This blog posting was inspired by the cold Beijing winter and a recent conversation with my roommate. After having lunch together, my roommate, a native of Shenyang in China’s northeast, described what she and her family ate during the winters of her childhood. Fresh fruit and vegetables were scarce to nonexistent; large quantities of Chinese cabbage and pears were bought in late autumn and had to last all winter. The pears were frozen, which caused them to turn black. The cabbage was either dried or put in jars to make “sour cabbage”. Meat was a luxury.
Having only two food choices available for one-fourth of the year sounded terrible to me. “So what did you eat in winter?” she asked. Well, I ate the same things as in the summertime – except maybe more cups of hot chocolate. Although winter likewise halted regional agricultural production, bananas, broccoli, seafood – you name it – managed to find their way to grocery stores in the American Midwest – where I grew up.
How could our childhood experiences in the 80s and early 90s have been so different? At least part of the disparity may be due to differences in the availability of transportation within China and the US.
As anyone involved in sourcing knows, although goods may be available in one location, the challenge remains of connecting them with their prospective end users, often many kilometres away. The greater the ease of connecting point A to point B, the cheaper the cost, hence, the more feasible trade becomes. This process requires infrastructure.
China has done a lot to improve its infrastructure since the 1980s. When imports arrive from overseas, they usually do so by boat. Not only does China now host some of the world’s busiest ports, but it has also has increased the length of its navigable inland waterways from 101,000 kilometres in 1985 to over 110,000 in 2008. From these inlets, the goods must then traverse land to reach their destinations. To this end, China has upped its railway length to 80,000 kilometres, as of 2008, from 55,000 in 1985. Even more substantial is the increase in highway availability, now at around four million kilometres, an increase of almost 300% from only 20 years prior.
The result of these advances in infrastructure: more goods are able to make it across the Chinese mainland to the people that need them. The amount of freight traffic within China, measured in ton-kilometres, has increased more than three times its 1987 value. Just as the wintertime shelves of the grocery stores in my hometown are filled with goods from the warmer southern US states, Mexico, and South America, similarly those in Shenyang can now be more readily stocked with products from southern China, the Philippines, or elsewhere.
Source: China Statistical Yearbook; US Bureau of Transportation Statistics: US Census Bureau; Beijing Axis Analysis
The increase in transportation channels has reduced the contribution of shipping costs to goods’ retail prices, lessened the impact of food expenditures on one’s budget, and has enhanced the well being of Chinese consumers. This is evident when comparing the Engel’s coefficients – the percent of the typical household’s income spent on food, used as a general measure of a country’s standard of living – between China and the US. This statistic suggests that my roommate’s family may have spent about 55% of their household income on food in the 80s. The affect of both rising incomes and greater transportation availability since then have reduced this to less than 40%.
Source: China Statistical Yearbook; US Census Bureau; Beijing Axis Analysis
It is interesting to consider how much more this is likely to improve in the future. I think for the Chinese New Year I will indulge in a little variety and buy my roommate both oranges and pears – fresh green ones– to celebrate the holiday and the progress made by China.
Trade sanctions have clearly strained China’s steel industry. Seamless steel tubes, Oil Country Tubular Goods (OCTG), drill pipes, steel mesh panels, wire shelves... the list of newly sanctioned Chinese steel products goes on. Among the numerous made-in-China products impacted by international trade frictions, China’s steel industry has been hit the hardest, and given the severity of these trade disputes, the consequences for China’s steel enterprises are substantial.
Price and quantity decreases
Proposed last April, the oil well pipe anti-dumping and anti-subsidies action undertaken by the US International Trade Commission will adversely affect Chinese exports of as much as USD 2.8 billion. These exports are supplied by around 200 steel mills, and these provided oil well pipes to the US during early 2008 and Q1 2009. The monetary value at stake makes this the largest steel trade dispute in US history.
The oil well pipe anti-dumping and anti-subsidies case is only a sample of the international trade sanctions that have targeted Chinese steel makers in recent years. Since 2008, the EU, the US, Russia, India and other countries have successively launched anti-dumping and anti-subsidy surveys on China’s seamless steel pipes, oil pipes, drill pipes, steel mesh panels and other steel products. As a result of the financial crisis, global market demand has rapidly declined, exacerbating ongoing trade frictions – particularly within the steel industry. According to China Customs, in December 2009 China exported 3.34 million tons of steel, which contributed to a total of 24.6 million tons for the whole year 2009. This annual figure represented a 58.5% y-o-y decline.
