The ACF China Co - Millstone Trading

Beijing traffic curbs stifle trade, may ripple to U.S.

Roger — Wed, 30 Jul 2008 03:10:49 +0000

LANGFANG, China — Road checkpoints erected this week around Beijing to boost security for the Olympic Games have put a chokehold on regional commerce and created ripples likely to reach as far as U.S. store shelves.

Long lines of trucks formed at dozens of highway checkpoints around China’s capital, leaving many drivers grumbling that they were unable to make deliveries.

“We are operating just for the most top-priority clients,” said Cong Peichao, a 37-year-old sales manager, as he moved merchandise from one provincial truck to another approved to enter Beijing .

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Welcome to the Olympics, Communist Style

Roger — Fri, 11 Jul 2008 05:36:53 +0000

Normally its the price of fuel, the latest trends in home furnishings and any and all things “quality control” related, which get us excited. But these days, for us (and most others in China), the closer we get to the Beijing Olympics, the less we are able to focus on much else. Like “mommy to a toddler,” the Olympics is just one big, bad looming force not to be taken lightly and showing up around every corner.

Take yesterday for an example. I turn on the television for my morning coffee with some CNN noise pollution as a backdrop. During a commercial break, a promo for an upcoming “spirit of” program suddenly catches my eye; there on the screen in from of me, for a few brief moments, are images of students protesting in Tiananmen square in 9teen 80nine. There is even the famous image of the lone man standing in front of the tanks (which ironically my Chinese girlfriend has never seen before). My draw drops in amazement at images I never thought I would see in mainland China.

Score:
CNN: 1 PRC government: 0.

A day later, during my morning coffee routine, the same promo airs but this time with a twist: just as the images begin to flash across the screen, all goes black with the text “poor quality signal” in its place. Normally in such circumstances, the screen goes black for a few moments, but the “poor quality signal” text is new and is a nice touch.

Final score:
CNN: 1 PRC government: 2.

And then there is our office, located in the heart of the “Gaobedian Furniture Street.” Despite the nice sounding name, the reality is Gaobeidian is still just a dirty, dusty village. Behind our office are train tracks (complete with old style gate crossing), most of our neighbors live in their shops, and more then one cannot read or write. The public toilet across the way is a one time experience: Use it one time and you never want to go back again. And then there is the public PA system: 1950’s style loud speakers strung up on poles lining the streets, periodically broadcasting instructions telling residents how to behave. Everyday around 7pm the loudspeakers start squawking. Every few seconds the phrase “Ow Yun Hway” (Olympics) constantly echoes loudly throughout the air, peppered with instructions on how be civilized. “Don’t spit. Be polite!” A few years back it was SARS related. Today its the Olympics. Either way, its loud and annoying.

So, when 8/8/2008 comes around, here is our predictions on what to expect, along with a roundup of some of the more relevant headlines floating around:

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Update: Olympics continue to cause major disruptions to business in China.

Roger — Thu, 03 Jul 2008 05:34:34 +0000

There is tons of press at the moment discussing the upcoming Beijing 2008 Olympic Games, ranging from political debates to complaints concerning visa restrictions. Obviously its just too much to cover in a singe post but there are a few points worth bringing up here; some related to business, others simply related to China in general.

Beijing Enters Lock-Down Mode as Olympics Nears

From China Briefing

We have received first hand accounts from businessmen attempting to enter China on apparently legitimate commercial trips being turned away, forcing mass cancellation of hotel bookings, and of individuals with seemingly impeccable employment credentials being denied a renewal of work visa. Additional problems from reliable sources indicate Olympic events tickets are being withheld currently from main Olympic sponsors entitled to certain seats in favor of Chinese government officials from other provinces who are “potentially” attending.

In one instance, we have been made aware of a group of Australian bankers whose collective party was rejected for business visas at a total loss of US$300,000 to the hotel over canceled bookings, as none of the bank’s executives were able to obtain visa clearance. In other cases, we have heard directly from businessmen of certain Asian nationalities, holding legitimate work visas as chief representatives of their companies in China, also being refused entry.

On Getting Your China Cargo/Freight/Product

From the China Law Blog:

DHL just came out with its 4th (and probably most important) volume in its “Olympics Memo And Contingency Plan.” (h/t to All Roads Lead to China). This memo does an absolutely amazing job of listing out the rules and changes applicable to cargo and freight and automobiles and trucks and ports and traffic and airports and polluting factories arising out of or relating to the Olympics. And if you think all of this only matters if you are in the cargo or freight forwarding business or doing business in Beijing or running a factory in China, think again. Just about everyone who does any sort of business in China will be affected in some way by the various changes that have happened or will soon happen as China (and again, not just Beijing) gets ready. Even if you do nothing more than buy product from China, I urge you to read this memo.

