Category Archive: Manufacturing

LOOKING FOR A RELIABLE SUPPLIER OF PPE?

 

Do you know someone who has been having a hard time finding a reliable supplier of PPE to protect medical professionals?

Lets face it, finding a reliable supplier of PPE is no easy task for large health care organizations and is especially difficult for smaller clinics, doctors, and other medical offices. Shortages of Personal Protective Equipment (PPE) in the USA have reached crisis proportions and everyone is scrambling to buy direct from China’s mature market where up to 85% of the world’s suppliers are located including the basic raw material, nonwoven polypropylene fabric. With health professionals facing shortages and the CDC recommending the voluntary use of face coverings, do you wonder where and how to fill your supply lines reliably?

In today’s market it is “buyer beware” like never before. It seems that whenever there is a strong market driven by fear there are also plenty of scammers and marginal suppliers ready to take your money by telling you exactly what you want to hear. For example, Canadian health officials reported recently that “around 1 million KN95 respirators acquired from China have failed to meet federal Covid-19 standards for use by front-line health professionals.” If you want to protect your organization from a “PPE Nightmare” it is imperative that you find a reliable supplier of PPE and leverage their experience, network, and infrastructure to your advantage.

WHAT TO DO?

woman in red shirt with hands on head frantically looking for a reliable supplier of PPE

Mitigating PPE Quality Risks

You should know that due to the rush of getting as much product out the door as possible in the least amount of time, some PPE manufacturers are not making quality product that consistently meets the specifications that it is rated for. Hospitals and medical facilities in Europe, the United States, and Australia have all recently discovered defective and counterfeit N95 and KN95 face masks from China.

Given the tight market and rising costs of PPE, it is highly recommended to conduct a pre-shipment inspection at the factory before allowing any PPE to ship. While inspections are not a 100% guarantee, the use of a statistical, random sampling and auditing the lot of goods at the factory that produced them is standard protocol and mitigates your risk significantly, raising your confidence that there will not be any issues when the goods arrive. In addition, when manufacturers know that a buyer is going to do a physical pre-shipment inspection, just knowing it can make them act more diligently.

Performing a professional pre-shipment inspection allows a visual check of appearance, quantity, labeling, packaging verifications and on-the-spot tests including flammability, colorfastness, airflow, dampness, mold, and odor to further mitigate your risk. Independent lab tests can provide the maximum level of verification but may take up to a week or longer and cost several thousand dollars. However, independent testing may make sense for large orders depending on the urgency of the goods but when independent lab tests are required it is recommended to have a third-party select random samples from the shipping lot, not rely on the factory to do it themselves.

Five Easy Steps To Avoid Getting Burned on PPE

According to current regulations, which have been tightened recently, the manufacturer that produces the product, the exporter, and the importer all need to be registered with their respective governments. You can qualify a reliable supplier of PPE in China by making sure the factory and importer are registered with the FDA for the specific product that you are buying and that the exporter is registered with the China government to export the specific product that you are buying. If you are using a broker, take an extra step to make sure that they can provide proof of their relationship with the manufacturer. And, in addition to verifying that their registrations are legitimate, make sure that you have proper documentation that the production also meets the international standards that it is supposed to meet. In summary, there are five easy steps to avoid getting burned when you buy PPE in China:

  1. Verify the Manufacturer
  2. Verify the Raw Materials
  3. Verify the Exporter of Record
  4. Inspect the Finished Product Pre- Shipment
  5. Verify the Importer of Record

 

In short, due diligence is more important than ever when trying to qualify a reliable supplier of PPE.

Source International is a Reliable Supplier of PPE

We invite you to share your experiences in finding a reliable supplier of PPE and what unmet PPE needs you have that we can help you solve. Supplying PPE that protect our medical workers is a job that requires attention to detail and a professional team.

The Source International PPE Team in the USA, China, and Vietnam serves customers large and small for high quality, on-time PPE at a fair price. As a registered FDA importer, we sell specific FDA registered products such as surgical masks, face shields, disposable isolation gowns, FFP2 respiratory masks, KN95 masks and other PPE products.

Our team of on-the-ground supply chain professionals perform inspections and testing of randomly selected samples from every shipment on-site at our FDA certified manufacturers. Years of experience in supplying OSHA first aid kits and other disposable medical devices and a 3-decade long track record of excellence are your assurances that Source International is a reliable supplier of PPE.

Contact our USA offices to speak with one of our PPE professionals on your time zone (east and west) for the most up-to-date product offerings, cost, and availability.

Manufacturing Cost Report For First Quarter 2020

 

Tracking The Trends Which Drive Manufacturing Costs In Asia

In the first quarter of 2020, as a result of the impact of covid-19 virus, most commodities and manufacturing costs in the Asia region moved lower.

