National Torch High-Tech Industrial Development Zone of ZhongShan

The building!

In 1990, the company was approved to be one of the first State-level development zones in 1991 to seize the opportunity to develop hi-tech industries and large-scaled manufacturing while foreign countries are restructuring their industries. At current, there are 30 international companies involved. Within 3 years, they have innovated more than 500 products.

Products:
o Biomedical
o Automobile fitting
o Modern packing printing

The zone is situated in the center of the Pearl River Delta with favourable transportation networks. Means of transportation are like by road, by water, by air and by railway.

The zone offers a comprehensive set of facilities of telecommunications, hospital, school, hotels, shopping centers and entertainment places. Combining various functional districts and industrial parks, a hi-tech industrial city has formed integrating research & development, production, logistics and living.

How do they attract foreign investors?
They classify the products into 5 major areas and each area is allocated a certain space of land. Because of the facilities available, they are able to attract foreign investors as they will look for the best facilities in the region. To attract foreign investors, exemption and reduction of income tax are given. There are also no limitation in selling proportion in domestic market if the hi-tech products are state-encouraged and up to international advanced level for its technology, or complementary with the technology in the province. Foreign investments are more than 95%.

Factors that they will consider before accepting:
o Constraint of area
o Pollution
o Whether it has financial abilities/ profit ability

this was posted one of their tv screens!

19 March 2007

Sunten

Main products of Sunten
o Dry type transformer (largest production)
o Rector
o Substation
o Switch gear

the transformer!

Sunten was set up in 1988. They have imported technology and facilities from Germany. Sunten also has successfully developed six generations of dry-type transformer products and this is the first in China.

we were given an introduction of Sunten!

Main partners:
o General electric
o Tsinghua university
o Xian Jiaotong university
o Schneider electric

The excitation transformer is one of their best products. They have incurred 160 sales with 40 out-sales. Their sales are either from local or they get others to help them promote such as thru agents. Sales also have been increasing continuously over the years. However, their prices are slightly higher by 5% to 10%. The reason is because their products are of better quality and the customers also trust them the most. Many big companies such as Toyota also uses their products.

A company no matter what will definitely face obstacles and challenges. Sunten is no different. They have difficulties getting raw materials as copper price has increased. Steel price has also increased as well to double or triple the pricing. Another obstacle faced is that there are many competitors in this industry. By pricing their products lower, it would also affect the market share of the company. There are also internal problems such as limited capital and control of employees.

Knowledge of culture is important. Guanxi is also important. Therefore, have to get locals to enter the company so that there will not be much variation. Thus business can be set up more smoothly. Also, studying of business environment first is also important.

The most important thing is the quality of the product! Once there is good quality in the product, there will be brand recognition too. This is more important as it is long-term as compared to short-term promoting.

They also attract foreign investors by giving tax incentives. Thou this is only short-term to those foreign investors.

18 March 2007

Yong Xiang Furniture

Yong Xiang Furniture is a distribution factory as they do not sell it directly to customers, instead they sell through trading companies and exported to other countries such as Europe, USA and middle east. This company has operated for over 10 years specializing in sofas. They have local designers to design their sofas and the sofas can even be customize according to customers preference upon ordering. They have to constantly improve their designs to keep up with competition.

How do they attract foreign investors?
o Thru own website
o Trade companies to introduce buyers
o Advertising
o Trade fairs

One major problem that they faced is that they are unable to get wood during certain seasons such as during May to July, where they are low seasons for sale. Another major problem is that they may not have enough sales to cover all the operating costs all the time.

Why they choose to set up there?
o Nearer to the main branch
o Cut transportation costs

Disadvantage to set up there?
o Electricity limited. Therefore, there will be 2 -3 days in a week that there will be electricity cut.
o More cost incurred as a result. But they have resolved the problem by having their own generator

One interesting fact is that they do not put their company name or logo on the sofa itself. Therefore, they are able to customize any designs which the customer requests.

The most exquisive sofa set!

