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Happy Holidays!

Merry Christmas, Happy Hanukkah, and Happy New Year–新年快乐!

SRI”s annual Christmas gift is now available.  Yes, our much awaited annual calendar and screen saver can now be yours–for free (mostly)!

The screen saver can be downloaded from our home page (link on the bottom left) or directly from here!

The calendar can be ordered from either our China or US offices for just the cost of shipping.  Let us know if you want one and we’ll send it right out to you!

And don’t forget, as much fun as it is for us to give this to you, we want stuff too!  So vote for SRI: Best China Business Blog 2008.



How long is your Chinese New Year Holiday and other unresolved China Questions.

This post is a collection of client questions from emails, Skype conversations and other online postings.  I’ve left peoples names off and updated the hyperlinks and correct some spelling to make it more readable.  I get these questions, in some form or another, about every week.  So I hope that these are helpful general answers.

First Question: When does Chinese New Year start and how long does it last?

Typically CNY lasts about a week.  Some factories only give their employees the mandatory 3 official days.  Others give them a week.  Some will give even more.  In the past workers will just leave when they want or come back when they want knowing that there will be jobs waiting.

Recently there have been millions of people not returning at all to jobs in the costal cities.  They’re going home for the holiday and staying to find similar jobs where it costs less to live and they are closer to family (and certainly where the salaries are lower too).

This year is different.  Factories are telling us that workers are leaving earlier than usual and they don’t expect them to come back at all.  The difference this year is that many factories don’t have work for them to come back to anyway.  CNY for some factories may be indefinite.  For others it will be 2-3 weeks as business is either very slow or getting enough people to come back and get running full-steam again will take time.

If you’re hoping against hope to get your goods out before CNY, you’d better hope that you’ll have your containers loaded by the 15th of January, at the latest.  CNY for many factories will last through the end of January.

Second Question:  What does this email mean?!

These are two actual emails from a factory to a client.  We were asked to step in and translate the Chinglish into Englese.

First email:

1.The product size we may adjust are 12.5*7cm, this question please have not felt relieved;
2. Whether needs again to pull for you confirmed, only confirmed to David?
3.Please consider the box ordinary white box printing + color to paste, color box printing, please provide a more detailed material, thanks

Second email (response to the first):

A few problems I ask you:
Extremely happy you to the sample approval, the diameter I confirmed again according to the request express sample to David that, ask this time for David express sample, whether needs to pack the color box;

Moreover in yours reply said SCH-RW2 & SCH-RW5 needs to pull, but you said to make the samples for SCH-RW2 & SCH-RW5 using the same finish texture as SCH800.ask is according to the SCH800 manual trace procedure,?or uses the laser to carve the even trace? You also knew the laser and the manual price difference is very far, but also please confirm, thanks

Is three section color product color box printing picture all must be consistent according to the product concrete color, also is printing must make three colors the editions?

Just because someone is the “foreign sales manager” doesn’t mean that he can speak a foreign language.  There is certainly as many levels of English competence as there are factories, so I can’t generalize that “all factories have communications issues.” But I will say this.  If you’re not communicating in Chinese, face to face, over a shared sample, there are things that are NOT being communicated properly that you don’t know you don’t know.

Third Question: How do we get someone in China to stop selling our designs under their name?

This is a Skype conversation that I had with a Englishman about design protection in China.

C: Hi David, read your blog with interest and am looking for some help with a copyright infringement. Is that something you can help us with?

D: Well, I may be able to send you in the right direction, but I’m not a lawyer.  What’s your question?

C: We’re a musical instrument company that purchases from factories in Huizhou and Guangzhou. I was at the Shanghai show in October and found another company selling a guitar with one of our designs (prints) on it. They’re claiming we need to provide a registration certificate in China in order for our claim to be valid. I don’t see that we should need a certificate since we can prove it’s our design.

D: China is a first to file country.  That means that unless you’ve filed for the copyright, you have nothing by just “showing” first to market or original designs.

C: Really! That’s incredible. OK, I guess we better get on and register it then and put this one down to experience.

D: Yes, you need to get registered FIRST.  Even if you are the originator of the design but someone else in China files first they get the legal protection, not you.  Sony, for a big example, didn’t register the Chinese translation of their name here and so they now have issues with a legal competitor with the same name.  I’ve heard that Germany is the same type of system as China, but I don’t know personally. I suggest you look up the guys at China Law Blog.

