Focusing on the difficulties of transparency within the supply chain, Melissa Brown of Association for Responsible and Sustainable Investment in Asia (ASRiA) sat down for an interview covering a lot of the angles surrounding the integrity of supply chains in China.

I highly suggest taking your lunch break to watch the 15 minute clip, and then think about some areas you feel may be at risk within your supply chain. I have listed the 7 questions she was asked along with a few bullets on what she said… and added a few thoughts of my own in italics

Questions asked during this clip are:

1) How easy is it to get details about Asian companies?
- Need to have a sense about what is know and how to compare
- Need to use different tools - policies are not set the same way, available resources can be limited

Getting information about Chinese firms is not terribly difficulty, it is about time and the amount of money one is willing to spend. One can approach firms from different angles, as a buyer, as a supplier, through a friend, through Alibaba.. you can even stake a factory out for a week. But it all comes down to how much time you want to spend, and the budget you are willing to allocate

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A couple of weeks ago, I threw out the argument that the potential success of Vietnam was severely limited over the next 5 years because their logistics infrastructure was not in place to support large amounts of FDI…

Well, as it turns out the World Bank agrees with me, or at least their recent Logistics Performance Index supports that line of thinking in general. Released November 5, the news release says the report:

a study based on a world survey of international freight forwarders and express carriers, indicates that facilitating the capacity to connect firms, suppliers and consumers, is crucial in a world where predictability and reliability are becoming even more important than costs.

The researchers/ authors did a great job at looking at “logistics” as more than the physical movement of goods on a ship by including telecom, services , gov’t department, and a number of other steps/ pieces that need to exist for the entire process… and then they linked that back to the income levels of a country

In this highly competitive world, the quality of logistics can have a major bearing on a firm’s decisions about which country to locate in, which suppliers to buy from, and which consumer markets to enter.

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for the last few months, there have been few China related topics discussed more than the 2007 lead tainted toys, and more generally, product safety. Fingers have been pointed, stones thrown, consumer rights in high gear, and Lou Dobbs has gained traction.

But thorough all this, many are wondering what the real impact will be. Will “Made in China” suffer, what will the impacts at the checkout counter be, and what does it all mean for those brands/ people in China who are manufacturing for export.

Well.. according to a NYT poll recently, it looks like cooler heads are prevailing (on the whole), and that the recent recalls have not damaged the “Made in China” brand - despite the efforts of some.

In fact, according to their study (full results can be downloaded here) that while a significant portion of the resppndants did think products made in China were more unsafe than those made in other areas

55 percent, said the recent wave of recalls just created a perception that Chinese imports are more harmful than imports from other countries.

and this “perception” of harm, while detouring some respondents (14%) from purchasing goods “Made in China”, has not detoured the majority (65% haven’t stopped).

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Just stumbled on a interesting collection of pictures on maZm (via China Digital Times) of men and women working in a toy painting factory. In total, there are 25 shots (I have a couple here).

As I said before, the average consumer is too disconnected from this process, and I hope readers will pass this around. There are no stone face killers in these pictures, just some shots of your average Mr. and Ms. Zhou (pronounced Joe) hard at work.

Why Lou Dobbs Scares Me More Than Chinese Toothpaste was a post I wrote early on in the days of “Made In China”. My position was that while there were certainly problems in the supply chain, Lou Dobbs (and other like him) were actually far worse because of their predatory reporting. Far from being balanced, Lou Dobbs always feels the need to remind viewers that China is a communist country, and does little himself to bring on balanced panels or perspective.

Well… it appears that someone else (more powerful than I) has also grown tired of Lou and his “communist China” angle.

According to a press release dated October 17, Gary Shapiro (CEO of the Consumer Electornics Association) has:

issued a direct challenge to Dobbs to present his viewers with a balanced view of international trade. “I am prepared to debate Lou Dobbs live on his CNN show,” Shapiro said. “His anti-trade comments on his cable show and his refusal to grant equal time to opposing viewpoints are inconsistent with CNN’s great legacy as a pioneering news network. We are hopeful that CNN will wish to retain its credibility and allow equal time for pro-free trade viewpoints.

also included in the release were some stats from a Zogby study (I am looking for study) that I found very interesting:

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With retail chains forming around China (Lianhua, Walmart, etc), there has been a lot of news recently on China’s sad state of affairs when it comes to cold storage. A lack of trucks, containers, warehouses, and just a generally difficult process for approvals for those who are wiling to invest.

So, when Eimkip opened their brand new warehouse in Qingdao (through put of 500,000TEUs), it goes without saying that people were excited… Baldur Gudnason (CEO of Eimskip) had this to say in front of the 350 other Icelanders

This is a very exciting project, which supports the current operations of Eimskip China. We have established 4 offices in the country in recent years and currently around 100 people work for Eimskip in China. The cold store project started with the visit of Mr. Olafur Ragnar Grimsson to Qingdao in 2005 and is now concluding successfully.

Located between Shanghai and Beijing, Qingdao is know best perhaps for its beer Tsing Tao (same pronunciation…just a different spelling), however Qingdao has a very long history as one of China’s original trading ports. Heavily influenced by the west, Qingdao has always had a strong port (see map), has seen a lot of western business and with this new warehouse, they are sure to garner more interest from those in the food industry (not just fish processing as mentioned in this Shanghai Daily article).

In addition to this opening, and the planned expansion, Eimskip’s website also announced that they had taken a stake in the Linyi container depot (110,000m2) . According to their announcement:

Eimskip has a call option to buy additional 20% share in Luyi Depot. Former owners will hold 40% share and will further develop the operation of Luyi Depot with Eimskip.

This investment obviously is a positive sign for things to come, but I cannot help but wonder where they will get the trucks needed to support the facility.

For anyone interested in learning more about cold chain in China, I would suggest you download this Accenture report or this AT Kearney Report. Both give a good overview of the industry, the need, and the hurdles. The September edition of CHaINA also has a great article on cold chain as well.

For more on Qingdao, see Dan Harris’s comments on a trip he took there. I personally have yet to make it there, but from everything I have heard, it is a place I need to go.

Part 3 really focuses on how buyers can ensure the quality of their products, and at this time there really is no greater topic of interest for many.

The purchase order is the beginning of the vendor coordination
process, not the end

His strongest statement so far, and possibly in his entire presentation.

These 14 words are words that many companies have wished they paid attention to, including Iams. There is a lot of hand holding that needs to, primarily in the beginning, but also ongoing. Goods do not just show up 3 months later without help anymore than a 5 year old learns how to read without a teacher. this time is THE MOST CRITICAL in the entire process as it is where the bar is set.

Quality standards, material specifications, tolerances.. EVERYTHING.. should be discussed at this point, particularly if there are international and Chinese inputs that can be used. One should always understand the qualities of the various inputs that suppliers have access to, the costs, and the quality differences.

One recent example of this is that we have one product that requires a glue to be applied to a foam piece. After 6 months, we had gone through 50 different varieties of glues and come to the realization that the only glue that would be good enough was the U.S. glue. had we not gone through that process with our supplier (together), we may have had a lot of returns.

then he gives some helpful tips on how to ensure quality on a limited budget

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