Of all steel goods, pipe products were the most severely affected. In 2009, China's seamless pipe exports dropped by almost 50% compared to 2008. In 2009, China's export price for oil well pipes to the US was only USD 1,600/MT, well below highs of USD 3,600/MT in 2008.
Entering new markets
Some Chinese producers have adjusted their strategies in response to the sanctions. As an example, take one of China’s major seamless steel manufacturers, whose exports accounted for 48% of total sales volume before the financial crisis. In 2009 its shipments to major regions such as North America and Europe fell by more than 70% compared to the previous year, yet its total 2009 export volume dropped by only 10%. Its secret weapon: new markets – the company’s sales in Asia increased by 30% and African sales by 100%.
Other steel mills have followed suit, successfully exploring new markets such as Southeast Asia, the Middle East and Africa, thereby weathering the decline in demand from mature markets.
Along with the shift from mature to developing markets, export product structures are also changing. Many manufacturers are shifting their focus from high value-added products such as oil well pipes to a number of oil and gas transmission pipeline products, primarily in demand in countries in Southeast Asia and Africa. These regions are without well-established steel industries, ensuring less risk of new trade frictions arising from local competition.
Expanding domestic demand
Many Chinese steel mills capitalised on the national stimulus package which enlarged the domestic market in 2009. One of China’s largest stainless steel mills stated that although their exports declined by more than 50%, domestic sales increased by 58%, causing profits to remain consistent with those of 2008.
As of November 2009, China's net exports of steel have been largely restored to earlier levels. Nevertheless, China’s steel exports are facing more difficulties as overcapacity problems mount and international protectionism becomes more severe. As a consequence, China’s steel industry may yet have to adjust again in the near future.
A new shade of green is gradually sweeping across China's export manufacturing industry, one that took a while to take root, and companies are riding the environment-friendly wave.
Pressure from the national government and tightening regulations in overseas markets are compelling a growing number of suppliers to modify their business strategies and incorporate ecologically safe processes. The transition is neither extreme nor desperate, but the impact could be widespread as many midsize and small companies are also taking "green" initiatives. Due to the sheer number of these suppliers, they account for a large portion of the pollution and wasteful practices in the country.
Irrespective of size, companies are introducing long-term strategies anchored on recycling, waste reduction and sustainable energy adoption.
Recycling is the most common practice among factories, one that is carried out internally or through third parties. This, however, goes beyond reusing offcuts and scrap materials. Highly polluting industries such as leather tanning have always been required to invest in wastewater cleaning systems, but very few actually do. Now, many are investing large sums in such facilities not only to comply with local ordinances but also as a marketing tool. This comes as an increasing number of buyers are including social responsibility as a criterion in supplier selection.
Fujian Guanxing Leather Co. Ltd in Shishi, a city under the municipality of Quanzhou in Fujian province, has invested USD 3 million in a 6,000-ton capacity wastewater processing station. Once operational, the facility is expected to save the company USD 1.4 million annually.
In fact, waste recycling is becoming the norm in the city, one of the major garment and textile hubs in the province. More than 20 manufacturers have now installed treatment systems such as those from Carrousel. The majority of Fujian factories that dye fabrics in-house have similar facilities for their sewerage as well. Moreover, several local governments have set up complementary wastewater recycling services to help ensure a continuous supply of fresh water.
When it comes to material refuse, many large enterprises contract professional disposal services. Small and midsize businesses often transact with recyclers and junkyard operators.
Guangdong Weiermei Underwear Co. Ltd, for instance, sells fabric cutoffs to waste collectors. Watch exporter Shenzhen Full Success Gift Mfg Ltd and lock specialist Make Locks Manufacturer Ltd vend metal scraps to recyclers.
Some companies involve customers in their green efforts. On request, Shenzhen FJY Electronic Co. Ltd uses recycled materials during production. Doing so has the additional benefit of lowering unit costs.
Adopting degradable materials, however, does not always bring a similar effect. In the beauty and cosmetics industry, bottles made from such substances are about 20% more expensive than conventional plastic.
