Column Strategic Sourcing with Greg Hutchins P. 7

Column Sourcing Dos and Don’ts with Stephen Chow P. 8

QuAlITY ConTRol How your representatives can get bribes from your suppliers P.9

logIsTICs Issues to Face Once Made in China Products are Imported to the U.S.A. P.12

PRoJECT mAnAgEmEnT Stop Fraud Before it Starts P.14

lEgAl Seven Tips for Successful China Due Diligence P.16

FInAnCE Tips to Avoid Supply Chain Corruption P.20

TERms oF ThE TRAdE P. 23

TRAdEshow CAlEndAR P.24

Tools oF ThE TRAdE Websites P.26

ExPERT InTERvIEw P.27

ChInEsE CITY InFo Wuhan P.30

ThE lAsT PAgE Smallpox P.31

ONLINE pdf EdItION

CHINASOURCINGINfO.ORG

ISSUE twELvE— AUGUSt 2011

Corruption......and you.

Most people typically have one of two responses to dealing with “corruption” within their supply chain in China—“It’s always going to be there, that’s just China.” Or, “fire everyone! we don’t work like that!” In my opinion both are correct.

to me, probably the worst thing about corruption is that it is indeed everywhere and it’s not going away anytime soon. It was here long before I was and it’ll be here long after I leave. And while I absolutely do not buy the excuse that it’s “cultural” it is certainly a “part of doing business in China” that I do not see changing in the near future.

Regardless of our personal stand on the issue, the reality is that there are more people involved in corrupt business practices here in China (and in other parts of the world too) than you or I will even talk to/influence/criticize/ask not to work like that. And most of the people that we will have contact with (both foreigners and Chinese) are already resigned to the lie that there are no other options—“that’s just how it’s done here.”

Yes, corruption is just about everywhere. Bur participation is an individual choice. Not only is it possible to do business without being actively involved in corrup-tion of any kind but more than likely it’s already required of you and your Chinese counter parts too.

the US government, for example, holds businesses responsible for the actions of their employees overseas and to some degree the actions of their sub-suppliers as well.

Specific industry and individual country import standards are regulations that will cost you thousands or millions of dollars if you are in anyway (numbers, chemicals, quality) non-compliant.

Historically, Confucius called on Chinese to be honest as part of developing moral character. Recently, the Chinese government has decided to “rehabilitate” the legacy of Confucius and promote his moral philosophies. Specifically, Chinese premier wen Jia Bao has called for Chinese businesses and individuals to “Speak the truth, Observe reality” to fight China’s “moral decline.” premier wen said that if China does not improve the quality of it’s citizenry it will never become a strong and respected country.

Really, it’s not a question of “what is everyone else doing?” but rather, “what should I be doing (or even, “what have I contracted to do?”)” And, if nothing else is enough motivation, the fear of penalties for non-compliance for legal or industry standards is a great place to start.

for me, I use the legal and other standards as the ultimate trump card: It’s not my call, it’s illegal. period. Because that is the line, I just never have to have the “Yea, but is this situation different?” debate. If it’s ever questioned why others do it but I don’t, I just tell them the truth, that I don’t have any idea what others do or how they do it.

for when corruption does rear it’s ugly head, and it certainly will, it needs to be cut off immediately (and most likely repeatedly) if you and your company are to remain untarnished (and un-prosecuted).

Happy Hunting,

david dayton, Silk Road International

Letter from the EditorBy David A. Dayton, Silk Road International

About the Editor founder of Silk Road International

david dayton is the owner and manager of SRI. david has nearly twenty years experience working in and with Asia and he leads SRI from Shenzhen, China. Besides Shenzhen, david has lived, worked and/or studied in thailand, taiwan, and Chongqing, China.

david is a regular presenter for Global Sources’ New Buyer training seminars in Shanghai and in Hong Kong. He has also spoken for Global Sources’ Supplier Education program and the Metering China Xi’an Sourcing Show. david has been published in Euro Biz magazine, Right Sight Asia, Garden International and other trade publications and on numerous sites online including the China Economic Review, the New Zealand government’s international trade information website and China Success Stories. He has been interviewed by the BBC, CBS 60 Minutes, the CBS Evening News, the Hong Kong trade and development Council and by NpR on china-related issues. His blog postings have been on the wSJ China blog “best of” lists.

david has a Master’s degree in Southeast Asian Cultural Anthropology, focusing on Comparative Chinese and thai Corporate Cultures and a BA in International Relations and East Asian History. david has worked as a consultant, manager, trainer and translator on both sides of the pacific and he is fluent in both thai and Mandarin.

Questions to the Editorfeel free to ask any questions via email at questions@ChinaSourcingInfo.org or on our website www.ChinaSourcingInfo.org

Q: Can you get genuine Apple products from China?

A: Short question. Long Answer.

Apple products are readily available in China. while there are only a handful of Apple stores, there are many authorized retailers. I live in Shenzhen and recently purchased an ipad2 for my daughter. But if your question is “can you buy genuine Apple products online from China at a price below what you can buy them in the UK or USA?”, then I am sad to inform you that the answer is “probably not.”

Everybody knows that most of these Apple products are made in China, but what people fail to realize is that due to the tax system in China, the price of the products at wholesale and retail or higher than the pricing you would find back home if you live in N. America or Europe. Also, Apple does an excellent job of controlling their sub suppliers and carefully controls the amount of made-in-China stock that ends up in the China market. despite what the scam artist say, the Apple authorized factories are unable to run an extra shift to make ipad’s and sell them secretly on the internet at “factory direct prices.” In fact, I have a few neighbors in Shenzhen who make a living bringing ipad’s INtO China from the USA. Not the other way around!

warning:

If you are finding pricing from China that is below what you can find back home, be very careful. Scam artists on the internet prey on foreign buyers who think they are getting a great deal on genuine products. It is not uncommon for these sellers to disappear with your deposit. And if they do ship goods, it is not genuine product. I met a french woman in dubai who wanted to purchase 100K USd worth of iphone’s from HK. I told her she was crazy and at great risk. But she was so caught up in the sirens’ song of low price, that she went ahead with the purchase convinced that she would easily double her money. thinking she was smart, in order to protect herself, she negotiated a “great” payment plan where she “only” paid 60% up front and had the safety of paying the final 40% upon provision of shipping documents. She thought that if the goods ship, the trade must be real. Imagine the tears when she opened the container load to find a load of iphon (missing “e”) which were poorly manufactured clones of next to no value. By the time she called me to try and track down the seller, they had disappeared with the money. Her so-called supplier was a guy and a computer in an instant office just trolling online for somebody dumb enough to accept his payment terms and believe they could get genuine Apple products in China at such a low price.

why do the scam artist target small scale foreign buyers of brand name electronics?

Most small buyers are working on tight margins and won’t do proper due diligence to verify if the supplier is legit.

Most small buyers don’t come to China or engage a 3rd party inspec-tion agent to check the goods before the good ship out and before

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Copyright: All content published in the “China Sourcer” is owned by CSIC and may not be reproduced in any print or online publication without written consent from the CSIC Board of Advisors.

Questions answered by Mike Bellamy, of CSIC

the final payment is made. perhaps the buyers don’t realize it only costs a few 100 USd to have an inspection agent check the goods out.

Most small buyers of electronics have grown accustom to buying and selling online back home and falsely assume the same buyer protec-tion is in place overseas.

Small buyers generally will not try to track down the scam artist and pay for a legal battle on a small order.

Smaller and especially new buyers, are too trusting of sellers. If the seller says they have 500 employees, the buyers take it at face value. If the seller says their standard procedure is 80% deposit and 20% at ship date, the new buyer assumes that is the norm, when 30% deposit and 70% after 3rd party inspection is very common.

Q: Our supplier won’t give us the discount for VAT. What can we do?

A: Under fOB terms, the supplier is responsible for paying the vAt tax up front and collecting any vAt rebate at export. In other words, the supplier has already calculated the vAt situation into fOB price quoted to you. Under fOB terms, it is not the norm in China for the supplier to refund the vAt to the buyer, unless you have made special arrange-ments in advance. Such special arrangement should only be made in cases where the two sides have a lot of trust and experience working together.

furthermore, because it is very easy for the supplier to distort how vAt effects the final price, in your case below, you would be wise to focus on negotiating the final fOB price rather than basing your negotiation on the vAt rebate.

for example, supplier could say something like “the vAt Rebate is 11%, and supplier will give the buyer 7% of the 11%.” Sounds great. But if that supplier has a special relationship with the tax bureau, they may be getting the full 17% back and keeping the 17-7, which is a lot differ-ent than 11-7. Unless you are well versed in the vAt system, you would have a hard time finding out what really happens.

to make a long story short, focus on the fOB price and let the supplier worry about the vAt. If you were buying Exw or consolidating orders at a central point in China before shipping, then vAt becomes a bigger issue.

You also asked if I could recommend a company to help you as an agent in China and Exporting company.

If it turns out vAt is an essential part of your negotiation for some rea-son, know that CSIC sponsor passageMaker (www.pSSchina.com) can conduct a vAt survey and offer advice (http://psschina.com/about/virtual-tour/auxiliary-services/value-added-tax-planning/) . passage-Maker also has an import-export registration and vAt license so they can conduct transactions on behalf of the clients who want total trans-parency.

Also, if you are not happy with your current supplier, there are agents who can assist with finding and managing vendors. the CSIC keeps a list of reputable 3rd parties open to the public at http://chinasourcinginfo.org/endorsed-service-providers/

Any other Q?Feel free to ask by email at ques-tions@ChinaSourcingInfo.org or on our website

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Your worst nightmare may be the follow-ing newspaper headline: “Activist Shines Light on factory workers” (Oregonian, July 27, 2011). the story lead states:

“When news emerged recently that work-ers at an Indonesian factory making shoes for Nike’s Converse Brand were abused by their supervisors …”

the issues of supplier governance, risk management, and compliance are now upper most in many customer’s minds. they know that alleged supplier abuses reflect poorly on the final manufacturer and can impact stock price.