Tracking

Manufacturing cost drivers for the entire quarter are summarized in the chart above. Leading to the decline in manufacturing costs for the first quarter of 2020 were much lower raw material prices. Most grades of Plastics, Rubber, Steel, Alum, Metals, Textiles, Ceramics and Fuel were down in price, while Wood price was flat, and only a few select grades of Paper prices went lower. Most of the Asian labor rates were unchanged in Q1 with the Lunar New Year season but some countries labor rates actually went down. The trend for World Container Index saw lower ocean freight costs while airfreight was in huge demand and was being priced on the spot market. The US Dollar remained strong against all of the Asian currencies in Q1 but, influenced by COVID-19, China imports and exports saw sharp declines in the quarter. The China CPI and PPI were also down marginally and the PMI indexes were down in February and rebounded in March. Much of China went back to work in late March with strict social distancing restrictions remaining in place.

READ ABOUT THE DETAILED ANALYSIS OF THE MANUFACTURING COST DATA

Betting on China Manufacturing-Tesla’s journey

 

Tesla is doubling down on China Manfacturing

Opposite of what the market is doing, Elon Musk, true to his contrarian nature, is heading in the opposite direction and doubling down by heavily betting on China manufacturing.  His Shanghai Gigafactory 3 went online in record time last year and currently Tesla stock is said to be more valuable than the market capitalizations of all China’s listed carmakers combined.  Tesla is the sole owner of its Gigafactory 3 car plant in Shanghai and this is the first time that this has been allowed in China, previously requiring joint ventures with local partners. Combined with low cost land and government incentives including low-interest loans and subsidies, Tesla was able to drop prices and increase sales and manufacturing volumes.

Betting on China manufacturing

In a recent article in Week In China published by HSBC, the authors discuss the Tesla strategy betting on China manufacturing and its approach to sales and manufacturing. Tesla recently selected China’s Contemporary Amperex Technology (CATL) and South Korea’s LG Chem as new battery suppliers in an effort to diversify its sourcing chain beyond Panasonic and allowing it to retain all three of the leading EV battery makers in its supply chain.  They discuss a possible “cultural clash” emerging and Musk’s vision for upending 100 years of automotive tradition. And, as the EV companies battle over charging standards, a confrontation is likely to develop.  Further, the emergence of cobalt free batteries has the potential to lower the battery costs significantly.

All of this is intertwined with Tesla’s sales strategy in China and its Chinese competitors.  BYD, a Chinese battery-maker that morphed into a car firm (backed by Warren Buffett and South Korean giant Samsung), is one of China’s closer competitors to Tesla.  Similar to Tesla’s business model, BYD has branched out into solar panels and energy storage and an ambition to accelerate the world’s generation and storage of clean energy. Tesla is seen as a trendy pacesetter in China this year, despite the virus, accounting for nearly 1/3 of all electric vehicle sales in China in 2020 so far.

So, what about your company? Are you betting on China manufacturing? Could your Asia supply chain need a tune-up to compete in the “new world”?

Let our team of professionals show you how we can add value to your supply chain in these volatile times. Now, more than ever, you need someone on your team, looking out for your interests and controlling the hard to control offshore manufacturing situations.

Contact us today to get started on your “buy global – act local” supply chain strategy.

To learn more about Source International, visit our About Source page.

DO YOU WONDER ABOUT THE PATH FORWARD FOR BUSINESS WITH CHINA?

 
Our customers have been asking for months about the path forward for business with China. While the future is never crystal clear, what seems evident to us is that business in China will continue to be a critical part of every global supply chain manager’s portfolio for years to come. It stands to reason that Supply Managers are concerned, and with good reason, especially with all the news in recent weeks regarding the coronavirus pandemic on top of the trade tariffs imposed by President Trump last year. But, in spite of these setbacks, there is still no better place to manufacture most products than China. In a recent post by Jonathan Bench in the China Law Blog (a great publication that we respect and follow) he outlines his thoughts and reasoning that China is not going away anytime soon. Specifically, he writes: ” When I say there is a good path forward in doing business with China, I am not saying it will be an easy path forward – only that doing business in and with China is a viable path forward and though it will certainly have its ascents and descents (as it always has) that path has an upward trajectory.” We agree with Jonathan 100%!

WHAT IS THE PATH FORWARD FOR BUSINESS WITH CHINA?

Social media is buzzing these days with companies talking about all the reasons that they have for leaving China and moving their manufacturing supply chains back home or to other low cost countries. What with trade tariffs and now this crazy corona-virus, there are a lot of reasons to be concerned. We have seen a slow trend that began several years ago from companies either looking to make a move, testing the waters elsewhere, or going forward with a move.

CHINA STILL HAS THE BEST MATERIALS AND INFRASTRUCTURE

Manufacturers rely on local suppliers for an array of materials, parts, and components, so relocating production requires an expensive and time-consuming effort finding new suppliers that meet quality standards and that have adequate capacity to take on more business on a specified timetable. Qualified suppliers may not always be available when and where you want them. Finding proper materials can also present a challenge since China produces many of the materials used in other Asian counties and has an extensive, developed infrastructure to deliver them efficiently. It will take years and years before the entire ecosystem of manufacturers and suppliers can shift out of China—if it ever does. We are betting that China will recover and come back stronger than ever and remain competitive despite some short term pain.

