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This page contains an archive of all entries posted to PN China Blog - English in the Business category. They are listed from oldest to newest.

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January 9, 2009

From palace-like factory to bankruptcy

One of China's largest plastic home décor manufacturers filed for bankruptcy last week, according to a provincial court. The company, Stars Arts and Craft Co. Ltd. of Xiamen, Fujian province, owes about 500 million yuan in debt but only has 200 million yuan worth of assets.

About 20 percent of the debt is to construction contractors, who built a luxurious, palace-like factory complex for the company. The 120,000-square-meter complex was put into use in July 2008, and Stars stopped paying factory workers in September. As the owner was confirmed to have fled to the United States, a local court took over the factory in October and shut down production.

Other creditors include suppliers, banks and private lenders. But the employees -- mostly migrant workers -- have so far been paid off by the local government.

It's undeniable that the global financial crisis hit Stars hard, but the irrational investment and unhealthy cash flow accelerated the company's collapse.

Posted by Nina Ying Sun on January 9, 2009 11:30 AM | | Comments (0) | TrackBacks (0)

September 10, 2007

Asia strengthens testing and certification

The world's growing concern with Asia production is having a push on the strengthening of product safety standards and testing in that region. Underwriters Laboratories Inc., whose service covers plastic materials, just announced an expansion in Taiwan.

The UL Taiwan Material Lab now integrates a complete system of sub-labs related to materials and has become the center of UL's operation in Asia, according to a news release dated Sept. 3 on the UL Taiwan web site.

The organization also boosted the number of long-term-thermal-aging (LTTA) testing machines, from 137 to 377. The increased capacity will help reduce the long wait time for manufacturers in Taiwan, Mainland China, Japan, Korea, India, etc.

Posted by Nina Ying Sun on September 10, 2007 3:49 PM | | Comments (5) | TrackBacks (0)

September 7, 2007

Mattel's PR

Mattel's massive recalls were received with much surprise and regret, as the company has long cultivated a nice image of tight control of overseas production and reliable quality.

I don't mean to question its record of quality control in the past, but just would like to point out the impressive work of its public relations team, especially in this crisis management project for the recalls.

My experience with Mattel's media relations has been positive. They are very responsive and professional.

They also played a nice trick in the August 14th recall. The wording of "the nearly 19 million toys that either had excessive amounts of lead paint or had small magnets that could easily be swallowed by children" appeared in the press release, repeated in the press conference, and used by most media.

How smart it is to bundle the 18.2 million toys with magnets that had design flaw instead of sub-par production with the 436,000 lead-tainted toys!

I made the facts and details clear in my story for Plastics News. But unfortunately most publications I've seen used the round-up figure and didn't distinguish between the design and production problems.

The Chinese Ministry of Commerce officials tried to clarify by claiming "only 15 percent of Mattel's two recalls in August were related to lead paint." But the message didn't come clear or convincing. I don't think the Western audience like percentage points in general; also it failed to point out the remaining part of the recalled toys were poorly designed in the States, rather than having production-related problems.

Posted by Nina Ying Sun on September 7, 2007 4:37 PM | | Comments (0) | TrackBacks (0)

August 27, 2007

Plastic irrigation tools offer opportunity

The Chinese government, on the one hand, is pruning value-added-tax (VAT) refund for low-value, labor-intensive plastic exports; on the other hand, it is offering tax incentives for plastic irrigation equipment, in order to encourage the production and use of water-saving drip irrigation.

According to the modified resin subcommittee of the China Plastics Processing Industry Association (CPPIA), China is waiving the 17 percent VAT for manufacturers, wholesalers and retailers of drip irrigation pipes and tubing, starting July 1st.

The subcommittee said in a news story on its web site, the number of manufacturers of plastic water-saving equipment in China has soared from six in 1998 to more than 110 this year, annual capacity from 30,000 metric tons in 1998 to 1 million tons.

However, only a handful of firms are capable of making high quality microsphere drip systems, with combined annual capacity of less than 30,000 tons. "That's far below the market demand," the story said.

Posted by Nina Ying Sun on August 27, 2007 5:11 PM | | Comments (0) | TrackBacks (0)

August 8, 2007

Plastic mobile campaign in France

The French plastic processors association, Federation de la Plasturgie, is launching a mobile workshop called Tour de France 2007 de la Plasturgie et des Composites to educate about plastics and promote plastic jobs. Details can be found on this page.

According to rough translation powered by Babelfish, the campaign is from July 5 to August 14, covering 18 towns and cities across France. The tour trailer houses an injection molding machine, which is used to demonstrate the molding process.

The federation says in the event brochure that the French plastic industry with an annual turnover of 29 billion euros is ranked the second largest in Europe. The industry consists of about 4,000 companies that employ 155,000.

The federation does a good job covering the event on its blog site. You can find a large collection of interesting photos with captions, as well as audio and video clips.

Posted by Nina Ying Sun on August 8, 2007 12:00 PM | | Comments (0) | TrackBacks (0)

August 7, 2007

Internet marketing improves

The first thing I do every morning in the newsroom is to clear unsolicited email of all types of subjects from across the world.

Many of them are Internet marketing materials from Chinese manufacturers, in particular, mold makers.

It doesnt surprise me that mold makers, in many cases also offering custom molding services, take the lead in aggressive Internet campaigns targeting overseas markets. I get the same impression from attending international plastic trade shows as well as discussions with industry sources.

Everything changes so fast in China, and so are these promotional email messages. Ive noticed major improvement of their content and format over the past two years.

First and foremost is the languageissue. For apparent reasons, these messages are always written in English. I remember some hilarious ones with incorrect use of words and strange syntax. I suspect they were translated by software rather than people with acceptable English proficiency. But, lately, I was pretty impressed with the almost perfect English in some of these unsolicited email.

Mr. Zhang, an owner of a mold shop in Shenzhen, told me everyone is studying English in China. My English has improved a lot last year. I realized how important it is, you know, I dont want to rely on my assistant for communication with western buyers. I take every chance to talk to native English speakers.

He made an interesting comment on the high turnover of his marketing staff. I always get new hires better than their predecessors. Theres no shortage of talent for such positions in the market, he said.

Back to the topic, the format of these email messages has evolved from plain text to embedded company logo and URL, to product photos, and to PowerPoint attachment. The information covers company profile, product display, detailed technical specs, photos featuring working scenes of every step of the production, as well as FAQ.

The vivid images add much credibility to the company, versus a fishy plain text messageby fishy I meant its hard to tell whether the sender has its own production facility or is just a sales agent.

Theyve also made subject lines and sender information more straightforward and user-friendly. For example, they now put the company name and location in the subject line instead of just saying quality molds from China or a new opportunity.

According to the Chinese Customs, China exported over $1 billion worth of plastic molds in 2006.

Posted by Nina Ying Sun on August 7, 2007 4:53 PM | | Comments (0) | TrackBacks (0)

February 21, 2008

The evolving map of world manufacturing

Christopher Devereux, managing director of consultancy ChinaSavvy, now resides in southern China. But he has a very interesting background -- specifically, extensive experience in the plastics industry in three continents, Europe, the Americas and Asia.

He first dived into the plastics business in the early '70s as a product development manager for an English investment bank that owned several manufacturing companies with extensive injection and blow molding facilities. Then he left his home in the U.K. and worked in the polymer industry in Central and South America in the mid-70s. In 1984, he returned to the U.K. to found a packaging company using injection molding and extruded foam thermoformed processes. Later he joined Packaging Corp. of America (Tenneco Packaging, Inc.) as business development manager for Europe and set up the company's first OPS packaging company in Belgium. He set up Chinasavvy in 2002 to help Western companies outsource and manufacture plastic and metal parts and products in China.

Hearing complaints every day here in the U.S. about China taking jobs away (especially in this election season), I wanted to pick his brain on the trends of geographical shifts of manufacturing. I'd like to share his reply with our readers:
Whenever labor jobs are lost, politicians scream. It's only natural. The United Kingdom politicians screamed as their automobile industry declined and as their manufacturing businesses slipped below the 50% mark (it's much lower than that now). Everyone said it would be the end of the British economy.

But what has happened there? The U.K. has now one of the most buoyant economies in Europe. The economy has shifted from a manufacturing economy to a service economy.

And the British, like the Americans, are good at inventing, designing and developing products. They know their markets. So what do they do? They invent. They design. They develop. Then they go to China and have it made and a third of the cost of making it in America.

The Chinese, on the other hand, are not good at developing products. They don't understand the markets. But they are good at copying and making to someone else's designs. It will be many years before they start producing home grown products that will beat American or British designed and developed products.

Remember the inflation of the last 20 years? Horrendous at times. Now we have low inflation. And why? Because the cost of goods coming in from China (and Asia) has brought down the cost of living and inflation.

If importing countries try to block these low cost imports they will find that prices will rise very fast.

What American producers and manufacturers need to do is to embrace the opportunities of an outsourced manufacturing base or setting up manufacturing within the China/Asia area. They will find that they can expand their sales and their exports through high quality/low cost manufacturing using their designs and IP.
There is a lot said about the lack of IP protection in China. This is changing but it only affects companies who want to attack the Chinese market. They have all the protection they need within the US.

Manufacturers who embrace the low cost manufacturing base in China will be the ones who will be laughing all the way to the bank.
If we look at economic history, the center of manufacturing shifted from the U.K. to the U.S.

The U.S. succeeded in overtaking the U.K. with higher productivity. Labor productivity in U.S. manufacturing was already roughly double the U.K. level in 1870, according to economist Stephen Broadberry. Measuring labor productivity by output per worker, the U.K. was still 36 percent behind the U.S. in 2000, according to a paper by the U.K. HM Treasury. About 65 percent of the gap was attributable to innovations, while physical capital accounted for only 31 percent, another research paper found.

How wide is the gap between China and the U.S. in innovation? As Devereux indicated, China doesn't excel in innovation at all. And the productivity is much lower than the U.S. level. Therefore, instead of seeing China as a threat, maybe it'll work better for all to respect the natural flow of manufacturing, especially the low-value-added, labor-intensive type. The future of U.S. economy can't depend on retrieving and retaining those low-level jobs. Expand the service industry and strengthen innovation, jobs will be recreated, and these upgraded jobs won't pollute the air and water either.

Posted by Nina Ying Sun on February 21, 2008 10:06 PM | | Comments (1) | TrackBacks (0)

February 19, 2008

Why Chinese companies fail the U.S. market

Plastics News' good friend Dan Harris came up with a list of why Chinese companies are having a hard time penetrating the U.S. market in a recent post on his China Law Blog.

My eyes lit up when I saw the list. That's exactly what our readers in China want to know, I told myself. I am seeing more and more Chinese companies at international trade shows and conferences. Demonstrating typical Chinese low prices, they crave a piece of the U.S. market, which in their minds is associated with hassle-free transaction, stable supply relations and sizable margins.

Many of the points are sharp and insightful, but in order to shed some light on the deep causes of these market-entry blunders, I'm adding comments under each point. There are also things that I have a different opinion on, and I'll tell you why.
1. Chinese companies focus on a Chinese consumer, not an American one.
Comment: Chinese companies would like to find out more about their target American consumers, but they mostly rely on personal-level approaches to collect business information, lacking a systematic and scientific market investigation conducted by professional Westerners that understand the market.

2. Chinese companies fail to realize that one reputation -damaging mistake in the United States could doom them forever here.
Comment: This one is dead-on. And how come they don't realize this common sense? Because they get by in China and assume it's the same in the States. See my recent post A monumental blacklist for more.

3. Chinese companies fail to realize it will take time for them to make an impact in the United States and they are unwilling to spend the time and money necessary to do so.
Comment: Chinese people take such pride of the fact that industrialization, urbanization and modernization have happened in China in a much shorter period time than in the West that they believe, if you try hard enough, everything can be done fast and well. Why don't they invest enough money to lay the ground work for the new market? Well, they look at the exchange rate. The same exchange rate that makes the Chinese production cost in yuan seem so low magnifies the marketing cost in dollars in the States.

4. Chinese companies focus too much on the end result (making money), and by doing so, they sacrifice the professionalism that would allow them to achieve long- term success.
Comment: The Chinese would ideally like long -term success. But the drastic social, economic and political upheavals and changes in the past century have paralyzed Chinese people's long-term thinking. Fill the pocket as full as possible before the next change hits, be it credit policy, industry standards or consumer interest.

5. Chinese companies tell users what they want instead of listening to users.
Comment: This obnoxious mentality is a hangover of the old Soviet-Union-style "planned economy" (1949-1978). That period of time featured insufficient supply of necessities and one-sided propaganda. Although it's hard to question about China running a market, capitalistic economy today, the country skipped some vital steps in the development of the Western countries.

6. Chinese companies focus too much on making money in the short term, rather than on building the quality necessary to sustain themselves in the long term.
Comment: What pops up in my mind includes: vicious and endless price wars, a business environment that has deprived consumers their say, and lack of technology and craftsmanship.

7. Chinese companies fail to understand how beauty and design might distinguish their product from that of their competitors.
Comment: Traditionally, domestic consumers simply can't afford beauty and design. Price is the only distinguishing point. Plus, the companies don't want to invest much on design, because it's bound to be copied by competitors right away, thanks to the absence of intellectual property protection in China.

8. Chinese companies rely too much on phone calls and face-to-face meetings instead of e-mail.
Comment: This is probably part of the Asian culture, underscoring personal communication instead of machine-generated and less interactive e-mail. I don't think it's necessarily a disadvantage though. Japanese companies have done well in the U.S. market, despite their preference for in-person meetings and phone calls rather than e-mail.

9. Chinese companies fail to use "simple and elegant designs."
Comment: Unfortunately, they are trapped in between complicated traditional styles and a blank page of modern Chinese inspiration. Again, they can't justify investment on design, because it will be copied by competitors overnight.

10. Chinese companies fail to realize their need to hire MBAs and those with local knowledge.
Comment: Call them cheap or arrogant. They don't trust MBAs or Western veterans unless foreseeable return is guaranteed. They also want everything under their control, not threats and risk brought by language barrier and different business values.

These are just my opinion. I welcome yours.

Posted by Nina Ying Sun on February 19, 2008 9:59 PM | | Comments (3) | TrackBacks (1)

February 14, 2008

Lead-paint won't hurt Chinese kids?

Bob Kroshefsky's recent letter to the editor in the February 11 issue of Plastics News and on the PN Web site at here showed understanding and sympathy for the difficulties Chinese factories have undergone lately and also rightly pointed out that the lowest-possible-cost mentality is what is causing quality issues. Kudos for that!

However, his speculation that "Even if someone there raised the lead-paint-and-kids issue, well, hell, the toys are going to be exported, so it's not like we'd be endangering any of OUR kids" neglects the reality in Sino-U.S. trade. I have no way to prove that the Chinese don't ever have any nationalistic thinking in doing business with foreign countries. But I know for a fact that China's exports are of much higher quality than goods sold domestically. Market regulations and standards play a large role, in part because the Chinese, three decades ago, had very little merchandise in the Communist planned economy. Having started from scratch not long ago, the country has a long way to go before it pars its product standards with developed countries.

Products that contain lead paint and other hazardous content are very common in China. Even with the rising awareness of product safety, consumers in China are much more vulnerable than their Western counterparts, due to the lack of information and a consumer-rights system to back them up. A nationwide recall system, such as the Consumer Product Safety Commission in the States, is nonexistent.

In the Mattel case, the paint supplier violated its contract with the factory and sneakily sent over substandard paint. The factory was completely unaware of it. Did the paint supplier ever reflect on the lead-paint-and-kids issue? We don't know. But if he'd thought his dirty trick wasn't going to harm his kids, he'd be wrong. Sadly, the recalled Mattel toys returned to China and climbed on its store shelves! Yes, consumers in China are still buying the products that America threw out because of the danger. Why do they remain stocked in China's stores? A Wall Street Journal article unfolds the complex situation:
In the U.S. and Europe, a wave of recalls of Chinese-made goods during the second half of 2007 led to heavy news coverage and a coordinated effort by regulators and the toy industry to pull dangerous products off the shelves. In China, it is a different story. The nation has no comprehensive rules governing recalls and no system for tracking injuries from defective products. Together with a thriving trade in black-market products, that means some of the goods that have caused alarm in the West are still available to Chinese consumers.

The situation is a reminder that often the people most at risk from China's public-health and safety lapses are the Chinese themselves. It raises questions about the responsibility of multinational companies to keep dangerous toys off the shelves in parts of the world where consumer-protection laws are weak and the threat of legal liability is relatively low -- but also about their ability to do so.
And the incentive for selling the hazardous toys rejected by the U.S.?
When U.S. companies cancel orders because products are defective, Chinese factories loath to lose money may resell the recalled goods out the back door. When the defect lies with the manufacturer rather than the design, the big brand may decline to pay the plant for the tainted toys -- often ensuring they won't be returned. Dangerous toys can wind up on Chinese auction sites like Taobao or in retail stores through a murky chain of suppliers.

Peter Humphrey, managing director of ChinaWhys, a Shanghai-based supply-chain monitoring firm, said the Chinese business-to-business world is 'full of shoddy, illegal goods.' He said enforcement is 'nonexistent, and people will sell whatever goods they think they can get. . . . There is a very lawless, unregulated Internet trade here in China.'
Back to Kroshefsky's concern on Chinese nationalism, who are the Chinese kidding? As the ancient idiom goes, harm set, harm get (Hai Ren Hai Ji).

Posted by Nina Ying Sun on February 14, 2008 2:49 PM | | Comments (0) | TrackBacks (0)

February 6, 2008

Chinese firms give workers happy New Year

Mr. Kui Cai, a 20-something engineer with injection press giant Ningbo Haitian Group Ltd., is stranded in Ningbo by the snowstorms. But he's excited! He received help buying a new condo and a free vacation package as Chinese New Year gifts from his bosses.

Cai, a native of the Jiangxi province, joined the research and development department of Haitian in 2006 upon college graduation. He and his new wife, also from Jiangxi, were ready to go back to their home province for the Spring Festival this year, but were forced to cancel their trip because of the snowstorms lashing China. So they found themselves with nowhere to go in Ningbo for the holiday.

The couple had planned to settle down in Ningbo to be together near Cai's work, so they started saving for a down payment on a condo. But the money was not adding up as quickly as they had wished.

When Haitian management heard of the couple's situation, they offered Cai 80,000 yuan to cover the condo's down payment.

Now the couple is busy decorating their new place for the holidays.

"Without the generous help from the company, I wouldn't know how to have a decent New Year," he told the local newspaper.

Cai also can't wait to use his bonus vacation package. The company will pay for everything during a one-week trip to Hong Kong and Macau, he said. He's never been off the mainland.

But Haitian is not the only plastics company that's going the extra mile to make sure their nonlocal employees enjoy the Chinese New Year even when they can't spend it at home.

Hangzhou-based Wahaha Group, China's beverage giant with in-house bottle making capacities, said most of the nonlocal employees are staying in Hangzhou for the Chinese New Year. Company executives, including the president and chief executive officer, invited all employees to attend the company's New Year's Eve reception. Wahaha organized performances and other entertainment activities for the celebration. The employer also tripled the pay for those who work during the holiday, plus overtime allowances.

Processor Zhejiang Guangbo Group Co. Ltd. originally had planned to escort 800-plus migrant employees home via charter bus services. As the snow blocked the roads, the owner immediately ordered 1,000 comforters for the dorms and arranged for a holiday celebration and local tours.

Information in this post is based on Chinese-language coverage in Ningbo News and China Business Times.

Posted by Nina Ying Sun on February 6, 2008 11:17 AM | | Comments (0) | TrackBacks (0)

Why is Chinese New Year a big deal?

To try to help Westerners understand how important the Chinese lunar New Year celebration is and why the snowstorms blocking holiday travel is such a big deal, let's take a common image we see here in the U.S.

Christmas is a time when many families gather, with the fireplace glowing, the Christmas tree trimmed and children anxiously awaiting Santa Claus. Now think of the family member who has to miss this annual gathering and multiply that by ten. Because odds are that the family member who misses the Christmas holiday will have other opportunities during the year to see his or her family. This is not the case for Chinese families, and many times it's the only time during the year that young families will see each other.

Unlike in the States, it's not uncommon for Chinese families to be located in different parts of the country. A typical scenario in China is one where a husband works as a laborer in a big city while his wife and child stay home in the village. The half-month Chinese New Year celebration is the time when Dad comes home, bringing hard-earned money and new clothes for the family, plus it's time for him to restore his energy for another tough year on the assembly line.

I read a story about a Chinese migrant worker who reportedly boarded a first class flight from Guangzhou to Chengdu with a packed comforter and plastic bucket. Some might question why he traded a big chunk of his annual income for a first-class plane ticket because coach seats sold out and trains and buses stopped running. But many others understand his choice, knowing how important a family reunion during the lunar New Year is to an ordinary Chinese man who works out of town all year round.

Posted by Nina Ying Sun on February 6, 2008 10:56 AM | | Comments (0) | TrackBacks (0)

January 30, 2008

Is frigid winter hurting Chinese processors?

As epic snowstorms continue to slam southern, central China, many Chinese have been stranded on their way home for the Chinese New Year, which falls on Feburary 7 this year.

Officially, the national holiday is seven days long, but most factories shut their doors for up to a month around the holiday, since it's the only time during the year when millions of migrant workers -- many traveling several days by train and bus -- can visit their families.

And because many plants are already closing for the holiday, I don't think the brutal blizzards should have too much direct impact on the plastics industry. A report from a Chinese plastics Web site confirmed my theory, sort of. In its forecast (viewable in Chinese at info.plas.hc360.com) on polyethylene pricing, the author says:
Almost all of the downstream processors have stopped production. Some trading businesses also have completed their annual plans and started vacation.

Although paralyzed transportation has caused a materials price hike on the seller's end, the report said, demand is staying low with little transaction being observed.