C: OK, you’ve been a great help, I really appreciate it. Out of interest do you have staff skills within your organization to QC musical instruments?

D: We’ve never done musical instruments, no.  I played the piano for about 15 years and went to college on a drum scholarship, if I can be of any help.

C: Compared to the Chinese we’ve been working with, you’re an expert already!

D: I’d be glad to contract for some QC work for you if you need it.  Just let me know.

C: OK, thanks, I’ll be in touch.

Fourth Question: What are the Second Tier Chinese Cities?


I recently stumbled across one of your articles on Smartchinasourcing.com.

Are there lists of 2nd and 3rd tier cities in China?  I asked several people in China and even they have a hard time naming them with any certainty.

If you are using migrant workers (and housing them) does it matter if your factory is located in a first tier city?  Would they expect more in wages being in a first tier city?  How far up the chain do migrant workers usually make it at a factory?  Are they always just general labor or do they advance to quality control or supervisory positions?


My response

Good questions.  Let me take a stab at a few and push to you a couple of resources for the rest.

First, the Chinese govt does indeed publish a list of 1st, 2nd and 3rd tier cities.  The govt’s ranking are usually based on either levels of federal investment, levels of development or population or some combination of the three.  Typically Beijing and Shanghai and Guangzhou are listed as the 1st tier cities.  Everything else you’ve likely ever heard of is 2nd tier—Harbin, Dalian, Tianjin, Qingdao, Nanjing, Wuhan, Hanzhou, Ningbo, Xiamen, Shenzhen, Kunming, Chongqing, Chengdu, Xi’an.  I’ve seen Shenzhen as 1st tier, Guangzhou as 2nd and Chongqing and Chendu each as third before too.  I think the discrepancies have to do with where and when the reports were published.  Shenzhen and Guangzhou are certainly first for most lists now.  Chongqing and Chendu are definitely 2nd now too.

Attached is a PDF with some lists and sources.  Another great resource is a site called All Roads Lead to China.  He’s got some great work on individual cities—the most detail I’ve seen anywhere.

Interestingly, the UN’s Human Development Index came out last month and said that China’s best cities compare to “poorer European cities” and the worst (Guizhou and Tibet) are worse than many places in Africa.  Not surprisingly, this report didn’t get much pub in the Chinese press.

Second worker’s wages.  Absolutely they will expect more in various higher level cities. Different cities, counties and provinces all have different minimum wage laws. Guangdong province has the highest in the country.  Shenzhen is the highest in the province.  Factories are moving inland because the same labor pool that has fueled growth on the east coast is now staying home since development has moved inland too. Wages are cheaper inland for the same people.  Of course costs of living for the workers is cheaper too.

Third, vertical opportunity.  Guangdong is special, it’s always been the home of manufacturing and trade and so there has always been migrant labor here.  Shenzhen is even more special, being a city of 10m that was created out of nothing just 30 years ago.  Basically, no one over 25 is actually from Shenzhen.  So here, yes, workers can move up to the very top of the hierarchy because everyone is a migrant worker, to some degree.

Zhejiang province is much different.  It didn’t have HK and Taiwan FDI or Shenzhen in the 80’s and so most of the factories there are either VERY large foreign or JV’s or small local facilities.  It is much harder for migrant labor to move up in either of these situations. Finally, the level of education is the most telling factor for vertical movement, rather than where people are from.  True migrant labor, and I’ve kind of blurred the lines with the above comments, is manual laborers with little to no education and they have almost no chance of working up into any real power position at all.  But people with skills, experience and education are in demand everywhere in China; no matter where they are from.

Good luck.  Thanks for asking.

Question Five:  Is my supplier going to be in business next month and how do I make sure?

Hi David,

I have just finished reading your thought provoking article on the global sources website. It has certainly presented me with some other dimensions for my business venture.

I am writing not just to thank you for the insight, but given your extensive knowledge and experience, I thought you would be a great person to ask about the current situation with the factories in China.

I am very close to placing my first order (a specialty glass product) and am now concerned that the chosen company may join the list of those going bankrupt and that, not only may i lose my money but the product I have finally sourced.

I am very interested in your opinion on this matter. Should you believe it safe to proceed i would also greatly appreciate any tips you may have, given its my first order.