I remember as a young quality engineer visiting suppliers around Christmas and the supplier’s sales guy coming out to wish us all a “Happy New Year” with a case of Jack daniel’s tennessee whiskey.

And, it went both ways. Not long ago, customers would provide suppliers with inducements to lubricate the formation of a partnership. this was common with Middle East suppliers. the host country often believed that baksheesh was a form of social tax, much like westerners view tipping. the customer thought that baksheesh was a form of supplier lubrication, gratitude and even respect between the customer and supplier.

Now, many western countries and com-panies view this as a form of outright bribery, especially if the transfer of funds in the spirit of business facilitation ex-tends to millions of dollars. In the U.S., the foreign Corrupt practices Act (fCpA) is a law that describes the legal penalties of bribing a foreign official to secure an unfair advantage to obtain or retain busi-ness. the fCpA has been a game chang-er in terms of reframing global business in western terms and for defining what is ‘right’; and, that’s the problem. ‘Right’ has cultural, social, commercial, value, le-gal exposure, and many other overtones. So, what is right in light of cultural cross currents?

Good Supplier Governance

thomas friedman, the NY times colum-nist, says: “we’ve gone from connected to interconnected to ethically interde-pendent.” And, the consequences can be far reaching. we’re now seeing a common platform for what constitutes the minimum threshold of ‘right.’ we call this good supplier governance. driven by the globalization of markets, litigation, compliance, and global sup-ply chains, questionable business and ethical practices of third tier suppliers can have major consequences on the final customer. for example, a third tier supplier with questionable child labor challenges can impact the upstream cus-tomer and its brand equity.

the social and corporate responsibil-ity values in Europe, US, and China may become global minimum requirements for doing business and what is deemed ‘right.’ Using friedman’s observation, we are moving to a world that is ethically interdependent. Global supply chains will be the first to experience this.

we also see the development of new governance standards. Corporate So-cial Responsibility is the broad term for developing business protocols on doing what’s ‘right.’ Let’s look at ISO 26000, which is the International Organization for Standardization (ISO) guideline for Corporate Social Responsibility (CSR). Global customers will require suppliers to demonstrate compliance with organi-zational governance, human rights, labor practices, environment issues, carbon emissions, fair operating practices. this may become the highest common de-nominator for supplier compliance.

Now some potential challenges- A third tier supplier may use child labor, may have non-sustainable practices, or may have dangerous working conditions that are deemed acceptable in the host country. western or host country media report this as a CSR noncompliance, even

though working conditions are much higher than what is common in the sup-plier’s country. the critical issue is the noncompliance is framed and deter-mined by the highest common working conditions, NOt what is acceptable in the supplier’s nation. Both the customer and supplier may have a critical difference in understanding, opinion and solution of doing what’s right or socially respon-sible. the third tier supplier believes that it is a socially responsible supplier based on its national norms and good business practices. these cultural, legal, and business differences can exacerbate customer-supplier relationships.

we believe that more change is coming for global suppliers. More CSR compli-ance. More supplier auditing.

final thoughts from CSR authority dr. Hank Lindborg:

“Corporate Social Responsibility is no longer defined by the good works a firm does in its local community. It’s now based on clearly defined standards, providing measures for continual improvement and benchmarking. Many global firms now publish their results--for example, Wal-Mart--to demonstrate commitment, reas-sure both stakeholders and stockholders, and protect their brand. This trend has accelerated rapidly in the last three to five years, and it’s not going away. My advice to corporations: Ignore CSR at your peril.”

About the AuthorGreg HutchinsChief engineer at Quality+Engineering

Greg Hutchins is the principal engineer with Quality+Engineering. He can be reached at GregH@QualityplusEngineering.com.

Strategicourcing

GOOD SUPPLIER GOVERNANCE … By Greg Hutchins, CSIC Columnist.

we have been strongly suggesting the buyers to sign a properly drafted and ne-gotiated contract to cover every aspect of the transaction, we have written an article on how to negotiate a contract with Chinese supplier.

But after you signed a perfectly written contract, can you for once and for all solve all the potential issues related with the deal? No! there is no perfect suppli-er, and there is no perfect performance of any contract, oftentimes, you will have issues.

Let me give an example: after you place the order, unexpectedly, the supplier may have a power restriction from the government (this is very common since last year). So you have to postpone the delivery time.

So when unexpected things happen, you could ask the following questions:

» Is it caused by the supplier or the sup-plier couldn’t do anything to prevent it happening?

» Is the supplier trying to actively solve the issue?

» Is this the first time or this something that happens over and over?

» what consequences might these problems cause?

» does the supplier understand the situation and willing to share the respon-sibility if bad results might happen?

» does the supplier give you solutions to prevent this from happening again?

the best way to solve contractual dispute is due diligence and precaution. the sec-ond way is to negotiate and cooperate to find a solution. Lawsuit should be the last option (especially if your supplier is the only one that can produce your product with the quality you need).

we think a strong relationship with the supplier can solve problems faster and

easier. Below are some principles you can follow when dealing with Chinese suppliers and help prevent unwanted is-sues in your supply chain:

1) Mistakes will come

Mass production is not an easy job. from specification to packing details, from document preparation to commu-nication, any tiny mistake can cause big problems later on. Mistakes do happen here and there. Experience tells us what kinds of suppliers will normally make what sorts of mistakes at what parts of the processes. Senior buyers can foresee these mistakes, take precautions to pre-vent mistakes happening, and know how to educate inexperienced suppliers. for new buyers, it is a learning experience.

2) Language is a barrier

Most miscommunications are caused by language issues, English is not the native language of your Chinese supplier, so there will always be a struggle to express and understand things in English. You will agree with me if you have visited Canton fair. the salesmen there are elite salesmen, however, at most booths, you will find that you can only communicate with them in basic English, especially as many of them have problems with speaking and listening, writing is some-what easier compared with speaking and listening.

to avoid language barriers, here is some advice I would share-

a. Use simple and easy to understand Eng-lish

when you write an email or converse on instant messenger, try to use simple and basic English to express yourself, if your supplier doesn’t respond to your ques-tions, which you think are important, ex-plain and ask that question again, since they might not have understood that question before.

b. Write instead of Speak, if it is important

Calling the supplier can speed up com-munication, however, in most cases, you will find it much more harder to commu-nicate on telephone(in spoken English), than communicate in email(in written English).

3) Face is more important than money or business

Chinese people are different than people in the west. Chinese people are subtle, indirect and introverted. In China, when a friend or a colleague makes a mistake, we normally won’t point it out directly, so they won’t lose face with your or other colleagues. Instead we might hint at the problem, point it out indirectly or direct-ly (So long as emphasis is placed that the mistake might be an unintentional.

Here’s hoping that your sourcing in China goes as smooth as possible!

BUyER/SELLER RELAtIONSHIPS (CONtINUED)By Stephen Chow, CSIC Columnist.

About the AuthorStephen ChowOwner of Chinawhy

Steven Chow has more than 10 years experience working in factories, trading companies and sourcing companies. He is the owner of Chinawhy, which offers sourcing, supplier verification and QC service to overseas small and medium sized buyers.

SourcingDos & Don’ts

with Stephen Chow

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when a person who holds a certain power accepts to bend the rules in exchange for certain favors, we are in presence of a corruption case. does it take place in your company, or among the people representing you?

I am going to describe three situations that might be taking place in your or-ganization. they are all very common in the China business environment.

1. The purchaser gets 3% on a private bank accountthis risk exists mainly in midsize and large companies, where professional managers (not owners) are in contact with suppliers.

How does it work?

In the request-for-quotation phase, the purchaser tells the supplier “please send us a quotation for this product. Oh, and please include a 3% commission for me”. the supplier in-creases his price accordingly. then, af-ter the payment is received, he wires the commission on the purchaser’s private account.

Some buyers from big-box retail chains can multiply their earnings by 5 or 10 times, so it is very tempting. And, in the grand scheme of things, it does not have a huge impact on the company’s bottom line. As we will see later in this article, other forms of cor-

ruption are much more dangerous.

By the way, it is also endemic in most large Chinese factories. Many pur-chasers of components earn 3,000 RMB per month, drive a nice car, and own a couple of apartments. In gen-eral it is a system. Everybody knows the unwritten rules. the owner often pays below-market salaries because he suspects what is going on.

How to avoid it?

there is no magic solution. It is really difficult. Here are a few suggestions:

ፚ Rotate the purchasers from one product category to another every 18 months.

ፚ Get a sense of the market price of certain products, in a random man-ner. Sometimes the commissions are above 10%, and in this case you will notice something is going on.

ፚ Have regular eye-to-eye meetings between the heads of the two com-panies (importer and supplier).

ፚ Have an internal auditor call every supplier regularly, to get a feel of what is going on.

2. The local “agent” gets money from both sides Many people give a commission to a local agent to help on product sourc-

How your representatives can get bribes from your suppliers

AnTI-CoRRuPTIon

By Renaud Anjoran - General Manager at Asia Quality Focus

Avoid bribes!

ing and order follow-up. what they don’t realize is that, in most cases, the agent will also ask a commission to the suppliers!

How does it work?

the scenario often looks like this: a foreign buyer is looking for someone based in China to look after his orders. He finds a charming person who ac-cepts to work independently for a few percentage points of the orders to fol-low, or full-time for a stable monthly payment. the job is usually to look for new suppliers, to request quotations, to develop samples, to have an eye on production, and to facilitate commu-nication along the way.