CHINA STILL HAS THE BEST LABOR FORCE AND TREMENDOUS CAPACITY

Source has been part of the development and training of the workforce as it has matured over the past 25 years. Source professionals are unparalleled anywhere thanks to our rigorous training programs. No country has a workforce that is as dedicated and productive as China. No country serves such a wide range of industry as China. And, no country supports it’s industries like China. And, now, with the “phase one” trade deal with China in place, the Trump administration has agreed to scrap planned tariffs on $160 billion of Chinese goods and to cut the tariff rate on another $120 billion of goods in half to 7.5%. ALL THIS LEADS TO MORE AVAILABLE CAPACITY AND MORE NEGOTIATING STRENGTH.

THERE WILL BE A NEW NORMAL IN CHINA ONCE THE VIRUS FEARS SUBSIDE

We definitely see a “New Normal” emerging from a tough 2019 and a slow start to 2020. Many things will have to change to protect the workers and the public at large. A greener, more organized country is likely to emerge in a new push for health and public welfare. China is used to change and is likely to find novel ways to adapt and continue to prosper.

We caution companies to consider all of the factors before leaving China and shifting manufacturing to other low-cost countries in Southeast and South Asia, Africa, Eastern Europe, or Latin America. As for Source International, we are NOT leaving China but, instead, see this as a great opportunity to serve our customers in new and different ways. We plan to double down our efforts to provide new answers to the new, pressing manufacturing and quality assurance questions that have emerged.

LEAVING CHINA IS NOT THE BEST OPTION IN SPITE OF THE CHALLENGES

THINKING ABOUT LEAVING CHINA?

 

EVERYONE IS TALKING ABOUT LEAVING CHINA

Social media is buzzing these days with companies talking about all the reasons that they have for leaving China and moving their manufacturing supply chains back home or to other low cost countries. What with trade tariffs and now this crazy corona-virus, there are a lot of reasons to be concerned. We have seen a slow trend that began several years ago from companies either looking to make a move, testing the waters elsewhere, or going forward with a move.

One large Asia based inspection company reported that inspection demand in Asia was down 14% in 2019 vs. 2018, while China volumes decreased 3.4%. For the same period, Southeast Asia (Vietnam, Taiwan, Myanmar, most popular) volumes were up by 9.7% and in South Asia (Bangladesh, most popular) up by 37%.  And, USA companies continued near-shoring in Latin America (Mexico, Peru, Guatemala, Haiti, most popular) with volumes there more than doubling. Meanwhile, volumes in North Africa and the Middle East (Turkey, Morocco,Tunisia, Egypt, most popular) more than tripled.

LOOK BEFORE YOU LEAP. LEAVING CHINA MAY COST YOU!

Companies must consider the total cost, complexities, and consequences of relocating which may potentially outweigh any savings that they are seeking. When contemplating such a move companies are well advised to be realistic about the pros and cons of leaving China. Instead, we recommend companies to re-assess total landed costs and the strengths and weaknesses of China relative to the products they are producing in other low-cost, offshore countries.

CHINA STILL HAS THE BEST MATERIALS AND INFRASTRUCTURE

Manufacturers rely on local suppliers for an array of materials, parts, and components, so relocating production requires an expensive and time-consuming effort finding new suppliers that meet quality standards and that have adequate capacity to take on more business on a specified timetable. Qualified suppliers may not always be available when and where you want them. Finding proper materials can also present a challenge since China produces many of the materials used in other Asian counties and has an extensive, developed infrastructure to deliver them efficiently. It will take years and years before the entire ecosystem of manufacturers and suppliers can shift out of China—if it ever does. We are betting that China will recover and come back stronger than ever and remain competitive despite some short term pain.

CHINA STILL HAS THE BEST LABOR FORCE AND TREMENDOUS CAPACITY

Source has been part of the development and training of the workforce as it has matured over the past 25 years. Source professionals are unparalleled anywhere thanks to our rigorous training programs. No country has a workforce that is as dedicated and productive as China. No country serves such a wide range of industry as China. And, no country supports it’s industries like China. According to China’s National Bureau of Statistics, 3.8 million manufacturing jobs were lost in urban areas last year. As a share of overall urban employment, it was the biggest annual drop in five years, at 1.5% and employment in factories has been declining every year since 2015, as a result of automation and productivity increases. And, now, with the “phase one” trade deal with China in place, the Trump administration has agreed to scrap planned tariffs on $160 billion of Chinese goods and to cut the tariff rate on another $120 billion of goods in half to 7.5%. ALL THIS LEADS TO MORE AVAILABLE CAPACITY AND MORE NEGOTIATING STRENGTH.

THERE WILL BE A NEW NORMAL IN CHINA ONCE THE VIRUS FEARS SUBSIDE

We definitely see a “New Normal” emerging from a tough 2019 and a slow start to 2020. Many things will have to change to protect the workers and the public at large. A greener, more organized country is likely to emerge in a new push for health and public welfare. China is used to change and is likely to find novel ways to adapt and continue to prosper.