Lastly, you recommend obtaining a Chinese lawyer for contracts and i am wondering how i would go about finding a reputable one.

I eagerly await your reply.

My response

Let me first say to you that I’m impressed with your good intentions and premonitions.  The economy is scary now and I would very much encourage you to check out your factory BEFORE you pay any monies to them.  You should first use a service to confirm that the factory is in good legal and or economic standing.  Two options would be: Glo-Bis or Verify.

A factory audit can give you some additional information about what’s happening in the factory right now and confirm that they are really there and really working on orders now.  A good way to do that would be to have someone SRI run an audit for you.   Larger companies, like Bureau Veritas run a more detailed factory audit for specific industries with engineers, if you need.

Here are two law firms that you can talk with.  The first is a US firm with an office in Shanghai and the second is a group of western educated Chinese lawyers in Shenzhen. The cheapest is the Chinese guys, but the Shanghai firm is probably some of the best lawyers in China.  I’ve used both before.

Dan Harris: Dan Harris @ China Law Blog
Li Yan: Liyan @ JunzeJun Law

If you have any other questions, let me know.

Save Baby Whales from Starving, Vote for SRI

The SRI Blog has been nominated for the Best China Business Blog 2008.  Thanks to whomever nominated us (and no, it was not me or my wife, or my mother, or any of our employees).  It’s nice to be recognized.  I hope you’ll vote for SRI, and, like they say in Chicago (and now DC): vote early and vote often!

SRI is nominated as Best Business-Law Blog

Please use Loretta Swit voice to read the following PSA (Personal Self-aggrandizing Announcement)

What does a vote for SRI get you?  For less time than it would take you to update your fantasy football team for this week’s play-offs you can, instead help someone in a third world country; namely me.

Just think, instead of winning your fantasy league this week, you can have the eternal joy that comes from knowing that you helped someone else win something almost as equally unrealistic–an online contest of blogs!

Wouldn’t it be great knowing that you, with just two clicks of a mouse, supported something esoterically larger than yourself?  Instead of your typical daily dosage of white-middle-class-christian guilt, you can actually do something for someone else and absolve yourself of the sins of ancestors past.

What have you got to lose except for a bit of your negligibly valuable time?  Come on, admit it, you’d click this link if there was pictures of Condie Rice (just kidding) or a way to to help a deposed Sudanese crown prince get his money out of his country (still kidding) or even a clip of a Chinese Andy Rooney (not kidding–very funny!).

Just two clicks of your mouse (one here and the second on the little green plus sign: +) and you’ll be that much closer to nirvana.  And someone else (me) will have, um…a better life too.

Thank you, and God bless.

(You can stop talking like Loretta Swit now).

Here are some other really good blogs that you should support too.  Of course, they won’t solve world hunger or give you warm fuzzies like a vote for SRI will, but hey, they still have good stuff!

China Law Blog

All Roads Lead to China
Experience Not Logic
Image Thief
Managing the Dragon
Silicon Hutong
Source Juice
WSJ China Blog
The China Economics Blog
The China Sourcing Blog
The China Vortex

What?! A Driving Test?! You’ve got to be kidding me!

I’ve been driving for 25 years now—since I was 14 actually.  I started out with big farm trucks, bailers, swathers, tractors and a 40 year-old IHC pick-up truck that you had to prime with a choke to start.  I’ve driven in snow storms on canyon roads, ice storms, in sand, through fields, through herds of cattle and flocks of sheep and goats, over washed out farm roads, in Taipei, BKK, LA and NYC traffic, and, of course over the river and through the woods to grandmother’s house too.  I’ve also driven for years in Thailand (illegally), Taiwan (legally) and China (I plead the 5th). I remember driving Rout 66 one summer with some friends.  I’ve driven back and forth from LA to Salt Lake City probably 50 times.  Back and forth from Chicago to SLC another 10 times in my grad school years.  I’ve seen it all.  And in that time I’ve got a total of four traffic tickets (all for speeding) and hit one wall (last week) and one parked car (when I was 16). I’m pretty confident in my driving abilities.