In these cases, the suppliers often ask, “So, what is your commission on this buyer’s orders?” It is extremely com-mon for the buyer’s agent to get paid by the vendors (I bet it happens in more than 80% of cases).

So, you might pay (directly and indi-rectly) your agent 2 or 3 times more than you think. But it can cost you much more than that, for two reasons.

first, imagine what happens if qual-ity is substandard and if you rely on your agent to approve it. the factory people are probably friends with your representative, because they are often in contact along the sourcing & development cycle. And they pay your representative. How can he/she denounce their quality shortcomings?

Second, the agent will probably know potential suppliers from their extended family/friends circles. that means they might introduce partners that are not screened on the basis of competency. the difference between a good supplier and a bad supplier often costs importers hundreds of thousands of dollars.

to make matters worse, very few importers sign a contract with their

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agent. And, when they do, it is often a labor contract that is NOt enforceable in a Chinese court of justice…to begin with; it is illegal to hire a Chinese citi-zen from abroad (without setting up a branch company in China).

How to avoid it?

My advice is to avoid agents. You can find third-party companies that will take care of the agent’s functions: the identification of suppliers, their evalu-ation and screening, the follow-up of production…

Now, I have to recognize that there ARE agents who bring a lot of value to the table and who are perfectly honest. But they represent less than 5% of the candidates… Good luck to find them!

3. The inspector gets bribed to avoid reporting certain findingsLet’s say a Chinese inspector finds a serious quality problem on a produc-tion batch that is about to be shipped out. the fOB value of the goods is 20,000 USd. the manufacturer knows that they will be hard to sell to other customers, and that the importer might refuse the shipment. Are you afraid of the inspector (who earns less than 1,000 USd a month) getting bribed? You should.

How does it work?

there are basically two types of cor-ruption, when it comes to quality control staff.

the first is the “hongbao” (an enve-lope full of cash). Basically, the factory and the inspectors emit subtle signals to indicate whether a hongbao is ap-propriate. If it is, they will sometimes argue until they settle on the right amount. then the inspector fails to report certain serious problems to the importer.

Unfortunately, neither party risks much in playing this game.

the inspectors, if they get fired, can

easily find another job—their new employer will not call the previous company, and will never know the truth.

the suppliers, when denounced by an inspector, often claim it is a “nor-mal business practice” to give money this way, to “express gratitude” (even though bribery is clearly illegal in Chi-na). they pretend not to understand the gravity of their actions.

Should importers react every time they hear accusations? It is not that simple. Suppliers sometimes de-nounce an inspector they don’t like. It is easy for them to say “he was more severe than he should, and his report looks much worse than reality. Of course he was trying to extract some money from us, we refused because we know our products are fine, and then he got his revenge.” In most cases, these accusations turn out to be false or even fake.

the second type of corruption is much more subtle. the supplier gives small favors to the inspector, such as transportation and nice meals. Social pressure makes it nearly compulsory, when the time comes to report the findings, to alter them in small ways that make the supplier happy.

that’s what Robert Cialdini calls the rule of reciprocation. In his words, “the rule says that we should try to repay, in kind, what another person has provided us”, even if this favor is uninvited.

It is much more frequent than the hongbao issue, and it seldom leads to accepting quality disasters. It takes the form of misunderstandings (“the inspector did not understand that he had to bring a pantone book”).

How to avoid it?

ፚ perform QC inspections earlier in the production cycle, and then again before shipment. Use a different in-spection firm for each step, to reduce risks even further.

ፚ do not use in-house staff that is not closely supervised (or that already have developed some bad habits). Either you train them and monitor

them heavily, or you subcontract the job to professionals.

ፚ do not put pressure on your sup-pliers. Some buyers say, “either the QC report is passed, or I refuse the goods”. this is NOt a good idea.

As you can see, cases of bribery can be initiated by suppliers or by your company representatives. You should keep an eye on every party that works for you. the most important is to be aware of it, to have everyone sign a strict honor code, to respect the law at all times, and to monitor everyone constantly.

About the AuthorRenaud AnjoranGeneral Managerwith Asia Quality focus

Renaud Anjoran, based in Shenzhen, is General Manager at Asia Quality focus, a third-party quality control firm operating in the main manufacturing areas of Asia.

Renaud’s blog and regular writings about quality control can be found at

www.qualityinspection.org.

“Perform QC in-spections earlier in the production cycle, and then again before shipment.”

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“Ten Best” China Business Blogs: www.silkroadintl.net/blog

Quality Control logistiCs ProjeCt management legal FinanCe

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Since March 11, 2011, the United States has had a searchable online Consumer product Safety Information database (da-tabase) of information identifying consumer products that have allegedly caused harm. the database was created by the Consumer product Safety Commission (CpSC) to collect and publicize reports of harm relating to consumer products and anyone can access it or use it to report their own allega-tions. the public, as well as competitors and plaintiffs’ law-yers, can search the database for reports of harm by keyword or by specific criteria, such as product, company or brand, model, and date.

the Consumer product Safety Improvement Act of 2008 (CpSIA), which mandated the creation of the database, gives manufacturers and importers the right to respond to reports involving their products. But to ensure timely notice of re-ports and to maximize their opportunity to respond before reports are published in the public database, manufacturers (including importers of goods manufactured outside the U.S.) and brand owners of products falling under the CpSC’s jurisdiction should register with the CpSC, online, now.

Backgroundthe database includes reports of harm – defined as injury, illness, death, or risk thereof, as determined by the CpSC – re-lating to the use of a consumer product. Complaints focused on the quality of a product or economic losses are not sup-posed to be included. Consumers (who are broadly defined to include virtually anyone, whether or not they used the product at issue and whether or not they have first-hand knowledge of the alleged harm), government agencies, healthcare professionals, child service providers, and public safety entities may submit reports about any of the following types of products:

ፚ Clothing and accessories ፚ Containers and packaging ፚ drywall ፚ Electronics ፚ fuel, lighters, and fireworks ፚ Hobby ፚ Home maintenance and structures

ፚ Kitchen ፚ personal care ፚ products at public facilities ፚ Sports and recreation ፚ toys, kids, and baby ፚ Yard and garden

the CpSIA specifies certain minimum content for reports, but many details about the product, the nature and circum-stances of the alleged harm, and the identity of the person submitting the report are optional. for example, the only re-quirement for the description of a product is that it “include a word or phrase sufficient to distinguish the product as a con-sumer product, a component part of a consumer product, or a product or substance regulated” by the CpSC, and the only requirement for the description of the alleged harm is that it include “a brief narrative of illness, injury, or death; or risk [thereof] related to use of the consumer product.”

Registration and Responding to Reports of HarmA manufacturer or brand owner has several options in re-sponse to a report of harm involving its product. the manu-facturer may: (i) submit comments to be published with the report; (ii) challenge the accuracy of the report; and/or (iii) object to the publication of confidential information in the report, such as trade secrets. the CpSIA and implementing regulations generally govern the handling of manufacturers’ responses, but important procedures – such as how disputed reports will be investigated and in what time frame – are largely at the discretion of the CpSC. the rules state that re-ports are presumed accurate unless proven otherwise and that the Commission shall favor correction and addition of information over the exclusion of reports alleged to be ma-terially inaccurate. the CpSC is required to transmit reports of harm to the manufacturer generally within five business days of submission, and in all cases to publish reports in the pub-lic database within ten business days of transmission to the manufacturer, unless the CpSC receives notice that a report is materially inaccurate. In that instance, publication of the

Issues to Face Once Made in China Products are Imported to the U.S.A.

logIsTICs

By Brenda Jacobs , Sidley Austin LLP

“You can (and will) be held accountable for dangerous products that you have imported into America”

Quality Control logistiCs ProjeCt management legal FinanCe

allow for the possibility of submission of unsubstantiated reports of harm to the database with very little, and with potentially false, contact information. A person submitting a report of harm via the CpSC website must check a box to “certify that the information pro-vided in this report is true and accurate to the best of [his or her] knowledge and belief.” However, the transmission and publication deadlines imposed by Congress make no exception for reports submitted by persons whose identity cannot be verified. It remains to be seen what if any actions will be taken by the CpSC if false, fraudulent or effectively anonymous reports are submitted to the database.

vague or incomplete descriptions of the manufacturer, the product at issue, the alleged harm, and the manner in which harm occurred (or might occur) present another problem. there have been instances already in which some manufacturers received reports of harm related to a product they did not manufacture. In other instances, man-ufacturers have expressed concerns about reports that were “unverifiable” due to lack of model, serial number, date of manufacture, or date/tracking code information. (Under an August 2011 amendment to the law, the CpSC may seek from the person submitting a report the model or serial number of the product, or if that is not available, a photograph of the product.) there is also a concern that the Commission may not have sufficient resources to timely review and verify reports of harm and manufacturers’ responses. there is disclaimer statement on the database website stipulating that CpSC has not verified the accuracy of any report, but the mere posting of an allegation on a government spon-sored website creates a reputational risk for businesses. these issues make the vigilant monitoring and proactive handling of reports through online registration an essential first step in minimizing the risk of publication of false or misleading information about your company’s products.

As a buyer and importer of Chinese-made goods, you can (and will) be held accountable for dangerous products that you have imported into America. due diligence requires care at every stage along the China business path: choosing the right supplier, getting

legally binding contracts in place (enforceable in China), checking the quality of inputs as well as the final product, and where required, particu-larly for children’s products, obtaining third party inspections from CpSC ac-credited laboratories. An importer/manufacturer simply cannot respond to a CpSC claim that “we didn’t know.” take extra precautions with your busi-ness if you’re coming to China, not less.