In the longer term, however, the industry will see impact. The Chinese government reported a direct loss of 22 billion yuan (more than US$3 billion) as of Jan 29. If the storms trigger higher inflation or a slowdown of the economy, the plastics industry will hurt as well. On a bright note, suppliers of plastic agricultural film and construction material might see a rise in demand.

Posted by Nina Ying Sun on January 30, 2008 11:08 AM | | Comments (1) | TrackBacks (0)

January 25, 2008

Selective enforcement in China

For some reason, the Chinese government hasn't played tough on enforcing intellectual property protection. It makes you wonder how effective the recent ban on ultrathin plastic bags and free, thicker shopping bags will be. It seems like government officials need a reason to prioritize. For example, let's take a look at a recent issue in the media I've had experience with, but that's not related to plastic: bicycle theft.

A January 24 Reuters story said that police in China claim they have cut bicycle thefts by half over a nine-month period. The news story said that:
China has halved the number of bicycles stolen to about 2 million in the past nine months...following a campaign to clamp down on theft months before its capital hosts the Olympics.

The story continues,
To help battle the theft problem, the government introduced a system of identification numbers, and buyers must register their bikes using their real names as part of the effort to curb widespread theft.

In addition, an earlier story said the police also reward any tips that lead to an arrest of more than 15 bike pilferers and seizure of more than 50 stolen bikes.

Despite what the story says, the nine-month bike theft rate of 0.4 percent (2 million divided by 460 million) seems low to me. Bike thieves caused me constant headache during my college years in Beijing. I lost a total of eight bikes in four years. I was advised to buy cheap, used bikes (less than US$8) from special vendors to minimize loss caused by theft. (No, there's no comprehensive insurance for bikes.) And guess what? When I was shopping for my fourth bike, I actually found my first bike! Of course I had to pay to get it back. That's when I came to realize how the system worked.

Anyway, I'm glad someone is doing some sort of real crackdown now. It just shows that if the government wants something done, it can be done. Better late than never, I say.

Now, let's get back to plastics. What's the latest public reaction to the plastic bag ban? I gathered these interesting tidbits from various Chinese online media sources:


  • Plastics wholesalers have reported rising sales of ultrathin plastic bags to individuals. I guess these bags are being stocked up for family use, such as to contain garbage. Not sure whether and how the government will punish the use of ultrathin bags for non-commercial purposes.

  • Cashiers in supermarkets have reported that some customers have been asking for extra shopping bags. Get as many free bags as possible while they last! Stock up!

  • A gentleman in Beijing said he started using a cloth shopping bag, but supermarkets bagged his cloth bag with a plastic shopping bag. He thought it may be because of the advertising on the bags.

  • Vendors in farmer's markets told the press that they already de facto charge customers for plastic bags. "It's part of our cost. Plastics bags have never been free really." Of course, same thing with supermarkets and stores that list written prices.

  • A consumer reported that he was given a little extra vegetable when he declined to take plastic bags at a farmer's market.

    • Posted by Nina Ying Sun on January 25, 2008 11:00 AM | | Comments (0) | TrackBacks (0)

    January 23, 2008

    Battenfeld Extrusion's uphill battle in China

    We all know that the enforcement of intellectual property protection in China is just not yet in place. You can see it everywhere in that country, from pirated DVDs found on most street corners to coffee shops with names that sound an awful lot like Starbucks, not to mention the large-scale "silk markets" selling top-grade counterfeit purses, watches and apparel in Shanghai and Beijing.

    But to be fair, these "fake markets" have thrived largely on foreigners. The Shanghai Xiangyang market, which had US$60 million in annual sales before a crackdown in June 2006, claimed that 80 percent of its customers were Westerners.
    Touring "fake markets" may be entertaining for the casual Western shopper, but the lack of IP protection really hurts when you are the one suffering infringement.

    Battenfeld Extrusionstechnik GmbH in Bad Oeynhausen, Germany, is a recent victim in the news. It entered the Chinese market in 1996 by establishing joint venture subsidiary Battenfeld Chen Extrusion Systems Ltd. in Foshan, Guangdong province. Partner Chen Hsong was later phased out of the deal, and the company updated its name to Battenfeld Extrusion Systems Ltd. in 2006.

    Battenfeld recently announced victory on an IP infringement case against three Guangdong subsidiaries of Hong Kong's Cosmos Machinery Co. Ltd. The case has come a long way from when Battenfeld filed it back in September 2003 at a local court in Foshan.

    According to the verdict of the Dongguan Intermediate People's Court, dated November 8, 2007, the case was transferred from Foshan to Dongguan on November 30, 2004, and finally two hearings were held in April and June of 2007.

    The copy of the verdict I'm referring to was supplied by Cosmos, who argued that Battenfeld's news release -- still available online at here -- contradicts the court ruling and is misleading.

    The issue at point is how many of the defendants were judged guilty. Battenfeld's release pointed at all three Cosmos subsidiaries. Cosmos said only one was found guilty, and that was Donghua Cosmos Machinery Ltd. But the discrepancy is easy to solve. The court verdict clearly maintained that only the Donghua subsidiary infringed on Battenfeld's intellectual property by making single-screw extruder model P0450.

    Cosmos also said it has appealed the judgment to the Guangdong High People's Court, so the case is not yet final. That's true. It might be a little early for Battenfeld to throw a party. But, even this preliminary success is encouraging to Western investors as well as Chinese companies that own patents, technologies and brands.

    And who knows? Maybe Battenfeld will be able to supply more solid evidence and secure bigger success in the litigation. But this is all still up in the air, and it's pointless for me to speculate. What I can tell you, though, is that protecting your own products is no easy task.

    The Dongguan court overruled some of Battenfeld's evidence, including testimonies from two of Battenfeld's Chinese mold suppliers. In written testimony, the moldmakers said Cosmos asked them for quotes for molds, and that Cosmos' drawings were almost identical to Battenfeld's molds.

    The court also rejected photographic evidence that was taken at the 2007 Chinaplas show in Guangzhou. The court documents said, "Although it says 'Cosmos Machinery' and 'DEKUMA Welltec' in the photos, there's no way to verify whether these exhibitors are the defendants in this case. Also, the plaintiff can't prove this is relevant to the commercial secrets in dispute."

    Battenfeld did request the court to collect evidence from Chinaplas organizers, including Adsale Exhibition Services Ltd., the China Foreign Trade Center, the National Light Industry Association and the Guangdong Plastic Processing Industry Association. But the court overruled the request based on Chinese laws, the same court document said.

    So really, it becomes a heavy burden on the victim's shoulders to collect evidence that's acceptable by the local legal system. For multinational companies that operate in different countries, it's additionally challenging.

    It's not easy even for Chinese local companies to defend their rights in their own country. Injection press giant Haitian commented on that in a speech at a Plastics News conference. In Haitian's headquarters city of Ningbo alone "there's another hundred companies that make machines the same as ours. Thirty of them use our logo to a certain extent," said Helmar Franz, Haitian International Holdings Ltd.'s executive director.

    China also lacks an environment conducive to public opinion. Plastics News is the only publication in China that has reported Battenfeld's litigation with Cosmos. The state-owned media may fear pressure from the top, and private publications have been known to make compromises to keep their advertisers.

    But if such information is not delivered to the public, violators of IP laws will never need to worry about their corporate reputation and branding. That's not fair to customers and the general public who deserve to be made aware of these happenings.

    Stay tuned. With independent and unbiased principles, Plastics News will follow this case through.

    Posted by Nina Ying Sun on January 23, 2008 11:34 AM | | Comments (0) | TrackBacks (0)

    March 31, 2008

    Chinese officials' unusual tasks

    What does it take to get a "gold bowl" -- a permanent, prestigious and well-paid job and become a government employee in China? The short answer is "a lot," even more than what it takes to get hired by a Fortune 100 company's Chinese operation. Since I write for Plastics News, I'm not going to tell you all the unspoken secrets about Chinese government's human resources practices.

    But here is a tip about what some Chinese government employees have to do to keep their jobs, which I bet their American counterparts can't even imagine. Next time you go on a trade mission to China, you can feel more knowledgeable about the society.

    Government employees in the Dongpo District of Meishan City in China's southwestern province Sichuan (known for its spicy cuisine) are required to recite at least 10 poems written by ancient poet Su Dongpo, who the city district is named after, according to Sichuan News Web.

    The local government organized a training session on the poems and distributed study materials.

    What is the point of doing this? An official said: "When receiving foreign and domestic guests and potential investors, if an official couldn't even recite some Dongpo poems, wouldn't it be embarrassing?"

    I don't think any businessman will base an investment decision on local officials' knowledge of ancient Chinese literature.

    But the official also said something more telling, "[studying the poems] won't affect their regular work, we just encourage people to spend some of their drinking and card game time on studying."

    There you go, drinking and card games. They are not just personal hobbies. Believe it or not, they can be work. Recently, a Chinese local official, Mr. Guo, died from drinking at a late-night reception (this is considered overtime work) and received an award, according to Oriental Today.

    Mr. Guo, age 46, died "at work," according to a report. After it was revealed to the public that his death was by alcohol, the government said it would take back the award. But I actually feel very bad for him, because drinking is part of a government job, and he did die for his work.

    If you refuse to drink to "bottoms empty" at a traditional-style reception in China, you are deemed disrespectful to the host or the person who toasts you. Mr. Guo and his family deserve something from the government, maybe not an award, but perhaps a change in the system?

    Speaking of change, the local government had introduced an alcohol ban long ago. After Mr. Guo died, officials interpreted the ban to the questioning press: "the ban is only for lunch, not for dinner."

    I guess I'd prefer the poems to drinking. But nothing is optional in the political world.

    Posted by Nina Ying Sun on March 31, 2008 10:00 PM | | Comments (0) | TrackBacks (0)

    March 28, 2008

    Heritage for money: a crazy idea

    I thought readers of my China blog would not only be interested in plastics in China, but also China as a country, a culture, a business battlefield and a phenomenon. Therefore, from time to time, I'm going to share bits and pieces of news and facts that may help you understand the ever-changing China better. And sometimes, the news and facts out of China can be odd, like this one below.

    Oriental Today reported a striking proposal by a real estate giant in Beijing, who suggested demolishing the Forbidden City, the Chinese imperial palace from the Ming and Qing Dynasties located right in the middle of Beijing.

    "Instead of spending billions [of yuan] every year on renovating and maintaining the palace, why don't we blow it flat and build real estate? It will significantly help skyrocketing housing prices in Beijing caused by lack of land," the unnamed businessman said.

    What's more, the statement was backed up by an industry group official. Hu Yunjing, president of Beijing Real Estate Business Association, explained that, if the land the Forbidden City sits on now can be used for residential construction, it will provide 24 million square meters of housing for at least 1.2 million residents. "That will bring down the housing prices," he claimed.

    I was speechless. Do they really believe it's a smart idea? By their logic, New York City should convert the Central Park to high-rises and Paris should transform Musee(sorry, the blog editing tool doesn't support accented letters) du Louvre to hot-selling condos.

    And the truth is, Beijing's housing prices, some parts of which are catching up with Manhattan, won't come down no matter what. People from all over the country continue to flood in. And the real estate people know this the best. Their goal certainly is to make more money (as if they haven't made enough by doubling and tripling prices in the past few years), not to reduce or stabilize prices.

    It's chilling to see how some Chinese people and businesses are becoming more relentlessly capitalistic than barons in the Enclosure Movement in Europe.

    They seem to see nothing more important or meaningful in this world than money. If that's the case, it's no wonder that toxic products continue to be manufactured, substandard buildings continue to be constructed, workers continue to lose their health in poorly regulated factories, and the air, waters and land continue to be polluted.

    Posted by Nina Ying Sun on March 28, 2008 11:27 AM | | Comments (2) | TrackBacks (0)

    March 24, 2008

    Blu-ray players under investigation

    It was only a couple of weeks ago that I wrote a blog item about Blu-ray discs. The question came out about whether counterfeit Blu-ray players exist (got to be more profitable than knocking off Blu-ray discs, right?). Click here for the original posting.

    Guess what? Blu-ray disc players themselves may have infringed a patent owned by a Columbia University professor emeritus. The U.S. International Trade Commission is going to launch an investigation into some 30 U.S. and foreign companies on possible patent infringement related to Blu-ray disc players and other products, Reuters reported.

    The commission posted a news release Thursday on its Web site, explaining the issue in dispute:
    The products at issue in this investigation are short-wavelength (e.g., blue, violet) LEDs and laser diodes that are used in products such as hand-held mobile devices, instrument panels, billboards, traffic lights, HD DVD players (e.g., Blu-ray disc players), and data storage devices.
    The list of involved companies highlights big names including Sony Corp., Nokia, Motorola Inc., LG Electronics Inc., Panasonic maker Matsushita Electric Industrial Co. Ltd. and Sony Ericsson Mobile Communications AB.

    Posted by Nina Ying Sun on March 24, 2008 11:37 AM | | Comments (0) | TrackBacks (0)

    March 21, 2008

    Buy local or imports in a downturn?

    It remains a mystery whether Americans will buy more made-in-USA products during the economic slowdown or recession to protect the domestic economy, or buy more imported, cheaper items, to hold on to their wallets.

    I asked exhibitors and attendees at the three-day International Home and Housewares Show in Chicago what they think will happen. Their response was mixed. I guess nobody really has the answer, they just hope to survive the hard times.

    Meantime, although made-in-China has become a synonym for cheap imports, rising costs--including stricter quality control and inspection--in that country may raise commodity prices in the U.S. market.

    Will the U.S. ditch or reduce imports to invigorate its own manufacturing at this critical point in time? Or will it rely more on imports to keep inflation down and maintain living standards?

    Dell Inc. recently said it will purchase large amounts of components from China to help reduce cost, according to a Reuters story. The computer hardware manufacturer plans to buy US$23 billion of components from China this year and US$29 billion in 2009.

    It looked like it's a clear upward trend, until I did some simple math.

    Based on the fact Dell will buy a total of US$70 billion of computer-related supplies and equipment from China over the 2007-2009 period, also according to the Reuters story, we can easily figure out that Dell actually spent US$38 billion outsourcing from China in 2007. From $38 billion to $23 billion to $29 billion, would you say it's a boost of spending on outsourcing?

    We need a bigger picture here. Is Dell's overall spending on outsourcing going up or down? At what kind of rate? Is China's share of Dell's outsourcing total rising or dipping? What are Dell's other major low-cost import countries? Where is the ratio of Dell's U.S. manufacturing versus overseas procurement headed? These are the questions multinational corporations need to answer, to provide the public with a better idea of what's going on in the economy.

    Posted by Nina Ying Sun on March 21, 2008 12:25 AM | | Comments (2) | TrackBacks (0)

    March 11, 2008

    China's new labor law won't change

    One of China's richest women, Zhang Yin, is in Beijing attending the annual session of the national political advisory body--Chinese People's Political Consultative Conference (CPPCC)-- March 3-14, but her proposal for amending the new labor contract law doesn't seem to have a chance.

    Zhang has suggested the law exempt labor-intensive companies from having to sign permanent contracts with staff with 10 years' service. She was criticized by some CPPCC members.

    China's Ministry of Labor and Social Security quickly responded to the press coverage Zhang's controversial proposal received. "Whether to amend the law contract law or not is not a question. The question right now is how to enforce this new law effectively," said deputy minister Sun Baoshu at a March 9 press conference, according to China News Agency.

    "Some companies believe the new law is increasing their cost. That's because they didn't have to provide social security taxes. ... It is not right or legal to chase profits by scarifying workers' rights," he said.

    Posted by Nina Ying Sun on March 11, 2008 8:44 PM | | Comments (0) | TrackBacks (0)

    March 7, 2008

    Deadly fire and "jinx" spokesman

    The blaze that killed 15 last week at LongFei Recycling Co. Ltd. has been brought to the attention of China's central government. Head of the State Administration of Work Safety (SAWS), Li Yizhong, told the press that an investigation is under way with joint forces of a few ministries, according to New Express Daily. But no further information is available at this point.

    Plastics News reported on the incident with extensive details in a February 29 story.

    SAWS is one of the most closely followed national agencies in China, especially due to notorious coal mine disasters. Chinese workers in general are more vulnerable than their counterparts in other countries where safety measures are better enforced. A study revealed that China's casualty-GDP ratio goes up as the economy accelerates its pace.

    The image of SAWS has become so negative that one of its spokesmen complained about being deemed a jinx. This official, Huang Yi, said February 26 during an online public chat that, "if the public feels that I bring nothing but bad news, I really hope I have less and less chance to appear... I'd rather disappear."

    Well, it's my hope, too, that the country will cut down workplace accidents.

    Yi added that he is sad about how the public equals work safety to accident/disaster. What he meant was, the public is earful of striking work accidents but doesn't hear about how preventive safety measures are put in place or how violators of safety regulations are penalized. Therefore, the terms of "work safety" and "work accidents" mean pretty much the same thing to them.

    That is sad indeed.

    Everyone knows labor is cheap in China. Unfortunately, it's not just the hourly pay that's cheap. It's also their health and lives. Every time a coal mine explosion happens in China, we hear how victims' families have a hard time getting any compensation and a "decent" settlement on a dead body only requires a few thousands, sometimes even just a few hundreds, dollars.

    In my opinion, China won't have world-class manufacturing until the labor condition is improved.

    Posted by Nina Ying Sun on March 7, 2008 11:12 AM | | Comments (0) | TrackBacks (0)

    March 5, 2008

    How much will a made-in-China Blu-ray cost?

    Like it or not, now that Blu-ray has become the default next-generation disc format, the prices are already sneaking up.

    An online report said that prices of Blue-ray disc titles have gone up on Amazon.com and Sony's new Blu-ray players will cost more than the old models.

    But what if China is to make Blu-ray discs?

    Word has it that a Chinese manufacturer is about to start production of Blu-ray discs. "Everything is ready. Once molds and the master disc arrive, mass-scale production will begin," according to a leading IT Web site in China.

    That may be good news for global consumers, as China seems to always be able to offer low costs.

    It is also speculated that this company will either be Henan Kerry Digital Co. Ltd. of Anyang, Henan province (100 percent Hong Kong ownership) or Dalian Hualu Group Co. of Dalian, Liaoning province.

    Panasonic, a shareholder of Hualu, also makes Blu-ray discs.

    Posted by Nina Ying Sun on March 5, 2008 3:35 PM | | Comments (4) | TrackBacks (0)

    March 4, 2008

    China's richest woman challenges new labor law

    Billionaire Zhang Yin, who topped China's wealthiest citizens' list in 2006 with a fortune of US$3.4 billion, appeared the other day as a political figure and told the press that the country's new labor law could use some amendment, according to a news report.

    Zhang is going to submit a proposal to the Chinese People's Political Consultative Conference (CPPCC) at the upcoming annual conference in Beijing. She is a member of CPPCC's national committee.

    "Requiring employers to give contracts of infinite length to workers is going back to the old times in China," she told the Chinese press, adding that the new labor law, which came into effect January 1, has already increased unemployment and impacted low-skilled and undereducated people in particular.

    China's new labor law requires all employers, whether foreign or domestically-owned, to enter into written labor contracts, either fixed-term or open-ended, with the employee.

    The law also stipulates that open-ended contracts must be signed if the employee has been working for the employer for more than 10 years or if the worker has already completed two fixed-term contracts.

    Employers will be subject to a penalty (double the severance pay) if they fire workers without "good cause" before their contracts expire, according to the new law.

    There has been wide speculation by consultants and economists that manufacturing in China will lose much of its competitive advantage under the new law.

    But if Zhang's amendment proposal gets through, it will be a different story.

    Although she has been living in the United States for almost two decades, Zhang remains well-connected in China in both political and business senses. Her father was a lieutenant in the People's Liberation Army.

    Zhang built China's largest paper recycling business, Nine Dragons Paper. Although China's latest richest person is Yang Huiyan, a Ohio State graduate whose father handed her the real estate family business, Zhang still is the richest self-made woman.

    Posted by Nina Ying Sun on March 4, 2008 8:25 PM | | Comments (0) | TrackBacks (0)

    February 28, 2008

    The Chinese should thank America

    Plastics News managing editor Don Loepp pointed out the attention the Western media gave Chinese product-quality issues last year in a recent post, as a few U.S. news reports on the subject have become strong candidates for the 2007 Pulitzer Prize awards for journalists.

    "China is a land of toxins and danger. Our homes may be full of made-in-China products, but we look at them suspiciously," Loepp wrote, summarizing the prevailing perception of China in the United States.

    He also rightly pointed out that a Pulitzer may trigger Washington to take a closer look at Chinese manufacturing and product quality.

    The same issues also have been recognized in China with the country's Administration of Quality Supervision, Inspection and Quarantine (AQSIQ) listing the Mattel recalls as one of the "Ten Most Influential Events of 2007."

    Besides pressure from its overseas buyers, Chinese manufacturers now face enraged domestic consumers who've read about Western countries' reactions to unsafe products and realized that their own domestic goods are much worse but nobody is there to safeguard them!

    AQSIQ and other authorities have, since June, fast-tracked a few projects targeting better product information transparency and stricter quality control. The newly launched online database "Product Quality Credit Records" is empowering the average Chinese consumer in an unprecedented measure.

    The same agents are also building a "China Import and Export Products Inspection and Quarantine Information Bank." The Chinese version is expected to go live online March 15 and the English version on June 15.

    With such a system, Chinese users will be able to have one more reference before they make a purchase. Profit-driven manufacturers will no longer be able to pass off their recalled products onto domestic consumers.

    All of this, without the recalls in the West, wouldn't have had a chance to be accomplished any time soon.

    So, in a sense, Chinese consumers owe Americans, the biggest importer, a thank-you. Thanks very much for heightening China's awareness of consumer rights and helping clean up the marketplace, whether it was intended or not.