Olympics a Bust for Beijing Business

From Time

The economic pain is felt well beyond the hospitality industry. Business groups complain that the visa rules are keeping overseas investors from visiting factories, and blocking retailers from attending trade fairs.

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Beijing Olympics Update: Major shutdowns ahead for the reproduction furniture industry

Roger — Fri, 20 Jun 2008 16:11:14 +0000

Everyone knows the Olympics is causing major headaches for anyone in or planning to come to China during these past and next few months. From Visa cancellations to the sudden demolition of warehouses (as a result of last minute beautification campaigns) to unannounced restrictions on transport (to curb pollution) - its all headaches! Some of our own suppliers from the more “sensitive” regions in China have been “deported” back home for “security reasons.” Even our French intern will return to France early since his visa cannot be extended.

Since there are a number of good blog postings concerning the impact of the Beijing 2008 Summer Olympics on business, particularly on manufacturing (which is basically all of China) I won’t spend time re-hashing whats already been said. Therefore, here is only quick summary of whats out there on the web at the moment - all worth the read.:

Beijing Olympics Impact: China to ease or shut down manufacturing

Beijing Olympics impact: Tianjin to cut vehicle traffic in half to curb pollution

Beijing Olympic Games : Logistics / Supply Chain impact update

UPDATED: If You Are Manufacturing In Beijing, Tianjin, or Shanghai. PAY ATTENTION

China’s Most Wanted Counterfeiter

Roger — Tue, 03 Jun 2008 14:32:32 +0000

I can’t remember where I saw this article on the web though apparently it was originally written for Time.com. It came out in January and I have been meaning to post it up here for quite some time, though only just getting around to it now. Much of what occurred seemed to echo my own experiences.

One thing I have noticed in my own experiences with suppliers is when they are caught red-handed in a white lie, a deception or sometimes even just an honest mistake, the common response seems to be deny it furiously - as if your very mother had been insulted in more ways then one. Act shocked, fight, scream and in general look as surprised and as shocked as humanly possible. In many ways its feels less like business and more like the way politicians conduct themselves. Now I know this is two some degree a common human trait but its what follows next that puts things over the top. Which is the second thing i have noticed: when you deny any wrong doing, there is no need to apply logic. For example: Did you crash the car? No. Were you driving it? Yes. Were you driving it when it crashed? Yes. Did anyone crash into you? No. So you did crash the car. No! The third is when and/or if it really does get nasty the fact that you are a foreigner will eventually be thrown into the situation in one manner or another.

Its interesting to see how these very same things played out in this story. Its also another reason to check out Why You MUST Have A China OEM Agreement. post on the China law blog (though it probably would not have helped much here).

China’s Most Wanted Counterfeiter By AUSTIN RAMZY

ABRO Industries learned early on that it was facing an audacious challenger. In 2003 Timothy Demarais, vice president of the South Bend, Indiana-based industrial adhesive manufacturer, says he walked into the Canton Trade Fair in Guangzhou, China, and found that his company’s product line - and his company’s identity itself - had been knocked off by a Chinese firm called Hunan Magic Power, also known as Magpow. When Demarais attempted to have the imposter kicked out, he says, Hunan Magic Power chairman Yuan Hongwei produced documentation that he claimed showed his company had the right to use the trademark ABRO. He had even copied ABRO’s labeling, including one sample card with a photo of a woman applying epoxy to a bicycle. The woman, it turned out, was Demarais’ wife. After Demarais pulled out another photo of his wife from his wallet, the trade fair officials booted Hunan Magic Power. “How blatant can you be when you steal my wife’s picture for your card?” asks Demarais.

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Chinese suppliers/foreign customers - sleeping in the same bed but dreaming different dreams

Roger — Mon, 02 Jun 2008 12:37:21 +0000

There is a great Chinese saying “sleeping in the same bed but dreaming different dreams” (tong chuang, yi meng). I find it seems to apply to so many situations ranging anywhere from causal friends to long-term business relationships. I was reminded of this yet again on Friday afternoon. I jumped onto the light rail for a quick trip out to the Tongxian district in the Beijing suburbs. To some extend, the fact that today, there even is a light rail is proof of progress. Eleven years ago, a trek to Tong Xian would have meant an hour plus ride in a yellow Mian di (which rode about as smooth as a dirtbike and smelled inside of dust, sweat, kerosene and Chinese baijiu - not to mention constantly sliding off the black pleather seats at every turn). But alas, this is merely progress on the outside - not on the inside.

I needed to check on some some supposedly “finished” product in a suppliers warehouse. I say “finished” because in this case, the product is “antique furniture” and “finished” means “restored to good condition.” Yes, antiques are a different beast, but nevertheless standards do apply. Loose joinery spells poor quality. Hardware thats falling off is unacceptable, whether its a cabinet from Ikea, or an antique cabinet from Shanxi. And even the novice at some point can quickly see the difference between “rustic” and “cheap crap.” In fact, the very uniqueness of this kind of product simply reinforces just how relevant concepts such as quality fade and supplier profiles are, across the spectrum of everything and anything which comes out of China.

