The China Sourcing Blog
How to Crack China
(Aug 23)
Switching your sourcing to the world’s third largest economy can save you 30%. But getting in there is no easy matter. China’s development has been one of the great marvels of the modern age. Its output was regarded as a mere statistical anomaly on the international landscape just a generation ago, but has since ascended to become the world’s third largest economy. Chinese exports dramatically expanded after the country’s admittance to the World Trade Organization in 2001, culminating in China’s current status as the number one exporting nation. In 2009, roughly USD1.2 trillion of Chinese goods reached consumers at every corner of the globe, with sub-Saharan Africa accounting for USD26.27 billion, the Southern African Development Community region accounting for USD12.9 billion and South Africa USD7.37 billion. If businesses wish to remain competitive, it is no longer possible to ignore China’s export potential. For those involved in sourcing, incorporating China into the supply chai...
New Procurement Opportunities in China's Emergence as a Producer of Renewable Technology
(Aug 16)
Today China is an acknowledged early leader in pursuing green economic development. From having an almost non-existent renewable energy industry in the early 2000s, China is now a leading exporter of renewable energy equipment and machinery. Here we highlight three factors contributing to the explosive growth of China’s renewable energy industry. Active government supportRenewable energy will be a key focus of the 12th Five Year Plan and of China’s plans to achieve energy independence and reduce pollution. The 11th Five Year Plan already mentioned natural resource depletion as a challenge and up to 40% of China's RMB 4 trillion economic stimulus package is targeted at green projects.
Not surprisingly, China is now the world’s largest investor in renewable energy. In 2009, China invested close to USD 35 billion in clean energy, almost twice that of the US. Today, renewable energy accounts for 4% of China’s total energy capacity and close to 20% if we include hydroelectric power. St...
Angola: China or Portugal? Part 2 - Competitive Forces
(Jul 29)
After the end of its long-running civil war, Angola required funding in order to finance much-needed growth. From 2002 until 2007, various facilities were set up by the OECD community, including Portugal. However, increasing amounts of non-performing loans inspired the International Monetary Fund’s refusal to roll-over the Angolan debt in 2007. Many of the OECD financiers did the same and Portugal, being largely tied to the EU political decisions on the one hand and committed to maintaining adherence to the developed world’s lending practices on the other, was bound to toe the line. This was a key opportunity for China, which it seized without hesitation. While the Angolan government was constantly reminded about outstanding debts by the EU community with occasional threats to downgrade its credit ratings and seize its overseas assets, China came up with an open hand and offered the funds on exceptionally flexible terms. In return, they wanted to provide construction, procurement, e...
Angola: China or Portugal? Part I - The Unlikely Contender
(Jul 29)
This is the first of a series of two postings contributed by our South Africa-based consultant, Kirill Riabtsev. In keeping with the Africa focus of our last few postings on this blog, these two postings look at Angola and how the business interests of China and erstwhile colonial power Portugal are competing in this resource-rich African country. Angola has become one of China’s leading partners in Africa. However, one unlikely contender to China is adopting its own very different ‘Angola strategy’, and instead of engaging in a head-on battle, it is opting for alternative and rather unique methods. Portugal is one of the smallest European economies, with a GDP of less than 3% of China’s and a population of less than 1% of China's. Its trade activities with the rest of the world are likewise dwarfed by those of China and barely worthy of comparison. However, when it comes to Africa – and specifically Angola – Portugal boasts a special kind of relationship.
A former Portuguese colon...
How China Exim Bank and China Development Bank Contribute to China-Africa Trade
(Jul 15)
China and Africa have become increasingly linked economically, particularly over the last decade. As a whole, Africa has become China’s fifth largest trade partner—behind only the United States, Japan, South Korea and Germany. The USD 90.9 billion exchanged between the two represents around 6% of Africa’s entire GDP. China to Africa investment has also picked up to the point where the People’s Republic has become the continent's second-largest foreign investor. Furthermore, China is the largest international contributor to Africa’s infrastructure development, its contractors receiving over 40% of all project revenues awarded to overseas-based firms. Key to this push into Africa has been China's banks, most notably Export-Import Bank of China (China Exim Bank) and China Development Bank (CDB).