    Posted by Nina Ying Sun on February 28, 2008 9:15 PM | | Comments (0) | TrackBacks (0)

    May 6, 2008

    Get our name right, please

    Labor workers of Chinese exhibition companies certainly aren't contenders for an American spelling bee contest, but they should know the 26-letter modern Latin alphabet used in English, which constitutes the Chinese pinyin system, the very first lessons of 1st grade. Maybe workers mistook it for a language other than English, but the letter "l" in the word plastic is upside down.

    Photo taken by Nina Ying Sun

    I took the photo at the Chinaplas show, held April 17-20, 2008, in Shanghai. I jokingly told the company about the sign, and the manager said they didn't discover the error until the show opened, and since the sign was high up in the air, near the ceiling of the hall, it couldn't be easily fixed.

    Plastics News had the same problem with our sign at last year's Chinaplas in Guangzhou. Our editor Bob Grace spotted the problem and had show service workers fix it right away.

    Forget about the poor workers who make $100 a month, the question is if the exhibition company had any quality control or proof procedures. Or did they just skip it like some toy makers?

    Posted by Nina Ying Sun on May 6, 2008 12:57 PM | | Comments (0) | TrackBacks (0)

    New Beijing impression (4)

    It didn't surprise me that at 4 p.m. Friday, the Yonghegong Lama Temple in midtown Beijing was still busy and at least half of the visitors were foreign.

    When visiting religious venues in China, remember it's difficult to define Chinese people's religious beliefs, but one thing is for sure: They are very pragmatic and worship all those who can bring them wealth and fortune (or more specific things such as good grades, promotion, lottery...anything you can think of). In order to be blessed, some people generously donate to temples, and others leave coins and change at every possible "auspicious spot." And, foreigners are following suite. When in Rome, do as the Romans do, I'm sure.

    Apparently, a stone animal in the West Pavilion of the Lama Temple is considered one of these auspicious places. People were feeding it with money. The animal is believed to be one of the nine sons of the dragon, from Chinese folklore, and considering the pavilion was surrounded in fencing, people really had to make an effort to place their money in range of the beast.
    Photo taken by Nina Ying Sun

    The ancient incense burner was clearly the target of flying coins, in spite of a bilingual sign on the side asking visitors not to throw incense and coins. Westerners were just as excited as the Chinese to try their luck.
    Photo taken by Nina Ying Sun

    Photo taken by Nina Ying Sun

    I was thinking, hey, people are just having some fun in the garden. No big deal.

    Then, I stepped into the formal halls with the Buddha sculptures and service items from the Qing dynasty. Another sign advised not to use camera. You may think Chinese people are never good at abiding by rules, judging by how they drive. But they don't want to risk their fortune by disrespecting rules right underneath Buddha's nose. I watched a foreigner slip into the corner of the pretty dark room and quietly take a photo without flash. I'm not sure if the staffer lama not far away noticed that. But nothing was said. Chinese tourists who stood close to the foreign tourist just walked away as if nothing happened.

    I could have told the lama on the prohibited use of the camera, but I was lost in my own thoughts at that moment. I was recalling a scene at the Shanghai Hongqiao Airport. At the jammed waiting hall for security check, a group of European tourists were pretty harsh with a Chinese woman who tried to cut in line. They spoke loud in English with thick accent, signaled the security and didn't want to listen to her explanation of being late for her flight. The security person let the woman go to the front of the line after checking her boarding pass, and then the group of Europeans booed him.

    Nothing should be generalized or taken out of proportion here. All I can say is, Beijing is a melting pot and at the same time a clash of old and new, domestic and foreign, rich and poor, individualism and collectivism, values and rules, etc. There's never a dull moment.

    Posted by Nina Ying Sun on May 6, 2008 12:33 PM | | Comments (2) | TrackBacks (0)

    New Beijing impression (3)

    When the great Tang dynasty poet Bai Juyi, also widely known in Japan as Haku Rakuten, first came to the then-capital of China Changan, now known as Xian, a friend made fun of his name-- which literally could mean "free living is easy," saying: "Everything is expensive in Changan; living here is not easy."

    The relatively high living costs in a capital city are understandable, based on fundamental economics.

    However, the Chinese government is intervening and making Beijing less expensive than it would otherwise. Take transport for example. A two-yuan (roughly US$0.30) metro/subway ticket can get you anywhere along Beijing's four existing lines (1, 2, 5, 13); whereas in Shanghai and Guangzhou, fare is calculated by distance, and two yuan is only good for a one-way trip of up to 4 kilometers.

    Beijing also offers the most affordable taxi service, compared to Guangzhou and Shanghai. Among the three major cities, cabs in Guangzhou are the most expensive.

    About seven years ago, when I lived in Beijing and commuted to work by subway every day, the train wasn't as crowned as it is nowadays, but it still had substantial traffic. In China, crowds of people mean juicy markets. Hence the existence of underground businesses on subway trains. Taking advantage of the one-ticket-for-any-distance-any-time rule of the Beijing subway, beggars and unlicensed newspaper and map sellers used to work on the trains all day.

    And now, as Beijing anxiously tries to polish its image, I've heard that the city administration is minimizing the presence of beggars, homeless and unlicensed street vendors. On my visit a couple of weeks ago, I didn't see a single street vendor and only met one beggar during rush hour in the subway. And most passengers were just trying to stay out of his way, rather than give him money.

    Beijng's metro lines 1 and 2 seem to have been around forever; lines 5 and 13 are relatively new. Still, the current system is not meeting the transport needs of the capital city's 17 million residents. I even met a cab driver who, instead of taking my 60-yuan-worth of business across town, took me to the nearby metro station for 11 yuan, rather than navigate the crowded roadway. "I don't want to get into the traffic jam on the main roads," he said, "even if you pay me to."

    According to a subway map on the official Web site of the 2008 Olympic Games, the Beijing metro system will expand a few times and become a huge web that covers the entire city.
    Beijing metro blueprint

    The purple line 10 on the map is expected to start running in June. It will accommodate locals and, in August, Olympics tourists. Other lines on the map are planned to be completed in different stages by 2015.

    The blueprint reminds me of Tokyo's extensive metro webs. There are a number of metro companies in Tokyo, instead of one government-backed system. Metro tickets are not cheap, but with the heavy road tolls and expensive parking, people prefer public transportation to driving. Here is the map of just one of the metro companies operating in Tokyo.
    Photo taken by Chen Lin

    I wonder how much the government is subsidizing the Beijing metro. Maybe lessons can be taken from the Tokyo metro industry, for a more diversed and faster-growing system based on market laws.

    Posted by Nina Ying Sun on May 6, 2008 12:07 PM | | Comments (0) | TrackBacks (0)

    April 29, 2008

    New Beijing impression (2)

    Everything is under construction.

    And the massive Forbidden City, i.e. the Palace Museum, is no exception. All three major halls where emperors held sessions with cabinets were being renovated. Such a disappointment! I was told the Forbidden City has a total of 9,999 rooms. But, at least for me, the rooms that count are those three magnificent ones. They are the ones that visitors must see.

    But to the north of the Forbidden City, the construction scene looked encouraging. The National Stadium -- or the Bird's Nest -- and the National Aquatics Center, also known as the Water Cube, are next to each other. Construction of the Bird's Nest is being finished. The Water Cube has been done for a while, and for a period of time was open to the public. But now it's also being prepped for the Olympic Games to open August 8.

    Photo taken by Nina Ying Sun

    I was wandering around on the site, thinking how contemporary and gigantic these buildings are. Then some people walked by, discussing how expensive it will be to maintain the plastic-film exterior of the Water Cube. "It's easier to build than to clean this thing in Beijing's environment," I heard.

    Speaking of which, many building exteriors in Shanghai and Beijing, as impressive as they are, could really use a thorough cleaning. But I guess the cost can add up with all the dust and chemicals constantly floating in the air.

    Posted by Nina Ying Sun on April 29, 2008 3:25 PM | | Comments (2) | TrackBacks (0)

    New Beijing impression (1)

    There used to be a popular slogan "New Beijing, New Olympics." It was part of China's campaign to become host of the 2008 Olympics. I still remember how the entire city of Beijing was transported with joy on the evening of July 13, 2001, when Juan Antonio Samaranch announced it had been awarded the right to host the global sports game.

    Nearly seven years have passed since then. And, since I've been away from Beijing for a while, I decided to visit my second-hometown before tourists from all over the world embrace for the Summer Olympics in a city with 3,000 years of history. How did this new Beijing strike me?

    In the taxi line of the Beijing Capital International Airport, I felt at home with all the Beijing and northern Chinese accents. My travel companion and I were greeted warmly by our cabby -- in English! Well, that's probably because we were speaking English when the cab pulled up. I started to chat with the 40-something driver in Chinese. But he asked me to switch back to English, so that he could test his language proficiency.

    "I'm a volunteer for the Olympic Games," he said, with much pride. A native Beijing resident, he's been learning and using English for his job for seven years, he said. He will even take full-time training in June for Olympics volunteers. "I learn English from customers every day. I learned the word smoggy yesterday when a Canadian lady was commenting on the weather."

    Photo taken by Nina Ying Sun

    Well, it's true, I didn't see the clear, blue sky of my memory of Beijing in the springtime. It was a little smoggy, as you can see from the picture I took. But honestly, the air was better than Shanghai. The city has spent more than US$12 billion to improve air quality. Considering all the construction, the exploding number of vehicles and Beijing's location and climate (next to deserts, as opposed to Shanghai and Hong Kong by the sea), you can see that the government has been working hard.

    But back to the language issue: Beijing is not as Westernized as Shanghai. Many service people still don't speak English. Hademen Hotel, where I stayed, is well-known for its traditional Chinese imperial furnishings. I saw more Western faces in the lobby and hallway than Chinese. But a bilingual sign in the bathroom caught my attention. A Chinese sentence reads: if you would like new towels, please place the used ones in the bathtub; if you need new disposable supplies (toothbrush, toothpaste, shampoo, conditioner and soap), please throw the used ones in the trash bin. That's pretty reasonable, right? But the English translation, as you can see in the picture, instructs guests to throw towels into the trash bin! That's really sloppy, to say the least.

    Photo taken by Nina Ying Sun

    Sometimes, I feel it's too harsh to expect China to speak good English. Just like how an American would brush up French before going to Paris, why expect the Chinese, representing a quarter of the world's population, to quickly pick up on a language that uses letters instead of square characters?

    Western expatriates in China in most cases don't speak Chinese. They have translators and assistants. It's alright for business people. But an interesting comparison of journalists tells something: Western correspondents in China usually rely on their local language aids for gathering info in Chinese language. They can say Ni Hao and Xie Xie, but rarely can conduct an interview in Chinese. But I've not met or heard of a Chinese national working for China-based Chinese-language media from the U.S. who doesn't speak fluent English.

    Just a random thought. But it's not an issue of Chinese versus English the global business language. It's the subtle interaction between all other languages and English.

    Posted by Nina Ying Sun on April 29, 2008 2:47 PM | | Comments (4) | TrackBacks (0)

    April 25, 2008

    Guest column: They call him "Mr. Li"

    Plastics News' Shanghai correspondent Lauren Hilgers was excited when she told me that she met a very interesting person at the recent Chinaplas event. She kindly wrote this following piece for my blog, succinctly portraying a Chinese industry veteran who bridges the East and the West:

    Li Qin Ren's American colleagues rarely or never refer to him by his first or full name. To Russ Johnson and Carl Olson, the bespectacled general manager of China Array Plastics's Wuhan operation is always "Mr. Li." And Mr. Li comes up so much in conversation that I had begun to think of him as fictional--China's Mr. Rogers of manufacturing.

    According to Johnson and Olson, Mr. Li can cook, he can run a factory, successfully negotiate China's bureaucracy and leap the cultural divide between the U.S. and China in a single bound. "What people don't know about Mr. Li," said Olson at Chinaplas, "is that he is a renaissance man in China."

    After meeting Mr. Li, it is hard to think less of him. At 65, he has weathered sea changes in China's economy, going from work as a chief engineer at a state-owned company, to a few years doing research in the United States, to retirement in 2003 and resurrection in the plastics industry.

    "I always joke that, although my past position was very high, I never had to worry about the whole company," Li said. "Now I work at a much smaller company, and I feel more pressure!"

    It was Li's relationship with Johnson that brought him to plastics at this late stage in life. Li's previous expertise had been in the shipbuilding industry. When Johnson came to China in 1984, he met Li across a negotiating table. "In our company there were not many people who could speak English, so they asked me to do negotiations and interpretation," he said. The pair hit it off. When Johnson returned on trips to China, Li helped him source goods and ensure quality. When Li went to do research in the U.S., he thought, "Naturally, Russ is the one American I would like to know."

    Li has helped Johnson navigate what Li sees as three phases of China's economy--the first negotiating with state-owned enterprise. "State companies are not so flexible, and these companies were defense industry companies so they will neglect other orders."

    As China's economy opened up, Johnson began contracting with private companies, but ensuring quality was an issue. "Now is the third phase," Li said. "This is a wholly-owned foreign enterprise and we are operating according to international standards."

    Li has been working with China Array since his retirement, but thinks the company should look to the future. "At first they needed a person like me, who has experience working in a manufacturing company," Li said. "But we need to consider the next generation."
    From left: Li, Olson and Li's daughter at Chinaplas. Photo taken by Lauren Hilgers.

    Posted by Nina Ying Sun on April 25, 2008 12:47 PM | | Comments (2) | TrackBacks (0)

    April 18, 2008

    India's toast to China

    As the Beijing Olympics torch was successfully relayed in New Delhi the evening of April 17 Beijing time, India's largest private enterprise and exporter -- Reliance Industries Ltd. -- made a toast to hundreds of its Chinese customers and industry friends at a Shanghai reception.

    The company has been supplying PP, PE and PVC to Chinese processors for many years. With two representative offices in Shanghai and Guangzhou, Reliance also operates five duty-free warehouses along China's eastern coastline.

    At the reception, the company announced that its experienced Shanghai chief representative, S. S. Naik, is returning to the company's Mumbai headquarters to oversee the resin giant's export business. Mr. Naik's successor is Mr. Soumen Bhattacharya, Country Head--China.

    Reliance is one of the six Indian exhibitors at Chinaplas, down from nine in 2007. The numbers look incredibly low compared with the total of 1,800 exhibitors, given the close trade ties between the two booming economies.

    Stanley Chu, chairman of the Adsale Group, said many foreign companies are represented at Chinaplas by their Chinese operations and therefore are listed in the China category. That may explain part of it.

    In the past few days I've seen plenty of Indian buyers on the show floor, a good number of whom have registered with the show -- over1,000 according to Adsale.

    India has maintained a healthy trade surplus with China in the plastics sector, a good chunk of it being resin. I wonder how much of that is generated by Reliance.

    Posted by Nina Ying Sun on April 18, 2008 7:11 PM | | Comments (0) | TrackBacks (0)

    Time to discuss Taiwan

    China's success story as a world powerhouse definitely wasn't a solo act. The economy has flourished in the past three decades with foreign investment, which, by governmental definition, includes money from Hong Kong, Macau and Taiwan.

    Taiwanese businessmen were among the first to move factories to the mainland. Today, they are swiftly starting to shift to lower cost countries, in particular, Vietnam. Nevertheless, the indispensable role Taiwan has played and continues to play in the development of the Chinese plastics industry can't be overlooked.

    That's why I give kudos to Adsale for planning a Taiwan-mainland pre-show conference for the 2009 Chinaplas. The one-day conference started in 2006 with a China-India theme and continued this year with a highlight on the cooperation between China and the United States. The Taiwan deal will be finalized in September when the Adsale Group leads a trade delegation to the Taipei Plas show. On a side note, the Taiwanese Association of Machinery Industry, organizer of the Taipei show, called off a press conference that was supposed to promote Taipei Plas at the Chinaplas show. Let's hope they've had more companies sign up than they can take.

    Plastics News, for the first time, will exhibit at Taipei Plas this year.

    Posted by Nina Ying Sun on April 18, 2008 7:00 PM | | Comments (0) | TrackBacks (0)

    Beijing misses Chinaplas

    Chinaplas, currently Asia's largest trade show for the plastics industry, debuted in Beijing in 1983. But it hasn't been back to its birthplace since 2004. And it's not going back in any time soon.

    Why? Believe it or not, although the Chinese capital is all geared up for the 29th Olympic Games, it is not ready for the ever-growing Chinaplas show.

    That's according to Stanley Chu, chairman of Hong Kong-based Adsale Group, the organizer of Chinaplas.

    "Beijing doesn't have a venue large enough to hold Chinaplas," he said April 17, the first day of the four-day-long 2008 Chinaplas show in Shanghai.

    Chu said Beijing's largest exhibition hall provides 125,000 square meters of exhibition space, while Chinaplas 2009 is anticipating 140,000 square meters of space.

    On the site of this year's venue, the Shanghai New International Expo Center, temporary pavilions have been built in between the 11 modern, spacious halls to fit more products and people.

    Chinaplas is returning to Guangzhou next year. It will take place May 18-21 in the China Import and Export Fair Pazhou Complex, which, according to Chu, is the largest fairground available in China and only slighter smaller than the Hanover Exhibition Center.

    Beijing remains the economic center for northern China. and as the southeast (the Peal River Delta) and east (the Changjiang River Delta) get more expensive than ever, businesses in those regions are inevitably moving north and inland for more competitive cost structures.

    You may think the location of a trade show shouldn't be a big deal, as people from all over the world fly to China for the plastics carnival. But it does matter to a country with such vast territory and diverse cultures. Just like how people from the New England wouldn't want to visit Houston in the summer, Guangzhou isn't the favorite destination for people from China's northern regions. But I guess, at least for the time being, the overwhelming advantage of foreign investment and plastic manufacturing in the South outweighs everything else.

    Posted by Nina Ying Sun on April 18, 2008 6:56 PM | | Comments (0) | TrackBacks (0)

    How big is Chinaplas?(updated)

    Chinaplas is the largest plastics show in Asia. But how big exactly?

    This year, the show features a total exhibition space of 132,500 square meters and nearly 1,800 exhibitors from 35 countries. Show organizer, the Adsale Group, said that the show's status as "number one in Asia and number three in the world(after K and NPE)" is "unshakable."

    The latest stats show that 27,223 visitors attended the show on April 17, the opening day. Nearly 20 percent of them, or 5,118 people, came from outside of China.

    Adsale also told the press that the electricity consumption of the show catches up to the normal power consumption of a Chinese town. Ten high-capacity generators were brought in this year and installed outside the halls, supporting the machines on display.

    Latest recap of Chinaplas 2008:
    Number of Visitors
    April 17 : 27,223
    April 18 : 25,300
    April 19 : 13,331
    April 20 : 6,307
    Total : 72,161
    Number of Overseas Visitors : 11,760 (16.3%)

    Posted by Nina Ying Sun on April 18, 2008 7:02 AM | | Comments (0) | TrackBacks (0)

    April 1, 2008

    Photo Gallery: green products from IHA

    This year's International Home and Housewares Show in Chicago featured an unprecedented collection of eco-friendly products. I hope you can get a feel of the green trend from the fresh photos I took at the March 16-18 show. Read my story Green Movement is in full force at 08 show for more information.

    Perf Go Green Inc. of New York touted itself as the first to mass-market 100 percent degradable trash bags to consumers. The green-tinted, low density polyethylene bags have a shelf life of two years and will break down completely in a landfill in 12-24 months.


    Perf Go Green also offers a unique dispensing system that's stored in the bottom of a trash can and dispenses bags one after another.


    Design Ideas Ltd. of Springfield, Ill., launched a line of bath products made of EcoGen plastic, a copolymer known as polyhydroxybutyrate valerate, or PHBV.


    Dirt Devil, a brand owned by TTI Floor Care North America of Glenwillow, Ohio, unveiled the industry's first cordless vacuums to receive the U.S. government's Energy Star label: the Dirt Devil AccuCharge hand (featured in the photo provided by TTI) and stick vacuums.


    Casabella Holdings LLC of Blauvelt, N.Y., launched a line of dish drains, cutlery trays and soap dishes made of PLA.


    Bissel Homecare Inc. uses recycled plastic in the brush block and parts of the solution tank of this Little Green compact, multipurpose cleaner.


    Iris USA Inc. of Pleasant Prairie, Wis. showcased a recycling organizer that is stackable.


    Hong Kong firm A&T International Co. touted biodegradable tableware and bags with a variety of materials including PHBV, a mix of 60 percent PP and 40 percent starch and natural materials such as bamboo and sugar cane.


    Eastman Chemical Co. showcased bottles made of Tritan-brand specialty copolyester, which the company touts as being free of BPA.


    Base Brands of Atlanta introduced water bottles that are made from a styrene acrylonitrile copolymer and prominently labeled "BPA-free," since the product is not made of polycarbonate and does not contain bisphenol A. The company promotes the message that people can use these colorful and attractive bottles to bring beverages from home to work, instead of consuming bottled water from vending machines. The SAN bottles come in packs of five, with an easy-slide base for refrigerators.


    BRK Brands Inc. of Aurora, Ill., a fully owned subsidiary of Jarden Corp of Rye, N.Y., announced that it is phasing out PVC in its packaging and using recycled PET instead for its First Alert line of smoke and carbon-monoxide alarms. Photo courtesy of BRK Brands.


    Umbra Ltd. of Toronto showcased desktop organizers--which resemble trash cans--injection molded with polylactic acid.


    Umbra uses industrial scrap PP, plus 1-2 percent additives, to make degradable trash bins.


    More degradable trash bins from Umbra with modern looks.


    The trash bin is designed to hold two trash bags, divided by the center bar, one for recyclables and the other for non-recyclables.

    Posted by Nina Ying Sun on April 1, 2008 11:22 AM | | Comments (8) | TrackBacks (0)

    June 3, 2008

    Labor revolution/evolution(3)

    If you've been to China and made some friends, you'll know that Chinese friends are nosy. They ask about your salary outright. My friends in China love www.salary.com and they use it compare their own income to their counterparts in the States.

