Doing Business in China, Vietnam and Asia

Thousands of companies large and small are operating in Asia.  Many have entered the marketplace to service a growing Asian customer base and compete in the domestic market.  However, costs are increasing, domestic competitors are emerging and established US firms are adopting more sophisticated manufacturing strategies. 

Thus, the competitive bar is much higher and to be successful, companies must employ best manufacturing and operational practices in order to successfully compete.

Manufacturing and operational excellence is critical for companies operating in this market.  Asia has unique cultural and business practices, and as a result, companies need to apply tailored business practices to ensure their success in this competitive market.

East West provides manufacturing and operational consulting for those companies operating in the Asia Pacific region.  Our Team consists of seasoned operational executives from global corporations like IBM, Michelin, and Owens Corning and operates with US and Shanghai-based offices and resources. 

We assist firms in various stages of Doing Business in Asia, including:

• Identification and qualification of Asian suppliers and subcontractors;
• Start-up of Asian businesses (manufacturing plants, sales offices, subcontracting relationships, etc);
• Productivity process improvements and operational trouble -shooting at existing Chinese facilities; and
• Investment in Asian operations.
  

We have highlighted Four Scenarios in which we are assisting companies Doing Business in Asia:

 Scenario No. 1
Company is sourcing products, or subcontracting, or establishing a
Business Development & Sales Office in Asia

Services include:

• Sourcing Finished and Component Products
• Identification and Qualification of Asian Suppliers
• Supply Chain Development
• Supplier Assessments
• Competitive Intelligence Reports and Briefings
• Industry Market Assessments
• Business License Formation and Registration
• Identification of Qualified Chinese Employees
• Identification of Available Office Space and Support Services
• Sourcing Finished and Component Products 

Scenario No. 2
Company is establishing Asian manufacturing capabilities

Services include:

• All Services in Scenario No. 1
• Site Selection
• Operational Business Plan Development
• Project Plan
• Facility Negotiations
• Facility Construction and Installations
• Plant Start-up and Qualification
• Employee Identification, Qualification and Training
• Operational and Manufacturing Process Development
• Interim General Management
• Joint Venture Partner Identification
• Joint Venture Negotiations

Scenario No. 3
Company needs Business Process Improvements or Operational Trouble-Shooting
at existing Asian operations
 

Services include:

• All Services in Scenarios No. 1 and No. 2
• Productivity and Manufacturing Process Improvements
• Resolution of Operating Problems, including:
• Supply Chain Failures
• Production Ramp-up and Quality Monitoring
• Verification of Manufacturing Capability vs. Specifications
• Human Resource Policies and Retention Problems
• Management and Leadership
• IP Protection and Mitigation Procedures
• Operational Transparency
• Asian Government Relations

Scenario No. 4
Company desires to acquire or divest of existing Asian companies

.Services include:

• All Services in Scenarios No. 1, 2 and 3
• Development of Asian Investment Criteria
• Identification of Investment Targets
• Manufacturing and Operational Due Diligence
• Negotiation
• Integration Planning
• Transition Execution
• Post Closing Compliance
• Cultural Training

Failure to adequately plan and execute in China can lead to major cost overruns which mitigate the potential market benefits.  Underestimating the complexity and resources required to operate successfully in Asia can also create real problems supplying critical customers and drain capital.  East West can assist your company in mitigating the risks and ensuring the successful management of your company’s Asian operations.

East West China, LLC (EWC) is a manufacturing and operational consulting firm providing strategic implementation and hands-on problem-solving services for clients  in the US and Asia Pacific.  
We have a team of seasoned executives from leading global corporations with deep operational experience in Asia, including IBM, Motorola, Michelin, Sonoco Products and Owens Corning.  Our methodologies and experience provide structure and clarity for companies navigating the Asian marketplace.  EWC operates with US and Shanghai, China offices which interface extensively with the client to ensure seamless execution.

For more information, please visit our website at www.eastwestassoc.com or www.eastwestchina.net , email the company at info@eastwestassoc.com or info@eastwestchina.net or call our Charlotte, NC headquarters at +1 704-364-8893 or Shanghai, China headquarters at +86 21 5116 8790.