Conclusionthe database is highly controversial. while consumer advocate organi-zations hail it as an important tool for consumers to consult in making purchasing decisions, manufacturers are obviously concerned about the potential for grievous harm to their reputations and bottom line without sound evidence. In late June, the Ap-propriations Committee of the U.S. House of Representatives, respond-ing to the concerns of business about the possibility of false and inaccurate reports, voted to pull the plug on funding for the database. However, it is unlikely that the full Congress will ultimately agree. A better prospect for manufacturers/importers may be that further experience with the database will justify fixes essential to ensure its credibility and value to both consum-ers and manufacturers.

This article has been prepared by Brenda Jacobs of Sidley

Austin LLP for informational purposes only and does not

constitute legal advice. This information is not intended

to create, and receipt of it does not constitute, a lawyer-

client relationship. Readers should not act upon this

without seeking advice from professional advisers.

About the AuthorBrenda JacobsSidley Austin LLp

Brenda Jacobs is an international trade and regulatory compliance attorney in the washington, d.C. office of the global law firm, Sidley Austin LLp. Her clients include multinational consumer goods manufacturers, U.S. importers, trade associations and governments on issues such as customs, rules of origin, export controls, sanctions, product safety, privacy laws, anti-corruption compliance, audits and internal investigations. She may reached at bjacobs@sidley.com

report may be delayed for five business days. Otherwise, only to the extent that the identity of a manufacturer is in doubt may publication be delayed while a disputed report is under inves-tigation. Given the statutorily-imposed deadlines, e-mail is the preferred method of notification to ensure the maximum opportunity for manufac-turers to investigate and respond to re-ports of harm, including possibly hav-ing the response posted concurrent with the posting of the harm report. But the CpSC will only have email con-tact information if a manufacturer or brand owner has registered at https://www.saferproducts.gov/CpSRMSpub-lic/Industry/Home.aspx.

to better protect a product’s reputa-tion and have the opportunity to re-spond promptly, every manufacturer and brand owner should register with the Saferproducts website. the follow-ing information is required for online registration: company name, address, telephone number, and e-mail address; contact information for the primary contact person; and type of business (manufacturer, private labeler, and/or importer). Importantly, a manufacturer may designate multiple people to be notified, so that a registrant does not have to rely upon a single contact to promptly learn of a report. the regis-tration process should take 5-10 min-utes. After submission, the CpSC will contact the primary contact person with the company’s account informa-tion. Registered manufacturers noti-fied of a report of harm can respond electronically using an online portal.

Issues of Concern the CpSC initially estimated that more than 15,000 reports of harm will be submitted to the database on an an-nual basis. that estimate was based on the assumption that the database will receive the same number of submis-sions the CpSC received in 2009 with its previous incident report form. Based upon experience with the database since March, it is apparent that the CpSC has under-estimated how many reports will be filed. Concerns abound that the database will be mined by aggressive plaintiffs’ attorney seeking new products against which to file lawsuits.

One problem for manufacturers is that the CpSIA and governing regulations

Quality Control logistiCs ProjeCt management legal FinanCe

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fraud. Corruption. Leeches and parasites on your supply chain, the scourge of your quality control. degenerates plaguing your profitability. vampires sucking at your bot-tom line. tapeworms affixed to the stomach of your guts and working their way slowly & methodically into your lower intestines...you get the picture.

If you’re reading this, you’re either sourcing from China or considering sourcing from China. perhaps you have had the unpleasant experience of finding your sub-contracted manufacturer stealing your Intellectual property, or per-haps your distributors claimed wastage was unreasonably high while selling your merchandise themselves.

the remedies for fraud and corruption vary. Good, strong companies have sometimes simply given up when they find a trusted supplier ripping them off. Others try to take punitive measures. the smartest stay vigilant-always.

fraud can occur at any place on the supply chain, and can be perpetrated by anyone on the supply chain. Sure, the factory manager who substituted low-grade wood for the speaker cabinets after you insisted on top of the line qual-ity is committing fraud. But give these guys credit—they are pretty darn smart!

Check these out:

ፚ An electronics factory which was reporting abnormally high waste was found to be selling production itself. this happens fairly regularly, but what made this one interest-ing is that they were actually throwing the parts away! the perfectly good merchandise was retrieved from the dumpster in the middle of the night, so few people in the factory were aware that the “trash” was just fine.

ፚ A factory owner charged with making heavy pumps for use pulling oil out of the ground was found making exactly the same pump—using the client’s drawings and blueprints—in his own factory. this is especially tough for investigators to work on. How do you tell the real pumps from the counterfeit? You can’t. to the naked eye, they are identical.

ፚ A delivery company charged with taking products from the warehouse to the retailer was observed stopping on the side of the road, unloading genuine merchandise, and replacing it with counterfeit products.

ፚ A sourcing manager for a huge software company was found to be set up with a prostitute when in China. what a man does with his free time is no concern of mine—but not when the prostitute was being arranged by the sup-plier as a condition to renewed contracts!

Accountants misreporting earnings? Sure. Skimming profits off the top? Sure. Salesmen taking kickbacks? It happens. And it happens at the worst possible time for you. these illicit profits are riding on the back of your hard work, your good reputation. when kids get sick because

Stop Fraud Before it StartsAnTI-CoRRuPTIon

By Kevyn Kennedy, GM, CBI Consulting, Inc.

your toys were painted with lead paint instead of the enamel you insisted on, the public backlash does not hit the factory in China. It hits you!

None of us can change human nature. Nor do I want to imply that we can eradicate all cases of fraud and corrup-tion. what I can do is offer advice.

ፚ don’t be naïve. the temptations of making an easy buck are often too much for suppliers to handle. Meeting with suppliers the first time often makes you feel at ease; taking them to dinner is like being entertained by long lost friends eager to make you feel at home. we encour-age you to be friends with your subs—while maintaining your vigilance.

ፚ don’t neglect your part. Inspect your finished prod-ucts when they arrive in the States or in Europe. Maintain constant contact with your China partners. when you see something that is atypical, a plane trip to confront them is not out of the question.

ፚ Use your economic muscle. very often our clients wish to either beat their wayward suppliers to a pulp (dumb!) OR send them to jail (won’t happen). what should they be doing? Using their contract to enforce their rights. Every agreement with a Chinese company should include a clause to the effect that if the China partner is found cheating, the contract will be cancelled on the spot. If the supplier is in business because of you, shouldn’t you make them adhere to your standards?

In every case, remember that it is your reputation that is carried on your products. It is you who is at risk. Zero tol-erance for fraud should be your norm.

About the AuthorKevyn KennedyGM, CBI Consulting Inc.

Mr. Kennedy has over fifteen years experience conducting and managing commercial inquiries throughout Greater China. prior to founding China Business Intelligence in taiwan in 1999, Mr. Kennedy worked as an investigator for the International federation of Spirits producers, and managed the Ip division of pinkerton Consulting and Investigations in taiwan. A U.S. Navy veteran with journalistic experience, Mr. Kennedy speaks fluent Mandarin Chinese. He holds an undergraduate degree from the University of texas and a master’s degree in finance from texas A & M University. He is the author or subject of multiple articles on business intelligence and supplier vetting in China, some of which can be found here.

find out moreat www.chinaqualityfocus.com

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Seven Tips for Successful China Due DiligenceAnTI-CoRRuPTIon

By Dan Harris, founding member of Harris & Moure

whether it’s cynicism or realism, I am becoming increasingly willing to blame the “victim” of China business problems. I am convinced that, nine times out of ten, when bad things hap-pen to good people who do business internationally, it is the “good per-son’s” fault. Like all lawyers who work with China, I have a ready set of horror stories, which rotate depending on the occasion, but usually include one or more of the following (modified slightly to protect the guilty):

1. the guy who “invested” $500,000 into a China business because the owner of the Chinese business was al-legedly the son of a five-star general. One of my law partners suggested to this investor that he instead use the money to fly himself and my law part-ner to vegas (this was before Macao got so big) and put the money on red. As my partner put it, the chances of the client recovering his money there were much greater, and it would be a lot more enjoyable. this guy went ahead and invested the $500,000 and lost every bit of it. He then wanted us to sue the “son of the general” on a contingency fee basis, but we would not have taken on that case for a 150% contingency.

2. the guy who bought a million-dollar condo in Shanghai under his

girlfriend’s name because he believed that foreigners were not allowed to own real property in China. His girl-friend then left him and claimed he had given her the condo as a gift. the guy wanted us to sue the girlfriend but we demurred, saying that we just did not like a case where our client would need to stand in front of a Chinese judge and explain that he had put the condo in his girlfriend’s name so as to avoid (what he believed was) Chinese law. And here’s the kicker. when he bought this condo for his girlfriend, he could have purchased it in his own name, no problem! His girlfriend had lied to him about Chinese real prop-erty ownership laws.

3. the countless people who call my firm after having sent tens of thou-sands of dollars (sometimes hundreds of thousands of dollars) to someone in China for a product that never arrives. Eventually the person and “company” to whom they sent the money disap-pear. we have never taken one of these cases because we deem them pretty much hopeless.

4. the US company that used its joint venture partner’s local Chinese lawyer (what was this company thinking?). the Chinese lawyer drafted up agreements that involved the American company giving its critical technology to the

joint venture permanently, without getting any real influence or control in it. this is an amalgamation of prob-ably half a dozen poorly formed joint ventures in which we have been called in. You can find out more regarding this sort of Chinese joint venture deal in a blog post I did entitled, “when in China trust Everyone.”

I could easily go on and on.

So what can a foreign investor do?

A lot.

