Global Sources Show Updates--SME's Sourcing Techniques

Quite a bit of really good information at the Global Sources Show today. The show was, as usual, packed and surprisingly the presentations had hundreds of people attend as well. Surprising only because (I was told) there were lingerie and swimsuit models downstairs in the exhibition hall (it’s a lingerie, swimsuit and electronics show). Outside of missing the “show” downstairs to listen to some suits speak, the only downside to the presentations was that we started late and Q&A time was limited.The presentations were generally geared toward SME’s coming to China for the first time. In addition to myself, Mike Bellamy was the other buyer on the panel. Both of us have had about 10 years of experience in China and fielded the most questions from the audience. Allen Matheson, Sabastian Tschackert and Michael Hetzel represented professional DD, shipping and 3PQ services respectively.The most repeated take away from all these speakers was that it is incumbent upon you, as the importer, to verify all the materials, claims, quality and processes that will ultimately bare your company’s name. You must either hire someone to do it for you or plan on doing all verification yourself. If you don’t do this you can plan on having either quality issues, financial issues or both—probably both.Another big issue was the structuring of deals and contracts. All contracts need to be both legal and extremely detailed. If you expect to realize any specific result you had better contract for it specifically. If it’s not on paper, and signed/registered/notarized it doesn’t really exist.Allen spoke to the impressive availability of business and legal information in China today. He says that there may in fact be more information about potential suppliers available in China than in Western countries. For example last year’s P/L filings, corporate and individual credit reports, company registration information, due diligence reports, litigation history, and PEP listings are all available from government and private agencies in China at relatively low cost. He also mentioned that too few Western companies do enough DD on their China supply chain.Each of the presenters commented on the fact that you’d better be legal with all your contracts, agreements and processes. Mike Bellamy mentioned that legal contracts made in China are more effective in China than contracts made outside of China—makes sense, and I agree, if you are dealing with a 100% domestically owned company. My experience with JV’s has been that if the factory you are working with has a foreign office, you can get better legal resolution outside of China. Either way, you need to have your legal bases covered.Michael Hetzel emphasized that you’ve better be managing and doing QC on your entire supply chain—not just the one “dimension” or single factory that most buyers think about when coming to China. He says, and I couldn’t agree more, you’d better be doing QA on the entire process from start to finish.More presentations to come—Sunday the 14th and then at the House wares and Crafts shows later this month.