Imports Oriental Blog

International apparel manufacturing and sourcing. If we don't make it, we can find it.

Posts Tagged ‘rural development’

Should you choose to partner with Big Factories or Small Factories?

Danny Coyle

Danny Coyle

There are big differences in the way large, established factories operate, as opposed to smaller boutique-style factories. To choose the best manufacturer for your products, you must weigh the pros and cons.

From our experiences with manufacturing in China, we almost always choose to use small factories rather than big ones.

Here are a few reasons why:

  • Lower minimums
  • Usually cheaper
  • More flexible
  • Unaccustomed to working with Chinese-speaking foreigners (find it interesting)
  • More readily adjusted to our way of doing things

Flexibility

When choosing a factory, you must consider his attitude to project changes. A big factory requires its customers to be very precise and orderly. These factories do not like to take on a project unless all details are clearly confirmed up front. This sort of factory is uncomfortable proceeding on verbal instructions, especially when the orders are large  – they won’t just trust a foreign buyer’s word that this new method will work, or this new idea is going to sell big.

Of course, the smaller factories have their own set of headaches. Very few have English-speaking staff. Not all have adequate quality control systems in place. In manufacturing the types of products we sell, however, flexibility and responding to unknowns on the fly is important. Our bigger factories have a harder time with this. The flexibility we gain in working with smaller factories is worth the losses in other areas.

Guanxi

The most significant gain in doing business with smaller factories is guanxi. Guanxi, or relationship, is more easily built with smaller factories, as usually there is one factory owner you will deal with. All the accommodations made on both sides are carried forward with the same working relationship. When that one owner likes you, you have it made (although the converse is also true).

This is because the owner of a small factory is usually directly involved in production, overseeing all steps involved. Rather than an aloof observer waiting for information to be passed to his huge corner office, the small factory owner will hopefully be on the factory floor working with your order hands-on.

Communication is clearer and progress made faster, too, as you always talk with the decision-maker, not a salesperson who isn’t involved with production. Messages don’t have to be passed along the line, chewing up time and delaying progress.

If you experience headaches working with big companies, try a small one.  They have worked out for us.

Do you prefer working with big factories or small factories?
What other pros/cons have you noticed?

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Posted in : Business in China, Manufacturing, Textile Industry

Rising Labor Costs in China – How it Affects Manufacturing Exports


Tanya Crossman

Tanya Crossman

There’s been a lot of talk around the world about rising labor costs in China. There is no longer an unending stream of workers prepared to accept the low wages which sufficed in previous decades.

Factories are offering better salaries and improving working conditions in order to entice the workers they need to fulfill production, and still coming up short. These additional costs are being passed onto buyers abroad, and therefore a “Made in China” tag is more expensive than ever.

Here’s a few articles on the subject that we’ve found helpful:

How Rising Wages are Changing the Game in China (BusinessWeek)

Doesn’t China have an inexhaustible supply of cheap labor? Not any longer. From the textile and toy factories of the south to the corporate headquarters and research labs in Beijing and Shanghai, the No. 1 challenge today is finding and keeping good workers. Turnover in some low-tech industries approaches 50%, according to the Institute of Contemporary Observation, a Shenzhen labor research group. Guangdong Province says it has 2.5 million jobs that remain unfilled, while Jiangsu, Zhejiang, and Shandong provinces say they, too, face shortages of qualified workers. “Before, people talked about China’s unlimited labor supply,” says Zhang Juwei, deputy director of the Institute of Population & Labor Economics at the Chinese Academy of Social Sciences in Beijing. “We should revise that: China is facing a limited supply of labor.”

This is not all bad news. Yes, it means the costs for companies exporting are going up, that international buyers will have to pay more for goods made in China. It also means, however, a strengthening of the domestic market. There are opportunities for those importing to and selling in China.

We here at Imports Oriental are very pleased to see worker salaries going up. It may not be good for the bottom line of exporters like us, but it’s good for the workers we all rely on. Factory workers are not as expendable as they once were, which should raise their value and result in better conditions. We’re glad to see the people of China gaining a share of the wealth being created here.