While recycling and reusing are gaining more adherents, only a handful of operations are tapping sustainable energy sources such as wind or solar power. Cynthia Garments Making (Dalian) Co. Ltd has taken steps to do so by using solar water heating at its workers' dormitories.
This posting was contributed by Global Sources, a leading business-to-business media company and a primary facilitator of trade with greater China.
There are many similarities between China and India in today's global-economic climate. Both have over one billion citizens, both have experienced resilient growth in output, and both have greatly expanded their roles in international trade. The relatively inexpensive yet well educated workforces of these two countries have made them key prospects for the sourcing of manufactured goods. Yet differences remain in their supplier and logistical capabilities which must be taken into account by the sourcing professional.
Both India and China are capable of world class manufacturing processes. A study performed by the London School of Economics on the supply chains of the two countries’ automotive industries found that two-thirds of their domestic suppliers were able to provide inputs with defect rates of less than 100 parts per million – the typical threshold for suppliers in the US, Europe, and Japan. It was observed that both Chinese and Indian auto manufacturers domestically outsourced component production at similarly high rates, suggesting an adequate availability of competent local suppliers. Whereas the study found higher productivity levels in India, in terms of capital intensity, delivery frequency and stock-turn ratios, China had the edge. In a more recent, broader assessment across multiple industries, Deloitte found that the average number of days an item sits in inventory favored China at 24.2 compared to India’s 32.5.
Beyond the factory floor, connecting products to end users poses different challenges in China and in India. Within India there is a heavy reliance on roads. Their network is the second largest in the world, behind the US, at over three million kilometres. However, only around half of these roads are paved, and their width is generally too narrow to allow the passage of anything beyond smaller, two-axel trucks. Road transit is further slowed by a fragmented Indian trucking industry and by state border checkpoints. China, in contrast, has a far less extensive network of roads. Out of its million-plus kilometre road network, only around 300,000 kilometres are paved. But what China lacks in actual length, it makes up for by having newer, more passable roads. It has five times the number of multiple lane highways than India.
China also has more transport options available to its supply chains in the form of rail, air, and waterways. Over 78,000 kilometres of terrain are connected by rail in China compared with 63,000 in India. Goods can be flown in and out of China by way of 500 airports whereas there are only 334 locations to take to the sky in India. Thanks to geographical endowments, China also has more navigable waterways. Besides some of the world’s most active ports, commerce in China moves on 110,000 kilometres of inland aqueous passageways. This is more advantageous than India’s 16,000 kilometres of waterways, particularly in the movement of bulk commodities.
These transportation differences are partially reflected in the World Bank’s Logistics Performance Rankings. China is rated the highest of all BRIIC (Brazil, Russia, India, Indonesia and China) countries at 27th in the world. Its comparatively higher scores in customs clearance, infrastructure adequacy, logistics, timeliness and tracking ability place it above India, ranked 47th globally. Some of the largest discrepancies between the two countries are shown in survey data collected by the World Bank. Responders reported much higher frequencies of compulsory warehousing/transloading and involuntary payment solicitation in India, while in China greater expenses were incurred in the form of agent fees.
The infrastructure and logistical differences may explain why India is a more common site for the outsourcing of services, particularly IT services, which do not require a physical good to be brought to market. However, India should not be entirely discredited as a sourcing destination for manufactured goods. Both it and China have allocated over 10% of their GDPs toward infrastructure development which will enhance their future logistical abilities in bringing their products to the world’s consumers. The greatest similarity between China and India: neither can be ignored by the sourcing professional.
