Tradeshow and News Round-up.

Best piece of advice that I heard at the show this week was from Ben Dolgin-Gardner of Shenzhen CE and IT Limted.  In his presentation at the Global Sources seminar “Buying from China: What New Buyers Need to Know” Ben said, “There is a difference between price and cost.”That one simple sentence revels a level of understanding about buying from China that most new buyers miss.  What he means that is this: Just because the price is better going direct to factories in China, that doesn’t mean that your final landed cost back home will be cheaper than buying from domestic vendors.  There is often a very good reason for domestic prices and factory direct prices being so different.  Reasons include: Quality control, international shipping, taxes, duties, a return policy, customer service.Other good advice from Ben:

• A network of professionals on this side of the ocean who give you personal attention is very important.  Don't reinvent the wheel if you don't have to.

• Get a sample of EVERYTHING at EVERY stage and for EVERY component/packaging/etc.

By the way, show attendence seemed to be rather low (I don't have any official numbers).  I've been to three different shows and didn't see much at any of them.  Even the Canton Fair is allowing domestic Chinese buyers into the show this year (they were not allowed unless they were employees of foreign companies before). Thailand has to be the only country in the world where there can be violent, deadly protests one day and then everyone takes two days of vacation before coming back and continuing the protests!  Blood in the streets on Wednesday and then water Wednesday through Sunday (Thai New Year festival) for a nice long weekend.  Unbelievable.Problem is, international trust and perception didn’t take a vacation.  The bad economy is now DEAD.  The remaining dribble of FDI still coming into Thailand is now bone dry.  When you look at China and say:  “more stable, more safe, better political environment” you know that your country (a supposed democracy, no less!) has hit the skids.  Tourism is even down now.  When back-packers and pedophiles are changing their vacation plans to avoid your country you know you have serious issues.Vietnam has really cheap labor but quality and education is lacking.  Really?  No kidding!?Notes on the Chinese economy. 1.    Chinese consumers, don’t. China is looking for a new stimulus package just to get consumers to spend a bit more.  All the first round of government loans went to well-connected factory owners who then invested it in the Shanghai stock exchange in stead of producing more or buying raw materials or even paying off debt.2.    If Chinese factories are not getting paid or not getting orders, who’s paying their bills?  Answer?  No one. The future is not so bright.3.    But when the Chinese consumers do buy, they buy smart. Oil, cars, houses and the Chinese stock market (ok, the stock market isn’t smart, but if you time it right you can make zillions!).  Is this a recovery or some digging in (and quick profit taking in the market)?  Except for the stock market, it's smart digging in for a longer recession than expected.  So many people made so much money in the stock market in '07 that people hope it can happen again.  Chinese people buy assets for security and save money so they can take care of themselves--why are Americans not doing the same thing?4.    China may not reach the govt’s goal of 8% growth this year. Really?  No!  Let's see...what non-Chinese commentators have been saying this for the last 6 months?  ALL OF THEM!5.    And…if that’s not enough.  Chinese Banks are handing out govt mandated money hand over fist to just about anyone with a Chinese ID card and a pulse (and to any foreigners with property).  Sound familiar?!  (Think the US sub-prime mortgage bill in the US in the ‘90’s.)  Add this new loan binge to the fact that Chinese banks are mostly insolvent already and you have the makings for another future economic disaster.6.    Steel is also up one of the items that's up (along with oil, autos, cars and housing prices, as mentioned above).  Steel?!  Really?  Why?  There is over capacity in industrial, commercial and residential building.  Shipping has so much over capacity they will not be using it all up for years to come.  Auto sales in China are up—but they had over capacity as recently as December in China (and no one other China has had an increase in sales).  Where are they using this steel?!  Could it be that no one bought steel for the last 6 months, waiting as long as possible before buying new supplies (seeing prices continue to drop in the meantime) and now finally they have to buy to keep (the low levels of) production going at all?!I hope that the Chinese economy is going to turn things around and can help the rest of the word by buying more imports.  But if buying trends continue the Chinese will be buying assest, not imports.  And that's not going to stimulate anyone elses bottom line.