Made in China Remade (Project Syndicate)

Rising labor costs are inevitable. China’s government introduced tough labor laws and a minimum wage in 2008. Recent policies to improve rural economic conditions have slowed the flow of migrants from the countryside. Workers are demanding higher compensation to match the fast-rising cost of living in China’s cities, as manifested in an ongoing and high-profile labor strike at a Honda plant based in Guangdong. Salary was the major point of contention.

One of the reasons for the labor shortage is that some people who once would have traveled to the city to seek work are staying closer to home in the interior provinces, as opportunities are growing there. We’re also glad to see this – it means fewer families split in half, with parents working in the city and children staying back with grandparents to attend school, seeing their parents only once or twice a year.

In a macro view, changes that improve the lives of workers here are good for the country as a whole and, we believe, for those of us who engage in business here.

China’s Rising Labour Costs (Euromonitor International)

The Chinese work force now varies between highly-skilled technical workers and low-level manual labourers, ensuring that all types of labour requirements can be met. This has allowed China to become a major manufacturing centre, with products ranging from textiles, to basic manufacturing and high-end electronic goods.

Manufacturing in China is maturing. While price is one of the major reasons companies choose China for their manufacturing needs, it is not the only reason. Countries such as Vietnam, India and Bangladesh, to name a few, also provide low-cost manufacturing, yet China remains the location of choice for many businesses. China has more to offer than cost.

Rising Labor Costs In China (Fibre2Fashion)

China possess high skill level, and quality fabrics. The country has good familiarity with the American retailers. Whilst these factors are beneficial to them, high import duties, and rising labor costs does not favor them from the views of apparel manufacturers. . .China might not lose its manufacturing base owing to its huge domestic market, but there may be a perceptible shift towards high-end goods.

Other countries may undercut on price when it comes to low quality garments, but China is still the place to source high quality items on a budget.

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Posted in : Business in China, Export, Manufacturing

BOPS – the Balance Of Power Shift

Jill Coyle

Jill Coyle

Read a great article on Chinese Negotiation Blog recently about the power struggle between supplier and customer. They use the term “BOPS” (Balance Of Power Shift) which I love! It succinctly defines what I’ve usually just called the cold shoulder.

I’ve always found it rather confusing when suddenly a supplier just didn’t want to do a sample for us (a supplier we’ve used for 6 years), or when a supplier just took his sweet old time when we were telling him, “This could be a moneymaker if you finished it THIS YEAR!”

Read the full BOPS article here

Everything is about relationship here in China. One thing that helps is to just continue to build those customer-supplier relationships – go see your supplier when possible, try to do negotiations face-to-face, go out to lunch, etc. It’s much harder for a supplier to write you off when you’re right there in front of him.

Building long term relationships with our suppliers in a high priority for Imports Oriental. To read more about how we’ve improved product through working with our suppliers in person, check out these  two articles

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Posted in : Business Relationships, Business in China, Export, International Business, Manufacturing

A Tale of Three Factories

Tanya Crossman

Tanya Crossman

It’s quite common in China for purveyors of similar items to group together geographically. As a result, some rural cities become known as “the place” to manufacture certain items. For example, Baigou, in northern Hebei Province, manufactures bags and all the accessories associated with them. Keqiao, in southern Jiangsu Province, is the place for fabric.

I once visited three Wujiang factories in one day – each a very different experience.  On this trip I was visiting factories that produced heat-transfer papers – printed papers that, when applied to plain cloth in a certain way, transfer their design to the fabric.

Factory #1
The factory warehouse was dirty and disorganized, the small office had a broken window and a distinct cigarette smell, and next door, rolls of printed paper were piled haphazardly. The factory area was dingy and dirty (piles of dust an inch deep could be found in back corners). The owner seemed only vaguely interested in our business, and hurried us away to lunch – a lavish meal he put on for the visiting foreigner. He brought his own flask-sized bottle of whisky and toasted everything until the bottle was finished. Upon our return to the factory, he disappeared – then we were actually able to get some work done.

Factory #2
This company was more high-tech. They sold electronic print designs to factories and apparel designers. Computers around the room were linked to the special printer which produced heat-transfer paper, and there were constantly new print jobs going on. A small press made take-home swatches. The offices appeared to be for factory owners, police, and other VIPs to smoke and chat while waiting for the work to be finished next door. We only saw the boss once when he wandered through to survey his domain and point out the foreigner to his guests.