The conclusion by the State Environmental Protection Administration (SEPA) that water pollution has reached the point of posing a serious threat to the normal life of residents is no exaggeration. The repeated contamination of drinking water sends a somber message. Local governments’ apathy and inaction toward the increasingly hazardous water pollution can well be considered life-threatening political pollution. Local leaders’ business-as-usual all too often includes giving approval to the operation of polluting firms.

Premier Wen Jiabao stressed at a conference last week that pollution control and treatment in the country’s major lakes must be at the top of local governments’ agendas. This shows the resolve of the central government in environmental protection.

SEPA Deputy Director Pan Yue made the point that pollution cannot be stopped unless local government leaders are held legally accountable for the local environment. The repeated drinking water contamination incidents have already brought home the urgency of pollution control.
(China Daily 07/05/2007 page10)
For full article see http://www.chinadaily.net/opinion/2007-07/05/content_910483.htm

http://www.allheadlinenews.com/articles/7006978047

The index, based on a survey of 19,500 Chinese enterprises by the NBS, has remained at a high level since the second half of 2003.

The mining sector recorded the highest index at 157.9 points, followed by the information technology sector with 155.1 points and the wholesale and retail trade with 151.7 points.

The index for the catering sector was 148.8 points, up 13.5 points from a year ago, the highest rise of any sector.

The index for large enterprises was 162.7 points, much higher than the indices for medium and small sized ones which stood at 126.7 points and 116.7 points.

The indices for China’s eastern, central and western regions were 143.9 points, 138.0 points and 132.8 points, up 10.1 points, 5.5 points and 8.7 points respectively.

Source: Xinhua http://english.people.com.cn/200704/06/eng20070406_364258.html

Twenty-five Congressmen from the Judiciary Committee and Foreign Affairs Committee of the U.S. House of Representatives and the Aspen Institute took part in the meeting held in Beijing on 05 April 2007.

For more detail see http://english.people.com.cn/200704/06/eng20070406_364213.html

A new judicial interpretation issued by the Supreme People’s Court on Thursday states that anyone who manufactures 500 or more counterfeit copies (discs) of computer software, music, movies, TV series and other audio-video products can be prosecuted and faces a prison term of up to three years.

Despite repeated police raids, hawkers of pirated discs re-emerge on Chinese streets as soon as the anti-piracy campaign begins to ebb.

The piracy issue has been a sore point in China-U.S. trade relations and the latest judicial change seems to be aimed at addressing overseas complaints that the country is too lenient with IPR violators.

According to judicial sources, courts around China settled 17,769 IPR protection cases in 2006. But most of these cases were handled by civil courts. There were only 2,277 criminal prosecutions, with 3,508 people convicted.

The new rules, jointly prepared by the Supreme People’s Court and the Supreme People’s Procuratorate, also widen the definition of a “serious IPR offender” — anyone who produces more than 2,500 counterfeit copies can now be thrown into jail for up to seven years.

The rules are effective immediately, the top court said. They replace the 2004 rules whose net only extended to infringers who produced 1,000 pirated discs and which defined “serious offenders” as those who produced over 5,000 copies.

Critics expect a new surge of IPR cases in Chinese courts now that the new rules have come into effect. They constitute a stern warning to pirates that the government will not go soft on IPR infringement.

Sources with the Supreme People’s Court said they made the change in order to deal with “new problems” in the crackdown on piracy.

“The courts will extend the protection of intellectual property rights and play to the full their role in punishing infringers and preventing crimes,” a court spokesman said.

To fight rampant piracy, China lowered the counterfeit product threshold in 2004. Official statistics show that IPR cases that came to court in China rose 28 percent in 2005, the first year of the new rules.

That year, a total of 3,567 cases concerning the manufacture of fake products and illegal sales of pirated products went to criminal courts.

Courts have also been instructed to raise fines for convicted counterfeiters. “Fines can range from one to 15 times the illegal gains, or from 50 to 200 percent of the business turnover,” according to the new judicial interpretation.

This will be welcome news to those who complain that monetary punishments for piracy violators are too low and that “the cost of IPR crime” remains low.

In January, the top court issued a notice ordering stricter penalties for IPR violators, saying “all illegal gains and manufacturing tools of IPR violators should be confiscated and their pirated products destroyed.”

The new rules also tighten the rules on the granting of probation.

In another measure to cast the anti-piracy net wider, the top court has instructed IPR criminal courts to accept litigation cases filed by individual piracy victims, in addition to those filed by procurators.