In one of my blog posts, entitled, “Seven Rules of China due diligence,” I set out the following seven rules to analyze a Chinese company with which you are doing business, taking the first six from an article by Muddy waters entitled, “the Six Rules of China due diligence”:

Approach the company as a potential customer does.“You want to see what the China side customers see. fraudulent companies have far less confidence that they can fool a Chinese company in their industry than they do about fooling a starched shirt analyst. Moreover, they’re usually less willing to take le-gal risks in their home market (China) than they are in the United States.”

Be careful who you trust...avoid being scammed.

Quality Control logistiCs ProjeCt management legal FinanCe

In other words, look to see how the Chinese company with whom you are interested is treated by other Chinese companies.

Take all company-provided in-troductions with a grain of salt.“when companies set up meetings or conversations between you and their suppliers or customers, take them with a grain of salt....In a country where a lot of managers earn less than $500 per month, it’s not hard for an unscru-pulous company to buy someone’s loyalty for the duration of a meeting or phone call. You should instead rely on your own networks to help you un-derstand the company and industry. If you don’t have those networks, you unfortunately shouldn’t be making investment decisions in China by your-self.” I completely agree.

Try to construct your own fraud scenario.“At some point in evaluating every investment, you should stop and ask yourself how you could have staged everything you’ve been shown or done with the company. It’s good for American investors to practice this mentality because it makes us less credulous. More importantly, this kind of thinking makes clear how surpris-ingly simple measures (e.g., switching factory signs before you arrive, paint-ing old machinery) can be so effective in fooling the credulous investor.” I absolutely love this advice and I urge everyone to follow it.

Forget about the paper. focus on the operations. “In today’s world where you can buy a compe-tent color printer for less than $200, it’s hard to understand why investors place so much faith in bank state-ments, invoices, and contracts. China’s deal making world abounds with sto-ries of forged bank statements and other documents leading to disastrous deals. Unfortunately, most auditors apply the US audit playbook in China – reviewing and taking documents at

face value…Instead, you have to look at the operation itself. How much does the output seem to be, how much material is moving into and out of the factory, does the office seem to be a hive of activity, how many employ-ees can you count, what is the square footage of the facilities? these are all basic questions one should concern themselves with during site visits. And it pays to visit two to three (or more) times – a good fraudster can put on a show, but they’re unlikely to be able to do it the same way each time. watch for the subtle differences. Ultimately if you cannot find a good way to measure the company’s sales or productivity (as in the case of a service company), you should think carefully about proceed-ing with the investment.” I completely agree with the advice to put the Chi-nese company’s operations under a microscope, but I completely disagree with the advice to ignore the paper, as I discuss more fully below. I advocate putting the paper under a microscope as well.

Always speak with competi-tors. “Competitors with real businesses can usually tell you one of two things about a fraudulent competitor – either that it’s obscure (sometimes the “com-petitor” is hearing about the company for the first time); or, that they know it’s a fraud. Many competitors will be reluctant to speak openly at first about a fraudulent competitor if they know you’re a potential investor in the fraudulent company. However, if you’re a potential customer who is shopping around for a vendor, it can be a different story.” this is excellent advice, but one should also take the views of competitors with at least a bit of salt.

Do not delegate. “A lot of experienced China investors have stories about subordinates who colluded with a target company to attempt (and sometimes succeed) to defraud the investor. Be attuned to the dichotomy between the investment

funds at stake and the income/wealth of the people on whom you rely for judgment.” very true. At least half the time when my firm has been brought into a fraud situation, we have to ask ourselves whether the “trusted subor-dinate” was incredibly stupid or in on the fraud.

the seventh rule (my addition) is to put the documents you receive under a microscope because the fraudulent company will nearly always make some mistake in its documents. In my career, I have caught the following, all of which threw up massive red flags:

ፚ Company claimed to have a multi-million dollar account at a non-exis-tent bank;

ፚ Company documents showed a subsidiary in the Marshall Islands, yet always spelled the country as Marshal Island. It had no such subsidiary;

ፚ Company claimed to have a branch office in a particular city, yet its docu-ments on that branch office (including supposed government documents) put that city in the wrong province;

ፚ Company claimed to be bringing in twice as much product as physically possible on a particular ship;

ፚ Company claimed to have been shipping out product on a particular ship that did not exist during the first few years when the product was alleg-edly being shipped;

ፚ Company claimed to have won an Ip lawsuit in a country’s Supreme Court (they produced the Supreme Court’s decision and everything), but there had never been such a case.

Bill Bishop at the digiCha blog re-cently did a post entitled, “do You Know where Your China Stock CfO Lives?,” setting out China company (mostly publicly traded) warning signs. the post talks about two Chi-nese companies, Longtop financial and Sino-forest, which publicly trade in the United States and have recently been under scrutiny for alleged im-proprieties. Both have Canada-based CfOs even though the bulk of their

Quality Control logistiCs ProjeCt management legal FinanCe

About the AuthorDan Harrisfounding member of Harris & Moure

dan Harris is a founding member of Harris & Moure, a boutique international law firm with lawyers in Seattle and in Qingdao, China. He is also lead editor of the multiple-award winning China Law Blog (www.chinalawblog.com). dan has written on China for such publications as the wall Street Journal, forbes Magazine, and Advertising Age and he has been an international law analyst on CNBC, BBC, ABC, CNN, CBC, and fox News. dan has a B.A. from Grinnell College and a J.d., magna cum laude, from Indiana University, where he was Managing Editor of the law review.

operations are in China. Bishop posits that these companies may have hired foreign-based CfOs as “China fraud beards.”

Bishop then goes on to quote from an iChinaStock post, entitled, “5 warning Signs that A Chinese Stock May Be a fraud,” listing out the following warn-ing signs:

1. Company went public through an OtCBB transfer or other ways of back-door listing;

2. Company name starts with “China” [unless they are state-owned they can-not register a company in China start-ing the word “China”];

3. the products are sold in China, but there is minimal Chinese-language in-formation about those products;

4. the business defies common sense;

5. the underwriter, audit firm and ac-counting firm are second tier and/or have a track record of missing frauds (like deloitte China).

Bishop adds a sixth item to the list, that “the CfO does not live in the same city as corporate HQ and is not a regular presence there.”

I like Bishop’s admonition not to in-vest in a business that defies common sense. Yes, that is pretty basic, but in many ways it is the key. It is not too dissimilar from the advice I gave in the “when in China trust Everyone” post mentioned above:

first off, tHINK. that’s right, think. Sec-ondly, do not do anything you would not do in any other country. Just be-cause your Chinese partner and/or your Chinese partner’s lawyer tell you this is how things are in China does not mean you have to believe them and it certainly does not mean you have to abandon your common sense.

One more thing to do before you in-vest or, in some cases, even do busi-ness with a Chinese company: get their official corporate records from the official Chinese government sources. we have of late been doing this rather frequently for our clients. though it is neither inexpensive nor easy, it can be incredibly enlightening in that it usu-ally goes far beyond the information provided by the basic company search

firms.

the China company search firms typi-cally provide only a fairly basic list of information, such as the names and addresses of those involved with the company and its registered capital. In addition to not being terribly com-plete, the information from these search firms is of dubious provenance. How did they get the information? Can we be sure they looked at the entire file? we know the files are only supposed to be open to lawyers. How did they obtain access? when did they review the documents? Last year’s documents may be of no help at all.

we strongly suggest that you seek out the full SAIC (State Administration for Industry and Commerce) file on the Chinese company about whom you are seeking information.

In our experience, the SAIC only opens its file to licensed Chinese attorneys. Everyone else is turned down. the Chinese licensed attorney must go in person to the SAIC office, review the file, and make copies in the office. So far, no Chinese licensed attorney with whom we have worked has ever been denied access. It is our understanding that the Chinese companies investi-gated through the SAIC will know they are being investigated. Like I said, we have so far always been able to get the file, but there could come a day when a local SAIC in an outlying province will block access to the file of a power-ful company within its purview.

these SAIC forays usually give us mas-sive amounts of documents in Chinese, which we then either translate for our clients or, more typically, summarize.

the hot topic in this arena right now is this: the parent company does an IpO in Hong Kong or the U.S. the parent claims the IpO proceeds were injected into a wfOE in China. was the money injected into the wfOE or not? If so, when? If not, what is the most recent record on the registered capital status of the wfOE? for a wfOE that receives an injection of capital from an IpO, there is typically at least six months of advance work in increasing the regis-tered capital amount. All of this is pub-lic and can normally be found in the SAIC file. In addition, the annual audit will show an injection of capital. But

“First off, THINK. That’s right, think. Secondly, do not do anything you would not do in any other country.”

the audit is of the previous year. So for recent injections of capital, we have to rely on the approval for the increase in the registered capital.

for more on these issues, check out the following China Law Blog posts:

ፚ Beware the potemkin Chinese Com-pany

ፚ Giving China due diligence Its due.

ፚ Giving China due diligence Its due, part II. don’t Be A Sucker.

With 3 decades of experience, 3 strategic offices located in Greater China, and over 80 dedicated consultants, we are the specialists to help you:

► Obtain research & advice ► Grow strategically ► Set up China & HK operations ► Recruit talent ► Trade products & services ► Outsource accounting Visit us at www.fiducia-china.com

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Quality Control logistiCs ProjeCt management legal FinanCe

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It seems to be all of the rage these days for western media outlets to point out and report on all of the coun-terfeit products being produced in China these days. And why not, these knock offs are hurting the brands of even some of the largest companies in the world (Apple, Land Rover and now IKEA!). All buyers should be con-cerned with this (though it really isn’t a new trend, just that there is now more media coverage than before) as knock off products can- ruin your image, cost you lots of money (lost revenue or potential lawsuits), and at a minimum just create a vast amount of headaches for your business.