China Exim Bank and CDB are two of three banks established by the Chinese government to further national economic policies (the third being Agricultural Development Bank of China). China Exim ...
GUEST POSTING: Shortage of Components & Workers Extends Delivery Times & Raises Prices
(Jul 15)
Transactions are prioritised based on the duration of client relationship and volume, as production difficulties make it a challenge to fulfill growing orders on time. China's export manufacturers are in a conundrum. Overseas demand is picking up, but with the shortage in key materials and labour, suppliers are now finding themselves in a situation where they can be selective in accepting orders. While this means they are in a position to charge higher prices, it also raises the possibility of slower growth for the rest of the year. The deficit in parts, components and labour has made it difficult for many factories to finish goods within traditional lead times. Companies are extending their delivery schedules by at least 15 days, which sometimes results in frustrated buyers and cancellations.
Fuzhou Hunter Bags & Luggage Mfg Co. Ltd said a handful of its EU buyers cancelled orders because lead time were not met. Production was delayed due to labour shortages at the fabric mills, w...
Angola and Zambia: Coping With The Only Show in Town
(Jul 1)
There are a few outstanding similarities between the African countries of Angola and Zambia, yet the most glaring one is probably the fact that both these countries have their economic stars hitched to a single commodity: oil in the case of Angola, and copper in the case of Zambia. If you look at a map of the state of transport infrastructure in the region, you could certainly also say that another thing these countries have in common is that they can both count the number of railway lines they have on one hand, so to speak. THE BEIJING AXIS just completed a southern African market entry project for a large foreign manufacturer, and if you would excuse me for just slightly taking the spotlight off China in this posting, I'm going to briefly look at the similarity of the sheer lack of diversity in the economies of Angola and Zambia. But of course, like almost everything else these days, you'll still see a lot on China below, I mean, how else? The Only Show in TownIf most people think ...
Made in China: From Small Labels to Big Possibilities
(Jun 17)
The words 'Made in China' can be found everywhere, from the labels on basic necessities such as clothing to the portable music players and cellular phones which exemplify modern life’s conveniences. It is the work of international procurement professionals who have brought these products from the manufacturing floors of China to households worldwide. China’s emergence as the world’s largest exporter in 2009 is further evidence of the immensity of this nation’s sourcing potential. But before calling the bank to open a letter of credit, it is best to first understand sourcing from China and how to engage with this unique business environment.
The reason for China’s position as the foremost sourcing destination is of course, low costs. On average, 30% cost savings can be expected for products procured from China in comparison with the home country. Everything from machinery to articles of steel to furniture can be obtained cheaply. At the heart of this are labour costs. Average wages ...
Charged Up: China's Electric Vehicle Industry
(May 28)
Given the worldwide importance of environmental protection and the continued drive for a shift away from fossil fuels, the market for electric vehicles is becoming one of the leading emerging markets for China and the world. With the electric vehicle industry rapidly gaining importance, and with HSBC anticipating China’s share of the global market to rise from 2.7% in 2010 to 35% by 2020, global players within the industry are already working to position themselves in China through new products and innovations. With a large and growing domestic market and emerging opportunities abroad, China could become a leader in this relatively new and untested electric vehicle segment of the transportation industry. Evolving market conditions have created an opportunity for China to establish itself as a predominant force, as for the first time it is entering a relatively immature industry in a state comparable with the global competition. Several factors suggest that China may yet become a lead...
EVENTS: China (Shanxi) Coal Mining Equipment and New Energy Industrial Expo
(May 17)
 2010 China (Shanxi) Coal Mining Equipment and New Energy Industrial Expo
Venue: Datong Coal Technology College Exhibition Center, Shanxi
Date: 17-19 May 2010
Organiser: Taiyuan Aides Exhibition and Planning Co., Ltd
Tel: +86 0351 786 9527
Briefing:As one of the leading international expositions for coal mining equipment and alternative energy sources, this expo gathers major players in these industries to advance international communication and cooperation. A platform is provided for domestic and international enterprises to establish, maintain and strengthen their strategic partnerships. The exhibition fully showcases the energy sector’s latest technology, equipment and protective devices as well as displays the most recent professional coal mining equipment for underground transportation, coal washing and screening. Head west to Shanxi to catch this three-day exhibition.
More information.
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