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More gloomy news for the furniture industry in China

Roger — Fri, 16 May 2008 19:51:55 +0000

China’s Factory Blues

http://www.spiegel.de/international/business/0,1518,543929,00.html

Hsu’s new factory, it turns out, is running at just 60 percent of capacity, and he predicts that half of China’s lighting factories — almost all based in Guangdong — will have to close their doors this year.

When more than a hundred South Korean-owned factories closed over the Chinese New Year in the eastern province of Shandong, 1,200 miles from the Pearl River Delta, thousands of workers were left without jobs — and with unpaid wages.

Distressing time for furniture retailers

http://www.latimes.com/business/la-fi-furniture14-2008may14,0,6770934.story

“This is one of the toughest periods we have seen in the last 30 or 40 years,” Farooq Kathwari, chief executive of Ethan Allen Interiors Inc., told Wall Street analysts in a conference call a few weeks ago. “A lot of our business has been diverted to these going-out-of-business sales.”

Along with the housing crash and rising fuel costs, Caffaro said, her business has been hammered by the falling dollar. The wholesale prices of furniture she imports from China and India have gone up 10% to 14% in recent months.

Rising nationalism - Will it effect the business climate in China?

Roger — Fri, 16 May 2008 17:26:26 +0000

If I were worried about one single element of doing business in China today, it wouldn’t be inflation. Nor would it be the rising costs of exports due to the rapid appreciation of the yuan. Or rising fuel costs for that matter. Air pollution? Nope. The cost of labor going up would not be my main concern either. No, all of these issue seem unpleasant yet manageable, in one way or another, even if difficult. So what then pray tell would it be? Definitely it would be rising Chinese nationalism. Normally I bypass politics altogether, to focus on the furniture industry and china business - two things I think are interesting enough to keep me busy. But in many ways, I find todays topic be quite relevant since one will effect the other.

Chinese nationalism

Eleven years ago, when I stepped off the plane, I found people were surprisingly open-minded and curious. Interested in knowing about the world around them while not necessary accepting the viewpoints - but still extremely curious to know what they were. Sure, people would be quick to correct you if you didn’t understand that Taiwan was a part of China. But beyond this, the prevailing attitudes were mostly curiosity. Safety was not a concern either, other then falling through an open manhole, off your bike or more likely off the sides of some un-restored remote part of the great wall during a hike. But personal safety? I generally always felt as if I was a welcome guest in the country (albeit exploited for my expertise and spending power). This is probably one of many reasons why I continued to stay for so long, despite the challenges of living in a third world country. (And yes - in 1997 there was no Starbucks - no Ikea - no Tiffanys - no Walmart - no Vics, no Jenny Lou’s - no nothing, just lots of bikes).

But I never felt unsafe.

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Import Nightmares - Readers share their experiences when things go wrong

Roger — Wed, 14 May 2008 18:37:48 +0000

As any experienced importer can tell you, the logistics of transporting large quantities of product internationally across oceans, local borders and even more so through national customs, involves quite a lot effort. Things can go wrong. In fact, things frequently do go wrong. Customs can hold up your order, freight damage can occur due to excess handling, mold on the product - you name it - it can happen. Importing from Asia (and particularly China) seems to add an additional layer of challenges being that most manufacturing environments also tend to be located in third world countries. Yet one thing which always baffles me is when first time importers ask “what can go wrong?” So, I thought it might be of use to share some of the horror stories we have come across mostly from customers prior experiences or people who have come across us on the web. Here are a few examples:

From “Arthur”

You have a company called beijingantiques.com advertising (in the links section) on your website. I bought a wooden table from them, paying almost AUD$400 for door to door shipping not including the cost of the item.

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Beijing 2008 Olympics effects exports & factory output in China.

Roger — Mon, 05 May 2008 14:48:37 +0000

This is an email which we mailed out to many customers, but I think its important enough to be posted here as well. If you import product from China, work in China or have any plans to travel to China between now and October, then pay close attention because this effects you!

As a result of the upcoming games in Beijing, we expect any and all business will be severely disrupted, increasing the closer it gets to the Olympic games. This will most likely effect large portions of the country including non-Olympic cities like Shanghai & Guangzhou. As you may already know air pollution is a major concern in China (particularly in Beijing during the games) and there is a high likelihood of the Chinese government will address this by shutting down large swaths of business during this time from North to South as much as the air pollution in major cities comes from the surrounding provinces. The Chinese government also believes that during the games, people will visit other cities which means their air quality will also be a concern and therefore factories in seeming unrelated places like Ningbo may suddenly close down. The recent political tensions with Tebet have also added complications with security tightening and for those planning on traveling to China, getting visa’s may be a problem. Business will probably not resume normally well into late September. With this in mind, we are making the following recommendations to all customers:

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