Consider this-China is #78 out of 178 countries ranked on the 2010 Corruption perception Index. And, as ev-eryone now knows China is also the world’s second largest economy and the world’s second or third larg-est manufacturer (depending on the numbers you use). So their lower status in transparency has an inordinate (negative) affect on world business. http://www.trans-parency.org/policy_research/surveys_indices/cpi/2010/results

But what does all the talk of corruption really mean for you as an individual buyer of Chinese goods? Bottom line: It means you’d better be actively vigilant in con-firming product quality and proactive in making sure that your suppliers and your own employees are towing the legal lines.

But the most important thing to know about dealing with China is not “How corrupt is it?” (more than any study can show) or “where it all comes from” (from the top down) or even “what to do to stop it?” (You can’t.) the most important thing for individual buyers is to know how to keep your goods, your company and your-self as safe as possible. Here are some proven steps you can take to verify that you’re dealing on the up and up.

Tips to Avoid Supply Chain CorruptionAnTI-CoRRuPTIon

By David Dayton, Founder, Silk Road International

Chinese government, destroying counterfeit products

As unnatural or offensive as it may seem, you really do have to assume that your supplier is “corrupt” to a certain degree—not that he’s evil or bad. But that the standards for what are acceptable business practices in the west and in China are very different and your sup-plier is in business because he knows how to be efficient in the Chinese system.

Second you must admit that your supplier has HIS best interests (not yours) in mind when he takes your order. there are very few win/win arrangements over here that are truly a win for both sides. My experience has been that win/win usually means that there is additional in-formation that has been left off the table to make it look like win/win, when in fact it’s more like win a lot/win a little in favor of the part with the info (usually the local supplier). So audit your factory, hire Chinese speaking lawyers, do your own engineering, design and art work.

third, Quality fade is often conscious. It might not be your supplier that is adjusting down the quality of the final product; it could be one of myriad sub suppliers of raw materials. But if you’re not mandating testing mul-tiple times in the production process you’ll never know from where the failures are originating.

fourth, in-house QC is really just costs-assurance for your supplier. don’t be fooled by the promise of quality control done by the supplier (who is also the one order-ing the materials, paying for rejects and labor and trying to make as much money as possible from your order). Sure they will check to make sure that visible defects are not common, but to count on the fox watching the henhouse is just asking for bad product. You have to have either someone from your company or from an independent third party that you hire check the goods before you pay for anything.

fifth, what you ultimately receive is YOUR responsibility. the best way to combat any type of corruptions is to be aware of what’s going on, have payments linked to

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third party inspections and test EvERY-tHING.

Now you maybe saying, “what about other types of corruption?” things like bribes to QC or officials, chemically incorrect/poisonous products, stolen Ip, etc. are certainly a part of what goes on here too. So how do you deal with things like that?

ፚ first and foremost, companies have to be doing the right things—the le-gal things. If you have the legal high ground then you can take legal action when things go wrong.

ፚ Second, publicly establish and en-force clear and unequivocal standards that every employee, yourself included, must abide by. this means that policies are reviewed often and violators are publically made an example of.

ፚ third, establish an industry reputa-tion as honest and make sure that sub-suppliers know they’ll retain your busi-ness if they have the same standards.

ፚ fourth, take the time to cultivate ethical and quality guanxi relationships with industry and government officials.

Monitoring the maintenance of ethical standards will most likely become a fulltime position for foreign companies in China; even companies with as few as 10-15 employees. And this monitor-ing will never be outgrown. Chinese companies are notorious for having relatives of the owner work in sensi-tive positions, such as finance or ac-counting. this is both a product of the guanxi system as well as a safeguard against “outsiders” having too much unregulated access to the money. why? Because there is just no trust for “strangers” in China.

If self protection is the standard for Chi-nese who know the system and know the culture and the types of people they are working with, how much more should foreigners be emulating that same survivalist attitude by imple-menting layers of legal social protec-tion?! the answer, obviously, is: If China

About the AuthorDavid Daytonfounder of Silk Road International

david dayton is the owner and manager of SRI. david has nearly twenty years experience working in and with Asia and he leads SRI from Shenzhen, China. Besides Shenzhen, david has lived, worked and/or studied in thailand, taiwan, and Chongqing, China.

david is a regular presenter for Global Sources’ New Buyer training seminars in Shanghai and in Hong Kong. He has also spoken for Global Sources’ Supplier Education program and the Metering China Xi’an Sourcing Show. david has been published in Euro Biz magazine, Right Sight Asia, Garden International and other trade publications and on numerous sites online including the China Economic Review, the New Zealand government’s international trade information website and China Success Stories. He has been interviewed by the BBC, CBS 60 Minutes, the CBS Evening News, the Hong Kong trade and development Council and by NpR on china-related issues. His blog postings have been on the wSJ China blog “best of” lists.

david has a Master’s degree in Southeast Asian Cultural Anthropology, focusing on Comparative Chinese and thai Corporate Cultures and a BA in International Relations and East Asian History. david has worked as a consultant, manager, trainer and translator on both sides of the pacific and he is fluent in both thai and Mandarin.

is corrupt, then you’d better be taking MORE precautions, not less. Is it really any wonder then that the problems with corruption in China have been labeled “endemic.” http://www.cnbc.com/id/43419991

Here are some further things to ponder as you start to think about doing busi-ness here in China-

You know that your country has a very serious corruption problem if…

…You can knock off an Apple Store when the government gave specific and very public promises that it would stop this very thing. http://www.ksl.com/?sid=16464355&nid=1014

…You can copy a BMw X5 and con-tinue to sell it domestically despite the fact that it’s been banned for safety and Ip violations across multiple other continents.

…Your own money supply is so full of counterfeits that even banks pass the fake notes.

…furniture stores can be copied (down to the same IKEA blue and yellows, and

“As unnatural or offensive as it may seem, you really do have to assume that your supplier is “corrupt” to a certain degree...”

》BUSINESS INTELLIGENCE

》COMPETITIVE INTELLIGENCE

》INVESTIGATIONS

》BRAND PROTECTION

Mitigating unforeseen risk in the Chinese market.

www.cbiconsulting.com.cn

Tradeof theTerms

About

“About”, “Approx.”, and “Circa” are terms which when used in a letter of credit, are construed to allow a difference not to exceed 10% more or 10% less than the monetary amount, or the quantity, or the unit price stipulated in the letter of credit.

DAmAges

1. A loss or harm to a person or their property.2. the pecuniary compensation or indemnity which may be re-covered by any person who has suffered loss, detriment or injury to his person, property or rights through the unlawful act, omis-sion, or negligence of another.

CApitAl gooDs

1. durable goods which are used to produce other goods for con-sumption: for example machin-ery, equipment, buildings2. Also, material used or con-sumed to produce other goods

entrepot

An intermediary storage facility (often in an intermediate coun-try) where goods are kept tem-porarily for distribution.

generAl orDer

(USA) the customs requirement that goods not cleared within a specific number of days after ar-rival of the carrier must be taken into custody of customs and de-posited in a warehouse at the risk and expense of the consignee.

FixeD ChArges

1. Charges which do not increase or decrease with a change in vol-ume.2. Expenses that have to be borne whether any business is done or not

lAy orDer

the period during which im-ported merchandise may remain at the place of unloading without some action being taken for its disposition.

unit loAD

various cargo carrying devices, or sizes of containers, which carry several smaller shipping pack-ages, including the banding to-gether of a number of individual packages on a pallet to create a single unit.

post-shipment VeriFiCAtions

(USA) An inspection or other action to determine that an ex-ported strategic commodity is being used in the places and for the purposes for which its export was licensed.

Tradeshow Calendarfor a complete list of all the tradeshows in the greater China region please visit Global Sources Calendar

All Shows highlighted in Red will be attended by CSIC. Our booth location will be listed in the show guide under our corporate sponsor passageMaker

Visit the Global Sourcing Fair: Electronics & Components in Shenzhen during September 6-8, 2011.

August 2011 September 2011Fri 1

Sat 2

Sun 3 Sep. 3-6 2011- Home textile & Home décor China 2011- Guangzhou China Import and Export fair, pazhou ComplexMon 4

Tue 5

Wed 6 Sep. 6-8 2011- Global Sourcing fair: Electronics & Components- Shenzhen Ex-hibition and Convention Center, Shenzhen (hosted by Global Sources)

Thu 7

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Sat 9 Sep. 9-11 2011- China International digital printers & Engravers & Signage & LEd Expo 2011- Guangzhou poly world trade CenterSun 10

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Mon 11 China International petroleum and petrochemical technology and Equipment fair- GuangzhouTue 12

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Sun 24 Beijing International Hospitality Equip-ment & Supply Exhibition- (China National Convention Center) BeijingMon 25

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Sat 30 Machine tool China (MtC) South (Shen-zhen Convention and Exhibition Center) ShenzhenSun 31

andTeaming up to offer free conferences on China sourcing topics in Hong Kong, Shanghai, Dubai,

Mumbai, Johannesburg, Miami, and Singapore in 2011

CSIC advisory board members hosting recent conferences in Hong Kong

Next stops on the global seminar series: 12-15 Oct Hong Kong (Electronics & Components) Hall 2 booth# 2D07

20-23 Oct Hong Kong (Home Products) Hall 5 & 7 booth # 5A36

27-30 Oct Hong Kong (Fashion Accessories) Hall 5 & 7 booth # 7L44

Contact Exd@ChinaSourcingInfo.org to book seats for an individual or group.

Buying from China: What new buyers need to know this one-hour introductory level course on sourcing includes modules such as: • Managing expectations: Sourcing opportunities and common pitfalls • Quality Control Fundamentals • Shipping & Logistics Overview • Supplier Payments whether you’re a beginner or veteran buyer who wants a fresh perspective on the subject, these seminars will give you valuable tips on sourcing more productively and profitably. Gain information that will continue to pay off for years to come.