| Country | Rank | LPI | Cstms | Infra | IntSh | Lgstc | Trckg | Time |
| China | 27 | 3.49 | 3.16 | 3.54 | 3.31 | 3.49 | 3.55 | 3.91 |
| India | 47 | 3.12 | 2.70 | 2.91 | 3.13 | 3.16 | 3.14 | 3.61 |
| Brazil | 41 | 3.20 | 2.37 | 3.10 | 2.91 | 3.30 | 3.42 | 4.14 |
| Indonesia | 75 | 2.76 | 2.43 | 2.54 | 2.82 | 2.47 | 2.77 | 3.46 |
| Russia | 94 | 2.61 | 2.15 | 2.38 | 2.72 | 2.51 | 2.60 | 3.23 |
| China | India | Brazil | Indon. | Russia | |
| Clearance time with physical inspection (days) | 3.38 | 3.45 | 5.47 | 5.12 | 4.62 |
| Clearance time, no physical inspection (days) | 1.70 | 1.92 | 1.67 | 2.14 | 2.57 |
| Percent of imports physically inspected | 8.59 | 13.63 | 10.54 | 11.08 | 44.20 |
| Percent of imports inspected multiple times | 2.46 | 6.20 | 2.04 | 2.56 | 10.05 |
| Export lead time from shipper to port (median) | 2.77 | 2.34 | 2.80 | 2.12 | 3.98 |
| Import lead time from port to cosignee (median) | 2.56 | 5.31 | 3.88 | 5.35 | 2.88 |
| Number of export agencies | 4.06 | 3.43 | 3.47 | 2.50 | 5.83 |
| Number of import agencies | 4.20 | 3.71 | 4.21 | 3.67 | 5.17 |
| 40 ft container export charge (USD) | 418.90 | 660.30 | 1,614.05 | 378.93 | 1,310.37 |
| 40 ft container import charge (USD) | 376.37 | 1,266.94 | 1,570.42 | 1,023.84 | 1,144.71 |
The 7th China International Offshore Oil & Gas Exhibition
Date: 22 - 24 March 2010
Organiser: Beijing Zhenwei Exhibition Co., Ltd.
Tel: +86 10 5823 6588
Briefing:
As one of the largest annual petroleum exhibitions in Asia and one of the top four expos within the industry in the world, this event is intended to provide a platform for enterprises at home and abroad to establish and maintain relationships with customers. The expo will display the latest industry information as well as the most advanced products like offshore petroleum equipment, petroleum and petrochemical pumps, valves, compressors, pipelines, auto-instruments and electric explosion-proof equipment, etc. The event will feature nearly 1100 exhibitors from China, the US, Germany, France, Italy, Norway, Russia, Kazakhstan, Japan and South Korea, among others.
More information.
January 2010 is the beginning of a new decade yet it also inaugurates a new era in international trade with the commencement of the ASEAN-China Free Trade Agreement. The 1.9 billion citizens of its member countries now comprise the largest free trade area in the world. In terms of total trade volume, the ASEAN-China Free Trade Agreement ranks third behind only the European Union and the North American Free Trade Agreement.
After its signing in 2002, China and the six veteran ASEAN members – Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand – have incrementally reduced their tariff levels, typically at 5% per annum. As of January 1 2010, 93% of the commodities exchanged between these countries will have their tariff rates reduced to zero. The newest members of ASEAN – Cambodia, Laos, Myanmar and Vietnam – are scheduled to follow suit with most of their intra-ASEAN tariffs eliminated by 2015.
The trade agreement seems to have been effective. Since the first provisions of the treaty went into effect in 2002, trade has soared between China and ASEAN countries. The exchange of goods among China’s top five trade partners in ASEAN – Indonesia, Malaysia, the Philippines, Singapore and Thailand – expanded at an average rate of 22.9% from 2004 through 2008. In the four newest ASEAN members during this five year time period, imports to China have grown at an astounding rate of 36.1%, albeit with great variation between countries and years.
Source: UN Comtrade; Beijing Axis Analysis
From this rapid increase, China has edged out the United States to become ASEAN’s third-largest commercial ally, behind Japan and the European Union. China-Asian trade totalled USD 231 billion in 2008. Although the first half of 2009 saw a decrease of 24% over the same period the previous year, indications of a global economic recovery suggest that expansion should once again resume in 2010.
Currently, trade between China and its southeast Asian counterparts is characterised by China swapping finished products, such as electronic equipment and machinery, for inputs such as oil/lubricants, plastics, rubber and intermediate electronic components. The effects of the free trade agreement may gradually change this. It is expected that a number of Chinese manufacturers may expand into areas with cheaper costs.
Take Cambodia, for example. Due to its net exporter status of cotton and to its low production and labor costs, Chinese garment factories may be enticed to relocate given these factors and the extremely competitive environment of China. Provisions of the free trade agreement, such as fair treatment of foreign investment and impediments to nationalisation make foreign direct investment within treaty participants a more viable option for such manufacturers.
