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Strategies & Market Trends : China Warehouse- More Than Crockery -- Ignore unavailable to you. Want to Upgrade?

To: RealMuLan who wrote (2192)	12/21/2003 6:35:45 PM
From: RealMuLan	Read Replies (1) \| Respond to of 6370

China is attracting workers from all over By JOHN TORINUS Special to the Journal Sentinel Posted: Dec. 20, 2003 The political hand-wringing over the loss of U.S. manufacturing jobs and the China trade imbalance have done little to change the real dynamics of our trade with the new Mecca of manufacturing. If anything, the stampede to China is thundering louder. Indeed, a new business niche has cropped up - advising companies on how to do business in that paradoxically communist/capitalist country. There are a half-dozen such consultants in Milwaukee alone, and the state's big law firms are building Sino-expertise. It's a growth market. My litmus test for the China equation is Chinese people who live outside China. These external Chinese from Malaysia, Singapore, Hong Kong and Taiwan are moving plants and, in some cases, their whole companies there. Many have moved their families. The number of Taiwanese businessmen who have picked up and moved to the mainland is reported to be approaching 1 million. There are large Taiwanese enclaves in Shenzhen across from Hong Kong and Suzhou in the Shanghai area. I asked one Malaysian manufacturing manager whether he was happy with his expatriate life in Shanghai. He complained about the cost of private grade schools - about $1,000 a month per child - but added that he had no choice but to be happy there. In other words, the action in his line of work is in China, not Malaysia. Commerce trumps nationalism As always, successful commerce trumps national loyalties. If we're lucky, it will also trump politics. With that kind of migration from Taiwan to China taking place, can some form of political integration or arrangement be far behind? Politicians on both sides of Formosa Strait are still beating their drums about one or two Chinas, forcing the hand of the Bush administration to take an active mediation role. There may or may not be a referendum in Taiwan on independence, but the business people are already voting - with their feet. Korean and Japanese companies also made major moves to the mainland. Given that exodus, it is little wonder that American companies that do not have a beachhead in China are exploring their options. About 30 Wisconsin managers, members of a learning group called Executive Agenda, gathered in West Bend last week to learn from two consultants about the ins and outs of doing business in China. Patrick Cronin, a former international manager for Johnson Controls who now runs his own consulting company called Global Business Strategies, advised: "If China isn't in your plans, it should be. Get ahead of the curve by starting to plan/act now." Bud Kinzalow, who is president of Mold-Tech Plastics in Northbrook, Ill., and a consultant, said he had his factory outside of Beijing up and running in one year. He advised the managers to start small and focus on products for export out of China. Attempts by U.S. companies to sell their products in the fast-growing domestic market there will be copied quickly. Build relationships, trust The normal path, they said, is to start by using a consultant to source simple, labor-intensive components, then move to contract manufacturing, then to a joint venture and finally to a wholly owned operation. Both agreed that, though rip-offs are rampant, it is possible to build relationships and trust. "Relationships are paramount," Kinzalow said, because you don't have a legal system to fall back on if something goes awry. "It's much akin to Wild West lawlessness," he said. To build the trust, Cronin said, it's wise to keep the same point person and team in place. That gives consistency, as opposed to rotating different people. Those kinds of practical tips, along with many on the arcane art of negotiating in the Far East, came just after the U.S. trade imbalance rose to a monthly record of $41.8 billion in October, much of the surge coming from Chinese exports to the U.S. Politicians are feeling the heat of job losses back home and are responding with rhetoric about higher tariffs, the need for revaluation of the yuan and reinforcing protection of intellectual property. None of that is happening very fast, so what choice do U.S. companies have but to set up shop in one form or another in China? If they had their druthers, most would keep their jobs here. But they don't have their druthers. They have to survive. So like the external Chinese, they are voting with their feet. John Torinus is chief executive officer of Serigraph Inc., West Bend. Contact him at jbt1@serigraph.com. jsonline.com