So when I keep failing my Chinese driver’s license test (the written part), I have to admit, I’m looking for excuses.  Yea, I know that it’s my own fault that I’ve got 88 points 4 times now (you need 90 to pass).  And believe me, I’m taking tons of crap for it too.  My wife has told me more than once (OK, more than 20 times) that she thinks I must have bought my MA if I can’t pass a simple driving test.  My response is I’ve never studied for a test like this—I’ve never had to memorize the answers to 1500 questions without learning a damn thing before.

I told my friend and old China hand, Richard Jones, that I was taking the Chinese driver’s license test today and he said:

Driver’s TEST????
Only in China.
Do they test you for swerving all over the road and stopping in the middle?

Yup.  That’s pretty much what I think too.  China has the most dangerous roads in the world.  And not just because they have so many (bad) drivers either.  There a thousand reasons that I’ve shared before here and won’t list out again now.  But whatever the excuses, since I can no longer pay someone to take the test for me, I’m stuck finding time to memorize the cacophony of Chinglish test questions.

Over Turkey dinner I told some friends about my poor test results and they, of course, laughed themselves silly.  They also shared a ton of stories, many are not publishable, but one that is must be shared.

Richard (not the one above) is from Taiwan but lived in the States for decades and driven now in all three countries.  He says that he always carries two driver’s licenses with him when he drives in China; one from China and one from Taiwan.  If he gets into an accident then he uses the legal one from China.  But for any other situation he uses the one from Taiwan.  It’s in Chinese, it’s not expired and Taiwan is, as we all know, “part of China.”  Richard says his Taiwan license has gotten him out of a lot of sticky situations with only a small “tip” to the officers.  Why?  Think about it.  What are the Chinese police going to say?  “Your license is not valid because … um … well … it’s just not!”  Yup.  Policemen are not going to tell another Chinese that Taiwan is foreign, so they stammer and hem and haw and basically let him go.  Richard says he learned this from other Taiwanese that are here in China.

One other driving story I was told.  The fines in China are relatively cheap, at least for foreigners or wealthy Chinese.  So cheap in fact that many just blow through watched intersections or speed past speed-limit signs knowing that the fee is going to be the equivalent of USD$50 or less.  Even the fine for covering your license plate is only $25 and/or a warning.  I didn’t realize that some of the bad driving here was on purpose.

And “everyone on both sides of the Taiwan straight” agreed that the only real traffic rule here is: follow the rules and everyone will think you’re an idiot!

Did you know it’s illegal to turn left before oncoming traffic clears the intersection?  Or that it’s illegal to continue driving when there are people in the crosswalk? Or that you can’t stop your car anywhere on a public road unless it’s marked for parking?  Or that you can’t back up on the freeway or down an on ramp if you’ve missed your exit or taken the wrong exit?  Join the club!  Neither do any of the other 10 million drivers here.  Or they know but just don’t care.  Not sure which is scarier.

Anyway, as I was studying this week I realized that the manual of questions was a treasure trove of great comedic material.  So in the interest of lightening the world’s overall depression and evoking a bit of sympathy for my plight, I share with you a few of the best test questions cut, pasted and unedited directly from the official English manual (Snarky comments are all mine).

Enjoy these—just stay off the roads. The driver may drive a motorized vehicle __________.
A. After drinking alcohol
B. When he suffers from a disease that impedes safe driving
C. When he is exhausted
D. After drinking tea

(What If I’m not thirsty?  What if I don’t like tea, can I still drive?)
Answer:  D

(my second most favorite question) The main feature of pedestrians participating in road traffic is _________.
A. They move slowly
B. The like to get together and look on
C. They are not stable
D. They walk around at will and can easily change directions
Answer:  D (I think that “all of the above” would be the best answer here!)