Factory #3
This company’s warehouse was packed with rolls of heat-transfers paper. A press transferred the prints to rolls of cloth which were then delivered to customers. We arrived late in the evening and the press was still running loudly, pouring out steam. A truck arrived and staff began loading it with rolls of newly pressed fabric. Despite all the activity, the boss was generous with his time. When we asked for small sample swatches, he gave us large swatches. He was courteous and accommodating, despite the fact he was clearly busy with an outgoing shipment.

This day was eye-opening for me. Although the first factory was the dirtiest they received the majority of our business. Their product matched our need best; everything else we could work around. No matter how gracious the third factory’s host is, we will not buy from him unless his offerings benefit our customers. Without a product that meets your customer’s need all the customer service in the world won’t create sales.

What about you?
Have you visited a “product city” like this? Share your own factory tale with us.

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Posted in : Business in China, Manufacturing, Textile Industry

Of Farmers And Factories (Part 2)

Tanya Crossman

Tanya Crossman

In part one of this article, we took a little look at small rural factories and their workforce of  part-time farmers. We saw some ways the worker demographics of these factories impact production.

Another challenge we have faced when using small rural factories is how to raise production quality.  These small town workshops are usually run by a single owner (and other family members), often with little experience in the industry, especially the export market. Problems with low quality and inefficiency are common.

The workers, and even owners, of these factories have no understanding of the large department stores well-known in other countries. Names like Macys or Kohls mean nothing to them. A chain like Walmart, which has stores across China, is better understood. They don’t shop in boutiques, or even in high-end department stores. It can be difficult to expand a small factory’s vision to a higher standard for production quality. If products meet their own personal shopping standards, they’re good enough. Higher quality requirements can seem overbearing.

One way we have sought to overcome this problem is to use our own resources to provide training to the factories we partner with. We send our own staff to visit factories in person, running training on quality control and inspection. Instead of telling (or demanding) higher quality, we take a hands-on approach and show our suppliers what our standard looks like.

Our company sees time and money spent on training suppliers as an investment in future business.  In addition to higher quality products, it builds a firm foundation for long-term relationships with our suppliers.

Factories are happier to accept this sort of direction.  It comes at little or no financial cost, and adds value to their business. This assistance enables our suppliers to meet our quality targets without requiring us to be heavy-handed or demanding – attitudes that will damage our working relationship.

Another important aspect of building up that working relationship over time is to genuinely care about our suppliers’ needs. We take time to talk to our suppliers. We discuss production schedules and strategies. We listen to their concerns and problems and, where appropriate, join them in problem-solving. Our goal is to let our suppliers know that we understand the pressures they are facing. We work with our suppliers to reach mutually beneficial outcomes. We want them to know that we are on their side; that we want to see their businesses succeed.

While it is true that these strategies also strengthen small workshops to become more influential factories (who can eventually compete with us), adding value to both customers and suppliers is a core value of Imports Oriental. We believe that strengthening the industry at a grass-roots level benefits players on all levels.

One of the unique rewards of partnering with these workshops, rather than with more established businesses, is seeing their growth over time –and knowing that Imports Oriental is part of their success.

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Posted in : Business in China, Manufacturing

Of Farmers And Factories: Life in the Chinese Countryside

Tanya Crossman

Tanya Crossman

China has become a manufacturing powerhouse, with large factories all over the country producing parts for every industry you can think of. Not all things “Made in China” come from vast assembly lines, however. In villages and towns that derive most of their income through agriculture, small workshops provide welcome part-time and seasonal work for farming families.

Mr. Han’s workshop is three rooms attached to his family home: a storeroom, a cutting room, and a sewing room. Another small room near the kitchen serves as office and sample room. The workshop is a 20 minute drive from anything that could be a called a “main road”. Small roads serving as boundary lines between rice paddies, barely wide enough for a small car to pass a small tractor, are the only way there. Mr. Han is the only male to be seen. His handful of employees are all local women who walk to work on foot-wide paths through the fields and go home every day to cook lunch for their families. Some of the clothing produced here will end up as far away as New York City.