How cool! I could customize my own Hello Kitty sofa in the future! =)

16 March 2007

Piano Factory

We visited a Piano factory in Guangzhou and that factory is the largest piano factory too. We get to see how the production of the piano is like, from the scratch to the testing out of each musical note. How amazing it is!

The brand of the piano that they manufacture is Pearl River and they have 300 over retailers around. They produce base on orders instead of mass production. They not only manufacture piano but they also manufacture and produce other instruments such as guitar and violin. Their annual sales are 7 to 8 million and mainly comes from production of piano.

people @ work

Other products that they manufacture:

At the very beginning, the pioneers spent 30k to build up the factory. They believe that determination is the route to success. Leadership is also important in leading the workers so that they would bring the company to a higher level.

The company broke into any countries around the whole, selling worldwide. Countries such as Europe and USA. However, many difficulties arose when breaking into Europe and USA. they have to try all means to protect the brand and create brand awareness as Europe and USA have their own local brand of pianos. They must also make the local people trust and have faith in the brand, Pearl River. Many of the customers would tend to make comparison with brands such as Yamaha. Therefore, they had to use local manpower to sell the product as only the local would know the culture and preference at the tip of their fingers.

In order to create brand awareness, they have to do advertising. They have advertising means such as piano competitions, sponsorships for events and even charity shows.

They have other production centres around China such as Hong Kong and Macau. The company also bought over a Germany brand to be manufactured in China. But this brand only appeals to locals in Germany as the prices are more steep and the China people aren’t very familiar with the brand.

AWESOME! how i wish its mine!!

After visiting the company, I was amazed at how fast they are able to break into the market and having pretty good sales. I also leant that when you want to go into production line, you have to clear of your customer’s taste and preference. That is very important!

15 March 2007

Regional Director of IE S’pore, Mr Nee

After our lunch, we had a networking specially arranged with the Regional Director of IE S’pore, Mr Nee. Personally I feel that he has managed to relate what are the important factors to take note when doing business in China and this has helped me to understand International Business as a whole as well as my group project topic better.

Before this, I had very little understanding of IE S’pore. But now I know that IE S’pore helps ready successful company to realize their dream, which is to look for bigger area for investment out to Singapore. This would also help them strengthen their base. But they are not responsible of bringing the company out of Singapore. They help to look out for business opportunities and assist them should they need help such as bringing them to the various embassies and government.

Guang Dong has the largest consumer market in China. But with very strong imitation around as compared with the city which is more sophisticated and international.

Mr Nee also said that “Guanxi” is more important in the less developed part of China thou generally its more important than in Singapore. The basic is still important where cases are not so clear in black and white. This leaves space for ambiguity where they are able to satisfy nearer to what you want. There is space for interpretation of the law. Therefore, if you were to maintain good relationship with the government officials, they would be able to interpret it in a good way. BUT… it is not true to solely have good relations only. For example, in a F&B industry, if the food is not nice, how big space given for shop is of no use also. Therefore, Mr Nee thinks that “Guanxi” acts more of an enhancement.

Understanding the culture of China is also important when doing business in China. but you need not know everything at the start as things could be learnt along the way.

One important thing that Mr Nee said was that :”Attitude is the most important in doing business”. I agree with what he says as you must have the right attitude of doing business, must be able to learn fast and adapt to the environment fast. If without the attitude, no matter what, you will not succeed!

We also should not have the complaining spirit. Instead, we should comply and adapt to the surrounding fast. If one was to keep complaining, he will never succeed. But some things should not change. The principle that we, Singaporeans, should keep and uphold is integrity. Singaporeans might be known “stupid” to HK as we think that cheating and bribery is wrong. But actually we should not fall into temptation.

I find this networking session very fruitful as I was able to learn a lot from Mr Nee. This session has left a very strong impression to me that I would always quote what he has said.

16 March 2007

Guang Zhou Institute

We visited a relatively old but prestigious institute. The teacher gave a lecture about Guang Zhou’s 2006 financial statistics. The lecture was very detailed with all the facts and figures regarding Guang Zhou as a whole and their financial sector.

The very old building!