    I always tell them that the less labor there is to a job, the less of a gap in income between the two countries. Investment bankers in Shanghai get paid as much as their counterparts in the U.S. But injection press operators and street sweepers in China get paid much less than their American counterparts. And those labor-intensive jobs have been filled by migrant workers in the past three decades when the labor-cost advantage enabled China to attract foreign investment and prosper as an export-led nation.

    But China may have come to the point where its hiring model for manufacturing and low-end service industries is in need of an overhaul. Maybe manufacturing jobs will eventually have to be localized and pay more.

    That way, the kind of tragedy that struck Shenzhen-based plastics recycler Longfei when a fire broke out and killed 15 migrant workers sleeping in a factory attic won't happen again.

    That way, there won't be the transportation frenzy like the one this past winter when snowstorms hit southern China just as millions of migrant workers tried to go home before the Chinese New Year.

    That way, a natural disaster won't torture so many more elsewhere -- right now, many of the families of the migrant workers who were employed in Chengdu when last month's earthquake and subsequent aftershocks struck are drenched in sorrow; many migrant workers who are from Chengdu but were working in other locations also are suffering, because when the tragedy hit, they were not with their families. What can be more heartbreaking than that?

    Posted by Nina Ying Sun on June 3, 2008 10:52 AM | | Comments (0) | TrackBacks (0)

    June 2, 2008

    Labor revolution/evolution (2)

    I can't say if I agree with Zuisetsu Su's prediction. But for quite a while, I've been wondering how long China's migrant labor-based economic boom can last.

    There are plenty of figures, models and analysis from economists out there. I just happen to believe that China's migrant labor waves will die down as a result of what's changing in people's minds.

    I'm talking about values and beliefs.

    Among the emerging economies, be it India, Vietnam or South America, has any other country seen anything as phenomenal as China's population of 100 million migrant workers who work out of town all year round?

    Most of them work laborer jobs that local city residents wouldn't want to take. These adults work at least six days a week, eat at the factory-run dining hall and sleep on bunk beds with dorm mates. They only see their spouses and kids once a year, around the Chinese New Year when they return home for the holiday. With their humble wages they will never be able to afford a house in the city nor realize a costly education for their kids because, being migrant workers, they are non-residents. Therefore, year after year, they never dream of settling down. They work hard and spend little during the year; they bring savings home in the winter to support their family's life in the rural areas.

    Many Western friends asked me: "How do these migrant workers manage to keep their marriage and family intact?" I don't know how to answer that. I guess when one struggles to fill the stomach, other needs are pushed back. Migrant workers' lifestyle seems so against human nature. And to me, it's simply not right.

    The awareness of life values has awakened in China along with the rising gross domestic product and living standards. The young generation in rural and inland areas would rather stay home; and more local manufacturing is starting in those regions. Those who leave town do so to change the path of their lives. They want to stay and blend in to city life.

    Hence the human resources challenge currently facing China. On the one hand, millions of college graduates can't find jobs; on the other hand, factories have a hard time finding laborers.

    Posted by Nina Ying Sun on June 2, 2008 11:39 AM | | Comments (0) | TrackBacks (0)

    Labor revolution/evolution (1)

    I was chatting with Zuisetsu Su -- an executive at Japanese automation equipment maker Harmo Co. Ltd.'s Shanghai branch office on the last day of Chinaplas. We first talked about the market's reaction to China's labor cost hikes; then he went on with a thought-provoking personal projection of China's future.

    "Labor shortages will end in a few years," he said. I disagreed, pointing out that wages continue to rise with strong legislative backup from the government; many middle-aged migrant workers are returning for good to their hometowns; and young people in the inland regions are not as enthusiastic about the lifestyle of a migrant worker.

    That's exactly where the problems are, Su said. He was referring to the geographical imbalance of China's economy, with its clusters of manufacturing around a small number of large cities and ports.

    By 2010, manufacturing will be more spread out across China, narrowing the gaps between regions, Su said. He believes the current manufacturing hotspots will see factories shift to areas with sufficient and affordable labor resources.

    "What do you think is sustaining the extremely high real housing prices in Shanghai, Beijing and Shenzhen?" Condominiums in midtown Shanghai sell for at least 20,000 yuan per square meter (about US$265 per square foot).

    It's the supply-demand relation of clustered population and limited space. Just like what happened in Tokyo in the 1990s, Su said, Shanghai and Beijing will also see their real estate bubbles burst soon. "That will bring down prices all over the board."

    A Beijing native, Su moved to Tokyo as a teenager and lived there for 14 years before relocating to Shanghai.

    Posted by Nina Ying Sun on June 2, 2008 11:30 AM | | Comments (0) | TrackBacks (0)

    May 29, 2008

    My secretive sources

    Cheers! The local governments in China have become a great news source for industrial expansions and other business information for me.

    No, I didn't bribe them. Nor did I hack into their databases.

    All I do is monitor their public information Web sites like nobody else.

    It has taken a decade for Chinese local governments to not only have vendor-built neat Web sites but also to regularly update them with useful information, from construction approvals to training for unemployed residents.

    The fact that you can now submit a request, check on its status and receive approval all online makes the government much more open, efficient and transparent.

    Government-backed local media are just as helpful to me. They are eager to write about the government's achievements: foreign investment, construction, exchange programs, etc.

    Take this report, first published by Tianjin Daily.

    It reported that on May 19, two dozen local officials visited Columbus, Ohio-based Ashland Inc.'s new polyester project in Tianjin and provided on-site consultation and approval. "The on-site services laid the groundwork for Ashland's 30,000-metric-ton unsaturated polyester plant," the news said.

    The story also gave details about the project that even Plastics News' latest update on Ashland's China expansion didn't include: The factory is 65,422 square meters, total investment is US$40 million and the project is scheduled to go on stream in July 2009.

    Isn't this nice?

    A local government-owned newspaper also reported that China's pipe giant Liansu of Foshan, Guangdong providence, has inked a 400 million yuan deal on a plastic pipe production base in Changchun, Jilin province. Liansu refused to talk about it when I checked with the company at Chinaplas last month. But industry insiders told me that the expansion makes perfect sense: As transportation costs rise, a factory in the northeast of China will greatly supplement its headquarters in Southeast China.

    So far, I haven't seen coverage on Liansu's new project anywhere else. I'm waiting to see how it plays out.

    Posted by Nina Ying Sun on May 29, 2008 4:03 PM | | Comments (0) | TrackBacks (0)

    May 21, 2008

    Speaking of visa rules

    The sudden change in China's visa policies -- more complicated procedures and stricter approval process -- is certainly frustrating Western business travelers.

    Just as the U.S. tightened its borders after 9-11, it appears that the Chinese government is trying to strengthen national security for the Olympics. Usually, such precautions are deemed a legitimate course by the international community. Who wants to see what happened in Tibet repeat in other regions on China's territory? Who wants to see the tragedy during the 1972 Olympics in Munich -- where eleven Israeli athletes were taken hostage and killed -- to repeat?

    What really has caused the grudge is the disruption of easy, convenient Chinese visas. And the changes weren't communicated effectively in advance.

    But, on the flip side, do you know the procedures a Chinese person must go through to get into the U.S.?

    For starters, the U.S. embassies in China change their rules often. That's why Chinese travelers check with the U.S. embassy and State Department Web sites before they board a plane to America.

    And did you know that Chinese citizens can't even get tourist visas to the U.S.? The situation is changing somewhat this summer as the U.S. starts accepting Chinese tour groups -- but still not individuals. Why loosen the control? Because the estimated per-person, per-visit consumption of a Chinese tourist is $6,000. That's good tourism revenue.

    Did you know that Chinese citizens must attend a personal interview session at one of the five U.S. embassy/consulate locations in China to get a visa? But first they have to make an appointment for the interview weeks, or even months, in advance, by phone. Not only does the phone call costs nearly 5 yuan a minute (a normal long distance call in China cost about 0.30 yuan per minute), but often, it's unpredictable when the appointment center will release time slots on which days. So one needs to call again and again to get an appointment on a particular day.

    Once visa applicants arrive at the U.S. embassy/consulates in China for their pre-arranged appointment, they must still wait at least two hours in the waiting hall -- sometimes standing in line outside the building in 100 degree weather.

    Do you want to know how many documents it takes a Chinese citizen to get a U.S. business visa? Bank statement, real estate document, business license, pay stub, tax document, personal resume, employment letter, marriage certificate, wedding photo ...

    Do you even want to know how many Chinese students with full-scholarship packages from prestigious U.S. schools are turned down U.S. visas every summer?

    Visa policies are supposed to be reciprocal. But the Chinese rules have been bent to welcome visitors from the West, probably with heavy consideration for tourism revenue and foreign investment.

    In spite of the current policy change, I do believe things will return to "normal" after the Olympics. After all, money talks, in both ways.

    Posted by Nina Ying Sun on May 21, 2008 10:45 AM | | Comments (0) | TrackBacks (0)

    May 20, 2008

    Alpla builds bottle plant in China

    As China's export markets down and domestic buying power up, demand for packaging is rising rapidly. Western companies are going after the growing market, including the Austrian packaging firm Alpla Werke Alwin Lehner GmbH & Co KG.

    According to Hefei Evening News, Alpla broke ground for its second factory in China on May 16. The new plant, located in Hefei, Anhui province, will supply packging to Unilever and L'Oreal. With an initial investment of US$20 million, the factory will start with annual capacity of 300 million plastic bottles. Alpla has a packaging plant in Tianjin as well.

    Posted by Nina Ying Sun on May 20, 2008 4:07 PM | | Comments (0) | TrackBacks (0)

    May 19, 2008

    Grace note: China tightens visa rules

    by Plastics News editor Robert Grace

    The Beijing Olympic torch protests appear to have triggered some fallout that is negatively impacting foreigners trying to travel into China for business or pleasure. One would expect that China would be lowering the barriers to entry and trying to put on a happy face for those wishing to enter the Middle Kingdom.

    But various sources suggest that ever since the torch protests in Europe and elsewhere gained a lot of Western media attention, Chinese authorities have implemented much stricter visa regulations, to include demanding new layers of documentation and pretty much shutting down the issuance of the popular one-year, multiple-entry visas that used to be relatively easy to secure. We hear that even Hong Kong residents are being put through extra paces to go to the mainland.

    Some of the new rules (though it is difficult to ascertain how widely or evenly they are being enforced):

  • All travelers need to provide a copy of a bank statement with their name on it, apparently to prove they have enough money to avoid becoming destitute and assuming permanent residency in the slums of Shenzhen;

  • Confirmation of a hotel booking for your entire stay in China, and that confirmation must include the names of all occupants of a given hotel room (e.g. your spouse or partner, in addition to yours, if you are not traveling alone);

  • For a business visa, not only does one need a letter (on letterhead, or else it's not valid) from the organization making the invitation, but now that organization also must go secure for their own purposes -- and in person, we understand -- a "special visa notice" for that invitee from a local entity such as an office of the Ministry of Foreign Affairs, an Economic Affairs office, or the appropriate municipal entity.

  • If you are simply going on vacation, on a tourist visa, one now needs a letter from your employer stating that you will, indeed, be on vacation in China on the dates in question.

    This is all in addition to the usual stuff, i.e. a valid passport and appropriate photo, a signed China visa application form, a copy of your travel itinerary that shows the flight has been paid for, etc. Multiple-entry visas cost no more than single-entry visas, but now seem virtually impossible to get. As a result, someone wanting to travel more than once into mainland China in a certain period of time gets to go through this lovely process each time (for a fee, of course).

    Let's hope this all dies down once the Olympics pass. So much for rolling out the welcome mat!

    • Posted by Nina Ying Sun on May 19, 2008 1:42 PM | | Comments (2) | TrackBacks (0)

    May 16, 2008

    Hands-on due diligence in China

    "More than half of factories in southern China are falsifying payroll documents!"

    "Many even create Potemkin factories.... Around the corner is a 'shadow factory' that produces the same goods under much less wholesome conditions."

    "There is even a cottage industry of 'falsification engineers' in China--consultants who specialize in doctoring payroll records and coaching workers to create a fiction of compliance with a Western buyer's code of conduct."

    The above statements are from Alexandra Harney's latest viewpoint for Plastics News' sister publication AdAgeChina, How to work with Chinese factories without getting burned(registration required). She is a China-based journalist and author.

    What's more sensational than the bold statements about unethical business practices in China, is her suggestion that, instead of waiting for Beijing to improve law enforcement, Western multinationals can be a large part of the solution to the problems--whose consequences include costly product recalls, falsified documents and worsening pollution.

    Here are the steps Harney suggested taking:


    1. Acknowledge that understanding what's happening in the company's supply chain is not simply a matter of risk management or good corporate citizenship; it is a core business issue and a valuable competitive advantage.
    2. Build frank, long-term partnerships with Chinese factories, rather than moving orders quickly from one plant to another.
    3. Take a field trip at least once or twice a year.


    But the most interesting advice was:

    Schedule a visit to one of your suppliers, but arrive quietly the night before your appointment, perhaps with a Chinese colleague. Instead of having dinner at the hotel restaurant, eat near your factory and spend time with the locals. Ask them: What's the average monthly wage in this area? Are wages going up or down? What time do most people get off work? What is considered the best factory to work for, and why? Have there been any problems in any of the factories recently, fights or disagreements?


    Ask motorcycle drivers that work near your supplier about the hours your factory keeps its lights on, and whether they see a lot of traffic between your supplier and others in the neighborhood.
    When you meet the factory manager the next day, ask him the same questions and compare his answers to what you learned the night before.

    Sounds like some good advice from a real China expert. However, don't assume the locals and motorcycle drivers -- if there are any -- really know the answers to your questions, even if they provide you with information. Be aware that Chinese Culture 101 dictates that, out of politeness, Chinese people won't tell you no. If the motorcycle driver isn't sure about the hours of the factory, he will probably give you an answer anyway, just to complete the conversation nicely.

    So, like any due diligence work, talk to multiple sources with different backgrounds and interests.

    Posted by Nina Ying Sun on May 16, 2008 10:32 AM | | Comments (1) | TrackBacks (1)

    May 14, 2008

    After the quake

    Words can't describe my feelings about the May 12 earthquake that has killed at least 15,000 so far, erased some Sichuan localities from the map and affected another dozen provinces across China.

    Early Monday morning, EST, China's Xinhua News Agency reported 107 casualties in the quake. I called as many people in China as possible until 8:15 a.m., when I had to leave home for work. Everybody I spoke with was fine.

    I was in a meeting from 8:30 to 10:30 a.m. When I came out, colleagues asked me about the quake and I said about 100 people died. But then on the Internet, the death toll exploded to 9,000 by around noon. I was appalled, to say the least. I sent a group e-mail to all my Chinese friends outside of China--in North America, Europe, Australia, and the rest of Asia, asking if any of their friends or families were in the affected areas. I received a dozen brief replies from friends saying that their relatives were in the region, but, thank God, they survived in one piece.

    Chinese who are living overseas are raising money for the quake. Houston Rockets' basketball center Yao Ming, alone, has donated 2 million yuan from the U.S. In the Cleveland-Akron area, where I am, Chinese student and scholar associations at area colleges and universities are taking the lead, followed by other regional organizations.

    Among Western media, Wall Street Journal has presented in-depth coverage, especially in this article: China Earthquake Exposes a Widening Wealth Gap.

    A friend of mine who works in the financial district in Pudong, Shanghai said she rushed out of the shaking building where she was working and saw, on the nicely mowed lawns between the new, well-built high-rises, a group of white collar workers filling out their life insurance forms -- right there on the lawn. But how many of the 15,000 (incomplete stat) small town residents and farmers who have died in the quake had life insurance? How many of the 64,000 injured (incomplete stat) have health insurance and disability insurance?

    I also blame the poor quality of buildings in rural areas and small cities for the horrific damages. But according to an architect friend who has worked in China, Australia, France, Canada and the United States, even Shanghai and Beijing have plenty of sub-par buildings. "They build fast and cheap, not so strict with shock-resistance performance," she said.

    Rumor has it the Water Cube Aquatics Center in Beijing already has a few leaking points ... I hope it's just rumor.

    Most Westerners probably know Sichuan only for its world-renowned spicy cuisine. But Sichuan people are also known in the Chinese community for being optimistic, strong, hard working and ready to help others. Just hang in there. With help from all over the world--starting with an 800 million yuan relief fund raised in the first two days after the quake, I hope Sichuan recovers soon!

    Pray for China. Pray for Sichuan.

    P.S.: The Taiwanese government is donating 2 billion Taiwanese new dollars (452 million yuan or US$65 million) for the quake areas. This marks the first time ever that the Taiwanese government has made a donation for the mainland. In the plastic industry, Taiwan's Formosa Group is donating 100 million yuan and Hon Hai Precision Industry Co. Ltd. 60 million yuan.

    Posted by Nina Ying Sun on May 14, 2008 12:56 PM | | Comments (1) | TrackBacks (0)

    July 10, 2008

    Fuel prices drag down China flights

    Not so long ago major U.S. airlines were scrambling for passes to fly to China. Now, some of those airlines that "luckily" obtained China routes from the U.S. Department of Transportation want to halt services.

    Taking the lead are US Airways Group and Northeast Airlines. Both have received permission from the DOT to suspend some of their China-bound flights without losing their rights to operate to the region in the future, said a Bloomberg report.

    Through-the-roof fuel costs are blamed for the step-back.

    US Airways also plans to delay the launch of its Philadelphia-Beijing service to March 25, 2010. United Airlines said in May that it will delay the launch of service between San Francisco and Guangzhou to June 2009.

    In my experience over the years, it's become a luxury to sit next to an empty seat in the main cabin on direct flights between the U.S. and China (same thing with domestic U.S. flights). Planes are getting fuller, airfares higher, and meals simpler. Now should we start to worry about securing a seat?

    Posted by Nina Ying Sun on July 10, 2008 11:39 AM | | Comments (0) | TrackBacks (0)

    July 8, 2008

    When bosses disappear

    We've seen plenty of press coverage about China's new labor contract law and its attendant rise in wages and improved benefits packages. But it would be naive to believe that Chinese workers now feel happy and secure. In reality, they are vulnerable and often thrown into unusual situations -- such as arriving at work to find that their bosses are no-shows.

    Such was the case for more than 1,000 workers of Xinyao Techonology Co. Ltd. -- a plastic molder in Shunde, Guangdong province -- who responded with extreme action when company management didn't show up for work last week, according to local media. Rumors spread quickly among the workers, who had not yet received their June paychecks, and they believed that the owner was unable to pay them because of a huge loss in the stock market.

    To make up for their overdue paycheck, 1,000 day-shift workers scrambled to collect raw materials and equipment from the factory.

    Local police rushed to the site, stopped the mad scene and retrieved the items that had been removed from the factory. Labor authorities are now on the case and in talks with the owner.

    You may wonder why workers didn't seek legal protection instead of looting the factory. I see it as a manifestation of people's discontent and lack of faith in the legal system. In order to change that mind-set, the government will need to resolve all labor-relations cases in a consistent, fair and effective manner in the years to come.

    Posted by Nina Ying Sun on July 8, 2008 8:57 AM | | Comments (0) | TrackBacks (0)

    July 3, 2008

    Tag tells energy used in product

    A Chinese researcher at a state-owned energy think tank said that in the future the amount of energy it takes to produce a product will be found on product packaging.

    Mr. Jiang Kejun said the research institute in Beijing is working to analyze the energy consumption of products used in people's daily lives. "For example, the amount of energy used to make an A4 size sheet of paper is about 0.1 kilowatt-hours," he told a Chinese publication.

    Well, that energy tag may help plastic bags regain some share lost to paper bags, since the production of paper bags uses more energy than plastic bags.

    But, researchers, especially those who advise governments on policies, should really look at the whole picture rather than one single parameter. What about carbon footprint? What about reusability? What about recyclability?

    And, how much energy does it cost to produce the energy tag, starting with figuring out the amount of energy in every commodity? Will it be worthwhile?

    Posted by Nina Ying Sun on July 3, 2008 3:46 PM | | Comments (0) | TrackBacks (0)

    July 2, 2008

    Plastic motor driven by light

    I have one bachelor's and two master's degrees -- none is anywhere near science and technology. But converting solar energy to mechanical movement without any aid but a plastic motor sounds really awesome to me.

    Nanowerk LLC of Honolulu, Hawaii, described the significance of the plastic motor in a June 20 release: for the first time, researchers have succeeded in amplifying the minuscule change in structure at a molecular level caused by an external stimulus (light) to a macroscopic change through a cooperative effect of liquid crystals. The polymer used to make the photomechanical device is liquid-crystalline elastomer, combing both properties of liquid crystals and elastomers.

    Posted by Nina Ying Sun on July 2, 2008 11:07 AM | | Comments (3) | TrackBacks (0)

    June 25, 2008

    Chinese sacks found guilty

    The U.S. Department of Commerce has reached a decision on a dumping and subsidization investigation of laminated woven sacks from China.

    In a June 19 release, the International Trade Administration said the government determined that Chinese producers/exporters have sold laminated woven sacks in the United States at 64.3 to 91.7 percent less than normal value and received net countervailable subsidies ranging from 29.5 to 352.8 percent.

    That's preliminary success for the petitioners, the Laminated Woven Sack Committee and its individual members: Bancroft Bag Inc. (La.); Mid-America Packaging LLC (Ohio); Coating Excellence International LLC (Wis.); Polytex Fibers Corp. (Texas); and Hood Packaging Corp. (Miss.).

    The International Trade Administration will issue its final injury determination on or about July 31. Depending on the ITC's findings on the imports' injury to the domestic industry, the government will decide whether or not to issue anti-dumping and countervailing duty orders.