It’s important to realize all the players when it comes to having your product manufactured overseas. Even if you are sourcing from large factories, they may be outsourcing production to small workshops such as these since the labor rates and overheads can be lower.

Imports Oriental has been working with rural factory owners like Mr. Han for 4 years. This sort of partnership brings with it unique rewards – and challenges.

One of the main challenges is the seasonal nature of life in an agricultural area. Most small town workshops like Mr. Han’s will close for long periods three times every year:

Chinese New Year

People around the world are aware of the Lunar new year celebrations common across most of Asia. It is the traditional time of year to return home and spend time with family.  An annual mass-migration happens in China during this time, with an estimated 200-300 million people on the move. New year celebrations traditionally last 2-4 weeks.  New year’s eve, New year’s day, the 5th and 15th days of the new lunar year are all significant occasions. While companies in urban areas generally close for only 3-7 days, in rural areas a shutdown of 3-4 weeks is more common.

Planting and Harvest

Many employees working in small workshops like Mr. Han’s are there to supplement their household’s primary source of income – agriculture. While there may be time to spare working in a factory for most of the year, when it comes time to plant crops, the whole family is needed. Small workshops will close down for about 2 weeks at planting time while their employees spend time planting rice or wheat. The third shut down happens at harvest time when for another 2 weeks all the workshop employees head back to the fields to bring in the crops.

An aspect of this particular challenge is that the shutdown times are not uniform, neither from factory to factory nor from year to year. This naturally makes planning production schedules tricky.

Be upfront with your factory and ask the right questions.  Are they using small factories to do your work?  If you already know that you are using a smaller rural factory, clarify when production will shut down during key holidays (keep in mind that even large factories may be affected by a New Year shutdown). Remember to ask about any other factors that might delay your order (such as planting and harvest seasons).

There are challenges inherent in all business partnerships. Understanding the region your supplier lives in gives you a head start.


Continue to part 2

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Posted in : Business in China, Manufacturing

Small Family Factory to Export Quality Goods

Danny Coyle

Danny Coyle

In the starting years of our company we had the opportunity to partner with a small factory who had cheap prices, terrible quality, but an attitude that we liked. We partnered with him to help him achieve export quality levels, which saved us money by not awarding the projects to the larger, established, but expensive factories.  Here’s how we did it.

When we first met this factory, he actually didn’t want to do our work.  He had introduced us to another factory that ended up being a disaster.  When we unloaded the goods and opened the cartons, the sleeves were ripping off the body of the blouses.  We immediately called him and asked if he would do the order instead.  Since we were in a bind, he agreed.

We sent the only Quality Control staff that we had up to the factory to monitor his production.  Our staff was very inexperienced but tried her best.  The goods were slightly better than what we had received the first time around.

By what seemed to be a miracle, we hired a Quality Control expert who had worked in large factories before, and was able to transform this supplier into an export level factory.

Our new Quality expert started traveling to the factory on a regular basis.  She first started by communicating our expectations of quality in terms that he could understand, and would not scare him off.  If we told him how high our standards were at the beginning, he would threaten to quit working with us. We would back down some, and he would get back into the game.  At times, we would offer bonuses for low defect rates, and as the defect rates got lower, we would remove the bonus for that item, and transfer the bonus to a new area.  For example, we offered a bonus if he was able to offer 5% defects or lower.  We inspected 100% of the goods at that time, so we could accurately calculate the defect rate.  Once he consistently met this level, we then removed the bonus for defect rate, and told him that we would give him the bonus when he delivered on-time (Which was a constant headache in trying to manage our customers’ schedules as well).

Again, when we told him our schedule, he threatened to quit, but we danced with that game, and came to an agreement on a reasonable time-line for both parties, and enticed him to do a better job by offering a bonus for quick delivery.

We have now completed over 60 orders with this factory, almost 1 million pcs over the last 5 years.  Most of our orders have been successful, some have been complete disasters, but we have an excellent relationship with him, and our successes have far outweighed the disasters.

Our investments into this supplier have grown him, our customers, and our own company. We are thankful that we’ve endured the headaches and heartaches over the years.  We look forward to taking our product to the next level as we approach more customers.

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Posted in : Business in China, Export, Manufacturing

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