year, a significant development considering the 11.3-percent decrease year-on-year in February and the 1.2-percent increase in February. An impressive 15.1-percent increase in shipments to the European Union occurred in April, compared to the...
Top Three CSR Challenges Facing Asian Factories
This post is the second in a series presenting the current status of CSR sourcing in China. Read part one, A Primer on CSR Standards and Sourcing in China.
In our sourcing projects, TBA has come across repeating infractions of corporate social responsibility (CSR) standards in Asian factories. TBA recently conducted a series of audits at factories in Southern China and Southeast Asia.
The most commonly observed CSR infractions fall into the following categories: unsatisfactory workplace safety arrangements, overworking employees, and poor compensation and record keeping practices.
Audited factories faced many challenges related to: failing to plan for emergencies, and risky treatment of hazardous chemicals and other dangerous supplies. The most common safety infraction that our team witnessed was the lack of an evacuation plan. Our team also noticed that several of the audited plants had not installed smoke detectors, did not have access to fire hoses, and had locked o...
A Primer on CSR Standards and Sourcing in China
This post is the first in a series presenting the current status of CSR sourcing in China. Part two will follow next week.
Recognizing the large scale of the social implications of actions taken by large firms, many firms began implementing Corporate Social Responsibility (CSR) policies in the mid-twentieth century. Today, producing a CSR report is a common marketing tool that allows organizations to demonstrate their support of social principles. Studies show a correlation between CSR activities, consumer activity, and appetite for high-quality goods and services.
Because many factories in China have labelled themselves as SA8000 certified (an international social auditing standard), we use SA8000 as the foundation of our social audits. The following checklist forms the backbone of our social auditing activities in the Chinese and Southeast Asian markets.
Also, the auditor should require factory managers to present all relevant documents for each requirement. In many cases, Chinese...