Misconceptions about doing business in
China
There are many misconceptions about sourcing
projects to China. We've tried to address as
many as possible below.
There are many misconceptions about
outsourcing to China or offshore sourcing.
The most prevalent is that companies who
promote outsourcing are eliminating jobs.
The fact is that most good companies are
working with manufacturers to help them
remain competitive. Plants and factories who
are not exploring their options for
purchasing parts, components and assemblies
could be headed for real trouble in the long
run. Many are purchasing from distributors
who A) are already are sourcing in China and
B) applying way too much mark up to begin
with. Companies should begin controlling
their own destiny by working with someone
who understands their business and has
representation “on the ground” in China.
1. China does little to protect
intellectual property rights.
In recent years China has strived (in a HUGE
way) to enforce intellectual property
rights. Since China's first intellectual
property law was published in 1982, the
legislation and enforcement of intellectual
property rights have been rapidly improving
in China. Intellectual property rights
protection is no longer an appeasement by
government to foreign investors. What you
should know is that the actual number of new
patent applications every year (in China) is
about the same as the number of applications
in the United States. Note: It is
recommended that businesses and individuals
register their intellectual property rights
in China as soon as practical.
2. It is too costly for small and
mid-size American businesses to do business
in or with China.
Actually smaller enterprises, even a
one-person shop, can develop good
relationships with trustworthy business
contacts in China. The high speed Internet,
better logistics services and more English
speaking talents that are available in China
have made it a lot easier to conduct
business from manufacturing or exporting to
distribution. Actually, the biggest savings
come from developing the right strategy to
minimize risk. Chinese entrepreneurs are now
more prepared and willing to work with
smaller foreign business owners. (This is
where All China Sourcing, LTD. really helps!
We have the contacts, the experience and we
KNOW the companies, their teams, etc and we
can make your sourcing project productive
and profitable.)
3. Chinese business people are hard to
bargain with and always want to maximize
their benefit from a deal, ignoring real
partnering opportunities.
This may have been the case a decade or two
ago. Years ago, before communication opened
the doors to more open dialog, Chinese
people held a general distrust toward
foreigners. With that in mind they would
also bargain hard to get the best deal as
they often felt foreign businesses were in
it solely for their own best deal. However,
after more than twenty years of open
exchanges, Chinese companies are seeking
more cooperation and partnership
opportunities. Through working with All
China Sourcing, LTD, we can communicate your
interests with our contacts and work out a
win-win business solution for you.
4. It is difficult to find professionals
in China who will meet the business
standards of the United States.
There are certainly isolated cases where
standards are not being paid attention to.
Recent news has covered some of these
difficulties. That is WHY it important
to do business with a firm that has the
experience, contacts and knowledge of All
China Sourcing, LTD. We can work to make
certain that your projects manufacturing and
implementation meets or exceeds U.S.
standards.
5. Americans are losing jobs due to China
outsourcing.
Actually MORE Americans are employed than
ever before. The household employment survey
of Americans indicates that there are 1.9
million more Americans employed since the
recession ended in November 2001. There are
138.3 million workers in the U.S. economy
today—more than ever before.
6.Outsourcing will cause a net loss of
3.3 million jobs.
According to economic experts, outsourcing
has little net impact, and represents less
than 1 percent of gross job turnover. Over
the past decade, America has lost an average
of 7.71 million jobs every quarter. The most
alarmist prediction of jobs lost to
outsourcing, by Forrester Research,
estimates that 3.3 million service jobs will
be outsourced between 2000 and 2015—an
average of 55,000 jobs outsourced per
quarter, or only 0.71 percent of all jobs
lost per quarter.
7. Free trade, free labor, and free
capital harm the U.S. economy.
Economic freedom is necessary for economic
growth, new jobs, and higher living
standards. A study conducted for the 2004
Index of Economic Freedom confirms a strong,
positive relationship between economic
freedom and per capita GDP. Countries that
adopt policies antithetical to economic
freedom, including trying to protect jobs of
a few from outsourcing, tend to retard
economic growth, which leads to fewer jobs.
8. Outsourcing is a one-way street.
This is just not true. Outsourcing works
both ways. The number of jobs coming from
other countries to the U.S. (jobs “insourced”)
is growing at a faster rate than jobs lost
overseas. According to the Organization for
International Investment, the numbers of
manufacturing jobs insourced to the United
States grew by 82 percent, while the number
outsourced overseas grew by only 23 percent.
Moreover, these insourced jobs are often
higher-paying than those outsourced.
9. American manufacturing jobs are moving
to poor nations, especially China.
This may come as a surprise but nations are
losing manufacturing jobs worldwide, even
China. America is not alone in experiencing
declines in manufacturing jobs. U.S.
manufacturing employment declined 11 percent
between 1995 and 2002, which is identical to
the average world decline. China has seen a
sharper decline, losing 15 percent of its
industrial jobs over the same period.
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