    Posted by Nina Ying Sun on June 25, 2008 11:56 AM | | Comments (0) | TrackBacks (0)

    June 16, 2008

    Chinese vs. Indian labor market

    Bharath Srinivasan is the Guangzhou Chief Representative of Mumbai-based Reliance Industries Ltd. His response to my "Chinese labor market revolution/evolution" series offers an interesting perspective, comparing two of the world's fastest growing economies. Here's an unedited version of his writing:

    We can attempt to put migrant worker demographics in China into perspective. The real demand for the workers would have come during 1990-95 as the country was coming out of re-adjustment. I presume the workers would have been around 25 to 30 at this time (Born in 1970s). Now, 15 years later, they are still in mid 40s having a minimum of 15 to 18 years of working years more (may be more considering the superior health of Chinese).

    One large plastics factory owner in China told me recently that the new labor law could lead to release of labor from smaller factories that cannot meet the norms and bring more wiling workforce with some guaranteed benevolent employment. I see this kind of readjustment within the Industry cluster a source of labor for the profitably running factories to aid any expansions.

    Movement to West could be mainly in textile and Shoe Industries as Plastic manufacturers' set up is a lot more elaborate than the stitching units, I guess. However, such Industry movements will attract that section of migrant population closer to their hometown, provided the moving enterprise is willing to retrain those who do not have the relevant skills.

    Hence, for the plastics industry, I see secure supply of workforce in two ways: (1) Existing labor which has some time to go & (2) Readjustments from closures of small units within the industry segment. Yet infusion of new workforce is still an area of concern as is the case in large rapidly developing countries like in India.

    The industry spread is all across India, exceptions can be in states where there was what you might call 'poor investment climate'. The reasons are simple. The focus of the Indian Industry was to satisfy domestic needs unlike the export-focused Chinese Industry. Hence they need not be located close to the ports. Secondly, any Industry had to rely significantly of self generated power as all provinces are equally power starved. Hence, most industries generate their own power, which means the engine for the Industry can be moved to any location. Thirdly, labor was available in all locations. India has 80 percent of Chinese population living in 30 percent of the land area. The population density is high in most places.

    Interestingly however, there are widespread cases of 'migrant workforce' from states like Bihar, Rajasthan and Orissa in the Plastic Industry. These states have seen the least development in the past 60 years of Indian independence with virtually no new Industry in these places.

    However, unlike China, which continues to be a manufacturing economy, India has moved into a 'service economy' in a big way. Most of the young graduates prefer white collar jobs which are also available in abundance. The recent flash of excellence displayed by Indian companies in manufacturing has mainly been in automobile, its ancillaries and the steel Industry which largely supports the automobile industry. Hence, finding a blue collared workforce for other industries in India is a lot more difficult than in China. I should also add, the productivity and work culture in India has much to be desired in comparison to China.

    Hence, I might conclude that China is in a much better position than India in terms of labor right now.

    Posted by Nina Ying Sun on June 16, 2008 12:29 PM | | Comments (1) | TrackBacks (0)

    Vietnam's plastic exports up, but...

    The plastics industry in Vietnam appears to be doing well, just looking at the export figures. The country has earned an estimated US$345 million from exports of plastic products in the first five months of this year, up 31.9 percent over the same period last year, the Ministry of Industry and Trade was quoted as saying in a Nhan Dan Online story.

    But the growth of dollar amount doesn't necessarily indicate an increase of volume. In fact, prices of plastic products have gone up across the board, both for exports and Vietnamese domestic market. The Nhan Dan report cited a 10-30 percent price hike of such plastic items as schoolbags, raincoats and children's toys. And the price increase of finished products was a result of rising resin costs. Prices of PP, PVC and HDPE increased US$30-50 per metric ton in May compared to April and up 23-25 percent compared to the same period last year.

    Since the Vietnamese plastics industry largely relies on imported resin, increased spending on resin imports is the price it pays for export growth of processed products. Also taking into account inflation and labor wage hikes in that country, the bottom line tells a different story than sales.

    Posted by Nina Ying Sun on June 16, 2008 11:04 AM | | Comments (0) | TrackBacks (0)

    June 13, 2008

    Big ship vs. small boat

    A U.S.-based consultant called me, asking about the validity of setting up manufacturing of simple plastic products in Asia -- such as China, Vietnam, Thailand, Malaysia, etc.

    I've been promoting the idea of keeping plastic manufacturing, especially those that can be automated, where the market is. From a pure business viewpoint, it's quite simple: resin prices have been pretty much globalized with regional fluctuation; fuel and transport costs continue to rise; labor cost advantages and preferential policies are bound to change in emerging economies as they become richer. On top of these factors, of course, there are political and economic uncertainties of investing in a foreign country.

    Take a look at Vietnam. The country's inflation tops 25 percent, with food costing more than 40 percent more than last year. It is also suffering a massive trade gap and a falling currency.

    Vietnam's neighbor, important trading partner and investor -- China -- is seeing Chinese firms facing difficulties across the border.

    According to Yang Zhen, chairman of the Business Association of China in Vietnam, who was quoted in a China Daily report, Chinese-invested companies in Vietnam have been suffering income losses as the dong depreciates, credit tightens, raw material and labor costs rise. The head of a plastic bag manufacturer from China was even attacked by local workers during a strike and had to hide in a government hotel, the paper reported.

    If the Chinese economy is a large vessel, then the Vietnamese economy is a small boat. The latter's GDP is about one fiftieth of the former's. That's why China is more able to weather storms. However, when the big ship gets on the rocks, the damage and losses will also be much severe than with a small boat.

    Posted by Nina Ying Sun on June 13, 2008 2:24 PM | | Comments (0) | TrackBacks (0)

    June 12, 2008

    "30 days" with Mr. Wang

    I like Morgan Spurlock's reality TV series "30 Days," in which he and other subjects live for a month in a way that's outside their comfort zones, such as living on minimum wages. If I had the resources, I'd tweak this concept and produce a TV program to showcase people's lives in China. Here's a brainstorm of possible episodes including the fictitious Mr. Wang:

    1. Viewers get to watch Mr. Wang as he parts with his wife and son in a small village in Sichuan province and tries to find an entry-level laborer job in the plastics manufacturing industry in a big city. Since China's labor demand is outstripping supply, 30-something Mr. Wang with a high school diploma and no factory experience may still get offers. He decides to travel to different regions -- like Guangzhou, Shanghai, Tianjin -- and evaluate the job markets in different parts of the country. He compares pay packages, tries to get around the middleman, negotiates with big enterprises and small workshops, and insists on a legal employment contract. Trust me. It'll turn out to be eye-opener for both Western and Chinese readers. He may get tricked by the hirer on the contract terms. He may be asked to pay a job application fee for a bogus position. He may find out that Guanxi (connection) is crucial for landing a good job, and the connection can be made on the spot with a red envelop (containing cash of course).

    2. In this episode, Mr. Wang takes a job. He starts a busy but simple life between his work station, factory dining hall and dorm. He gets basic training, tries to get along with his boss, coworkers and dorm mates, and observes the work environment: how safety measures are implemented, how overtime is tracked and compensated, how workers from the same province form cliques, etc. Since the free food provided by the factory is not great at all, he befriends the dining hall cooks for some perks. Since there's no TV or other entertainment options, every night, he and his seven dorm mates lie on their bunks telling stories about their families back home. When finally he has a day off, he gets out of the industrial park and explores the city, probably getting a taste of how expensive city life is and how he doesn't belong there. He inevitably encounters some cold faces and bad attitude from department store sales associates and restaurant waiters, who judge people on their appearance and accent... Back to the factory, he gets tired of waiting in line for the public phone in the dorm building and discovers that cell phone text-messages are more affordable than long-distance calls. He spends half of his first monthly paycheck, buys a pair of low-end, used cell phones and mails one to his wife.

    3. In this episode, Mr. Wang quits his molding job and gets into the plastics machinery sales business. Viewers get to see how he prepares the first formal outfit of his life, learns to use the Internet, finds sales leads, and then hangs out with potential customers. Viewers will also see how he closes deals, and how kickbacks and other tricks work in China. He is lucky and successful, but not happy. As a salesman, he is expected to socialize everyday with customers, drink bottle after bottle of Chinese beer and shot after shot of liquor, and stay up all night in night clubs. He now sends more money home, but he doesn't want to tell his wife what his work is like. Over time, he finds himself making up things on the phone and subtle tensions arise between the couple.

    ...

    Ideas and characters welcome!

    Posted by Nina Ying Sun on June 12, 2008 2:30 PM | | Comments (0) | TrackBacks (0)

    August 1, 2008

    The China vs. India game

    When I was writing my July 31 post on China becoming the world's largest online community, I thought about India. In fact, the 4 percent penetration rate of the Internet does sound low for a country known for IT outsourcing, and, more recently, design and engineering.

    I didn't include a comparison of the two countries in my posting, mainly because I wanted to keep the piece short and sweet.

    But Business Week writer Frederik Balfour did in the "Eyes on Asia" blog, highlighting a pair of data sets: China's 19 percent Internet penetration vs. India's 4 percent, and China's 85 percent broadband percentage vs. India's 4 percent.

    He received some harsh and outspoken comments, which criticized the writer's lack of understanding of the matter and framing up or exaggerating the China-India rivalry.

    BW does like the China vs. India theme. It certainly grabs attention and invites bickering. A case in point was a July 22 BW article, "Why India will beat China". The story stirred up more than 500 comments -- some are intense and angry -- in a week.

    If I can weigh in a little, China and India are on the top of the target list of Western companies' investment locations. So it makes perfect sense to compare the pros and cons.

    But it can get writers into hot water to judge developing countries with their own set of values and underlying assumptions and then hope everyone else agrees. What is or is not desirable? Which goals are and are not priorities? These are all subjective value judgments.

    And, local knowledge--understanding how a particular social system works--is vital. For instance, Balfour was surprised by how firewall -- used by the government to block Web sites, Web pages and even certain key word search that the government deems inappropriate -- doesn't discourage the growth of Chinese Internet users. I can help solve his puzzle: First, most Chinese people use the Internet for reasons other than political; second, the Internet has enabled Chinese people to talk more openly than ever and helped form an emerging public sphere in the cyberspace. Online firewalls can be frustrating, but not as almighty as in the off-line world. In other words, people who are used to tight government control in the day-to-day life aren't deterred by the presence of online police from using the Internet. It's that simple.

    Posted by Nina Ying Sun on August 1, 2008 4:39 PM | | Comments (0) | TrackBacks (0)

    July 31, 2008

    China outstrips U.S. in Web users

    With a whopping 253 million Internet users, China has surpassed the United States to become the world's largest Internet user base.

    The China Internet Network Information Center (CNNIC) released that number last week and noted that more than 80 percent of Chinese Web surfers use broadband, according to Xinhua News Agency.

    The United States had an estimated 223.1 million Internet users in June, the Associated Press said, quoting Nielsen Online's data.

    A July report from the Boston Consulting Group spoke highly of the quality of China's online population, which spends more time online than their American counterparts and is quicker to adopt new technologies.

    "Many people in the West think that China is still early in its digital development. In fact, in many activities such as instant messaging and blogging, China is more advanced than the United States and other Western economies," Xinhua quoted Christoph Nettesheim, a senior partner and managing director in BCG's Beijing office as saying.

    Posted by Nina Ying Sun on July 31, 2008 12:30 PM | | Comments (0) | TrackBacks (0)

    Albemarle helps out Chinese institute

    Baton Rouge, Louisiana-based chemical maker Albemarle Corp. is helping the Sichuan Fire Research Institute (SCFRI) to restore work by housing SCFRI's research projects at the company's technical center in Nanjing, Jiangsu province.

    Several buildings at SCFRI collapsed or were seriously damaged during the May earthquake, and some testing equipment was ruined, a news release said.

    Albemarle's Nanjing technical center is an official Flame Retardant Products Test Center certified by Beijing-based China Plastics Processing Industry Association. The center is providing SCFRI with testing and research support. This way, "the issuing of flame retardant certification labels will not be affected by the damage caused to the institute," the company said.

    Posted by Nina Ying Sun on July 31, 2008 11:13 AM | | Comments (0) | TrackBacks (0)

    July 29, 2008

    Trade shows on the ground: UTECH Asia/PU China

    For polyurethane professionals and managers in Asia, UTECH Asia 2008 will once again incorporate PU China 2008, and it will all take place September 3-5 in Shanghai.

    The biennial event attracted 7,654 visitors in 2006 and covered a variety of industries, including automotive, general engineering, aerospace, furnishing and bedding, building and construction, electrical/electrotechnical, footwear, textile, mining and medical/surgical applications.

    Plastics News' sister publication Urethanes Technology International is a co-organizer of the event.

    More information is available at www.utechasiapuchina.com.

    Posted by Nina Ying Sun on July 29, 2008 2:38 PM | | Comments (0) | TrackBacks (0)

    July 28, 2008

    Olympics, plastics plant and terrorism

    It takes some imagination to connect the dots between the Beijing Olympic Games, a plastics factory in Guangzhou, an explosion and a Uighur separatist group called the Turkestan Islamic Party.

    But the Turkestan group made such a linkage by claiming responsibility for four recent explosions in China in an online video statement transcribed by the Washington-based IntelCenter. The group threatened to target the Beijing Olympics scheduled to open next week.

    One of the four terrorist attacks claimed by the group was "a July 17 explosion in a plastics factory in Guangzhou." However, Guangzhou police refuted the claim and said they had no record of such explosion in Guangzhou on the particular day.

    Chinese public security officials denied the claims and said the other three explosions -- May 5 in Shanghai, July 21 in Kunming, Yunnan province, and May 17 in Wenzhou, Zhejiang province -- had no connections with terrorist activities, according to the Xinhua News Agency.

    Chinese and foreign media have pointed out the poor production quality and the factual errors in the narratives. The Wenzhou incident was referred to with a wrong date. The video also mentioned "the eight Olympics cities in China," while in fact there are only seven such cities.

    An official with the Guangdong Plastic Industry Association in Guangzhou told Plastics News Asia Bureau Chief Steve Toloken on July 28 that they were not familiar with any bombing or terrorist activity in local factories.

    There was speculation in some media, including the Washington Post, that the Turkestan group may have been referring to a March 13 explosion at a Guangzhou vehicle repair facility and residential building that killed seven people. According to local media reports, that explosion occurred during an accident involving a truck delivering a large load of plastic caps or discs used in toy guns.

    A Chinese vegetable vendor also claimed responsibility for the Kunming explosion via the online forums, who later admitted to the police that he made up the story to gain attention.

    While denying the Turkestan group's claims, the Chinese government also is reinforcing security measures at Olympic venues and other public space in a number of major cities, according to various local media.

    Posted by Nina Ying Sun on July 28, 2008 1:51 PM | | Comments (0) | TrackBacks (1)

    July 25, 2008

    Is Shanghai plateauing?

    Maybe I'm making a mountain out of a molehill, maybe it's just a numbers game, but Shanghai's gross domestic product growth rate of 10.3 percent in the first half of 2008 is below China's national average of 10.4 percent.

    Yes, the discrepancy is small. Yes, maybe other regions inflated their numbers.

    But, Shanghai has, since 1992, maintained double-digit annual growth rates, which were always higher than nationalwide averages, financial magazine Caijing pointed out.

    During the first six months, the securities industry made zero no contribution to Shanghai's GDP growth, and the real estate industry dragged the overall growth, the Caijing article also said.

    Figures from the Shanghai government show a decline of investment in city infrastructure and industrial projects.

    Where is Shanghai headed? Should we pull out of that market?

    Not yet. On the flip side, Shanghai's export growth rate is still climbing, thanks to aggressive expansion into markets outside of North America and Europe -- Japan, Southeast Asia, Latin America and Africa. The strategy of global diversification may spare China from being hit hard by the economic downturns in the West.

    Posted by Nina Ying Sun on July 25, 2008 11:58 AM | | Comments (1) | TrackBacks (0)

    July 21, 2008

    China's auto market a safe harbor?

    Rising prices of food, energy and commodity materials across the globe are stretching consumer confidence thin. Auto sales in the U.S. dove more than 17 percent in the first half of 2008. Sales of new vehicles also dipped 2 percent in Japan during the same period. But growth remains brisk in China, topping 18 percent in the first 6 months.

    But the pace of growth is slowing down slightly, compared to the 22 percent rate in the first half of 2007. Xinhua also reported that growth fluctuates vastly, as shown by monthly performances. Sales reached a record high in January but took a hard hit in February due to the Chinese New Year holiday and snow storms. March saw a beautiful rebound, but April was a month of adjustment. Sales in May declined again, impacted by the Wenchuan earthquake. The market finally regained growth momentum in June.

    Posted by Nina Ying Sun on July 21, 2008 11:20 AM | | Comments (2) | TrackBacks (0)

    How to sell medical devices in Asia

    When asked about the regulatory issues of medical devices in Asia, a European speaker at Engel's recent Medical Days event in York, Pennsylvania, said outright that he has no interest whatsoever in Asia. He told the audience that North America and Europe are leading the market, and Asian firms will only later "copy products and do their own things."

    He represented a German supplier of automation equipment used in high-end medical molding. That could be a reason for his lack of interest in Asia, since Asia mostly produces commodity medical products.

    But that same reason translates to great opportunities for Western medical molders. Asia, including developed regions such as Japan and South Korea and developing countries like China and India, demands state-of-the-art medical devices.

    A recent Medical Design article discussed the opportunities and challenges for entering the Chinese market.

    To get started, take this piece of advice from the U.S. embassy in Beijing: "We encourage U.S. firms to participate in CMEF (China Medical Equipment Fair)." The embassy advises companies interested in exporting to visit www.export.gov.

    An effective strategy for entering the Asian medical device market is to track down diseases to find niche markets. Japan suffers a lot of neurological disorders, and heart disease is rapidly growing in India, for example.

    On the regulatory aspect, the article said, a roadblock to marketing products in China is the stringent product registration process, which usually takes about a year or more, depending on the type of product. But that's true for all foreign markets. If anything, the Chinese standards are lower than the Western ones.

    Posted by Nina Ying Sun on July 21, 2008 11:15 AM | | Comments (1) | TrackBacks (0)

    July 16, 2008

    Indian processors fast for support

    Maybe the Indian plastics processors who fasted July 7 in Chennai could find a more healthy way to communicate with the government.

    The dawn to dusk fast was to press the Indian government to provide better support for thousands of local plastics enterprises, including uninterrupted power supply.

    "Entrepreneurs have been facing severe hardship, particularly in Mettupalayam indutrial estate for some time now due to frequent power cuts," S. Rajaganapathy, president of the Plastic Traders and Manufacturers Association said in a release, according to The Hindu.

    It's unclear how many people participated in the fast. But the firms also hope to get reduced duty on imported raw materials -- 5 percent customs duty and 4 percent additional import duty.

    Posted by Nina Ying Sun on July 16, 2008 10:42 AM | | Comments (0) | TrackBacks (0)

    July 15, 2008

    700 Chinese laid off by Progressive

    Who could have guessed that nearly 700 Chinese workers would lose their jobs overnight in auto molder Progressive Moulded Products Ltd.'s recent layoff?

    One-third of the 2,000 workers at the Concord, Ontario, factory were of Chinese descent, Chinese newspaper Ming Pao reported.

    Since the factory didn't have a union, workers joined forces with representatives from the Canadian Auto Workers and held negotiations with the owner, who has agreed to pay wages up to June 2008 and health insurance until the end of July. Progressive also said it will give each laid-off worker C$1,500.

    "It's difficult to find a job in Canada. Now the factory is closing, where can I get the money to pay bills and support my kid?" Ming Pao quoted one of the former workers, identified as Ms. Zhang, as saying.

    Posted by Nina Ying Sun on July 15, 2008 10:34 AM | | Comments (0) | TrackBacks (0)

    July 14, 2008

    Misunderstanding Chinese workers

    Two American business professors lead a survey of Chinese workers and published some of the results in an article headlined Misunderstanding the Chinese Worker in the Wall Street Journal.

    In a nutshell, the study found that the West's perception that Chinese workers are motivated only by salary may be outdated and wrong. It points out that "Cultural shifts in China have altered social networks, leaving some workers there looking to employers for a sense of affiliation," and "nonmonetary incentives such as training, time off and community building might help multinational companies attract and retain workers in China."

    I chatted with some friends including a head hunter in Shanghai on the subject. I was told that multinational companies are no longer the only top choice for Chinese talents.

    When Western companies first set up shops in China in the early 1980s, up until the mid- to late-1990s Chinese local employees at Western companies took pride in their income, which was higher than Chinese state-owned companies and domestic private enterprises by a large margin. That gap has since been shrinking, as Chinese state-owned and private companies catch up on compensation.

    More importantly, the absence of an efficient social security and health-care system has made people realize that money doesn't bring a sense of security. "The average government employee's base salary is still lower than his/her counterpart with multinational companies," my head hunter friend said, "but you pretty much have zero pressure at work, don't need to work overtime and also enjoy all kinds of benefits and additional income." Typical benefits can be anything from overseas vacations to a monthly garment fee; gym passes to quarterly bonuses for working in summer (called High Temperature Allowance); right down to cash, gift cards and food items.

    Most importantly, state-run company workers never need to worry about losing their job. Believe it or not, many Chinese are nostalgic of their "iron rice bowls" (an idiom coined for permanent, state jobs) that have been shattered in the three decades of market reform and economic development.

    Posted by Nina Ying Sun on July 14, 2008 10:35 AM | | Comments (0) | TrackBacks (0)

    September 4, 2008

    Coke's bold move in China

    The single largest acquisition of a Chinese company by a foreign firm in Chinese history is likely to be pulled off by the world's largest beverage company. Coca-Cola Co. is offering to buy the China Huiyuan Juice Group, for $2.5 billion, about three times the current value of the firm based on its Hong Kong-listed share price.

    Regulatory approval pending, Coke will buy all the outstanding shares, bonds and options of Huiyuan and take the company private. The French food company Groupe Danone owns about 23 percent of Huiyuan and American private equity firm Warburg Pincus 6.8 percent.