(My personal favorite) When the driver senses he will inevitably be thrown out of the vehicle, he should violently straighten both his legs to increase the force of being thrown out and jump out of the vehicle.
Answer: Right ___________ of the following are not road traffic signals.
A. Traffic lights
B. Traffic bulletin board
C. Command of the traffic police
D. Traffic signs
Answer:  B __________ of the following are not road traffic signals.
A. Warning lights
B. Traffic signs
C. Command of the traffic police
D. Traffic markings
Answer:  A On the road not divided into the lane for motorized vehicles, the lane for non-motorized vehicles and the sidewalk, the motorized vehicles should run _______.
A. On both sides of the road
B. In the middle of the road
C. According to lanes
D. At will
Answer:  B  A small motorized vehicle may overtake a police car performing an emergency task.
Answer: Wrong A driver is not allowed to drive a motorized vehicle for ________ running without stopping the vehicle and having a rest.
A. 4 hours
B. 5 hours
C. 6 hours
D. 8 hours
Answer:  A If a driver has driven a motorized vehicle for more than four hours running, he should stop the vehicle and rest for at least ____________.
A. 5 minutes
B. 10 minutes
C. 20 minutes
D. 40 minutes
Answer:  C With regard to the vehicle that is suspected of stealing and cannot be immediately released, the traffic police may _____ on the spot.
A. Confiscate it
B. Detain it
C. Auction it
D. Impose a fine
Answer:  B     The person who is addicted to drug taking and injection may apply for a motorized vehicle driving license when he is not overwhelmed by drug addiction.
Answer: Wrong When running at a high speed, the steering wheel can have a feel of “being deprived” due to the impact of _______. The driver should firmly hold the steering wheel and drives at a lower speed.
A. Ice and snow
B. Heavy rain
C. Side wind
D. Fog
Answer:  C When driving, the driver should strictly obey the relevant provisions of the laws and regulations and consciously safeguard the traffic order.
Answer: Right A qualified driver should not only be technically adept, but more importantly have   good driving habits and ethical attainments.
Answer: Right When putting out a fire, the wrong method is to ____________.
A. Stand leeward to the fire
B. Take off the clothes made of chemical fiber
C. Protect the exposed skin
D. Do not breathe through mouth or cry loudly
Answer:  A Before the driver escapes from a fire disaster, he should turn off the ignition switch, cut off the power switch and the blind, and manage to turn off the fuel tank switch.
Answer: Right (What is the blind and where is the fuel tank switch in any car that was made in the last 50 years?) The gear is designed to smoothly connect and completely separate the engine and the transmission system for starting to move and changing gear.
Answer: Wrong The foot brake is designed to keep a stopped vehicle from moving.
Answer: Wrong When there many wounded persons, those who should be sent to hospital last are the persons ________.
A. Suffering cervical vertebra damage
B. Suffering massive haemorrhage
C. Suffering breathing difficulty
D. Whose intestines and veins are exposed
Answer:  A The wrong measure to rescue a person sustaining burns all over his body is to _________.
A. Use sandy soil to cover
B. Swiftly put out the flames of his clothes
C. Spray cool water to his body
D. Take off his burning clothes
Answer:  A The first-aid measure to rescue a poisoned person is to _______.
A. Take warming-up measures
B. Bring him to a place where air is fresh  (Um…like Canada?)
C. Give him artificial respiration
D. Depress the heart over the chest
Answer:  B The article that cannot be used to stop bleeding by dressing is _________.
A. Bondage
B. Sling
C. Tourniquet
D. Hemp rope
Answer:  D Stopping bleeding with tourniquet refers to ligating an elastic rubber tube and rubber band at ________ of the upper limb or the middle thigh of the wounded person.
A. One-third
B. One-half
C. Two-thirds
D. Three-quarters
Answer:  A (If you know the answer to this question you are either an Eagle Scout or a paramedic.) When putting a bone fracture in the lower limb, the limb must be crooked and tied up.
Answer: Wrong (I always wanted to know how to put a fracture in someone’s lower limb. I guess this test wasn’t a waste of time after all!) When a wounded suffers bleeding in the forearm or shank, the rescuers may place a cushion in the armpit or in the rook of the arm, crook the armpit or rook and tie up.
Answer: Right When using a bondage to dress a wounded person, the knot should be made neither above the wound nor at the back of the body. Otherwise, the wounded person will feel uncomfortable when sleeping.
Answer: Right  (Because if you have bleeding wounds that have need of “bondage” sleeping comfortably is a priority.) ____ refers to the material and article that has the danger of overall explosion.
A. Explosive
B. Inflammable solid material
C. Inflammable gas
D. Self-igniting article
Answer:  A Gun powder, explosives and detonating powder are ________.
A. Oxidizing materials
B. Inflammable solid materials
C. Explosives
D. Self-igniting articles
Answer:  C _____ of the following are a dangerous inflammable solid material.
A. Matches
B. Fireworks
C. Calcium carbide
D. Explosives
Answer:  A