We caution companies to consider all of the factors before leaving China and shifting manufacturing to other low-cost countries in Southeast and South Asia, Africa, Eastern Europe, or Latin America. As for Source International, we are NOT leaving China but, instead, see this as a great opportunity to serve our customers in new and different ways.  We plan to double down our efforts to provide new answers to the new, pressing manufacturing and quality assurance questions that have emerged.

LEAVING CHINA IS NOT THE BEST OPTION IN SPITE OF THE CHALLENGES

ASD SHOW SOURCING PANEL, March 2020

 

YOU CAN’T MISS THIS SHOW & THIS SOURCING PANEL.

ASD and Source Direct are right around the corner where we will be participating in a thought-provoking Sourcing Panel held right on the show floor with the audience participating. Las Vegas will be hopping March 22 through 25 at ASD Market Week with 9 Trade Shows in 1 Central Location including 2,700 Suppliers and over 45,000 Buyers from around the world. It’s your chance to learn, shop, network, and play all in the same week!

ASD Market Week is the most comprehensive B2B trade show for consumer merchandise in the U.S. ASD brings the world’s widest variety of retail merchandise together in one efficient shopping experience. Retailers of all sizes will find that the ASD Market Week show floor is filled with quality choices at every wholesale price point where they can find thousands of high-margin products which consistently achieve a 300% mark up.

What’s more, ASD Market Week is also home to the SourceDirect trade show for importers, distributors, wholesalers, and large retailers to buy wholesale goods directly from overseas manufacturers. SourceDirect at ASD is the go-to destination for buyers looking to source new product categories and find new ways to directly profit from manufacturers coming from top sourcing countries.

Sourcing Panel

Every business owner has the same goal; to make money. ASD is the largest wholesale merchandise trade show in the USA. Whether you have an online store, a brick-and-mortar business, warehouses or all of these, ASD is truly the wholesale buying event that can’t be missed for any retail, e-commerce, distribution, or importing business.

What’s more, ASD is the only retail merchandise trade show that allows buyers to network with each other, attend over 100 educational seminars, and meet with retail industry experts in order to learn how to sell more products online, drive foot traffic in-store, and improve general business operations. At ASD Market Week, you can learn and stay ahead of the curve with over 100+ free retail seminars & educational sessions.

TOP FIVE REASONS TO ATTEND

  • Highest Margin Merchandise
  • On-Trend New Products
  • 100+ Educational Sessions
  • One Place at One Time
  • Exclusive Buyer Perks

It’s Las Vegas, baby! There are lots of great reasons to attend but and the top five reasons are listed above.  And, did you know that ASD partners with the best hotels, popular shows, and clubs to bring buyers exclusive deals to make the most of the buying trips after-hours. From Cirque Du Soleil to buyer happy hours, there’s plenty of networking opportunities. See what events are happening on our Facebook events.

Contact Jim to schedule an on-site meeting at ASD where we can give you helpful tips and discuss how our program can add value to your new product development efforts. And, join our Sourcing Panels to gain valuable knowledge about developing private label products.

Registration to ASD and Source Direct is free through the link below.

Sourcing Panel

Global Executive Forum: Future of the China Relationship For Kentucky Business

 

Future of the China Relationship For Kentucky Business

Event Description:

Global Executive Forum: Future of the China Relationship For Kentucky Business

Date: October 10, 2019

Time: 8:00 AM – 10:00 AM EDT.

Register Now

As the trade war looms on between the U.S. and China, Kentucky businesses are modifying business practices to navigate this new environment.  What does the future hold for the relationship with China and our Kentucky businesses? How can Kentucky continue to leverage this important trading partner for future business growth?  We will hear from a group of distinguished speakers who will help global companies address the issues surrounding the ongoing trade wars, and provide insight into future business practices in China which will mitigate risk and reap rewards.

The keynote speaker will be Vivian Liu,  Senior Vice President and Chief Financial Officer, Lexmark International and our panelists will be Alan Black, Regulatory Affairs Leader, Valvoline; Jeffery Langer, Member,  Stites and Harbison and Harbison, and Jim Ullum, Managing Partner, Source International.

The session will explore the topic, the Future of the China Relationship For Kentucky Businessand various aspects related to this important topic including specific issues faced by US companies in China and risk mitigation recommendations.
PROGRAM AGENDA:

7:30 – 8:25 – Breakfast (buffet style)
8:30 – 8:40 – Intro remarks (World Trade Center Kentucky and sponsors)
8:40 – 9:10 – Keynote speech (high level overview of current US-China trade and economic relationship)
9:10 – 9:15 – Introduction to panelists (keynote speaker will join panel)
9:15 – 9:55 – Panel discussion – Discuss specific issues faced by US companies in China and risk mitigation recommendations
9:55 – 10:00 – Closing remarks, update on upcoming World Trade Center Kentucky educational programs

Future of the China Relationship For Kentucky Business

The Supply Chain Conference Of The Year Is Coming In September!