    It's worth noting that Danone's journey in the Chinese beverage market has been marked with dozens of lawsuits with its Chinese partner Wahaha. Danone may still be trying to cope with the denial ruling by a Swedish arbitration tribunal in July.

    Beijing-based Huiyuan said it dominates the pure juice market in China with 46 percent of market share. In addition to pure juice, the company also makes diluted juice, fruit vinegar, bottled water, nectar, etc. Huiyuan's packaging solutions include 1-liter and 1.5-liter PET bottles. The company told Chinese press earlier this year that it runs 15 PET aseptic cold-filling lines. And I found from the company Web site that Huiyuan makes PET bottles in-house with Sipa blow molding equipment.

    It looks like that Huiyuan, with more than 30 factories nationwide, is stronger in northern China than the southern regions. But the company currently is setting up production in Guangdong province.

    It's also interesting that Huiyuan's listed entity doesn't represent Huiyuan's entire portofolio. The concentrated juice business, for example, is directly owned by Huiyuan Beijing.


    Links:
  • www.coca-cola.com
  • www.huiyuan.com.cn/en
  • www.danone.com
    Courtesy of Huiyuan

    • Posted by Nina Ying Sun on September 4, 2008 11:15 AM | | Comments (0) | TrackBacks (0)

    September 3, 2008

    U.S. buyers increasingly break contracts

    The economic slowdown in the U.S. is weighing on China. Wenzhou, Zhejiang, one of the busiest export bases in China, reported a surge of contract breaches since last year.
    Beijing-based China Export & Credit Insurance Corp. (Sinosure) told Digital Business Time that the dollar value of contract breach cases filed with the agency's Wenzhou branch reached $8.79 million in the period from March 2007 to February 2008. That's a 639 percent increase over the previous year. American buyers account for 75 percent of the total.

    A very common trick buyers use is decline of shipment, Sinosure said. Consumer products are more likely to encounter failure of payment than other categories.

    The new trend is definitely shaking the image of export businesses.

    In the meantime, Chinese exporters also suffer from the depreciating dollar. Measured in U.S. dollars, Wenzhou's exports of footwear to the U.S. grew a mere 0.3 percent in the first half, but when converted to Chinese yuan, exports are shrinking.

    These problems are not unique to Wenzhou. Rather, the entire export-led Chinese economy is facing challenges.

    Will China be able to weather the storm this time? As we say, don't put all your eggs in the same basket. Although no other single country will demand as many goods as the U.S. did [and still does] in any time soon [perhaps China or India will catch up one day], there are still under-tapped markets for the Chinese to explore. And don't forget about China's domestic market. I wouldn't call it under-tapped, but it certainly presents potential, especially on the higher end.

    Posted by Nina Ying Sun on September 3, 2008 11:24 AM | | Comments (2) | TrackBacks (0)

    August 22, 2008

    Who invented plastic bags?

    In a family chat about China's bag ban, my parents all of the sudden asked me: "Who invented plastic bags? Did he/she have any idea that plastic bags would turn out to be such a controversy?" I guess they assume that I must be a plastics expert since I work for Plastics News. Too bad, I didn't have a clue.

    I found some relevant info from the Internet but can't verify the validity. I asked around in the office and still don't have an affirmative answer.

    I am going to call up some real experts to find out more. In the mean time, can anybody shed some light on this interesting question?

    Posted by Nina Ying Sun on August 22, 2008 5:08 PM | | Comments (5) | TrackBacks (0)

    August 19, 2008

    Who molded the 80,000 seats in Bird's Nest?

    The answer is Nanjing Jinling Plastic & Petrochemical Co. Ltd., located in Nanjing, the capital city of Eastern China's Jiangsu province.

    Nanjing Jinling was founded in 1955, became a subsidiary of Sinopec, China's largest petrochemical company, in 1982 and was merged into Jiangsu GPRO Group Co. Ltd. in 2004. It appears that Nanjing Jinling still has close ties with Sinopec -- the official sponsor of the seats.

    The seats were blow molded out of polypropylene and feature two colors -- "China Red" and "Great Wall Grey," Sinopec said in a release. Engineers at Nanjing Jinling said the color names were coined by "national leaders in Beijing" with no detailed description, and it took the company months to develop the specific shades, hues and tints.

    The PP material is highly flame-retardant with an SDR below 50 and is UV-resistant -- the color will not fade for at least three years. What will happen when the color starts to fade? The manufacturer noted that the seats can be easily recycled.

    Nanjing Jinling recently revealed the timeline of the project to a regional newspaper, Jiangsu Fazhi:

  • December 2005: Nanjing Jinling received product requirements from the Beijing Organizing Committee for the Games of the XXIX Olympiad (BOCGO) and started the product development process, with an emphasis on ergonomic design.

  • August 2007: The BOCGO approved the design and prototype.

  • October 1, 2007: The company completed the molding of 80,000 seats in less than two months and started installing.

  • January 26, 2008: All 80,000 seats were installed, and the project was completed.
    Photo courtesy of Nanjing Jinling

    • Posted by Nina Ying Sun on August 19, 2008 11:12 AM | | Comments (4) | TrackBacks (0)

    August 15, 2008

    The 'China overtaking U.S.' news

    Not that long ago, in the 1950s, Mao initiated a nationwide campaign called the "Great Leap Forward" in China, and the slogan he coined -- "Catch up with and leapfrog and the U.K. and the U.S," which I've paraphrased -- turned the country into a dangerous mess of chaotic passion, deception and fraud. The campaign failed, of course, with a very brutal ending that was coupled with natural disasters, which lead to famine and cost tens of millions of lives from 1959-1961.

    Decades have passed. But time hasn't faded the Chinese people's memory of that mad era. Therefore, when I saw that China is set to overtake the U.S. (see the original report from the Financial Times) in terms of manufacturing output, the first thing that came to my mind was, how will the Chinese people take it?

    I checked Chinese media and online forums. Yes, there are expressions of pride and excitement. But an op-ed from China's government-backed English-language newspaper China Daily went beyond that. The article highlighted the challenges China faces, underscored the fact that China is still behind even the world's average level of industrialization (otherwise, it'd account for about one-fifth of global manufacturing given the size of its population), and stressed the new goal of sustainability instead of blind expansion of low-end manufacturing.

    Those are fair, objective and constructive points. No one can argue about how much and how urgent sustainability is needed in China for the overall good of the world. I'm glad that China is examining its success in the right context with modesty and vision. That attitude alone is a huge step up.

    Posted by Nina Ying Sun on August 15, 2008 11:12 AM | | Comments (0) | TrackBacks (0)

    August 11, 2008

    1 quarter in China = 1 year in U.S.?

    I've been to the annual International Housewares Show in Chicago for two years in a row. Its organizer, the International Housewares Association of Rosemont, Illinois, just sent me an e-mail, touting some interesting materials on its Web site.

    The one that interested me was "Manufacturing in Asia: Current reality and emerging trends," an audio-enhanced powerpoint presentation by Michael L. Hetzel, vice president/Americas of Pro QC International.

    In the speech, Hetzel tried to bust the myth that the U.S. manufacturing output is dropping. The reality is that it's growing. I'm not sure if that applies to the plastics industry though.

    Hetzel downplayed China's role as the world's factory, underscoring that China's industrial output is well below the U.S. output. However, according to today's Financial Times, China is set to overtake the US in 2009 as the world's largest producer of manufactured goods, four years earlier than expected, as a result of the rapidly weakening US economy. Global Insight, a U.S. economics consultancy, conducted the forecast.

    Hetzel also questioned the belief that China is "the cause" of America's trade deficit, as the U.S. has a deficit with 13 of its top 15 trading partners.

    Hetzel also stressed that the U.S. manufacturing output is going up in spite of the decline in employment.

    But wait, he isn't promoting China as a sourcing destination. He made a long list of the challenges China faces and advised businesses to consider different sourcing options around the world.

    The last slide concluded: "The U.S. doesn't import too much ... We export too little."

    In addition, the Web site also featured a whitepaper on Doing Business with China, which has only one page of executive summary, and another 15-page whitepaper called "Manufacturing in Vietnam."

    For some reason, the Vietnam article failed to recognize the sky-high inflation and currency crisis in Vietnam. The addendums have some useful information about logistics, including inland transportation costs. But the quotes were from January 2008, so don't be surprised if it's changed by now.

    Some American expats in Shanghai once told me that "Things change so fast in China, it feels like three months in China equals a whole year in the U.S.," pointing out the fast pace of change in China's economy as well as other aspects of society. Very true. Therefore, be sure to take any China/Asia literature, be it business reports, books, or say, my old blog postings, with a grain of salt and do some research for the latest development.

    Posted by Nina Ying Sun on August 11, 2008 12:11 PM | | Comments (2) | TrackBacks (0)

    October 3, 2008

    Sustainability conference in Chongqing

    If you watched Ted Koppel's "The People's Republic of Capitalism" TV series on the Discovery Channel, you'd have heard of Chongqing, a booming industrial hub in southwestern China with substantial automotive and motorcycle production.

    Maybe that's why the China Plastics Processing Industry Association is organizing the first annual meeting of its Sustainability Committee in Chongqing with a clear focus on the sustainable use of plastics in the auto industry.

    The Oct.22-23 forum will feature speakers from the government, the industry and trade groups. It's interesting that three of the four industry speakers are from American companies: resin supplier Ticona, additives producer Albemarle, and automaker Ford Motor Co. In fact, Albemarle was one of the 10 founding members of CPPIA's sustainability committee, suggesting that U.S. firms are taking an initiative in promoting sustainable growth in China's plastics industry.

    Details about the conference can be found here, in Chinese only. Basic info is also in the Plastics News Calendar.

    Plastics News Asia Bureau Chief Steve Toloken will be covering the conference from on the ground.

    Posted by Nina Ying Sun on October 3, 2008 5:56 AM | | Comments (0) | TrackBacks (0)

    October 2, 2008

    When inspection is not enough

    Back in February, Plastics News reported on a major fire that killed 15 employees of a plastics recycling company in Shenzhen, Guangdong. [story link]

    On Sept. 28, authorities finally concluded the investigation and announced that government employees were involved and punished.

    The Feb. 27 tragedy was caused by an "unlawful company not fulfilling safety measures [and] government and law enforcement officials' delinquency and misconduct," the Xinhua Agency quoted a government spokesman as saying.

    Nine people, including three fire department employees and one official from the Environmental Protection Bureau, have been arrested and prosecuted. The charges include offering and accepting bribes. Seven other local government employees were also found guilty in the investigation and received "administrative disciplinary measures."

    The company, Longfei, has been fined 2.6 million yuan.

    Right after the Feb. 27 blaze, the Shenzhen government told the press that it would start a citywide inspection of workplace safety measures. However, on Sept. 26, a short-circuit caused another fire in Shenzhen, this time at the components warehouse of Taiwan-invested Jinshun Plastics Products Co. Fortunately, Xinhua said nobody was injured in the fire.

    On the same day, a plastic toy factory in Foshan, Guangdong, reported a fire in the plastic recycling station. The affected area reached 450 square meters, Guangzhou Daily said.

    In my opinion, the root of factory fire hazards in China is the same as tainted food: the pairing of irresponsible businesses with a lax/corrupt regulatory system.

    I was asked by an American friend whether the tainted milk scandal will inspire Chinese businesses to pursue better quality. I'm not sure as to what exactly it will take to awaken businesses' conscience and correct the system. If toys coated with lead-paint weren't enough, will a milk/food scare do it? My fingers are crossed.

    Posted by Nina Ying Sun on October 2, 2008 5:47 AM | | Comments (0) | TrackBacks (0)

    October 1, 2008

    Dropping plastics for metal

    Apple Inc. picked plastic instead of metal for the iPhone 3G's casing, but the trend seems to be reversing. The company is switching from plastic to a "very thin aluminum casing" for its new MacBook laptop, according to CNET.

    Apple is not alone. Lenovo makes magnesium aluminum alloy casings for its IdeaPad notebooks, and the new luxury line called "Lamborghini VX3" from Taiwan's Asus primarily uses magnesium as well as some leather [not sure if it's genuine or synthetic]. Click here for the report with nice art.

    The metal construction certainly appeals to consumers with an anti-plastic attitude and/or retro tastes. Manufacturers also claim that aluminum casings improve the recycling and environmental credentials.

    Production is also a factor. Some laptop brands are switching to metal casings out of fear of short supplies of in-mold roller (IMR) treated plastic casing, a recent Chinese article cited International Data Corp. as saying. But I didn't find such a statement on IDG's English-language Web site.

    If you are interested in learning about the top suppliers of electronic product cases, here is a report from VerticalEdge Ltd. Just the executive summary contains a good amount of information, such as:
    As for the [laptop] case, the plastic cases are mainly supplied by Ju Teng International Holdings Ltd. and Foxconn Technology Group as well as some relatively small companies, including Everskill Technology Co., Ltd., Huan Hsin Holdings Co., Ltd. and Shengmei Precision Industrial (Kunshan) Co. Ltd. The metal cases are mainly supplied by Foxconn Technology Co. Ltd., Catcher Technology Co., Ltd. and Chongqing Huafu Industry Co.,Ltd.
    Background link: my blog item iPhone's plastic casing.

    Posted by Nina Ying Sun on October 1, 2008 12:14 PM | | Comments (0) | TrackBacks (0)

    September 29, 2008

    My take on bringing work back to America (2)

    I'm not sure how many companies are bringing production back for pure patriotic reasons. That's a wonderful cause, especially if the move is financially sound. But most business people make those decisions exclusively through business considerations. The maximization of profits within legal boundaries -- isn't that what capitalism is about? By the way, when the Chinese finally got to embrace market economy and capitalism, they pushed the limits too much. That's why toxic products are getting out of their hands. What a shame.

    Back to the topic of "winning work back to the U.S.," I would like to ask you to define "work." What exactly do average Americans want back? Jobs? Robots will take over the repetitive laborer jobs. Profits? Multinational corporations' profits come back to the headquarters anyway, and the margin will be lower because of higher costs. Taxes? Yes. Pollution? No. Morale? Yes.

    I do believe some work should be on its way back. For instance, I use Calphalon cookware. The made-in-China ones are affordable, but they are not as good as the old American-made ones. I'd love to pay more and get better American-made pots and pans. That's right. The American consumers never asked the big corporations to move production overseas and ship back cheap goods. The real drive of this wave of globalization was the endless pursuit of bigger margins, not to pull third-world countries out of poverty.

    It is time for the U.S. to rebuild its manufacturing excellence and competitive advantages. Middle class consumers around the world are happy to pay for good quality products like Swiss watches, English teapots, Belgium chocolates, German cars, French perfume, and Japanese robots. Neither China nor India is able to replicate these products to a comparable level. What are America's best manufactured products that are globally recognized and nontransferable? Perhaps this is where we should start to bring work back, and make it stay.

    Posted by Nina Ying Sun on September 29, 2008 10:48 AM | | Comments (1) | TrackBacks (0)

    September 26, 2008

    My take on bringing work back to America (1)

    My managing editor Don Loepp's blog posting "Bringing work back to America" reminded me of my experience covering the International Housewares Show in Chicago in the spring.

    The show guide suggested a new record of international exhibitors, but since I was the only Plastics News reporter there, I decided to make the domestic U.S. market and industry my priorities. So, I went after the American companies that have kept manufacturing in the States. At their booths, I had to say upfront that, despite my Asian face and accent, I work for Plastics News, serve the U.S. plastics industry and would like to write about how businesses can survive and thrive by staying in this country. You bet some of them didn't manage to disguise their confusion and suspicion. But as conversations went on, they trusted me and appreciated my effort.

    The trend story I put together from that show, "Firms find U.S. market favorable", features at least one example of bringing outsourced plastic tooling and molding work back to America. Designer Philip Seldon got burned by a dishonest Chinese vendor and switched to a custom molder in the Midwest.

    Is that concrete evidence that plastic manufacturing is flowing back to America?

    In my opinion, this type of individual business failure doesn't mark the trend. Many more Western companies have had better luck for good reasons such as strict due diligence.

    There could be so many different reasons for a company to move manufacturing (or outsourced work) back from overseas. To name just a few: 1) bad experience with vendors, partners, suppliers, local government, employees in China, 2) updated product portfolio and pursuit of short lead-time or customization, 3) good utilization of automation, 4) overheated competition from improving Chinese competitors, and 5) finding the made-in-USA label sells really well in China. I don't rule out legit reasons like being fed up with pollution and tainted food in China.

    The overall rising costs in China, from wages to taxes and to utilities, are definitely in the spotlight. But does it make sense to pull work in China all the way back to America? To some extent. American businesses may have realized through the years, from observing work transfer first to Mexico and then to Asia, that no country will be low-cost forever. They may have decided to jump out of the business that depends heavily on cost and invest in real value-added products, things that the Chinese can't copycat in an economical way.

    Posted by Nina Ying Sun on September 26, 2008 10:15 AM | | Comments (0) | TrackBacks (0)

    September 25, 2008

    How I see Chinese companies

    I guess silence must be contagious: Not a single English-speaking reader has yet shared his/her view of Chinese plastic companies. As an ancient Chinese ode goes, "I was given a papaya, and I give back a beautiful gem." In other words, I was really expecting some feedback that I can share with and inspire Chinese readers.

    Let me share my two cents, though.

    Companies that manufacture plastic products in China include three types: foreign-invested, state-owned, and privately owned. But it's really not that clear-cut or rigid. A big chunk of the foreign investment comes from Hong Kong and Taiwanese business people. Many state-owned enterprises are being privatized. Smart private business owners make their companies "foreign" by, for instance, listing a relative or friend who has foreign citizenship as the foreign investor. The "foreign" title used to bring tax and other benefits, and it still helps with brand building. Meantime, foreign joint ventures are increasingly bought out by one of the parties involved, and becoming either wholly foreign-owned or locally owned.

    Foreign-invested companies still dominate China's export-led manufacturing. But the real determinant force of China's future plastics industry, I believe, is the privately owned domestic Chinese companies (I'm going to shorthand it as PODC) and the entrepreneurs behind them. It's a big, diverse group we are talking about, ranging from the very state-of-art facilities to the down-to-the-earth workshops.

    Compared to their American counterparts, on the macro level, PODC firms' competitive advantages include: 1) relatively easy credit from official and underground sources, 2) a driven, affordable, and highly trainable workforce, and 3) relatively cheap infrastructure and lax regulations.

    All three points are double-edged swords, though. With easy credit and an inefficient financial system, risky investments are made. Factories come on stream fast and go out of business just as quickly. Workers are used to being told to execute tasks, lacking innovative capabilities. Cheap infrastructure and loose law enforcement encourage the abuse of the environment, workers' rights, etc.

    You may wonder why I haven't mentioned the low cost. Let's face it. Materials cost more or less the same everywhere. Labor cost is lower in China than in the U.S., but wages are rising faster than business owners would like. Especially at senior management and executive levels, the Chinese pay is not far behind the American pay. Utilities and pollution-related costs are lower, but they, too, will have to catch up soon.

    The only way China can overcome its limits in natural resources and maintain industrial growth is through the optimized use of its human capital. A country that doesn't lack entrepreneurship, China needs to overhaul the business system to foster better ethics, mutual trust, long-term vision, fairness, transparency and regulatory enforcement (such as protection of intellectual property). It's the lack of all the above that smother innovative spirits and sustainable growth.

    Posted by Nina Ying Sun on September 25, 2008 9:11 AM | | Comments (1) | TrackBacks (0)

    September 22, 2008

    Chinese plastics firms in your eyes

    Now it's your turn to share your take on the advantages and disadvantages of Chinese companies in the global market. Also, feel free to rebut the Chinese views about U.S. companies.

    Tell me if I'm not alone: I wonder why the Chinese readers didn't mention the transfer of manufacturing from the U.S. to China. My guess is that they don't really think about it. Mainstream Chinese media doesn't cover it that much. And when it does, the media mentions it as a macro-economic trend of capital seeking profits in the global setting, without the micro-economic, human-interest details about workers being laid off, families losing income and failing to pay mortgages.

    What do you think?

    Posted by Nina Ying Sun on September 22, 2008 6:10 AM | | Comments (0) | TrackBacks (0)

    How Chinese firms see U.S. counterparts (3)

    Feedback from Chinese reader Neo Huang:

    I worked on a project at my company's U.S. branch factory in March. I'm here to share some reflections:

    1) Americans like to plan everything. So the testing I was going to had been scheduled two weeks ahead of time. But when I arrived, I was told that not all approvals were in place. It took two days of hard work to walk through the process. And the process will be just as confusing next time. Complicated protocols essentially are a form of bureaucracy. They were made to control risk and regulate procedures. However, they naturally become more complicated over time, just like computer programs in the movie Matrix. If we set risk control aside, American companies can not compete with Chinese private firms on execution and speed.

    2) On the flip side, the maintenance of machinery in the U.S. is far better than in China. Forty-year-old machines still look like new. ... They base everything on facts and numbers. Even experts would not make assumptions without data. The Chinese don't have this type of mentality and communication means.

    3) Most U.S. workers have been working in the same field for decades. They have rich experience and excellent skills. I didn't spend enough time with them to compare their innovative capability with young workers in China.

    Chinese plastics firms are already global leaders in some areas including cost, efficiency and scale. They need to make a real effort in innovation and management. It may take 10 years to perfect management and 20-50 years to develop the innovative spirit and capabilities.

    Posted by Nina Ying Sun on September 22, 2008 6:07 AM | | Comments (0) | TrackBacks (0)

    September 19, 2008

    How Chinese firms see U.S. counterparts (2)

    More from Chinese reader Mr. Li You of Nanjing Wellplas Platics Co. Ltd.:

    In my personal view, there are two types of plastics manufacturing. One is pure plastic products such as basins and hangers, and the other type is plastic parts and components that go into more complex and value-added products. China obviously has advantages in the first type of products, which feature steady supply, large demand and sensitivity to price points.