But one thing I would have to bring up regarding this visit to the institute is that the powerpoint slides are very wordy and long. The words are practically covering up the whole entire screen and there are a lot a lot of slides. Even when there are pictures in a slide, he would try to cover up every single space there is for words to be typed in.

Because of the way the powerpoint is prepared, it did not manage to capture much of our attention towards the end and I even caught people dozing off half way through. Opps! But that is something that all should learn which is not to present your powerpoint slide with all the words or else it would capture your listeners. This is one lesson learnt!

Overall, his topics covered are essential. Such as investment in Guang Zhou have increased over the years and that GuangZhou’s electronics industry have increased over the 9 years. Tourism in the country has as such increased as well, resulting in China’s ¼ of inflow.

15 March 2007

Guang Zhou Wholesale Market

This is one of my most look forward places in the whole itenary. Before entering the place, all you could think of is “Marketing Research”, slashing prices at an unbelievable rate and getting a hand full of goods. But after actually going there, THINK AGAIN!

Explanation:
When entering the place, it looks quite the way you thought it would be. There are many stories of shop houses. We were all very excited!

But we realized that they mostly sell only in bulk and if you were to get just one piece, they usually jerked up the prices by a lot. Which means either you buy in bulk of like 10 pieces or you buy only 1 piece at a price that is not really worth. The people there also have very bad attitude and very bad service. They would not slash the prices for you despite how good your bargaining skills are. Even if you said you were to use it for business purposes or as samples for company, they too would not bother you that much.

The goods at the top floors are priced slightly higher than those at the lower floors. I guess the reason why they would not sell it to us at a lower rate is because most of us are dressed in formal attire and quite a large majority are in Ngee Ann blazers. Therefore the shop holders would have recognized us at a distance. Many of us also used the same tagline such as :”We are here to do market research…blah blah” resulting in them knowing that we are all from the same place. Lesson learnt! Next time when going there, dress casually! But I doubt I’ll be going back there unless I am getting goods in bulk.

I also realized that most of the shops sell imitation goods. Even their imitation goods are priced at steep prices. And when the police officers are patrolling the places, they would hurriedly off the lights in the store, close the curtains and locking up the doors. They would then sit outside their shops waiting for the coast to be cleared before reopening their stores. I had one experience where I was locked inside one of the shops when looking around their goods. But they let me out when I requested to leave. So no harm done!

Overall, quite a bad experience and a lot us went back empty handed.

I’ve learnt that you have to build relationship first unless they refuse to sell it to you thinking that you are buying for personal use. A lot of talking and negotiations have to be done before buying first. That is if you meet a good shop holder. It is also a good place for business people to get items in bulk at cheaper rate but not a good place for casual shoppers like me! =)

Day 2

China South International Industrial Materials City







This is the trading flagship for both China and overseas market. There are 5 raw materials trade centres in China South City.

1.Leather and Accessories Trade Centre
2.Textile and Clothing Materials Trade Centre
3.Metals, Chemicals, Plastic Materials Trade Centre
4.Printing, Paper Products and Packaging Materials Trade Centre
5.Electronic Accessories Trade Centre

The objective of the Material City is to gather all the international suppliers at one designated area so as to cater for convenience and to attract buyers. Within each of the trade centres, there are a whole row of shop houses selling raw materials. Thou most of the shops are selling identical things but they compete for the lowest prices in order to survive there. 70% of the display units are for rental and 30% are for sale.


A row of shophouses selling raw materials!

Connecting with Business people
- Connect and contact the major shareholders of the various companies.
- Introduce and allow them to view the place
- Buy samples first
- If everything is alright and settled, they will then place order with the suppliers.

It is important to keep in good relations with the business people so that they would also introduce other potential buyers as well. The place is strategically located and thou Material City is very big but they have buggys, with interval of 15mins, to bring buyers around the place in search for the raw materials they need.

Material City also provides lodging (hotels) for interested buyers within the region so that it would be more accessible to them.

Catalogues are distributed each month to keep the buyers updated and thus make awareness to them.