 
Join us for the all-new ASCM 2019 taking place September 16 – 18. THE SUPPLY CHAIN CONFERENCE OF THE YEAR will feature all new content, insightful speakers and keynotes, and the opportunity to build connections with supply chain professionals from across the world.

ASCM 2019 features keynote by Fareed Zakaria, CNN Worldwide host, Washington Post columnist, and best-selling author. There will also be a lineup of knowledgeable thought-leaders addressing end-to-end supply chain topics. Each individual has been carefully selected to ensure a broad range of content, viewpoints and topics. Presenters include respected business leaders, authors, educators and innovators who share their expertise through more than 60 educational sessions.

This influential conference from the world’s leading supply chain organization brings together more than 2,000 people from 50+ countries. You’ll make invaluable contacts, explore new and different ways of thinking, and meet people from many of the world’s most respected organizations.

No Other Event Covers End-To-End Supply Chain In As Much Depth

From planning and procurement through production, delivery and return, ASCM 2019 is the place for end-to-end supply chain education. Professionals from all areas of the value chain rely on the annual conference for career-building knowledge.

It’s All About Education

ASCM 2019 is first and foremost an educational conference that provides an immersive learning environment that will advance your knowledge, skills and ability to move organizations forward. ASCM 2019 features 65+ sessions that are mapped across six learning paths to cover all aspects of the extended supply chain; plan, source, make, deliver, return, enable.

ASCM 2019 is first and foremost an educational conference that provides an immersive learning environment that will advance your knowledge, skills and ability to move organizations forward. ASCM 2019 features 65+ sessions that are mapped across six learning paths to cover all aspects of the extended supply chain; plan, source, make, deliver, return, enable.

supply chain conference

BE SURE TO CATCH THE PRESENTATION BY SOURCE INTERNATIONAL AND LIBBEY ON WEDNESDAY, SEPTEMBER 18, 2019 – 11:00 AM – 12:00 PM PDT

Enabling Network Optimization through Effective 3rd Party Management – Hosted by Mike Bunge (Libbey) and Jim Ullum (Source International)

EXERPT: When seeking new outsourcing opportunities and strategies to manage risk and maximize team performance, using real-world case studies is a highly effective way to learn what has worked and what hasn’t worked for other organizations. Whether you directly manage outsourced suppliers or work through a service provider, outsourcing is a multifaceted process with goals that include lowering costs, managing quality, gaining operational efficiencies, enabling access to external resources, and many others. This joint session includes the perspectives of an outsourcing service provider and a manufacturer who will share sourcing and procurement best practices and strategies. They will outline solutions to address some of the challenges you might encounter in areas including QA, auditing, ethics, product development, cost drivers and cost justifications, and navigating in a low-cost, offshore environment.

This session will count as 1 elective credit hour toward the ASCM Risk Management Education Certificate.

CONTACT US FOR MORE INFORMATION

OR, REGISTER FOR THE EVENT USING PROMO CODE: LVPPN100 for a $100 discount.

PLEASE FEEL FREE TO SHARE AND FOLLOW US ON FACEBOOK AND LINKED-IN AND SEE YOU IN Las Vegas!

ASIA MANUFACTURING COST DRIVERS REPORT Q3

 
The commodity price trends in the third quarter in Asia are mostly up. Many grades of Plastics, Rubber, Steel, Alum, Wood and Paper raw materials rose in price while some grades of Metals, Textiles and Ceramics went down in price. Petroleum and fuel prices were up in this quarter and labor rates were steady in the lower wage countries. The US Dollar rose moderately against most of the Asian currencies in Q3. China imports and exports saw up in the quarter. The China PPI was down slightly while the China CPI was up slightly. The PMI USA and Hong Kong indexes saw a slightly improvement in Q3 while PMI China saw a little marginally down. Below is a chart of the cost driver trends in 2018-Q3 and for all the details, please see the entire report.

Executive Summary

ASIA MANUFACTURING COST DRIVERS REPORT DETAILS

PLASTICS & RUBBER
– All General Purpose plastic resin prices were up in the third quarter, PP(K8303) and Food Grade are up significantly (on average about 8.9%) and the others only up in price marginally. Year over year, PVC and PE prices are down 7.2% and 4.3% respectively. But most plastic prices remain up in price versus one year ago. PP (K8303) is up the most (close to 22%), followed by PP up 13.7% and PS up 9.6% while PET price is unchanged.
Genral Plastic

– Engineering plastic prices were more mixed with Nylon and Nylon (PA6) and POM prices up by 6.6%, 5.4% and 4.1% respectively, while ABS and PU Foam prices were down slightly. Year over year, ABS up in price the most at 21.4% followed by Nylon up over 11% and the others only up in prices marginally, while ABS and PU Foam were down marginally in price versus one year ago.

Engineering Plastic

– Most of the Rubber prices were up in Q3, BR saw a huge up in price, up over 22% and Latex, SCR5 and CR prices were all up over 5%. NBR is the only one which down marginally in price. EPDM price is unchanged. Year over year, CR and EPDM prices up sharply which are over 19% and BR and NBR up slightly, while Latex and SCR5 down marginally versus one year ago.

