Once primarily made up of fishing villages, now with many high-rise residential apartments and multi-story factories, Shenzhen was located somewhere in China, very close to Hong Kong. He once exported almost everything for the Christmas shopping session, from the Christmas tree to the decorations. It wasn’t doing very well this year, mainly due to rising raw materials (including electricity) and labor costs that had kept many buyers away. Not so long ago, Shenzhen boasted of being the hub of all production activities and now it is no longer the favorite of many buyers. This is nothing new; The same power shift was witnessed by Hong Kong and Taiwanese businessmen a few decades ago right on their doorstep.

Being the lowest cost is a tough battle, there were always some that Tom and Henry could set up production facilities at even less cost than theirs and snatch all the orders from them. Good news for buyers, right? Just keep looking for lower-cost manufacturers to enjoy higher profit margins? The answer was yes and no…

Therefore, as buyers, it is important to distinguish the three main categories of models made in China. They were the Wenzhou model, the Dongguan model, and professionally managed companies. Together, they form the fundamental production engine that had been driving China to even greater export powers.

1. Wenzhou Model, I first heard about Wenzhou when the Chinese government implemented a series of measures to curb the heating of properties in China’s major cities to prevent the formation of bubbles that would one day burst. I came to learn about the purchase of the Wenzhou group, consisting of a cash-rich person who organizes a trip to explore the development or launch of new projects throughout China. Snatching almost 90% of units in a single shot is not uncommon. Granted, what the Wenzhou model meant was simply copying the most popular products launched and released by others, within months identical products were made available and ignited competition, which in turn lowered the price and many times beyond cost values. These hit-and-run models did not have proper management planning or core technology.

2. Dongguan model, I was there once, many entertainment establishments in full range, I mean, some were beyond your wildest dreams. Also, there were many fancy restaurants and shopping malls as if you were in Taipei or central Hong Kong. As you probably guessed, these manufacturers were mostly run by cross-straits entrepreneurs and many were good at exploiting China’s emerging market opportunities, but share the same fate as their Wenzhou model counterparts; having the weakest link in production between R&D, production, marketing, distribution. They were easily subject to getting their throats cut by other competitors who can do it cheaper.

3. Professionally run companies, normally run by returning engineers and scientists, mostly from the US, some were SOEs (State-Owned Enterprises) that had been reformed or, so to speak, liberated. They compete with others with competitive technologies and participate in the market on a much larger scale; companies like Hair, TCL were classified in this segment.

So, as a buyer, how could you use this information to harness the great power of manufacturing? Simple, always optimize your requirements in 3 main areas of competitiveness,

1. Product development

2. Marketing variation

3. Packaging innovations

For long-term cost gains and quality products that can sell well and earn high profit margins, focus on these 3 aspects;

1.Product development. Use the Dongguan model to develop new products by leveraging your existing R&D infrastructure, no matter how trivial, make them develop products at a faster pace and lower cost. You will be amazed at your innovative strength to develop new products with production and manufacturing requirements in mind, dramatically reducing product development cycle time for retail shelves.

2 Marketing Variations: This depends largely on budgetary resources,

Depending on the target customer groups, whether they are domestic in China or international. He always developed 2 or more products with different features to serve different market segments. For example, certain features have been turned off or disabled for home customers whose price needs to be lower to establish economies of scale. High-end version for international buyers.

3 Packaging Innovations: Ever wonder why a box of chocolate can command a much higher price in a different country? I once received a box of attractive and tempting chocolates from a friend who bought it in Japan. The mere sight was enough to appease my appetite. Breaking through layers of wrapping paper, ribbons, the chocolate tasted no different than what I bought in the glass containers at the grocery store. Yes, packaging can add additional competitive advantages to your products, please work with the Wenzhou model on the packaging requirement, as the cost will be minimal and the idea will certainly double in less than 3 weeks, but it is unavoidable and as long as you have your own niche market to go for, it’s the best advantage you can get

The author is a founding member of the [http://www.china-import-guide.com]

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