IS CHINA SHUT DOWN?

A strategy for smaller and medium sized manufacturers, ………..and their Sales Reps

 

Just over three years ago, former President Trump started trade actions against China, as well as many other countries, as part of his economic plan to revive American manufacturing. Initially, some punishing tariffs were introduced against most foreign suppliers in the categories of steel and aluminum products. Then China was targeted for many more product groups in stages in an attempt to coerce the Chinese government to come to the discussion table on a number of trade issues.

Each one merely served to increase the resolve of the Xi Ping government to stand firm and not capitulate to the pressure. China did suffer a bad year of economic growth in 2019 as a result of Covid-19 and the downturn in the economies of its trading partners. However, by being the first to take strong actions to control the spread of Covid-19, they were in a better position to rev up their economy before most nations. Even though they cannot claim the robust growth rates of their GDP from before 2017, they staged a turnaround.

The new administration in the U.S. has so far refrained from trying to dismantle the tariff actions in place. It is unlikely to do so in the near future even if Xi Ping were to show readiness to re-engage in trade talks. If you are following the political scene in America, you would get a pretty good idea why this is so.

But there are still a large number of product categories which the Chinese manufacturers can produce much more economically than the rest of the world. It is evident from the fact that very large companies like Apple outsource most of their production.

If you or your client is not as big as Apple, the impact of their higher cost of production can be crippling when their bigger competitors can outbid them because of the economy of their larger scale of production. So, what can you do? Exactly. This is the type of client who can benefit from looking at sourcing in China.

Your client is a proud innovator who has built his company from scratch, and wants to keep his own production and provide employment to as many of his or her countrymen and women. There will be fear and resistance when it comes to handing over the production of the entire product to an offshore manufacturer. Can they protect the high reputation for quality which he/she has earned with a lifetime of hard work? How about proprietary design information? Will it be safe?

Yes. You can still make significant cost savings to drive your bottom line up and still protect your technological secrets while still keeping people in your domestic factory. With a careful analysis of your production costs, you can find the parts that result in the greatest competitive impact. You can selectively outsource these parts to reduce your costs enough to survive against competitive cost pressure. By spreading out the sourcing one part at a time to different offshore factories, so that your total design is not visible at any one location, you can protect your proprietary technology.

For Independent sales representatives like yourself, this could be a new area with great potential. Instead of just representing your client by selling what your client makes, have you thought about how you can make your client more competitive by helping to find cost savings for them?

You will need someone who can spend the time in the offshore country, and I mean a lot of time, to do it right. You will need someone who can get into the details of the parts and understand the critical specs and the manufacturing process. You would need someone with managing suppliers and designing the right supply chain to deliver the quality and the timely supply to you.

Interested? Please contact me. There are still many categories which have not been subjected to the heavy tariffs under Section 301 Tariff Actions by the U.S.A. We can help with several of them.

Just send your request for a no-obligation free consultation.

If it is something we can handle, we will get you started and put you in the hands of an experienced senior professional in China who can work on it. One client at a time, and one part at a time, you can increase your income without adding much to your workload. Are you ready?