Rubber

METALS
– For the third quarter of 2018, most of the prices for Carbon Steel were up, with Steel Wire is up most which was over 12% followed Pig Iron was up 8.5%, others were up marginally. Only Hot Roll Steel Sheet in price was down a little. Year over year, the trend is all up with Cold Roll Steel Tube and Pig Iron up over14% and others up slightly.

Carbonsteel

– In the Stainless Steel part, 201, 410 and 304 prices were up on average about 3% while 420 and 430 grade down a little in the third quarter. Year over year, the trend is down with most grades of stainless steel down in price on average about 9%. Except for 304 price is up 3.7%.

Stainless Steel

– All aluminum grades rose faintly in price in the third quarter. Year over year, all prices were down in price, with 6061 is down the most which is over by 27% followed 3003 and A00 down 13.6% and 11.1% respectively, and 1060 price is down marginally.

Aluminum

– In Other Industrial Metals, all grades trend was down in Q3. Nickel’s price was down by 11%, followed Zinc down 7.2% in price and the rest of metals were down a little. Year over year, most of metals prices are up, with Nickel is up most (close to 14%) and Copper and Brass Rod are both up 2.6% while Zinc price is down 12.8% versus one year ago.

Industrial Metal

WOOD, PAPER & TEXTILES
– Wood prices inched slightly higher in Q3 except Pine and MDF is steady in price. Year over year, MDF’s price increase over 13% and the others only up marginally.

Wood

– Meanwhile most grades prices of Paper Materials were no change except for Corrugated Board price down 4.1% in the third quarter. Year over year, most of the paper prices are decreasing, with Corrugated Board down over 16% and others prices down a little. Only Art Paper is steady.

Papper

– Textile fabric prices saw little change in the third quarter with Raw Cotton down slightly and the rest were unchanged. Year over year, the grade in prices are mixed, with Raw Cotton and Polyester Fabric up in price t at 2.4% and 0.3% respectively while the 100% Polyester Fabric and 100% Cotton Fabric are down marginally.
Textile Fabric
CERAMIC AND GLASS RAW MATERIALS
-In Ceramic Raw Materials, only Alumina price was up over 23%, while in Feldspar, Soda Ash and Kaolin were down in price on average 4.6% and rest were down marginally. Year over year, Feldspar, Kaolin and Quartz are all up marginally while rest were down, with Soda Ash is down in price the most by 16%, followed by Alumina down 5.9%, Glass Grade Sand and Glaze were down slightly versus one year ago.

Ceramic Glass

FUEL
Fuel prices in China were generally going up with LPG and Diesel Oil were significant in the range of 25% ~32% in the third quarter, and year over year, except for Petroleum is unchanged, the rest fuels are up significantly in price between 21%~29% one year ago.

OCEAN FREIGHT
The World Container Index was up 13.7% in the third quarter. Year over year, the World Container Index was sharply up 31% versus one year ago.

COST OF LABOR
Asian labor rates saw no change in the third quarter. Year over year, rates are up in most countries with Indonesia up the most (over 7%) followed by Thailand (up 6.6%), Vietnam (up 6.1%), China (up 5.2%) while India labor rate down 13.5%. Bangladesh was unchanged.

CURRENCY EXCHANGE RATE
For the third quarter, the USD is obviously strengthened slightly against the Thailand Baht, Chinese Yuan, Taiwan New Dollars, India Rupees, Indonesian Rupiah, Vietnam Dong and Bangladesh Taka. Year over year, the biggest gains for the USD are against the Indonesian Rupiah and India Rupees China RMB, Thailand Baht, Vietnam Dong and Indonesia Rupiah while its slightly weaker against the China RMB and Thai Baht.

CHINA TRADE (Data lags by one month)
– China Imports and Exports were both up by 11.36% & 4.61% respectively in the latest third months. Similarly, year over year, China Imports and Exports are up obviously by almost 15%.

– The China Producer Price Index (PPI) gone down 1.1% in the third quarter while the China Consumer Price Index (CPI) rose slightly. Year over year, the China PPI is down 3% while the China CPI is up slightly versus one year ago.

PURCHASING MANAGERS INDEX (PMI)
USA and Hong Kong PMI were both up slightly. Only China PMI was down 0.7% in the third quarter. Year over year, China PMI and Hong Kong PMI is down slightly while USA PMI is up slightly versus one year ago.

CONTACT US FOR MORE INFORMATION

Thank you for taking the time to follow trends in Asia manufacturing. Source International has operational offices in Louisville, Kentucky & Xiamen, China. Our passion is to partner with companies in supply management from Asia. We have a 25 year on-the-ground track record, a rigorous operating procedure, and a very well trained local staff. We welcome the opportunity to show you how we can add value to your supply chain in Asia and invite you to visit our offices and website to learn more about us.
For additional details, please refer to the charts that follow or contact one of our Operations Specialists for more information. Thank you for your support.
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Data for this report comes from the sources listed and while every attempt is made to be as comprehensive and accurate as possible, please consider that these are just general trends and you should not draw any specific conclusions from the data. We recommend that any information provided in this report be weighed against other sources and experts on the individual topics covered and\, accordingly, we make no specific claims nor assume any liability from the use of the data contained herein.