Negotiation tactics for successful purchase contracts/orders this one-hour intermediate-level course will discuss com-mon pitfalls and strategies in supplier evaluation and purchase order agreements. Outline 1. Conducting RfQ (Request for Quotation) 2. face-to-face Negotiations 3. Critical Contractual Items • Price • Quality • Lead Times • Payment terms • Intellectual Property valuable “tools of the trade” such as check lists and templates used by industry experts will be provided.

About the key note speakers: Mike Bellamy & David Dayton Mike serves as the Chair of the CSIC advi-sory panel and is the founder of Passage-Maker. Mike, in Asia since 1994, is recognized as expert on China sourcing. Mike has been a featured presenter for a number of high profile seminars and trade shows including Global Sources Asia Expo HK, Global Sources dubai, & the US Chamber of Commerce. He lives in Shenzhen with his wife and daughter.

David Dayton is the owner and manager of SRI in Shenzhen, China. david has nearly twenty years experience working in and with Asia and is a regular presenter for Global Sources’ New Buyer train-ing seminars in Shanghai and in Hong Kong. david, fluent in both thai and Mandarin also heads the Silk Road International Blog- voted one of the top 10 China business blogs.

Tradeof the

Tools

while we wish we could say there was some way to completely help buyers from being scammed in China, it’s a promise I can’t make (and not just China- scams, corruption are a global nuisance). If someone really wants to get your money, they’ll find a way to do it. However as with most other ail-ments that can affect your business, there are ways to help lesson the likeli-hood of becoming a victim statistic.

One of the wishes of the China Sourcer is to provide our readers with a broad range of help, whether they be best practices, warnings (from our writers out in the front lines of China business), or just great information. Of course it also helps to have something that you can refer to that keeps up with the times. that’s why we have the internet. we would like to introduce our readers to a couple of websites out there that we found, that can hopefully help you in the future. Hopefully you’ll be able to use these websites in conjunction with others (like www.GlobalSources.com for supplier searches) BEfORE you run into any problems. the wonder-ful thing about the internet though is that if you do happen to be victimized at the hands of less than ideal supplier, you at a minimum can help someone else from running into the same sup-plier.

The ICACthe Independent Commission Against Corruption was founded in 1974 to help, prevent, enforce (through the law), and educate the commu-nity against corruption in Hong Kong. Hong Kong is recognized as being one of the cleanest places to do business in the world.

what you can find on the ICAC web-site-

Anti-Corruption Laws

ፚ A list of ICAC’s most wanted sus-pects accused of corruption

ፚ A white paper on best practices and avoiding corrupt practices

ፚ Graphs on corruption complaints (broken down by the industry- gov-ernment or the private sectors)

As well as the

ፚ Int’l Anti-Corruption Newsletter

ፚ transcripts of speeches, videos, and conferences

Again while specific to enforcement in the jurisdiction of Hong Kong one should not pass up the opportunity to take a glance from time to time on ICAC’s site. Also it is important to note that if you or your company has formed their company in Hong Kong to take advantage of the tax incentives in China, your company could be at risk to prosecution or actions taken by the ICAC (especially if any Hong Kong citizens are involved).

Ripoff Reportfrom their website- “Ripoff Report® is a worldwide consumer reporting web site and publication, by consumers, for consumers, to file and document complaints about companies or indi-viduals. while we encourage and even require authors to only file truthful reports, Ripoff Report does not guar-antee that all reports are authentic or accurate. Be an educated consumer. Read what you can and make your de-cision based upon an examination of all available information.

Unlike the Better Business Bureau, Ri-poff Report does not hide reports of “satisfied” complaints. ALL complaints remain public and unedited in order to

create a working history on the company or individual in question.”

As of the time of this article’s publication there have been nearly 610,000 com-plaints filed into the website’s database. for Buyers this website can serve two functions:

1. to verify if a company one is dealing with has complaints filed against it

2. Also to check to see if the buyer’s com-pany has had complaints (due to bad product for example)

Ripoff Report though also allows com-panies to file responses to complaints against them (always a good pR move should your product come under the spotlight- for negative [or positive] rea-sons).

What you can find on Ripoff Report

ፚ the latest filings/complaints against companies

ፚ Best practices to help avoid common pitfalls & scam (primarily western scams)

ፚ A legal directory for lawyers in your state (U.S.A)

By using a keyword search of ‘China’ (or you can click on the link here) one will find over 700 complaint reports filed against companies (725 at the time of writing).

It may seem like an uphill battle when you come to do business in China. How-ever information is easier to access these days. the choice for buyers is whether or not they want to take the time to do the research. the more work you do now to source from China correctly from the be-ginning, the better your China business experiences will be. Good luck and as always know that resources like the CSIC and the above sites are here to help!

The ICAC & RipOffReport.comusEFul wEbsITEs

InterviewExpert JulIA KAhlEnbERg

CsIC - Are laws concerning corruption radically different in the west compared to China?

JK - No, not at all. If we compare China’s Anti-Bribery provi-sions against the U.S. foreign Corrupt practices Act (fCpA) or the new UK Bribery Act for example, we find that all Anti-Corruption laws are generally consistent in the conduct they prohibit: these laws criminalize the offering, promising, the giving of or authorizing the giving of gifts (regardless of value) to a government official either directly or through a third person in order to influence an official action(s) or ob-tain an improper advantage. Most of the conventions and the laws implementing them also require that books, records and accounts be kept accurately and reflect all transactions. If we specifically compare Chinese laws with other Anti-Cor-ruption legislation we can state, that in Chinese law there is more emphasis on the receiver, with the penalty for receiving bribes sometimes being death, and the bribe must actually be delivered, whereas under the fCpA and/or the UK Bribery Act, the offer or promise is sufficient to constitute for a bribe.

In february 2011, the legislature of China, the National people’s Congress, passed a slate of 49 amendments to the Criminal Law, one of which was a provision that criminalizes paying bribes to both non pRC-government officials and to officials of international public organizations. this Amend-ment appears to be an attempt to bring China’s anti-corrup-tion laws into even closer alignment with the provisions of multilateral conventions and keep pace with international practice. Official news releases from China suggest that the revisions were also motivated by its international treaty com-mitments.

the ultimate effectiveness of the Amendment in preventing bribery, however, will depend on interpretation and enforce-ment.

CsIC - In addition, how does the enforcement of such laws differ between the west and China?

JK - It has been proven a myth that corruption is only pros-ecuted by western regulators. we recently have seen many investigations based on fCpA violations and settlements for companies like IBM or Avon in the US or MAN, ferrostaal and deutsche Bahn in Germany. Some of the convicted activities occurred in Asia, including China. the white paper “China’s efforts to Combat Corruption and Build a Clean Govern-ment” issued by the State Council highlights China’s efforts to increase its role in international cooperation concerning anti-corruption. the new 5 year plan echoes these ideas expressing China’s resolve to strengthen its anti-corruption efforts domestically. we have seen recent enforcement acts directed at a range of specific industries like medical-related sectors, oil & gas, wine & spirits or government procurement. Also AIC became quite active in enforcing commercial brib-ery cases. In order to prepare for such enforcement more and

more China Companies are hiring Compliance officers or counsels with compliance backgrounds and are implement-ing Compliance programs in their offices.

However, due to the long history of GuangXi in China and the provincial set up of the state I think it needs huge on-going efforts for the Central Government to foster their activities also in the regional and provincial structures.

CsIC - what can small companies learn from large companies in terms of company ethics policies?

JK - the current Siemens Compliance System, which is a benchmark in the Industry, was developed in 2007 and 2008, initially in response to criminal investigations un-dertaken by the Office of the public prosecutor in Munich, the SEC, doJ and numerous other investigating authorities worldwide. these inquiries, as well as the independent in-ternal investigation undertaken by US law firm debevoise & plimpton between January 2007 and January 2009, exposed systematic violations of anti-corruption laws and account-ing regulations in many Siemens business units and Region-al Companies which had been taking place over many years. It was only possible to conclude the proceedings against the company in Germany and the USA because – as explicitly stated by the US authorities – Siemens not only launched its own investigations into past malpractices and fully cooper-ated with public authorities, but also developed a compre-hensive new Compliance System in under two years which it has implemented worldwide.

In order to provide genuine help and not be seen as a bu-reaucratic issue, our Compliance rules have to be simple and clear, risk-specific and fully integrated in business processes. Bearing this in mind we still strive for continuous improve-ment based on various suggestions from the business and in reflection of changing regulatory environments.

Even the best Compliance rules are ineffective though if em-ployees are unaware of them and do not know how to put them into practice. this is why one of the key elements in implementation is training and creating awareness backed by a strong and adequate attitude from upper leadership. So we strive for our employees to not only read our policies but to really embrace our values. And we try to make them

Julia Kahlenberg

Compliance Officer for OSRAM in Greater ChinaSiemens Limited Hong Kong

on Anti-corruption

understand how ethical business and a company policy af-fected by transparency and compliance can protect them. people in our company can say “No” to corruption knowing that the entire Company firmly backs them up anytime.

Small companies might not have the budget and resources to implement and monitor a sophisticated Compliance pro-gram and they might also not be able to install dedicated Compliance Officers, but it’s crucial to anchor the company’s values on integrity. Exceptional performance on the one side and ethics and integrity on the other side are not mutually exclusive, they are absolutely essential. Integrity requires tak-ing responsibility and having the courage to make decisions following our inner compass. that’s what every company should expect from its employees - from workers to top Managers – and in small or mid-sized local companies as well as in multi-national corporations (MNCs). If this is success-ful, the right track of the company will be ensured by many Compliance Ambassadors and Compliance will become part of the business’s dNA.