Despite the progress already underway through this new agreement, there are still a number of obstacles that must be overcome in order for it to reach its full potential. Road and rail networks are limited between China and ASEAN members; exchange almost exclusively takes place by sea. The Chinese government has allocated USD 25 billion to alleviate this problem, but the construction process will take years to complete. The fact that the free trade agreement has been made without the guidance of the WTO is also a concern. Given the lack of transparency in China and in several Asian countries, restitution in legal disputes may be difficult to obtain.
But the effects of these glitches seem to be minimal. The ASEAN Secretariat estimates that the agreement will contribute an additional 0.3% to China’s GDP and another 0.9% to the GDP of the whole of ASEAN. One may expect that at the beginning of the next decade, the ASEAN-China Free Trade Agreement may yet truly rival those in North America and Europe.
The new January 2010 edition of The China Analyst is now available. We are pleased to once again provide this publication as a free resource online. In this edition, we look at the the threat of protectionism facing China; we delve into China’s prominent role in the rare earths industry; and we look at the new era for China and Africa after November’s FOCAC meeting.
Then of course there all the usual sections analysing China's
economy in range of perspectives: Macroeconomic Monitor, China Souring
Strategy, China Trade Roundup, China Facts & Figures, China Capital
and China Business News Highlights. The four regional focus sections
analyse the latest trade and investment relations between China and
Africa, Australia, Latin America and Russia. In this edition we also launch a new Strategy section, which includes a map comparing China's economic performance in 2009 with the rest of the world, and a section discussing the business strategy of China International Marine Containers (CIMC), a great success story for China Inc.
To download this free quarterly publication by THE BEIJING AXIS, please click on the link below
The China Analyst - January 2010.pdf
or go to the Knowledge section of THE BEIJING AXIS website to see the full range of our publications. As always, we welcome your feedback and hope you enjoy this edition of The China Analyst.
Ningbo International Sourcing Expo
Date: 2 - 6 March 2010
Organiser: China Council for the Promotion of International Trade, Ningbo Sub-Council
Tel: +852 3588 9688
Briefing:
As one of the largest international sourcing expos in China, this event is intended to establish a bridge for enterprises at home and abroad to exchange the latest product information and technology. The event attracts various areas like baby and nursery products, beauty and health products, consumer electronics, fashion accessories, apparel home textile and interiors gifts and premiums.
More information.
In the post financial crisis era, many countries are seeking new paths for economic growth and are implementing defensive measures to preserve their own domestic industries. Given these circumstances, along with the recent anti-dumping cases raised by the US Department of Commerce in regards to China's steel plate and pipe products, maybe it is time for China to rethink its business development methods and to shift its focus to value added products.
美国当地时间29日，美国商务部初步裁定，对从中国进口的钢格栅板征收反倾销税。部分企业涉及的关税高达145%。
钢格栅板是用钢材作为原材料的深加工产品，被主要用于工业类建材。根据美国商务部的统计数据显示近年中国出口到美国的钢格栅板增长极为迅速。据悉，美国商务部计划于2010年4月做出最终决定， 当前多家被卷入的中国厂家正在积极应诉。
除此外美国国际贸易委员与30日的表决也使得美国对中国产用于油井钢管征收反补贴税的裁决获通过，该裁决随即将正式生效。
据媒体统计，自一月奥巴马就职以来，已经对中国产品开展了至少十余次“反倾销、反补贴”调查。中方已多次就美国对中国出口产品征收关税表示不满，称这种贸易保护措施阻碍自由贸易。
后危机时代各国都在寻求新的经济增长方式。在这个大背景之下，中国经济增长方式的转变就显得更为迫切。正如商务部发言人所说：“转变外贸发展方式是我国从外贸大国成长为外贸强国的必然选择。”
China’s steel industry suffered severely in 2009. Due to the global financial crisis, a majority of developed countries entered economic recession. The resulting decline in demand, especially for steel, produced deleterious effects which were not lost on China’s steel industry. However, a pickup in domestic demand has greatly helped local producers recover from the crisis and has promoted their further development.
China’s steel industry displayed five major trends in 2009:
I．Both the output and the consumption of crude steel are expected to exceed 565 million tonnes to reach a new high.
- The actual deduction in crude steel inventory will be more than 500 million tonnes. China's stimulus package has caused an acceleration in industrialisation and urbanisation, resulting in higher steel consumption due to a surge in construction activity.
