Sourcing in Asia: China
SHANGHAI’S WORKSHOPS: SOURCING GOOD CHINESE COMPANIES IN THE SHANGHAI CHINA REGION
Shanghai is the modern, thriving hub of business in China and many Overseas companies naturally think of it first as they consider sourcing products in China and/or locating a factory there. The fact is, however, that Shanghai has already become a more expensive place to do business and although many Chinese companies maintain offices there, most Chinese company’s factories in the area are likely to be located in one of the two neighboring provinces – Zhejiang or Jiansu which border and surround China’s commercial hub.
Recently I visited Shanghai with three groups of clients involved in outsourcing aluminum fabrication, computer monitors and in sourcing plastic items.
A number of major aluminum fabricators and manufacturers make Shanghai, Jiansu and Zhejiang their home and good companies can be readily found to handle even complex projects. In terms of computer items Suzhou which is located a little of an hours drive out of Shanghai in Jiansu province is the place to go. Suzhou which is Portland, Oregon’s sister city in China has become the hub for Taiwanese and other major companies involved in computer monitor, printer and other components and is a must stop if your company is looking to source items in China, have a major OEM design completed or especially to move a factory to lower costs. City authorities are welcoming and the Business Development and Cultural Outreach city offices under Mr. Ronglong Tang are well run, proactive and can be counted upon for support with major projects
In all of China, most first time overseas visitors fail to realize the large spaces involved or how much development has occurred already and how much is still going on everyday. China is one vast construction project with new cities, government offices, roads, housing developments, shopping centers, malls, factories, etc. going up everywhere. Air quality is seriously impaired and traffic is often dense and congested. Despite this, even in less well known locations, generally there are good hotels, safe restaurants and a warm welcome for the company interested in sourcing products or doing other projects.
A good example of the above is Zhejiang Province. As noted earlier, the province borders Shanghai which lays to its east and extends over a relatively large area which means that visits are usually best performed by air to airports in Yuanyan, Ningbo or Hangzhou. Modern highways link all of the major cities and transportation is relatively straight forward although leave some time in your schedule as factories are often a farther drive time than expected as many Chinese don’t want to disappoint or inhibit their potential buyers. Factories often will provide a car and an English speaking staff person to meet so the process shouldn’t inhibit even buyers for mid and smaller overseas companies as the process is less daunting than might be imagined. An additional advantage of Zhejiang is also that it is the site of the major port for the area which is located in Ningbo and containerized shipping can therefore be easily arranged as local transportation from the factory to the port is relatively low cost.
A good example of what Zhejiang has to offer is the city of Taizhou. Taizhou which was formed a little over 10 years ago is what is considered a mid sized city in China, with over 5.5 million people. In China, large population numbers are taken for granted and a city of a million is considered minor in Chinese terms although it would be a major city in the U.S., Europe or many other countries. Taizhou’s airport is located in nearby Huangyan which was formerly a Chinese Airbase and where some planes are still based but what now is mainly a civilian airport with several daily flights from Shanghai and other Chinese cities. The airport is about 10 minutes to the city center of Taizhou, and 15 minutes to Huangyan, the city for which it is named.
The City of Taizhou
Taizhou is the largest plastic manufacturing base in China and the premier Chinese city for plastic mould fabrication. Much of this work started in China in Guangdong province when neighboring Hong Kong became too expensive but has now moved more to the Taizhou area although many of the larger Taizhou companies also have sales offices in Shanghai. Taizhou is however not just a major plastics center, it is also a major site for automotive and the automotive and motorcycle accessories industry, home and commercial sewing machine manufacture, medical and commercial chemical facilities, pumps and valves, clothing, small and family electrical appliances, food processing and for many arts and crafts. During my recent visit, I visited many of these facilities and found them modern, well run and looking for increased business.
(Picture from left: Leo Chen - Officer of Taizhou International Investment Promotion Center, Chris Runckel - President of Runckel & Associates, Jeff Bailey - General Manager of Max Packaging, Jin Yujia - Director of Foreign Investment Service of Taizhou Foreign Trade and Economic Cooperation Bureau, David McFarland - Vice President of Max Packaging , and Chen Weilin - Vice-Director of the Government Information Office of Taizhou and Director of China Taizhou Internet Information Center)
| As many cities in
China, Taizhou has an active office promoting investment and
seeking to attract companies to locate in their city or to source
major projects there. Jin Yujia (Mr. Jinni) heads the Foreign
Investment Service of Taizhou’s Foreign Trade and Economic Cooperation
Bureau and is actively assisted in the Taizhou’s International
Investment Promotion Center by Leo Chen, a very active, well informed
and well spoken official who assists foreign businesses interested in
the city. Taizhou also is lucky to have the services of Mr.
Chen Weilin, Vice-Director of the Government Information Office of
Taizhou, and the Director of China Taizhou Internet Information Center
which is seeking to bring Taizhou and
its many advantages to the attention of a wider audience and support
attraction and job creation. Together these three are ably
by many others who make the process of doing business in Taizhou
forward and easy to understand.
Major industrial factory zones around Taizhou include Damai Island Economic Development Zone, Huangyan Economic Development Zone, Linhai Economic Development Zone, Taizhou Economic Development Zone and Wenling Economic Zone plus several smaller areas. I visited a number of factories located in these zones and most are located in fairly new facilities although some of those in especially Huangyan that I saw had been in operation for well over 10 years.
Although I was prepared for a Spartan hotel stay, Taizhou also has the four star New Century Hotel in Taizhou and is building a five star hotel that will open in mid-2004. We stayed in the New Century and ate at three of the restaurants there and found the food, service and facilities to be excellent. We also ate dinner at the Huangyan International Hotel which although not as new seemed well run and had a very good restaurant.
Taizhou and Zejiang province are firmly now in the front of my mind as places to think about whenever I am looking for a company to produce a product or a new area to site a factory and from what I saw the rest of the world will be hearing more and more about this booming industrial and commercial area.
About the Author:
Christopher W. Runckel, a former senior US diplomat who served in many counties in Asia, is a graduate of the University of Oregon and Lewis and Clark Law School. He served as Deputy General Counsel of President Gerald Ford’s Presidential Clemency Board. Mr. Runckel is the principal and founder of Runckel & Associates, a Portland, Oregon based consulting company that assists businesses expand business opportunities in Asia. (www.business-in-asia.com)
Until April of 1999, Mr. Runckel was Minister-Counselor of the US Embassy in Beijing, China. Mr. Runckel lived and worked in Thailand for over six years. He was the first permanently assigned U.S. diplomat to return to Vietnam after the Vietnam War. In 1997, he was awarded the U.S. Department of States highest award for service, the Distinguished Honor Award, for his contribution to improving U.S.-Vietnam relations. Mr. Runckel is one of only two non-Ambassadors to receive this award in the 200-year history of the U.S. diplomatic service.