UPBEAT ON ECONOMY – U.S. COMPANIES IN CHINA SHOW INCREASING CONFIDENCE

 

U.S. COMPANIES IN CHINA INCREASINGLY UPBEAT ON ECONOMY

A recent AmCham China survey of over 400 of its members finds greater optimism about future of U.S.-China relations and its members generally upbeat on economy.  Confidence within the American business community toward China’s economy is strengthening, despite significant concerns about the regulatory environment and the possibility of Trump Administration action against Chinese trade and investment practices.  Some 36 percent of respondents believe relations between the two countries will improve this year, compared with 17 percent last year, possibly influenced by the perceived success of President Trump’s visit to China and that of President Xi Jinping’s earlier trip to the U.S.

“Regarding the economy, there is cautious optimism that the ‘new normal’ rate of growth is sustainable for the foreseeable future, providing opportunities for business to expand,” said William Zarit, Chairman of the American Chamber of Commerce in China. “Nevertheless, the survey continues to paint a troubling picture of the regulatory environment in China. The best that can be said of this year’s data is that there appears to be a bottoming out of sentiment from the very low levels plumbed over the past few years. There continue to be challenges and areas of disagreement, but by offering our candid assessment of the environment our members operate in, we hope we can contribute to the healthier and more sustainable development of China’s economy.”

Sixty four percent of respondents reported revenue growth, up from 58 percent last year and 55 percent in 2015. For 2018, the average forecast for GDP growth was 6.3 percent, up from the 2017 prediction. Nearly six in 10 companies rank China among their top three investment priorities, up from the previous year but still below the historical average.  On the other hand, 75 percent of respondents continuing to feel foreign companies are less welcome in China than they have been in the past which is down from 55 percent last year and 46 percent feel foreign companies are treated unfairly compared to local companies.  For the third year running, respondents cited inconsistent regulatory interpretation/unclear laws and enforcement as the top challenge to doing business in China.

China compliance risks are one of the top challenges companies expect to face in 2018 despite business being upbeat on economy. Increased regulatory fairness, predictability and greater transparency are the steps respondents say would have the greatest impact on their level of investment in China. Specific reforms members would like to see include greater access to officials and consistent implementation of national policies at the local level.

“Facing a market with so many uncertainties — and domestic competitors that continue to grow stronger — foreign companies must increase their organizational agility in China,” said Stephen Shih, a Bain partner based in Shanghai. “They need to grasp opportunities in innovation and digital and be able to respond to rapid and unpredictable changes in the regulatory and competitive environments. New organizational models and ways of working are likely to become an imperative in the next chapter of growth for foreign businesses in China.”

The survey also found about being upbeat on economy:

  • One-third of respondents plan to expand their investment in China by more than 10 percent in 2018
  • 45 percent of respondents report domestic competitors are more attractive to job hunters, up from 36 percent last year
  • Rising costs and changes in the regulatory environment are the prime reasons 23 percent of respondents say they have moved or plan to move capacity from China
  • 67 percent of Consumer companies see China as either the leading edge of digital technology in their field or more advanced than other markets

CONTACT US FOR MORE INFORMATION

Thank you for taking the time to follow trends in Asia manufacturing. Our passion is to partner with North American companies to manage supply from Asia.  Source International has operational offices in Louisville, Kentucky & Xiamen, China and a 25 year on-the-ground track record, a rigorous operating procedure, and a very well trained local staff.

We welcome the opportunity to show you how we can add value to your supply chain in Asia and invite you to visit our offices to learn more about the scope of our operations. Please contact us for more information.

Hanjin Shipping Files Bankruptcy

 
Hanjin Shipping, the largest Steam Ship Line in Korea, filed for bankruptcy court protection after their liquidity plan submitted to Korea Development Bank was rejected on August 26th.  Below is a quick recap of what happened, what will happen moving forward and what you need to know:

Hanjin announced earlier this year that they were filing for receivership which meant that banks in Korea were going to take over moving forward to avoid going bankrupt.  After Hanjin presented their most recent liquidity plan to Korea Development Bank on August 26th the bank decided they no longer wanted to be involved and pulled out and as a result without the bank’s financial support announced yesterday that it would file for bankruptcy.

Hanjin is the world’s 7th largest Steam Ship Line operating 98 vessels and shipping over 609,500 TEU per year and its bankruptcy will be the largest container collapse in history and will impact rates for importers/exporters globally even those who do not use Hanjin service currently.Hanjin has put a hold on any new container loadings on ships. Delays and issues retrieving containers that are currently in Hanjin’s possession are expected for all importers/exporter.  As of yesterday at least 10 vessels have been either seized or expected to be seized soon by port authorities or creditors until there is more clarity on what will happen to Hanjin next.