- In November, the output of crude steel surpassed 1.57 million tons, an increase of 37.4% over the same period in 2008. In September, the average daily output was at its highest in 2009 at 1.69 million tonnes.
II．China’s steel exports have experienced setbacks, as the vibrancy of the domestic market has outpaced that abroad. Although a major net exporter of steel in previous years, China now imports quantities which rival the out-going totals.
- From January to November the net export of steel equaled 980,000 tonnes, a reduction of 98% y-o-y.
- It is predicted that annual imports of crude steel and billet will total 23.8 million tonnes, while exports will equate to around 25 million tonnes. This narrowed gap between imports and exports signifies that China is no longer predominantly export oriented in rudimentary steel.
- Excluding billet, China increasingly imported more steel than it exported from April to June, a trend which restarted again in November. It is expected that imports will continue to dominate through 2010.
III. The structure of demand has changed significantly, with a shift toward more toward long products.
- From January to November 2009, the output of rails, long products and narrow tape all increased by 24% y-o-y.
- The output of plate (narrow tape excluded) increased very little – only 8.4%.
IV. The overall steel market was relatively stable this year. Price movements fluctuated within reasonable levels.
- As a result of the global financial crisis, the international demand for steel decreased substantially causing a severe drop in the commodity’s price. The price of steel on the Chinese market was also affected.
- The decline in the price of steel accelerated after October 2008, dropping to 1994 price levels by the beginning of November 2008.
- From November 2008 to November 2009, the steel price moved within a narrow range, and has remained at a similar but slightly higher level in comparison to November last year.
V. The profitability of the steel industry dropped sharply this year. Small to medium sized steel mills who specialise in long products profited more than larger steel mills who specialise in plates.
- From January to October 2009, the total industrial output value for 70 medium to large sized steel mills decreased by 20% y-o-y – sales decreased by 20% y-o-y while profits decreased by 70% y-o-y.
- Medium to large sized steel mills ran deficits for seven months, from October 2008 to April 2009. The deficits switched to profits only in May of this year, and until recently, these profits have remained small.
Beyond language barriers, the negative perception of Chinese products’ quality often hinders their ability to enter the Russian market. Although a prospective deal between a Russian client and a Chinese supplier may make it to the final stages, even to a point just before the contract is signed, reservations on the Russian side may lead to a failed or delayed transaction. All may be ameliorated with a single certification – the GOST R.
GOST R Certification
The GOST R is not an advanced certification, hence for certain industries allows fast access to the Russian market. It is issued by the Federal Agency of the Russian Federation on Technical Regulating and Metrology to ensure that production activities, goods and services conform to Russia’s national standards.
There are two types of GOST R: the Single Shipment Certificate and the Serial Production Certificate. The Consignment Certificate of Conformity for Single Shipments is a trade document valid for one consignment only, i.e. for a certain quantity and product type. It can be issued only if the foreign manufacturer is able to prove that there is a pre-existing agreement with a Russian customer/importer by means of a contract or an invoice.
In contrast, the Serial Production Certificate of Conformity is a trade document whose validity can vary from one to three years, and is issued specifically to manufacturers. In this case, there is no need for the manufacturer to provide documentation from a customer/importer in Russia. This certification enables the foreign suppliers to send an unlimited quantity of goods during the certificate’s period of validity. To obtain the Serial Production license, Russian experts must first inspect the manufacturer’s facilities and test product samples.
Of these two Certificates of Conformity, there are both voluntary and mandatory types whose colours are blue and yellow, respectively.
The GOST R certification system concerns the majority of products sold and/or used in Russia, such as foodstuffs, textiles, cosmetics and toys; mechanical and electrical goods; and equipment for such industries as food, chemical, oil and gas, and construction as well as others.
Regional Applications
The benefits of GOST R certification are apparent in CIS countries. It is officially required and acknowledged in Russia and Belarus. And although not officially required in Kazakhstan, Azerbaijan, Moldova, Lithuania, Latvia, Estonia or the Ukraine – in the Ukraine, UkrSEPRO is the officially required standard – the possession of GOST R certification is widely recognised, and assists in the promotional activities of one's product.