    I can give you some examples: a 90-metric-ton, second-tier brand injection press costs only 70,000 yuan (US$10,200); in the Yangtze River delta, the monthly salary for injection press operators is 1,000-1,500 yuan (US$150 to US$220), 2,000-4,000 yuan (US$290 to US$590) for injection technicians, 3,000 yuan (US$440) for a mold technician, and just 5,000 yuan (US$730) for a mold technician with ten years of experience. Isn't that far less than even unemployment benefits in the U.S.? That's why made-in-China products are so cheap.

    However, the U.S. has a tremendous advantage in the second type of plastic products, leveraging other leading manufacturing sectors and industries. In this category, quality, delivery time and communication are highly valued, as well as local services like product design, drawing and prototyping. The Chinese plastics industry doesn't have these leveraging opportunities from domestic manufacturing sectors such as medical, aviation, biochemical, etc. Since Chinese firms can't even get in the door to supply these industries, they miss all the opportunities of growing with them.

    I also would like to take the auto industry as an example. Twenty years ago, when Shanghai Automotive Industry Corp. started a joint venture with Volkswagen, making Santana-branded sedans, less than 3 percent of the parts and components were supplied by domestic Chinese manufacturers. Twenty years have passed. Today, China's fast-expanding automakers are bringing mold and plastics suppliers up to speed. That illustrates how different industries support and enhance each other.

    I believe that eventually China will become a leading player in the plastics industry, but definitely not through making low-value-added products like basins and hangers. The best technologies always apply first in military supplies, medical, precision systems, etc. As these sectors develop in China, the Chinese plastics industry will eventually enter the high-end markets.

    The present American plastics industry, perhaps, is the future of the Chinese plastics industry.

    Posted by Nina Ying Sun on September 19, 2008 6:00 AM | | Comments (0) | TrackBacks (0)

    September 18, 2008

    How Chinese firms see U.S. counterparts (1)

    Your international business consultant probably has already told you that the key to foreign market entry is to know the competition. And you sure have read quite a few Westerner-authored business books about China or India, wherever your place of interest is.

    But do you know what's missing? Sun Tzu, an ancient Chinese strategist, said in The Art of War:"Know yourself, and know the enemy." Understanding your own strengths and shortcomings is the first and the foremost. You may be amused:"Of course I know myself!" Not necessarily. In this globalized economy, the definition is given in relative terms and specific contexts.

    All I'm trying to say is that different perspectives can help us locate ourselves and our competitors in the global market.

    So, in the Chinese-language China blog, I asked readers: 1) What do you think are U.S. plastics firms' advantages and disadvantages; 2) What are the things North American companies do that are admired by Chinese manufacturers? 3) Do you think Chinese firms can eventually dominate in all areas of plastics product manufacturing? And if so, how long will that process take?

    Here are some bullet points I translated from readers' responses:
  • There is no longer a technological divide between Chinese and American manufacturers. Chinese companies can have the most advanced, state-of-art equipment and technologies. But overall, the American plastics industry is more developed, with more mature technologies and management and higher-quality workers. After all, they've been in the race longer than the Chinese have.
    • To be continued.

    Posted by Nina Ying Sun on September 18, 2008 11:43 AM | | Comments (0) | TrackBacks (0)

    September 17, 2008

    A straw maker's confession

    Lou Zhongping, a 43-year-old businessman from Zhejiang province, manufactures a quarter of the world's beverage straws at his 400-employee factory, but he is not that proud. In fact, he says, "If I were given another chance, I would stay sway from this business."

    A feature story from the 21st Century Business Herald described the hardship Lou is going through.

    Lou's straws sell by the metric ton, which breaks down to be about 0.008 yuan (US$0.001) per straw. Of that price, half had being going into resin cost, but now that percentage has risen even higher because resin prices went up more than 30 percent since last summer. Lou's factory uses 30 metric tons of polypropylene every day.

    To cut costs and improve efficiency, he modified the 60 extrusion lines and implemented a heat-recycling system. But that's just not adequate to maintain margin.

    In order to minimize negative impact of the inflating yuan, Lou only approves contracts with cycles shorter than a month-and-a-half.

    Lou also is determined to diversify risk and limit large clients. "We can't let a single client take up more than 3 percent of our entire sales." It's easier to raise prices with smaller clients.

    Thanks to the dragging U.S. economy, Lou's U.S. sales have shrunk by a third. Lou decided to switch his focus to the domestic market. The Beijing Olympics gave the market a lift, he said. Beverage straws were used to make a handle/holder for small national flags.

    "The largest market is right here in China," Lou concluded with a relatively upbeat spirit.

    Posted by Nina Ying Sun on September 17, 2008 11:46 AM | | Comments (0) | TrackBacks (0)

    September 16, 2008

    The world's lightest pallet

    Nevada-incorporated Airdex International Inc. is touting the "world's lightest pallets" in China and the Asia-Pacific region. The company made headlines in mainstream Chinese media, presenting a pallet model that weighs just 3.5 kilograms (7.7 pounds) but can hold up to nearly 5 metric tons (11,023 pounds).

    Together with its Singaporean partner Broadway Industrial, Aidex has produced about 100 million such pallets in factories in Shanghai, Suzhou and Shenzhen for electronics makers like Hewlett-Packard and Toshiba.

    By manufacturing in China, the company hopes its light pallets can replace the 12- to 25-kilogram wooden and plastic pallets currently in use by Chinese air freight companies.

    If Shanghai ships out 100,000 Airdex pallets to Europe instead of wooden pallets, the company claims, emission of CO2 will be cut by at least 730,000 kilograms.

    What materials are the world's lightest pallets made of? I found the answer from Airdex's Web site: expanded polystyrene (EPS) in the inside and high-impact polystyrene (HIPS) on the outside.

    Airdex has manufacturing facilities in the U.S., China and Malaysia.

    Posted by Nina Ying Sun on September 16, 2008 11:37 AM | | Comments (0) | TrackBacks (0)

    Auto suppliers invest in future growth

    Despite slowing car sales, China's auto suppliers are maintaining decent growth and making new investment.

    The auto supply industry increased its sales by 32 percent to 368 billion yuan and profits by 37 percent to 25 billion yuan in the first five months of this year, according to the National Bureau of Statistics. The rates are lower than last year, but still strong.

    In the meantime, investment is still flowing into the auto parts and components industry.

    State-owned Dongfeng Motor Group Co. plans to build a large-scale production base for recycling parts. The company is putting in 200 million yuan and hopes to start production in three years. The base is expected to annually recycle 50,000 used vehicles, reprocess 100,000 metric tons of materials, and manufacture 100,000 sets of parts and components using recycled materials.

    China's Huaxia Times reported that more than 3 million vehicles end up in junk yards every year. Chinese authorities expect the auto industry to recycle 90 percent of all automobiles and at least 80 percent of the materials by 2012. The effort will help protect the environment and better use resources, industry insiders said in the report. But obviously, recycling will also be an effective way to reduce costs or at least offset rising production expenses in China.

    Another expansion plan came from Taiwan Lian Chen Metal Manufacturing Works Co. Ltd., which is investing US$25 million to move its automotive mold center from its headquarters to Qingdao, a coastal city in Northern China. Having been in business for 55 years, Lian Chen is believed to be a major supplier to Ford. According to The Peninsula News, the project will be completed by 2009 and is expected to achieve 1.2 billion yuan in sales in the first year. The company said that the center will mainly supply five clients, including Beijing Benz-DaimlerChrysler Automotive Co. Ltd. and BMW's joint venture in Shenyang.

    While Dongfeng's project illustrates the importance of recycling and cost-reduction in China, Lian Chen's plan unveils great potential of higher-end auto parts in China.

    Posted by Nina Ying Sun on September 16, 2008 11:11 AM | | Comments (0) | TrackBacks (0)

    September 12, 2008

    China's plastic export declines

    After a couple of years writing stories about China's growth rate slowing down, today I'm here with a real "decline" story.

    China's export of processed plastic products dipped 1.4 percent in the first half of 2008, according to latest data from the China Customs.

    The Customs noted a few important factors in play: the cutback of export tax rebate last summer, rising resin and logistics cost, rising wages and stricter labor laws, the strengthening Yuan, etc.

    The agency also stressed that the economic downturn in the U.S. has directly impacted demand for Chinese manufactured goods. To support the claim, China exported $2.17 billion worth of plastics products to the U.S. in the first six months, 7.9 percent down from a year ago.

    But demand from the European Union has been stable for Chinese exporters, with a 0.9 percent increase to $1.44 billion. Japan's imports from China actually climbed 7 percent, but the sheer volume $810 million is far less than the U.S.

    Obviously those who export processed plastic products from China include foreign-invested companies, privately owned firms and state-owned enterprises. SMEs suffer the most from the slowdown, with a 15 percent drop. Foreign firms' export total decreased just 1.2 percent decline, while Chinese private companies managed to expand their export by 8.8 percent.

    Foreign ownership still owns the lion's share of China's plastic export. But if the trend reflected in the first half of this year continues, we may see in the future that domestic private companies will take over the top position, which I truly believe, will contribute to a healthier structure of the Chinese economy.

    Posted by Nina Ying Sun on September 12, 2008 4:47 PM | | Comments (0) | TrackBacks (0)

    Rising star: the auto aftermarket

    Sales of new passenger vehicles in China are indeed growing at a slower, still double-digit, pace now, but the rapid expansion of consumer base in the past decades has established a sizable auto aftermarket that offers opportunities to part and service providers.

    Shanghai-based consultancy Technomic Asia is clearly going after the trend with its new report "A Strategic Assessment of China’s Light Passenger Vehicle Aftermarket, Fourth Edition."

    The company pointed out that:
  • Parts and service in China's light passenger vehicle market reached an estimated US$27 billion in 2007;

  • The number of light passenger vehicle cars has expanded to more than 32 million units, with middle-aged vehicles (4-9 years old) reaching a 41 percent share;

  • The parts and service market is expected to expand at 19 percent per year through 2012.
    • More information is available at www.technomicasia.com/auto.

    Another good source of information on Asian auto markets is the Automotive Resources Asia Ltd., a Bangkok-based division of J.D. Power and Associates with offices in Shanghai and Beijing. I found their "Asian Vehicle Sales" section useful. It's open to the public, but you do need to sign up for free.

    Posted by Nina Ying Sun on September 12, 2008 4:34 PM | | Comments (0) | TrackBacks (0)

    September 8, 2008

    A chilly summer for automotive (3)

    China's third-largest domestic automaker, Dongfeng Motor Group Co., managed to beef up sales by 28 percent in the first half of 2008, and more importantly, increased its net profit by 27 percent.

    Dongfeng may get even more momentum with hybrid and electric models in the works. The company told the South China Morning Post that it's investing 33 billion yuan on the development project. Part of the fund will be provided by Dongfeng's joint-venture partners Honda, Nissan and Peugeot.

    While Dongfeng still doesn't have a clear timeline, privately-owned Chery Automobile Co. Ltd. is already introducing a hybrid model to the market this month. Another domestic automaker, ChangAn Auto Co. Ltd., also is commercializing a hybrid sedan, according to China Quality News. BYD Auto Co. Ltd. is leveraging its lead in the battery business and preparing to commercialize two electric models in the second half of 2009. Geely Automobile Holdings Ltd. is scheduling a 2010 debut for an electric model.

    High-mileage and low-emission models are definitely what China needs. Gas prices are still being subsidized, but that won't last forever. Commuters stuck on jammed highways every day will appreciate a hybrid or electric ride.

    Note that Chery's hybrid model is selling for 100,000 yuan (about $14,629).

    Western and Japanese automakers are not taking active positions in the ongoing hybrid/electric car race in China. Although many of them have hybrid models already, they are not localizing them for the Chinese market. Maybe they are too busy dealing with the North American market. But if they lose out in this round, they'll be offering a golden opportunity for Chinese domestic automakers -- still struggling with exporting to such developed markets as the U.S. -- to claim bigger share in their home market.

    Posted by Nina Ying Sun on September 8, 2008 11:59 AM | | Comments (0) | TrackBacks (0)

    September 5, 2008

    A chilly summer for automotive (2)

    Certainly China's auto slowdown is not anywhere near as drastic as the U.S. market's nosedive.

    Measured by year-to-date sales, the market still grew 16.7 percent in the first seven months, according to the China Automotive Industry Association. Commercial vehicles grew 18.8 percent, slightly better than passenger cars at 15.8 percent.

    But given that more than 100 companies manufacture finished vehicles in China, plus imported cars, competition is fierce. Therefore, the overall market shift may take a bigger toll on some car makers than others.

    Ford's affiliated firm, Mazda Motor Corp.. has cut its sales forecast in the country for the fiscal year ending March 2009 from 110,000 to below 60,000. The Wall Street Journal quoted Mazda as saying that a delay of sales network expansion is one of the reasons.

    Toyota's Shanghai joint venture FAW Toyota Motor Co. remains positive about reaching its 420,000-unit sales goal in China in 2008. That's according to Shanghai Securities. With another joint-venture factory in Guangzhou, Toyota expected to sell 700,000 cars in China this year. But the Japanese maker scaled back its global sales target last month.

    Posted by Nina Ying Sun on September 5, 2008 11:50 AM | | Comments (0) | TrackBacks (0)

    A chilly summer for automotive (1)

    I'm not just alluding to the across-the-board decline in sales for General Motors (20.3 percent), Ford (26.5 percent), and Chrysler (34.5 percent) in the U.S. in August -- and in fact, count in Honda (down 7.3 percent) and Toyota (9.4 percent).

    What also raised a red flag in my head was the Chinese auto market's performance. According to portal site Sina.com, China's National Passenger Vehicle Information Exchange Association pointed out that August is the first month of the year when car sales in China fell compared to a year ago. Year-ago comparisons are the usual measure of success or failure. But industry insiders argue that the Olympics pretty much froze auto sales in Beijing.

    The China Automotive Industry Association hasn't announced official data for August sales yet. But it noted that passenger car sales dropped on a month-to-month comparison basis for five consecutive months from March through July. That's a record in Chinese auto history, according to the China Securities News.

    The Shanghai auto industry saw its "production value" decline 18 percent in July, and "dragged [down] the overall industry output growth in Shanghai by 2.4 percent," the municipal government commented with disappointment.

    Analysts at CBI (Shanghai) Ltd. said auto suppliers are bound to face a domino effect. Resin markets are expected to reflect the changes as well.

    Posted by Nina Ying Sun on September 5, 2008 11:37 AM | | Comments (0) | TrackBacks (0)

    November 3, 2008

    Are Obama's remarks on China just rhetoric?

    By the time you read this blog posting, you probably already have cast your vote for America's next president. But before the results come out, let's look at what Sen. Barack Obama has pledged to do if elected. In a letter to the National Council of Textile Organizations, he vowed to use all diplomatic means to stop China from gaining an unfair trade advantage in global markets by manipulating its currency.

    An interesting article from the Los Angeles Times quoted a few Chinese foreign-relations experts, who are not overly concerned with Obama's tough line.

    But they may well be stretching their optimism.

    Richard Baum, director of China studies at UCLA told the LA Times that: "Unfortunately, the search for villains abroad intensifies as the economy worsens at home. So notwithstanding Obama's relatively benign intentions, the first year of his presidency could see a sharp increase in protectionist pressures."

    That's exactly what is going to happen, no matter who wins this election, as far as I am concerned.

    The report rightly pointed out that "China has traditionally favored a Republican in the White House. Richard Nixon's surprise overture in the 1970s helped break decades of Chinese isolation. And the GOP's more laissez-faire economic policies have generally meant fewer human rights headaches, from Beijing's perspective, and less focus on lost U.S. manufacturing jobs or China's huge trade surplus."

    Democrats, on the other hand, tend to be less keen on selling arms to Taiwan, which China considers part of its territory. But at the same time, former President Clinton has a huge fan base in China with his trade approaches.

    That's why I often get asked by my friends in China: "Why are the Democrats currently in power [Nancy Pelosi is usually named] so different than Bill Clinton [in terms of their attitude and policies on China]?" I reply: "It has more to do with the individual than the associated political party."

    An obvious trend I notice is also mentioned in the LA Times report: The Chinese are reminding Washington that it needs China, especially now. During my coverage of the Rotoplas show last month, the handful of Chinese exhibitors in attendance bombarded me with frequent mentions of the nearly $1 trillion U.S. government debt held by China. They, and all Chinese people, are proud, I know.

    But they should be very concerned at the same time: the U.S. and China are in the same boat, and, as I see it, the U.S. still holds the upper hand in the game.

    Posted by Nina Ying Sun on November 3, 2008 10:29 PM | | Comments (0) | TrackBacks (1)

    October 31, 2008

    Slowing China hurts the world

    The ripple effects of economic crisis are spreading among countries on multiple levels and through interactive channels.

    Chinese plastic processors, losing orders from overseas, are buying less resin and stocking smaller inventories. Japan, which sells 68 percent of its resin to China, has seen the export to China tank 45 percent during the first three quarters.

    PVC producer Tosoh Corp. has cut its resin production by 15 percent since September, for the first time in a decade. Tosoh said demand from China has dropped sharply. Korean firm SK Energy Co. also told the Wall Street Journal that the company saw a 35 percent dive of petrochemical products sold to China.

    There's no doubt that Western suppliers are tightening their boot straps.

    Note that China's export category -- processed products -- are less value-added and profitable than the equipment and materials it imports from the West. I wonder which side -- the developing countries that manufacture low-end products, or the developed countries that supply advanced equipment, materials, technology and sometimes branding -- suffers less from reduced international trade.

    What I'm certain about is that the global downturn is costing more jobs in China than anywhere else. Local governments used to support labor-intensive export factories running on razor-thin profits, just to maintain employment. Now even that is becoming history.

    What is ahead of us all?

    Posted by Nina Ying Sun on October 31, 2008 10:43 AM | | Comments (2) | TrackBacks (0)

    October 29, 2008

    U.S. toy importer explains weak demand

    Mr. Hu Yaoming, a veteran in the toy importing business in Los Angeles, told Sing Tao News that imports from China are rapidly shrinking due to difficult market conditions. He also noted that cultural differences can be a market-entry barrier.

    Chinese toys still make up 80 percent of the toys being sold in the U.S. But American consumers are buying less in general, pressured by the economic downtown. Some customers are discouraged from purchasing made-in-China toys because of the lead paint scandals last summer.

    Importers like Hu are also trying to hold smaller inventories, because new regulations on lead and phthalates will come into effect Feb. 14, 2009, and Aug. 14, 2009. "Today's qualified products will become illegal tomorrow," he said.

    Hu pointed out that American consumers have different tastes than their Chinese counterparts. Toy weapons, for instance, sell very well in China but can turn off American parents.

    On the flip side, he noted that there's great market potential for electronic toys from China. Lower cost countries like Vietnam can offer cheaper stuffed animals than China, but China has unique advantages on electronic toys, thanks to the strong electronics sector in China.

    Posted by Nina Ying Sun on October 29, 2008 4:09 PM | | Comments (0) | TrackBacks (0)

    October 28, 2008

    China raises export tax rebate

    While governments in the West scramble to nationalize financial institutions and inject money into the ailing economy, Beijing has finally decided to make its own move to protect its export sector, the engine of China's growth for the past decade.

    Effective November 1, 2008, China will raise export tax rebates for 3,486 items. The rate for "processed plastic products" will go up four percentage points to 9 percent, and the struggling toy industry will enjoy a 14 percent tax rebate. Click here for the official announcement on the Web site of the Ministry of Finance.

    The export tax rebate for plastic products was cut from 11 percent to 6 percent July 1, 2007. Since that time, the global economic slowdown, as well as domestic labor and environmental regulations, has put Chinese exporters under tremendous pressure.

    Will the tax policy be able to rescue China's export business? I doubt it, as the decline of global demand poses a more grave challenge to China than cost structures.

    Take the toy industry for example. China makes 90 percent of the world's toys. I don't have the hard numbers, but I wouldn't be surprised if the 2009 global demand ends up to be less than what China made and sold in 2007. It is hardly possible for China to keep its toy factories -- many of which have added capacity in the past few years -- running in a smaller global market. Therefore, there simply won't be enough orders to sustain all of the players. For those that can still secure orders, then yes, the tax rebate increase will certainly help with their bottom line. But the overall industry will not be able to escape the brutal restructuring.

    Posted by Nina Ying Sun on October 28, 2008 10:53 AM | | Comments (2) | TrackBacks (0)

    October 21, 2008

    Can auto suppliers create value?

    During economic hardships, the word "value" sounds more important than ever. Whether a business can survive such tough times has everything to do with its ability to create value.

    A report from McKinsey & Co. examined North American auto suppliers' business conditions and whether they can create value. The findings, in short, suggest that over the next five years, North American auto suppliers could potentially create value across 60 to 70 percent of a vehicle's content, in three segments: innovative products; those that are consolidated with high barriers to entry; or those that that provide "early-mover" cost benefits.

    The report's authors also advise North American suppliers to stay away from categories like: products that use mature technologies requiring labor-intensive production processes (for instance, transmissions); have low entry barriers (weather strips) or minimal capital expenditure requirements (functional plastics); and can be shipped long distances without adversely affecting an OEM's assembly schedules (antennas). What these products have in common is that OEMs well understand such products' cost structure and therefore have been able to reduce prices significantly.

    Even products that some North American suppliers deem safe because of high shipping costs can be challenging, such as suspension modules, the study says.

    Posted by Nina Ying Sun on October 21, 2008 8:46 PM | | Comments (0) | TrackBacks (0)

    October 20, 2008

    U.S. economic storm hits China

    The financial and economic crisis in the U.S. spread faster than some expected and is denting China's economy in many ways.

    The twice-yearly China Import and Export Fair in Guangzhou is an important barometer of China's exports. The most recent fair, held earlier this month, witnessed a 10 percent drop in trade volume. According to the Xinhua Agency, orders from the U.S. posted the biggest decline: more than 30 percent from last year.

