Misconceptions about doing business in China

There are many misconceptions about sourcing projects to China. We've tried to address as many as possible below.

There are many misconceptions about outsourcing to China or offshore sourcing. The most prevalent is that companies who promote outsourcing are eliminating jobs. The fact is that most good companies are working with manufacturers to help them remain competitive. Plants and factories who are not exploring their options for purchasing parts, components and assemblies could be headed for real trouble in the long run. Many are purchasing from distributors who A) are already are sourcing in China and B) applying way too much mark up to begin with. Companies should begin controlling their own destiny by working with someone who understands their business and has representation “on the ground” in China.

1. China does little to protect intellectual property rights.

In recent years China has strived (in a HUGE way) to enforce intellectual property rights. Since China's first intellectual property law was published in 1982, the legislation and enforcement of intellectual property rights have been rapidly improving in China. Intellectual property rights protection is no longer an appeasement by government to foreign investors. What you should know is that the actual number of new patent applications every year (in China) is about the same as the number of applications in the United States. Note: It is recommended that businesses and individuals register their intellectual property rights in China as soon as practical.

2. It is too costly for small and mid-size American businesses to do business in or with China.

Actually smaller enterprises, even a one-person shop, can develop good relationships with trustworthy business contacts in China. The high speed Internet, better logistics services and more English speaking talents that are available in China have made it a lot easier to conduct business from manufacturing or exporting to distribution. Actually, the biggest savings come from developing the right strategy to minimize risk. Chinese entrepreneurs are now more prepared and willing to work with smaller foreign business owners. (This is where All China Sourcing, LTD. really helps!  We have the contacts, the experience and we KNOW the companies, their teams, etc and we can make your sourcing project productive and profitable.)

3. Chinese business people are hard to bargain with and always want to maximize their benefit from a deal, ignoring real partnering opportunities.

This may have been the case a decade or two ago. Years ago, before communication opened the doors to more open dialog, Chinese people held a general distrust toward foreigners. With that in mind they would also bargain hard to get the best deal as they often felt foreign businesses were in it solely for their own best deal. However, after more than twenty years of open exchanges, Chinese companies are seeking more cooperation and partnership opportunities. Through working with All China Sourcing, LTD, we can communicate your interests with our contacts and work out a win-win business solution for you.

4. It is difficult to find professionals in China who will meet the business standards of the United States.

There are certainly isolated cases where standards are not being paid attention to. Recent news has covered some of these difficulties.  That is WHY it important to do business with a firm that has the experience, contacts and knowledge of All China Sourcing, LTD. We can work to make certain that your projects manufacturing and implementation meets or exceeds U.S. standards.

5. Americans are losing jobs due to China outsourcing.

Actually MORE Americans are employed than ever before. The household employment survey of Americans indicates that there are 1.9 million more Americans employed since the recession ended in November 2001. There are 138.3 million workers in the U.S. economy today—more than ever before.

6.Outsourcing will cause a net loss of 3.3 million jobs.

According to economic experts, outsourcing has little net impact, and represents less than 1 percent of gross job turnover. Over the past decade, America has lost an average of 7.71 million jobs every quarter. The most alarmist prediction of jobs lost to outsourcing, by Forrester Research, estimates that 3.3 million service jobs will be outsourced between 2000 and 2015—an average of 55,000 jobs outsourced per quarter, or only 0.71 percent of all jobs lost per quarter.

7. Free trade, free labor, and free capital harm the U.S. economy.

Economic freedom is necessary for economic growth, new jobs, and higher living standards. A study conducted for the 2004 Index of Economic Freedom confirms a strong, positive relationship between economic freedom and per capita GDP. Countries that adopt policies antithetical to economic freedom, including trying to protect jobs of a few from outsourcing, tend to retard economic growth, which leads to fewer jobs.

8. Outsourcing is a one-way street.

This is just not true. Outsourcing works both ways. The number of jobs coming from other countries to the U.S. (jobs “insourced”) is growing at a faster rate than jobs lost overseas. According to the Organization for International Investment, the numbers of manufacturing jobs insourced to the United States grew by 82 percent, while the number outsourced overseas grew by only 23 percent. Moreover, these insourced jobs are often higher-paying than those outsourced.

9. American manufacturing jobs are moving to poor nations, especially China.

This may come as a surprise but nations are losing manufacturing jobs worldwide, even China. America is not alone in experiencing declines in manufacturing jobs. U.S. manufacturing employment declined 11 percent between 1995 and 2002, which is identical to the average world decline. China has seen a sharper decline, losing 15 percent of its industrial jobs over the same period.




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