In addition to GOST R certification, RTN certification is necessary for exporting potentially dangerous products to Russia. This applies to manufacturers of such items as lifting equipment, heat exchangers, hot water boilers, pressure equipment, and compressors.
| Type | GOST R Certificate | UkrSEPRO Certificate | GOST K Certificate |
| Certifying Body | GOSSTANDARD | Derzhspozhyvstandard | KAZMEMST |
| Certificate Types |
Mandatory Certificate of Conformity (yellow) Voluntary Certificate of Conformity (blue) |
Mandatory Certificate of Conformity Voluntary Certificate of Conformity |
Mandatory Certificate of Conformity (blue) Voluntary Certificate of Conformity (pink) |
| Validity |
Single Shipment Certificate 1 Year Certificate 3 Year Certificate |
Single Shipment Certificate 1 Year Certificate 2 Year Certificate 5 Year Certificate |
Single Shipment Certificate 1 Year Certificate 3 Year Certificate |
Another point to mention is that Russia’s individual industries, and even individual leading enterprises, may have their own standards. For example, some steel end-users only buy boiler tube with ОАО "CNIITMASH" certification, and oil major Rosneft has its own qualification standards for providers of its equipment.
Once the language barrier is overcome, obtaining GOST R certification is the next step toward enhancing a product’s competitiveness in Russia and the CIS. It is an indispensable move for making the quality of one’s product recognisable to these countries to ensure that, next time, the deal runs smoothly.
This advertisement represents China’s first ever global branding campaign to enhance the image of the Made in China brand. The theme of the ad is Made in China, Made With the World. It attempts to highlight how Chinese and overseas firms work together to produce high-quality goods. Appearing in the ad are products used in daily life, including running shoes made with US sports technology, an iPod player with software from Silicon Valley, a French-designed fashion label and a European-designed refrigerator - all sporting the Made in China label. As such the ad is a clear attempt to link Made in China with Designed in the West and to illustrate China's capability and potential to manufacture quality products.
Before this advertisement, the global branding image of Made-in-China products was derived from individual companies such as Haier, Tsingtao, Huawei, or from Chinese companies investing capital overseas, such as Lenovo. The new theme of Made in China, made with the world, however, points to a whole new trend in the development of the Made-in-China brand. Yet this is only the start of the global reconfiguration of the Made-in-China brand. What do you think of the ad? Have a look and let us know in the comments section below.
It is said that one does not only buy a product, but the supply chains that come with it. For those sourcing from China, this is especially true. The rapid development of China has taken place unevenly within its territory. Various levels of infrastructure development, different legal structures – particularly within special economic zones – and diverse geographic features give some cities a logistical edge over others. A recent paper[1] in the Journal of Social Science and Management attempts to make sense of it all. The findings of this study are presented to enable supply chain professionals to assess their own logistical standing.
The authors evaluate a city’s ability to move goods based on ten variables, which include local gross domestic product, the number of foreign funded enterprises, freight traffic (by weight), investment in fixed assets, railway and highway density, and possession of civil motor vehicles. Scores are then generated from the relative dearth or abundance of these features to compare the logistical situation of 30 Chinese cities.
The results are unsurprising. The top of the list is dominated with cities along the east coast. Shanghai is number one in all but two categories – it is behind Beijing and Tianjin in railway development and ranks 21st in regards to the possession of motor vehicles. Chongqing may be considered the most prominent city for logistics in western China. It is 7th overall, number two in freight traffic, and is in the top five in four of the other factors. In general, cities in the west were overshadowed by their eastern counterparts: Xining (in Qinghai province) lagged behind the other 29 cities in all but one category - freight traffic.
Keep in mind that this study provides only a historic snapshot of a
dynamic picture, given that 2005 data was used. However, the overall situation of China's logistical capabilities remains clear; the north has an edge in rail capacity, the south by way of road, but above all it is the eastern cities which are best endowed to handle large flows of goods.
[1] Jiang, C., and D. Chen. "Research on Urban Logistics Infrastructure: An Empirical Study of China." Journal of Service Science and Management 2.2 (2009): 80-91. ProQuest Computing, ProQuest. Web. 21 Dec. 2009.
Most of the world’s leaders are saying that the global recession is over. But does this correspond to the data? A few leading indicators, both conventional and unconventional, will be examined to determine the outlook of the global economy.