CsIC - what should one do if there is evidence that top management is taking bribes?

JK - fundamental elements of an effective, working compli-ance system are early recognition of issues and appropriate response(s) to suspicious circumstances. So if there is reason to believe that top Management violated laws or regulations, an independent investigation must be started soon enough and with the necessary resolve. this can be done either by the Audit department, the Legal Counsel or an external law firm. the latter might be the preferable solution in case top Management is involved, based on “conflict of interest” con-siderations.

In order to obtain relevant information or evidence, a com-pany should also provide channels for employees and even non-employees to – if they desired to anonymously - raise concerns. this might be a hotline, an Ombudsman or any independent reliable function in the company. the whistle-blowers must be strictly protected during the course of an investigation.

If you want to safeguard documents or files, which you think might serve as evidence later on, it’s important that you keep in mind privacy laws and data security laws. Otherwise you run the risk that this evidence can not be used in front of court as they were illegally obtained.

A crucial point is that you show a “no tolerance” policy irre-spective of management level, clearly demonstrating that all employees must be held to the same standard.

Internal information in such cases must be restricted to a “need to know basis”. If your internal pre-clarifications reveal that the allegations or suspicions are substantiated, then consider it your duty to report the case to authorities and of-fer full cooperation.

Once the boss is proven guilty of unlawful competitive prac-tices, clear consequence and disciplinary sanctions must be executed. Companies should consider openly communicat-ing the outcome of such a case and the executed sanctions to all employees in order to avoid all speculation and to clearly demonstrate its “Zero tolerance” policy.

CsIC - how do you unify your company’s policies on ethics when dealing with international employees of differing cultures?

JK - though from a remote perspective we often tend to think of Asians being somewhat different from westerners regard-ing education, values and business practices, my personal experience showed that the general patterns of bribery on one hand and the concept of ethics and integrity on the other hand are not that different.

Siemens, actively doing business in more than 170 countries, always respect local customs and none of our employees are expected to violate a country’s fundamental rules of cour-tesy. But there is a red line, which must not be crossed.

It is this red line that requires the rules that govern our ac-tions and guide all our employees and managers in their day-to-day activities, to be clearly articulated by unambiguous and binding principles of conduct. Our “Business Conduct Guidelines” provide this very ethical and legal framework within which we want to maintain successful activities. they contain the basic principles and rules for our conduct within our company and in relation to our external partners and the general public.

these Guidelines - partly derived from fundamental provi-sions provided by some external laws like the fCpA or UK Bribery Act, which are binding for companies doing global business - are mandatory at all times/places and apply to everybody in our otherwise highly diverse culture. they are a core element for ethical behavior and enable us to make integral decisions and live up to Siemens’ values. CsIC - what can we learn from your company’s issues in the past few years?

JK - Siemens had to learn the hard way and we have been going through a very painful chapter.

Actually we had all the relevant guidelines and procedures in place, but they were not being enforced. people did not live up to the company’s values.

Now - after our greatest crisis in history, costs for investiga-tions and reparations escalated to billions and with serious damage to the group’s image - our company has funda-mentally changed again and our strong values and our high integrity makes us a trustworthy partner to stakeholders all over the world and is recognized by independent authorities like transparency International or the dow Jones Sustainabil-ity Index as a benchmark company in terms of transparency and compliance.

Being a responsible company – this is what our foundation was built on and this is a core element of our values. But it’s only after our crisis that we thoroughly again bethought ourselves to what our founder already said 160 years ago: “I won’t sell the future for short term profit”.

CsIC - Any final thoughts?

JK - Siemens initiated collective action three years ago in hopes of paving the way for an anti-corruption culture- to-gether with business partners, governments and society.

It falls to all company leaders to actively join the fight against corruption in order to trigger tangible change of market be-havior.

the economic world calls for ‘responsible’ leadership. these are a reminder that ethics, integrity and high business stan-dards are essential characteristics of business leaders if they are to regain the trust of society.

Even though the Global financial Cri-sis is still affecting many of the world’s largest economies, China has man-aged to steer clear of most of the prob-lems other countries have faced. they have been successful due to the large amounts of investment poured into the local economies. In conjunction with rising costs along the east coast, some of China’s inner cities are reap-ing vast rewards. One of these cities you’ll know doubt hear more about in the future is wuhan located in Central China in Hubei province.

Geographywuhan has the unique distinction of being known as one of the 3 furnaces of China (along with Chongqing and Nanjing- all three in South-Central China). this distinction is due in large part to its humid summers (with dew points as high as 79 degrees fahren-heit). the city itself is situated among the river basin areas of both the Han and Yangtze rivers flowing through and around the city. due to its central location, wuhan served as the capitol for the KMt (the current government in taiwan) in 1925. during the Second world war, the city was viewed as high value by the Japanese army.

TransportationLike so many other cities in China, wuhan is undergoing a massive over-haul to its infrastructure. while the city has had one line of subway since 2004, wuhan is not only expanding the existing line, but also construct-

ing several new lines to help improve traffic and congestion problems. plans have called for an additional 7 lines of subway cover all parts of the city (both underground and above). due to its location, wuhan is known as a major hub in central China. As with the rest of China, railroad infrastructure has been deemed an important part of China’s economic future. Completed in late 2010, a high speed railway con-necting Guangzhou to wuhan was completed. what was once a 13 hour ride has now become a 5 hour trip on the world’s fastest train.

Economydue to the previously mentioned railroad system (even before the new high speed lines), stable (while hot during the summer) climate, and con-nections to the Yangtze River (and thus Shanghai) wuhan has become an economic epicenter for central China. In 2009, wuhan had a reported Gdp of 450 billion RMB. the city has been the recipient of over one third of all french based company investment, with over 50 companies establishing themselves in the city. Many of these companies are able to tap into the pool of highly educated university graduates as well. wuhan and the surrounding counties are home to over 35 universities in the higher educational and scientific com-munities. there are 4 major industrial zones in wuhan including-

ፚ wuhan East Lake High-tech devel-opment Zone ፚ wuhan Economic & technological

development Zone ፚ wuhan Export processing Zone ፚ wuhan Optical valley (Guanggu)

Software park

Tourismwuhan, again like most other cities in China has a long and distinct history. As such, tourists have many options for things to see in the city. As it’s on the Yangtze River, wuhan receives a lot of traffic for both barge and tourist traffic. Many use wuhan as an ending point after seeing the three Gorges and the three Gorges dam. with its wartime significance, wuhan is home to several museums and temples.

As China’s value increases with its improved infrastructure and supply chain capabilities, there is no doubt that cities like wuhan will continue their upward growth for years to come, as buyers/companies gain the added value of decreased labor costs.

City Datapopulation 9,785,392

Area total 8,494.41 sq km (3,279.7 sq mi)

population density 1,152/sq km (2,983.3/sq mi)

Useful links ፚ wuhan Economy

ፚ wuhan Metro

Wuhan

Wuhan Skyline

City Info

The Last Page *true Stories and images of humor/horror from the front lines of China Sourcing

*the China Sourcing Information Center (CSIC) is an educational service designed to help both the experi-enced sourcer doing business in China, and a buyer who is just beginning to source their project from China for the first time. Most of us who have been in China long have seen or heard both harrowing and hillarious stories/instances while doing business here. “the Last page” was created for that purpose- to allow our read-ers to share their stories to fellow readers/sourcers. we here at CSIC hope to collect the very best (and worst) stories and images of triumps and failures, humor or horror for the world to see. we at CSIC have hundreds of stories to share ourselves, but we really look forward to contributions from fellow sourcers. Enjoy!

Have any funny/scary stories to share with us?Any funny or scary pictures?we’d love to hear your stories or see your pictures!please feel free to send any stories/imagesto the Executive director and Editor of the “China Sourcer” at-exd@ChinaSourcingInfo.org

Many thanks to Mike for sending us this !

The Classifieds

Multimedia/Graphic DesignAmerican Freelance Web, Video, and Graphics Designer in Shenzhen.

Contact Curt at: Curt@Kirkhoff.com

Making a trip to China?I can help with things like interpretation and trip planning. Based in Shenzhen but willing to travel. References available. ChinaHelp@yahoo.com

Dispute Resolution/ArbitrationCSIC will help to resolve disputes that buyers may have .

Contact David at:

exd@ChinaSourcingInfo.org

English Speaking Lawyers- protect your IP - review contracts - take suppliers to court if they have done you wrong exd@chinasourcinginfo.org

Worried your products are be-ing knocked off and on display at a China trade show?I’ll walk the show and look around, even gather evidence for you, saving you a flight to China. 2400 RMB a day plus travel expenses if out of town. Most shows can be walked in a day. Recom-mended by the China Sourcing Informa-tion Center.

EyesAndEarsInChina@gmail.com

the China Sourcing Information Center (CSIC) is a not for profit organization providing the following services at no charge: » “China Sourcer” eMagazine Library » Ask the Experts Service » video tutorials » Endorsed Service providers List

www.ChinaSourcingInfo.org

would you like access to the operations manual of a successful sourcing agency? Almost 300 pages of strategies, templates, procedures and best practices are now available for purchase. for purchase details and more information, please visit:

http://chinasourcinginfo.org/book/

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The Essential Reference Guide to China Sourcinga comprehensive guide to common pitfalls and best practicesby CSIC advisory board member Mike Bellamywith a foreword by Global Sources’ COO, Peter Zapf

Educational Videosthe CSIC partners with Global Sources to host the New Buyer’s Conferences at various shows worldwide. the video on the left is of CSIC Advisory Board mem-bers Mike Bellamy and david dayton. their presentation guides new buyers through the various stages of China Sourcing. Click on the picture to view the videos.