    China's State Council decided over the weekend to stimulate exports in the fourth quarter by raising the export tax rebate for "labor-intensive products such as garments and textiles, as well as mechanical and electrical products with high added value."

    China's largest appliance maker, Haier, told a Guangzhou newspaper that the company's export of refrigerators, washers and dryers dipped 10 percent in the first nine months. The company also saw red for the first time in its export division of refrigerators, washers and dryers. The company has been canceling orders that are likely to be unprofitable, such as refrigerators.

    The global economic slowdown has also flattened commodities prices. In turn, it affects Chinese recyclers, which adjust prices according to futures. News reports from across China show that many recyclers have closed their doors, in fear of a further downward trend.

    Posted by Nina Ying Sun on October 20, 2008 9:36 PM | | Comments (0) | TrackBacks (0)

    October 15, 2008

    Odd news for your amusement

  • Would you like a martini in a plastic cup? Apparently authorities have ordered the Star Bar & Grill on George Street in Sydney to serve drinks in plastic cups after 11:30 p.m. to prevent injuries from violent behaviors. Last August, a man suffered serious head injuries after being struck with a schooner glass. In December 2007, authorities launched a trial involving the use of plastic cups after 11 p.m. on weekends and a 3 a.m. lockout. The Star Bar didn't participate in the trial. But another pub, Scruffy Murphy's on Goulburn Street, which has been using plastic stemware, said: "[We've had] not one complaint about the plastic. It holds the beer well, so it's fine." (Source: Sydney Morning Herald)

  • A plastics factory in China has been ordered to cease production for causing pollution -- a bad mix of coal smoke and toxic gas from burning plastic. For some reason, Hubei Hanyang Shi Lake Plastics Products Processing Factory decided to change the heating mechanism for its extrusion equipment. Instead of electricity, the company used bituminous coal to heat up resin. (Source: Hubei Daily)

    • Posted by Nina Ying Sun on October 15, 2008 11:34 AM | | Comments (1) | TrackBacks (0)

    October 14, 2008

    China's toy exporters down by half

    The first seven months of this year saw radical changes in the Chinese toy exporting business. The number of companies that had actual overseas sales plunged 52 percent to 3,507, according to one of the latest reports from the China Customs.

    Most of the companies that have left the market were small enterprises with annual sales less than US$100,000. Stats show that 3,631 of such firms have closed their export business.

    I actually believe it's a wonderful thing that small firms no longer dominate China's toy exporting business. The ones that have remained in the market usually have better margins, cash flow and are more adaptable to market changes.

    I suppose the bigger companies also have better quality control, technologies and brand value. This year, more than 40 countries and regions have released new standards on imported toys, challenging the lower-end of the Chinese toy making industry.

    The massive closedown of small exporters also has lead to the dominance of foreign investment and state ownership in the industry, a phenomenon rarely seen in China's manufacturing sectors. Domestic private ownership usually takes a more important role than state ownership, such as in the plastics processing industry, which overlaps the toy industry.

    Posted by Nina Ying Sun on October 14, 2008 11:52 AM | | Comments (0) | TrackBacks (0)

    October 13, 2008

    Malaysian plastics industry grew 8.3 percent

    The Malaysian Plastics Manufacturers Association (MPMA) was quoted in a New Strait Times report (in English) as saying that the industry remains robust and sales increased 8.3 percent in the first half of this year. Exports, in particular, rose by 18 percent.

    Lim Kok Boon, the president of MPMA, said the industry was expected to benefit from stable raw material prices and an improving supply situation of resin.

    MPMA's executive director ST Giam noted in a recent announcement that Malaysia cut import duties August 30 for polyethylene and polypropylene resins from 25 percent to 20 percent; polystyrene and PVC from 15 percent to 10 percent; and for plastic finished products from 25-30 percent to 20 percent. But the prevailing import duties under the ASEAN Free Trade Agreement remain unchanged at 5 percent.

    MPMA will host its fourth International Plastic Conference Nov. 4-5 in Kuala Lumpur.

    Posted by Nina Ying Sun on October 13, 2008 10:47 PM | | Comments (0) | TrackBacks (0)

    October 10, 2008

    The richest Chinese in the plastics business

    British gentlemen Rupert Hoogewerf quit his accountant job in Shanghai in 1999 and created the "China Rich List" with Forbes. He later struck out on his own [actually Forbes dropped him first] and has since been churning out his own version of rich lists in the popular "Hurun Report" [Hu Run is his Chinese name] magazine.

    His latest product, the 2008 China Rich List (click to see the English version, which unfortunately has some translation errors compared to the original Chinese list), came out earlier this month. I ran a search for "plastic/resin" in this ranking of the 1,000 wealthiest in China and came up with my list of China's Richest Plastics Businesspeople.

    Some of the company and individual names may look familiar, as they have appeared in Plastics News.

    Interestingly, Kingfa is the only company that appeared twice in my list. And Mr. Song Ziming of Kingfa, 40 years of age, is also the youngest in my list.

    I also found it thought-provoking that, out of the 35 provinces in China, half of the richest plastics people are from Zhejiang province. With a unique regional culture/tradition centered on business and investment, Zhejiang undoubtedly houses many of China's most diligent, ambitious and shrewd entrepreneurs. Now you know where to visit on your next business trip to China, maybe.

    Posted by Nina Ying Sun on October 10, 2008 11:34 AM | | Comments (0) | TrackBacks (0)

    October 9, 2008

    Ripple effects shown in plastics trade

    As China exports fewer processed plastics products to America in response to the slipping U.S. economy, Thailand is seeing a slowdown in resin demand from China.

    Bangkok-based KASIKORN Research Center pointed out that Thailand's exports to China only grew 1.4 percent in August, and many product categories are even shrinking, the China News Agency reported.

    Thailand said that China is importing less chemical products, circuits and refined oil, all important feedstocks for Chinese industries. Resin export also has lost momentum.

    KASIKORN noted that China is vital for the regional growth in Asia. China is Thailand's third largest export market, after Japan and the U.S.

    It seems to me that, compared to during a global boom, people actually get a stronger message during worldwide downturns on how countries and regional markets are closely interwoven in a globalized economy.

    Posted by Nina Ying Sun on October 9, 2008 12:24 PM | | Comments (0) | TrackBacks (0)

    October 8, 2008

    Is 11.62 percent a good margin?

    In a recent report released by Beijing-based China Industrial Information Issuing Center, Chinese plastics processors, at least the largest ones, still produce decent margins, compared to other manufacturing sectors.

    According to the study, which analyzed the 500 largest manufacturing companies in China, the plastics processing industry is the third most profitable (11.62 percent), only behind the tobacco industry (17.3 percent) and the beverage industry (15.03 percent).

    Average margins register at 2.81 percent for telecommunications equipment, 4.77 percent for electrical machinery, 6.93 percent for transportation equipment and 7.38 percent for steel.

    The industry giants' performance certainly doesn't represent the entire market. The Chinese plastics processing industry, like its U.S. counterpart, consists mostly of small and medium-sized enterprises.

    The 2007 average margin of China's 500 largest manufacturers was 6.51 percent, almost one percentage point higher than a year ago.

    The company at the bottom of the list of China's 500 largest manufacturers reported 2007 sales of 5.4 billion yuan (about US$789 million).

    Posted by Nina Ying Sun on October 8, 2008 1:10 PM | | Comments (2) | TrackBacks (0)

    December 12, 2008

    Toy series 6: The Gen Y

    On the evening of October 13, 2008, 22-year-old Fang Chen (alias) received a text message on her cell phone: "New orders came in. Production starts tomorrow!" She was so excited that night that she hardly slept.

    A native of Hunan province, Chen had been working in Guangdong province for four years. She works at a plastics toy factory as a "production team leader," which means her monthly salary is 100 yuan [$15] higher than the average worker's.

    Chen had been waiting for work. Due to the lack of business, production was off and on. By early October, the 60-person factory had lost half of its workforce.

    On October 14, Chen went to the factory early and worked long hours. She returned to her shared dorm after 10 p.m., feeling exhausted but happy.

    Two busy weeks passed, orders were finished, and Chen, again, had no work to do.

    She used to make 1,300 yuan [$190] a month when she worked 10 hours a day. After deducting living expenses, she managed to put 300 yuan [$44] into savings every month. Now the work has been few and far between, pay has shrunk. Chen made less than 1,000 yuan [$146] last month, which means she needed to tap into her savings just to cover day-to-day living.

    Chen couldn't afford to stick around for long. And she didn't.

    On November 3, Chen left the factory. She saw the vicious circle beating up smaller toy makers: less business lead to loss of workers, and a smaller workforce further limited the chance of getting large orders.

    Chen went down to Shenzhen and had no luck finding work there, so she finally decided to go home.

    At the Guangzhou Railway Station, Chen met up with some friends from the same town. They are all very young, born after 1985. They never went to college and some didn't even finish high school. It's hard to tell if they regret choosing to be migrant workers or not. But Chen's friend shrugged and said: "So what? College graduates can't find jobs either!"

    That's true. According to the Chinese Academy of Social Sciences, one million college graduates from 2008 and previous years are still on the market, while six million more will graduate by summer 2009. Lopsided supply-demand has slashed prevailing salaries and pushed more college graduates to attend graduate school or join the army.

    After the Chinese New Year, Chen and her friends will give up on Guangdong and travel to Zhejiang province instead. Hopefully they'll find some work there.

    [Part of this blog post is based on a Chinese-language story on Hunan Online.]

    Posted by Nina Ying Sun on December 12, 2008 9:41 AM | | Comments (0) | TrackBacks (0)

    December 5, 2008

    Toy series 5: "made in USA" tainted?

    Chinese toy makers' quality scandals of last summer created a perfect opportunity for U.S.-made toys to reclaim market share. Toy companies that still have production in the U.S. quickly jumped on the bandwagon, pitching their "made-in-USA" label and associated quality assurance.

    But unfortunately, the "made-in-USA" label may not be a guarantee for safety, according to Michigan-based Ecology Center, which published a report on its Web site HealthyToys.org.

    The nonprofit organization and its partners examined more than 1,500 popular toys, purchased from retail stores in Michigan, with portable X-ray fluorescence (XRF) analyzers that identify the elemental composition of materials on or near the surface of products.

    The good news is that 62 percent (954) of the products tested contain low levels of chemicals of concern, and 21 percent (324) of all products contain no chemicals of concern.

    The bad news is that U.S-made toys are not immune to health hazard. Among the 17 U.S-made toys in the sample, six had detectable levels of lead -- that's 35 percent. Two items had levels above 600 parts-per-million (ppm) -- the federal recall standard used for lead paint. A Halloween Pumpkin Pin even had 190,943 ppm of lead, one of the highest in the entire study.

    Ecology Center said 21 percent of toys from China and 16 percent of those from all other countries had detectable levels of lead in 2008.

    Although the Toy Industry Association has called the HealthyToys.org report "misleading at the least," it doesn't seem like anyone can argue about the hard facts.

    That's a real shame, because the disappointing news is not only alarming parents at the toy store but also tainting the made-in-USA label. Consumers may dampen their passion for supporting domestically made products, and that's not what this country needs right now.

    Posted by Nina Ying Sun on December 5, 2008 4:29 PM | | Comments (0) | TrackBacks (0)

    December 4, 2008

    Toy series 4: The doll fight

    No, Chinese dolls are not invading. Whew!

    The fight in hand has been running here in America, between California-based toy makers Mattel Inc. and MGA Entertainment Inc. A breakthrough was made Wednesday (Dec. 3) by U.S. District Judge Stephen Larson, who barred MGA from manufacturing or selling its popular Bratz dolls.

    Earlier this year, a federal jury found that designer Carter Bryant came up with the Bratz doll while working for Mattel under an exclusive agreement and awarded Mattel $10 million for copyright infringement and $90 million for breach of contract.

    Mattel's classic Barbie dolls have been losing market share to MGA's edgy Bratz dolls since their launch seven years ago. It's got to be tough for Mattel, as the overall doll market has been shrinking in the same time. The New York-based Toy Industry Association said doll sales in the U.S. dipped 8 percent from October 2007 through September 2008.

    The LA Times quoted court papers in saying that MGA has said that losing the Bratz dolls would be "lethal" for the company.

    Larson said his order won't go into effect until after he has ruled on both sides' post-trial motions. A hearing on those motions is set for Feb. 11.

    MGA said it has so far made $405.4 million on the Bratz line, but Mattel claimed it was as much as $777.9 million. Both companies have spent lofty amounts in legal fees on the case -- nearly $30 million in the first three quarters this year for Mattel, according to Bloomberg.

    MGA bought rotational molder Little Tikes in 2006 from Newell Rubbermaid Inc. and put Little Tikes' plant and offices in Hudson, Ohio, on the block in February 2008.

    It's not surprising that both Barbie and Bratz dolls are made in China -- most likely in the same factories. Back in 2006, U.S.-based China Labor Watch and the National Labor Committee revealed that Bratz dolls were manufacturered by Chinese workers who were made to work 94 hours a week and denied access to injury and health insurance. In response, MGA CEO Issac Larian said in a statement that MGA used "first-rate factories in the orient" and that "the same factories make products for the world's biggest toy manufacturers, including Mattel and Hasbro."

    Posted by Nina Ying Sun on December 4, 2008 4:37 PM | | Comments (0) | TrackBacks (0)

    December 3, 2008

    Toy series 3: How to define success

    Fifteen years ago, 20 percent profit was less than the market average for toy exporters in Guangdong. But right now, just staying in business is success. Chonggao Toy Products Factory in Zhongshan city -- which, according to rumor, is cutting headcount and experiencing hard times -- said it will not go down.

    The company said its 2008 sales will reach HK$700 million (US$90 million), slightly up from previous years. But undeniably, the balance sheet is still in the red, due to rising costs and the strengthening yuan.

    Meantime, Chonggao is confident that its 2009 sales will be no less than HK$500 million (US$65 million). "That would be the worst scenario. If governmental bail out plans across the world lead to economic progress, our revenue will easily reach this year's level."

    But the company needs to regain profitability. The way to do it, according to Managing Director Cen Lecheng, is to make a foray into the Chinese domestic market.

    A long-time export-exclusive contact manufacturer, Chonggan doesn't have its own brands to sell in the domestic market. Cen said he is doing research and will get ready to contract manufacture toys for Chinese consumers.

    Maybe he can start with his existing customers like Mattel? China is an underdeveloped market for Mattel, itself. Perhaps it's time to change that.

    [This blog post is based on a news report published in the Nov. 28 Zhongshan Daily.]

    Posted by Nina Ying Sun on December 3, 2008 12:22 PM | | Comments (0) | TrackBacks (0)

    Toy series 2: Factory girls on vacation

    Miss Wu, who declined to give her first name, works at a large toy factory in Dongguan, Guangdong province. Compared to the 8,000-plus workers who were let go and underpaid by bankrupt Smart Union Holding Ltd., or the 500 protesters against Kai Da Factory, Wu knows that her situation is not too bad.

    Originally from Hubei province, Wu has been working for the 3,000-person toy factory for years. Starting in October -- when most Christmas items were finished and shipped -- she noticed the factory started to reduce production. "My fellow workers and I haven't had anything to do at work for months," she said.

    The factory owner finally decided that he couldn't afford idle workers and offered Wu a "paid vacation." That sounds like a luxury for a factory girl like Wu. She is used to working overtime, on the weekend, and during holidays.

    But there is one problem: The pay during her leave is less than the minimum wage in Dongguan.

    Still, Wu is lucky. Less experienced workers have been "talked into" quitting. As the factory is running on low capacity, workers don't get to work overtime -- an important part of their income. Their base salary is very modest, compared to living expenses in Dongguan. So many migrant workers choose to go back home and lay low for a while.

    "I'm not included in the government's unemployment stats," Wu said.

    Also missing from the government stats are workers laid off from small workshops that are not registered. In Guangdong province, there are many such workshops, where owners can give workers the pink slip anytime and workers just quietly leave.

    But, to business owners' advantage, the once-threatening shortage of skilled workers in Guangdong has been solved. Wage increases are slowing down or disappearing.

    As a matter of fact, the government announced in mid-November it decided to postpone enforcement of the minimum wage increase prompted by China's updated labor contract law.

    Who'd have foreseen this a year ago?

    [This blog post is based on information from the New Express Daily and the China Business Journal]

    Posted by Nina Ying Sun on December 3, 2008 11:31 AM | | Comments (0) | TrackBacks (0)

    December 1, 2008

    Toy series 1: Ou Bochang's small factory

    Businessman Ou Bochang has gone through a typical -- also lucky -- career path in the toy industry. He dropped out of high school in the early 1980s, left his hometown in Hunan province, and moved down to Guangdong province to work in factories. Ou gradually worked his way up to become a manager in a large toy company, and finally started his own shop -- Hong Fa Plastics Products Factory in Dongguan, Guangdong, a second-tier toy supplier.

    His business was good until last year. "Since the second half of 2007, payment cycles started to stretch: from 15-30 days to 60 days or even longer," Ou said. He sensed the looming storm and adjusted his strategies. He declined orders from large factories -- Ou believe large factories carry the highest risk, took no more than three orders at a time, and limited the value of each order to no more than 80,000 yuan [$11,619].

    His conservative approach has saved him from being dragged down in the current wave of toy factory closures. But still, Ou had to tighten his belt. He cancelled the night shifts, cut his workforce from more than 200 in 2007 to about 80, and is running only four of the seven injection presses in his shop.

    Ou doesn't regret leaving his management position in large toy firm Jian Da Toys and starting his small business. Jian Da used to employ 15,000 but now only 2,000 workers are left, worrying about the future. Ou's future, albeit unclear, is at least in his own hands now.

    (This blog post is based on information from a report in the Chinese-language business newspaper CBNWeekly.)

    Posted by Nina Ying Sun on December 1, 2008 11:53 AM | | Comments (0) | TrackBacks (0)

    November 26, 2008

    Upcoming: Series on Chinese toy makers

    As the Christmas shopping season unfolds, we are hearing toy safety warnings. Although the latest reports are not pointing fingers at China in particular, I'm sure consumers still remember last year's recall scandals surrounding Chinese-made toys. Plus, after all, China makes 90 percent of the toys in the world.

    I'm not making any less of the toy safety issues, but there's a bigger crisis going on in the toy industry China. Factories are laying off masses of workers or closing down completely, not because they fail to make high-quality products, but because the businesses have been squeezed out of profitability, viability and hope.

    In the past two days, more than 500 workers protested against Kai Da factory in Dongguan, Guangdong province -- a supplier of Pawtucket, Rhode Island-based Hasbro Inc. -- over a severance pay dispute. The demonstration turned violent, with police cars and computers damaged and workers injured.

    Unfortunately, such riots are neither new nor rare in China nowadays. They are not exclusive to but they are especially prominent among toy factories, which usually hire thousands of labor workers.

    That's why I decided to start a series of reports on Chinese toy makers. Hopefully, through profiles of individuals, discussion of market trends, and analysis of government policies, we can get a better sense of where the world's toy-making industry is headed.

    Stay tuned.

    Posted by Nina Ying Sun on November 26, 2008 3:29 PM | | Comments (0) | TrackBacks (0)

    November 21, 2008

    Christmas trees from China

    How many American and European families are buying new Christmas trees and decorations this year? Not as many as before. That's bad news for Chinese vendors in the world's biggest "small commodity" -- basically all kinds of consumer products -- wholesale market in Yiwu, Zhejiang province.

    "The Christmas goods section is festively decorated, but only from time to time, a couple foreign buyers show up in the hall, driving hard bargains. The Christmas songs, played repeatedly, make the empty market even more cheerless," a story from the Qianjiang Evening News describes.

    Vendors, most of whom make their own products, are trying everything to move their inventory and survive the winter. Some are subletting part of their booth space, others have let go of some employees. Disappointed with overseas orders, vendors are marketing the goods to domestic customers more aggressively than ever. "I text-messaged everyone I know, offering good prices and free shipping," a young businessman said. "Many restaurants, hotels and airports [in China] are buying."

    The export situation in Yiwu really isn't as bad as it could have been. Thanks to the massive closure of factories in Guangdong province, more buyers are looking into Zhejiang province, where factories produce even cheaper products than those in Guangdong.

    "They prefer cheap plastic Christmas trees now, no bells and whistles," a vendor said.

    Low price is all that matters. Price-cutting pressure squeezed Hong Kong-listed Boto Co., formerly the world's largest maker of artificial Christmas trees, out of business in late 2007. Boto's high-tech, innovative trees attracted Wall Street Journal reporters and American private equity, but didn't beat the cost hikes and consumers' tighter pockets.

    Posted by Nina Ying Sun on November 21, 2008 1:41 PM | | Comments (0) | TrackBacks (0)

    November 19, 2008

    Long overdue kudos to Chinese 'peasant workers'

    At a time when China celebrates the earth-braking development it has achieved in the past three decades, Beijing finally is recognizing the enormous contribution of a special group: the millions of Chinese people who left their villages and townships to work in manufacturing, construction and services in the booming urban areas.

    There's no question, in my opinion, that China's economic miracle couldn't have happened without these hard-working citizens. The Chinese central government, for the first time in history, awarded 1,000-plus "outstanding peasant workers" -- I personally prefer to call them "migrant workers" out of respect -- at a recent, high-profile ceremony in Beijing's Great Hall of the People.

    A quick search of the honorary list from the Department of Labor yielded about a dozen plastics workers, including Mr. Su Bing, a team leader at Kautex Maschinenbau GmbH's operation in Shunde, Guangdong province.

    Thank you, migrant workers!

    Posted by Nina Ying Sun on November 19, 2008 10:23 PM | | Comments (2) | TrackBacks (0)

    November 12, 2008

    Wal-Mart's sustainable goods (3)

    A bigger question is how effectively Wal-Mart manages and audits its suppliers in China. In a nation where authorities fail to police the factories, has Wal-Mart kept its supply network clean?

    Not according Bo Lin, again, quoted in