OECD Leading Economic Indicators
The Organisation for Economic Co-operation and Development (OECD) releases its Composite Leading Indicators (CLI) on a monthly basis. Each country’s index is comprised of different statistics. For example, China’s includes items such as the production of chemical fertilizer and the tonnage of cargo handled at ports, while for the United States the interest rate spread and consumer sentiment are measured. Periods of expanding or diminishing economic activity fluctuate around the value of 100, deemed to be the long term economic trend. Movements in the CLI generally precede similar movements in the business cycle.
According to the OECD’s leading indicators there is an overwhelming trend of economic recovery. Countries such as China and India have even eclipsed the 100 mark, suggesting that they are back on track in terms of more long term trends. From the OECD data, it seems that the worst days of the recession have indeed passed.
Baltic Dry Index
The Baltic Dry Index is another way to predict future economic growth. It is published by the Baltic Exchange in London and gives an overview of the marine shipping price for raw materials worldwide. This is a useful indicator because the availability of cargo ships is relatively stable, whereas the need for international shipments in dry goods—things like coal, metals, and grains—varies considerably depending on economic activity. An increase in shipping activity means an increase in future output.
This index collapsed in late 2008, but has since recovered. It is now listed at over four times its previous value in January 2009. This largely agrees with the OECD leading indicators in reflecting a wide-ranging recovery for the world economy. The Baltic Dry Index can be tracked on Bloomberg.
Skyscraper Index
This one is less conventional. The Skyscraper Index is a measure based more on casual observation than statistical analysis. The argument behind it is that the construction of record-breaking towers is often initiated just before an economic crisis. Ground was broken on the Singer Building and Metropolitan Life Building before the panic of 1907; the Empire State Building’s construction in New York corresponded with the Great Depression; the Sears Tower in Chicago preceded the downturn of the 1970s; just before the Asian financial crisis there were the Petronas Twin Towers in Malaysia; and more recently, there was the Burj Dubai before its city’s debt problems.
If the soothsaying behind this index is correct, it doesn’t bode well for China. The country will see new towers such as the Shanghai Center, the 117 Tower in Tianjin, the Ping An Insurance skyscraper in Shenzhen, and the China World Trade Center Tower 3 in Beijing within the next few years. These projects come at a time when some have warned of the possibility of asset bubbles in China. A slowdown in this rapidly growing economy would have adverse effects on the rest of the world.
For the sake of optimism thus, following the conventional indices is recommended.
US president Barack Obama’s November visit to China highlighted China-US trade relations and the importance of these two major economies in leading the world out of crisis. The US president and other world leaders have charged that China is keeping its yuan currency artificially weak in order to benefit domestic exporters. An appreciating yuan, these foreign leaders feel, would bring greater balance to trade and lead the world out of the current crisis. But is this really the case? Perhaps history and a few economists can shed more light on this issue.
Those in favor of a dearer yuan include the IMF Managing Director, Dominique Strauss-Kahn. In a recent speech
Nobel Prize winning economist Paul Krugman is even more strident in his criticism of China’s monetary policy. He contends
Not all agree with this sentiment. Justin Yifu Lin, chief economist at the World Bank, warns that appreciating the yuan will not help to improve global trade balances and would spoil what appears to be the beginning of economic recovery. Goods would become more expensive in the US, adversely affecting the already beleaguered American consumer. The trade deficit between the two countries would not diminish significantly because manufactured goods shipped from China are not produced domestically in the US. Mr. Lin advises instead that a growing China and a reformed US financial sector are the keys to global recovery.
Historic precedence also challenges the assertions of the likes of Krugman and Strauss-Kahn. In the 1980s the world’s major central banks worked to appreciate the Japanese yen by around 50% to the USD. The unexpected result was that the US trade deficit with Japan actually increased. The first significant decrease did not occur until 1990, five years after the central banks’ action and three years after the currency revaluation.
There is no simple short-term solution to trade imbalances. In the end, China’s monetary policy is set by China’s leaders who appear content with the yuan at around 6.82 to the USD. The result: China’s GDP once again surpassed the 8% growth rate with indications that the rest of the world is regaining its economic footing. It could be a lot worse. Debates on China's monetary policy will continue, but for now the yuan is staying put, for better or worse.
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