New Buyers Seminar--Electronics Sourcing Show Q&A

October 12, 2008Once again, I’m speaking to new buyers at the Global Sources Electronics Show in Hong Kong.  If I may, I’m speaking at the good show, out by the airport, not the other one downtown.  This is not just my own (biased) opinion, but rather the general consensus from a number of buyers I talked with.  With that out of the way, here are the “new” takeaways from the show speakers.  Besides myself, speakers included Mike Bellamy from Passagemaker, Charles Kirmuss from Infinity and a representative from Bureau Veritas.  This presentation will be repeated on Tuesday at 12 noon at the same show location.First, set appropriate expectations.  This includes time, communications, price, professional experience, etc.  I know that I’ve joked more than once that low expectations are the key to happiness but coming to China probably no general theme could be more true.  China is honestly amazing, you’ll be overwhelmed, but not always for good reasons.  So manage your expectations and the expectations of those that are paying for your trip (if it’s not you personally).First, you need to understand that you will most likely not be working in factories on an architectural par with the Bird’s Nest or Water Cube. Yes, we all saw those on TV and yes those are in China too—but so are 800 million peasants living in cement houses or huts they built with their own hands.  The Bund (Shanghai) is not China, just like Times Square is not America.  But if you think of China more like the US than like Singapore you’ll be better prepared for what you really encounter.  While you’ve seen the Chinese equivalents of Washington DC, Rodeo Dr. and Michigan Avenue most Chinese and most of your factories are more likely to be in the Chinese equivalents of Corona California, Price Utah, Lander Wyoming, and DeKalb Illinois (all places I’ve lived)—in other words, small towns a ways outside of larger city centers with infrastructure and factory capabilities that are nowhere nearly as nice or modern as you’d think if you’ve only seen China from the MSM.Second, Chinese factories are not going to be nearly as good with design as they are working with counter samples.  Know this before you ask them to start working on design for you.  In fact, I would go so far as to say that unless you have invested in the design department of your supplier you most like do not want your supplier’s engineers or designers creating/working on anything of yours.  China’s value is still in copying, mass producing and finishing things that are designed elsewhere.  Are their exceptions to this?  Certainly, but exceptions do not make the rule.On a related note, to help you secure your IP, spread the components of your products around to various suppliers.  Don’t disclose your end use and requirements rather than the market.  And don’t share all your IP/design/ideas with every booth you visit at Chinese shows.Third, don’t assume anything is “just industry standard” or “everyone knows this.”  This goes for everything from component parts to color standards to testing requirements to packaging.   When you are working across cultures there is no such thing as “common knowledge.”Since this was an electronics show, it’s probably appropriate that most of the audience questions were centered around IP and protection.  So here are some issues that you should be aware of in China.First, what kind of IP rights are recognized in China? China has a First To Register (FTR) not a First To Market (FTM) legal system for IP.  This means that if you share all your own IP with a supplier and they run out and resister it before you do then legally it’s theirs.  For this simple reason you need to put all of your legal ducks in a row BEFORE you start sharing all your sensitive information with potential (or even final) suppliers.Second, can you be successful in a lawsuit in China against a manufacture that has violated your IP?  Simple answer, yes.  All of us speakers on the panel have had successful experiences with lawsuits in China.  But the real question isn’t can you win in court in China but have you set yourself up for success in court or to be taken advantage of.  To know the answer to this question you most likely need professional help.  I’ve used Harris & Moure before—they know China.Last, what’s the best way to coordinate your shipping?  Don’t do it yourself.  There is really no reason why you should be doing anything but paying for your shipping.  International shipping can involve up to 15 different entities for a single shipment and there are professionals that can handle all of it for you, door to door, for very manageable fees.