The judicial change came as the state announced big seizures of pirated products and said it plans to improve the transparency of IPR trials by allowing foreigners to sit in.

Envoys of foreign governments and representatives of international organizations will be allowed to attend IPR trials if they wish, said Jiang Zengwei of the State Office of Intellectual Property Protection on Wednesday.

This will be the first time overseas representatives have been allowed to attend public IPR trials, an official from the top court told Xinhua.

Major trials will be publicized in the media.

Meanwhile, in the largest single crackdown on CD and DVD piracy in China’s history, more than 1.81 million pirated CDs and DVDs were seized in a production factory in Guangzhou, capital of south China’s Guangdong Province on March 17, the government announced on Tuesday.

Thirty production machines in 11 warehouses were confiscated and 13 people arrested in the case.

But a circular from the police authority said the fight against piracy was still very arduous, and should be a priority for public security departments nationwide.

The government has launched a “spring campaign” against illegal and pirated publications that will last until May.

People providing information about piracy crimes that lead to convictions can be rewarded by the police.

Source: Xinhua 05 April 2007

http://english.people.com.cn/200704/06/eng20070406_364218.html

In January, automotive products exports rose 43.1 percent year on year to 2.76 billion U.S. dollars, while imports surged 50.7 percent to 1.95 billion dollars.

February’s exports dipped 1.45 percent from the previous month, but were 68.8 percent higher than February last year at 2.72 billion U.S. dollars.

Meanwhile, imports declined to 1.28 billion U.S. dollars, down 10.1 percent from the previous year.

Source: Xinhua 05 April 2007

http://english.people.com.cn/200704/05/eng20070405_363976.html

The project is proposed by the CNNC, a state-owned nuclear energy conglomerate, to build a domestically manufactured nuclear plant of such a massive capacity.

Actually it is part of an extension project of the Qinshan nuclear power plant in east China’s Zhejiang Province.

Experts have approved a feasibility report and the central government is examining the project proposal, safety analysis of plant location, and evaluation report of the impact on environment.

“It takes us six years and more 200 million yuan (25 million U.S. dollars) to design the project,” said CNNC General Manager Kang Rixin.

China began developing its nuclear power industry in the late 1980s to help ease the energy bottleneck. In March this year, the State Council adopted a strategy to promote nuclear power capacity.

The goal is to make the nation’s total installed capacity of nuclear power reach 40 million kilowatts by 2020.

Source: Xinhua  10 December 2006

Addressing the national development and reform working conference, Ma said that the country’s economy has been developing fast this year with good efficiency and low inflation. Stable economic operation has benefited the people and will power future development.

He said that the Chinese people have benefited well from the steady and fast economic development. The SDRC projects that newly increased job opportunities could pass 10.5 million for the whole year, exceeding the 9 million planned figure at the beginning of the year.

The per capita net income for farmers and urban residents is expected to grow by 6 percent and 11 percent, respectively. The consumer price index will rise by 1.3 percent.

In the first 11 months, the investment in fixed asset went up 26.6 percent year-on-year, with the growth rate down 4.7 percentage points from the first half of the year. Newly increased loans in September, October and November have also decreased by 125.2 billion yuan, 9.5 billion yuan and 31.5 billion yuan, respectively.

However, he warned that the basis for economic development is not solid enough, the GDP growth rate is still too fast, and the cost is too much. “It’s necessary to keep clear-headed,” Ma said.

Statistics from the National Bureau of Statistics showed that in 2005 China’s GDP hit 18 trillion yuan.

The SDRC will continue to change the country’s pattern of growth from pursuing scale and output to stressing quality and efficiency next year, by further reducing energy consumption and pollution, said Ma.

China has planned to cut its energy consumption for unit GDP from 1.22 tons of coal last year to 0.98 by 2010.

Meanwhile, Ma said the government will go on reining in fixed-asset investment and boosting consumption, which was also pledged at the 2006 Central Economic Work Conference.

The conference delegates proposed to boost the income levels and consumption of rural people and the urban poor, calling for greater attention to creating employment opportunities.

The allocation of public resources must bring people more direct benefits, and problems involving people’s immediate interests must be carefully solved, said Ma.

“We should promote social justice and stability by letting the people share the achievements of reforms,” said Ma.

Source: Xinhua  11 December 2006