As a result of the Hanjin bankruptcy announcement effective today ocean rates from base port China are expected to go above $1700/40′ container to the US West Coast Ports and above $2400/40HQ container to US East Coast Ports.

Hanjin is not the only Steam Ship Line that has been losing money over the last 4 years.  Additional bankruptcies and Steam Ship Line consolidations are likely as well in the next year.

See links below for more details.

http://www.wsj.com/articles/hanjin-shipping-upsets-global-trade-after-seeking-protection-from-creditors-1472683164

http://www.foxnews.com/world/2016/09/02/downfall-south-korean-shipping-firm-tale-chaebol-woes.html

SourceDirect ASD – Sourcing Seminars

 

SourceDirect ASD – Sourcing Seminars

SourceDirect ASD – Sourcing Seminars to take place from July 31 – August 3 2016 at the Las Vegas Convention Center – North Hall

Please come join Source International Managing Partner & COO, Mr. Jim Ullum, at the SourceDirect Show at ASD from July 31 to August 3, 2016 at the Las Vegas Convention Center – North Hall in fabulous Las Vegas, Nevada. Mr. Ullum will be presenting on effective negotiation when sourcing, best sourcing practices in China, and sourcing in low-cost countries throughout Asia.

Mr. Ullum’s seminar schedule is as follows:


Mon, Aug 1, 2016 – 9:30 AM to 10:30 AM

Sourcing 101: The Advantage, the Process, and the Art of Negotiation – PANEL DISCUSSION

Speaker: Jim Ullum, Managing Partner & COO, Source International
Speaker: Oliver Baran, Managing Director,
Speaker: Jose Calero, President & Founder, LapWorks Inc.
Moderator: Ann Sieg, Founder, E-Commerce Business School
Speaker: Gary Young, Founder, President and CEO, Avela Corporation
Track: Sourcing
Location: SourceDirect Floor, North hall


Mon, Aug 1, 2016 – 11:00 AM to 12:00 PM

Five Best Practices For Buying in China

Speaker: Jim Ullum, Managing Partner & COO, Source International
Track: Sourcing
Location: SourceDirect Floor, North hall


Tue, Aug 2, 2016 – 9:30 AM to 10:30 AM

Sourcing 101: The Advantage, the Process, and the Art of Negotiation – PANEL DISCUSSION

Speaker: Jim Ullum, Managing Partner & COO, Source International
Speaker: Oliver Baran, Managing Director, Source2B
Moderator: Ann Sieg, Founder, E-Commerce Business School
Speaker: Gary Young, Founder, President and CEO, Avela Corporation
Track: Sourcing
Location: SourceDirect Floor, North hall


Tue, Aug 2, 2016 – 12:30 PM to 1:30 PM

Sourcing 201: The Elements of Sourcing-Contracts, Logistics, and Quality Control (QC) – PANEL DISCUSSION

Speaker: Jim Ullum, Managing Partner & COO, Source International
Speaker: Greg Buhyoff, Attorney at Law, Law Office of Gregory F. Buhyoff
Speaker: Kelly Raia, Managing Director, Dragonfly Global, LLC
Moderator: Ann Sieg, Founder, E-Commerce Business School
Speaker: Robert Sieg, Director, Sino Sales & Support LTD
Track: Sourcing
Location: SourceDirect Floor, North hall


Tue, Aug 2, 2016 – 2:00 PM to 3:00 PM

Low Cost Sourcing Beyond China: Where to Go Next?

Speaker: Jim Ullum, Managing Partner & COO, Source International
Track: Sourcing
Location: SourceDirect Floor, North hall


Jim Ullum

Source International – MP
& COO – Mr. Jim Ullum

For more detailed information on the events and/or to register for this opportunity to hone your sourcing prowess, please visit this link:


Manufacturing Trends in Myanmar

 

Manufacturing in Myanmar: One of the Most Promising SE Asian Production Frontiers

As labor and other related manufacturing costs continue to rise in traditional Asian production powerhouses such as China, many firms are looking for new ways to reduce overhead and increase their bottom line. Relocation to Southeast Asian countries such as Vietnam and Thailand has been happening for quite some time; however, until now, Myanmar has yet to gain a similar amount of FDI from such projects although it is currently gaining steam on such fronts.

As an alternative manufacturing location, Myanmar has much to offer in the way of numerous workers at competitive wages. In addition, recent government implementation of a plethora of political and economic initiatives and reforms has made doing business in Myanmar particularly attractive.

The Hong Kong Trade Development Council (HKTDC) recently visited Myanmar to conduct research on the changing landscape of production in Myanmar and found some positive and encouraging trends. To read their intriguing report in full detail, please follow the link provided below:

HKTDC – Myanmar Rising: Opportunities in Asia’s Final Production Frontier

If your firm is currently exploring manufacturing options in Southeast Asia, Source International’s experienced, highly qualified team of sourcing, product engineering, quality control, and supply chain specialists can help. Contact us today for a free consultation on how we can help you focus on what counts most: Increasing your bottom line.