1

MARKETING OF CHINA PRODUCTS

WHAT IS MARKETING OF PRODUCTS

Product marketing deals with the first of the "7P"'s of marketing, which are Product, Pricing, Place, Promotion, Packaging, Positioning & People. Product marketing, as opposed to product management, deals with more outbound marketing tasks (in the older sense of the phrase). For example, product management deals with the nuts and bolts of product development within a firm, whereas product marketing deals with marketing the product to prospects, customers, and others. Product marketing, as a job function within a firm, also differs from other marketing jobs such as marketing communications ("marcom"), online marketing, advertising, marketing strategy, public relations, etc. A Product market is something that is referred to when pitching a new product to the general public. The people you are trying to make your product appeal to is your consumer market. For example: If you were pitching a new video game console game to the public, your consumer market would probably be the adult male Video Game market (depending on the type of game). Thus you would carry out market research to find out how best to release the game. Likewise, a massage chair would probably not appeal to younger children, so you would market your product to an older generation. Product market definition focus on a narrow statement. It focuses on the product type, customer needs (functional needs), customer type, and geographic area.

MARKETING OF CHINA PRODUCTS

INVASION OF CHINESE GOODS IN INDIA- THE WHYS AND HOWS

Come any occasion and the Indian consumer is ready to make a beeline to purchase another of those Chinese goods. For one, these Chinese goods are substantially cheaper than Indian goods and come in wide varieties. In very simple terms in Economics, we know that anything like large scale dumping and imports can spell a disaster for the economy. In simple Keynesian terms, it is a leakage of Income from the Economy. This article focuses on the background of the Pricing Policy by China, the damage or not it can cause for the Indian domestic industry, the anti dumping tariffs adopted by the Indian government, the latest Statistics and we conclude with some Policy suggestions. As the memory of an Indian consumer goes, this influx of cheap Chinese goods started in the late 90s and gained momentum thereon. Every article, be it an expensive Barbie doll or a painting you want to adorn your house with has a Chinese alternate to it. Why are the Chinese goods priced so cheap? The cost of production being less in China is an obvious answer but when we dwell deeper into the world of Chinese manufacturing, the reasons abound. Chinese goods are known for their moderate quality, prompt delivery and affordable prices in comparison to Indian goods.

MARKETING OF CHINA PRODUCTS

WHY ARE CHINESE PRODUCTS CHEAPER?

Chinese products of comparable quality, novel conception and low prices have been flooding the Indian market. The differential in price ranges from 20% to as high as 50%. ? Dumping!? Has been the outcry by our businessmen, nurtured over five decades by the license raj, and many industry circles have been clamouring for protectionism. Conversely, companies are sourcing products for the Indian market from China and some like the Patel Group are proposing to shift their entire operations to China. One of the mainstays of the Chinese strategy of following a mass-production and massconsumption formula, is to keep the profit margins low and cover the gap by the subsequent boost in sales. With ?Think big, think global? as its motto, the huge scale of operations of the Chinese industry is geared towards supplying not only the large domestic market, but also exporting extensively to global markets at cheap rates. When China opened up its economy to foreign investors, it simultaneously provided a significant thrust to the export potential through a judicious mix of state incentives and the free market mechanism. It created Special Economic Zones (SEZs) that were given preferential treatment. The export sector was given a boost by creating an extensive export network and dismantling impediments to the import of technology. The benefits accruing to Chinese manufacturers are essentially due to seven factors: economies of scale in manufacturing, tariff differentials, lower cost of capital investment, higher labour productivity, lower transaction, power and transportation costs. An oft ignored aspect of the Chinese business acumen is the Chinese manufacturer?s vision to climb up the value chain and China's competencies in the higher end of the technology spectrum that requires highly skilled labour. The country?s state-level research institutions and major universities have opened research centres and bases that combine production, training and research. China is doing what Japan did in the 1970s and South Korea in the 1980s. An alternative strategy for India could be to concentrate on building competitive advantage in the services and knowledge based sectors, allowing the Chinese to rule the manufacturing domain.

MARKETING OF CHINA PRODUCTS

Following are some of the reasons behind Chinese goods being cheaper than Indian goods
1. China does not have stringent intellectual property rights (IPR) issues so come any new product in the world market; China is ready with a cheaper alternate. Thus there is no cost of research, designing and redesigning of any product. 2. The labor is not demanding and does not go on strike. 3. Where most Indian companies are striving for a Total Process Review (TPR) for quality satisfaction, Chinese companies are not so particular. 4. China does not have any after sales tax on its products leading to a further lowering of costs. 5. Are we enjoying the cheap Chinese goods because the Chinese currency is undervalued leading to purchase of cheap Chinese goods? This needs to be carefully studied. 6. The cheap Chinese labor is another major reason for the dirt cheap Chinese goods especially like toys where intensive labor techniques are employed 7. With the removal of quantitative restrictions (QR), the ending of the textile quota regime and Chinese accession to WTO, the dumping activity by Chinese has increased manifold. 8. Lower rate of Indirect taxes on Inputs 9. High level of cash subsidies being offered by the Chinese government to its producers and exporters 10. Lower taxes enable the Chinese companies to participate in the world market at a lower margin and thus dominate it. Adopt the business model focused on higher volumes is a natural progression in this scenario We must also mention here the advantages of the high economies of scale and higher level of Productivity achieved by highly skilled labor. We must remember here that China could not have been able to do it alone. The import of technology and Infrastructure from West has played a very important role. Had West not opened its gate to the Chinese products, China could not have boasted of such huge trade surplus. China Imports very little from the rest of the world.

MARKETING OF CHINA PRODUCTS

It is noteworthy to mention the reverse Chinese model of manufacturing.

China produces in bulk and sells in bulk. Rather than waiting for the orders and then producing, Chinese have mastered the art of producing first and selling it later.
This is possible due to low interest rates and low taxes Chinese government imposes. This model helps the buyers as they do not have to wait for the produce. They can inspect, pay and ship the delivery in a single day! Since Chinese accession to WTO, China has been much more liberalized in reducing Tariff and Non Tariff barriers. The Liberalization measures taken by China have been more broad and deep in nature though it entered WTO in 1991 whereas India has been a member since Inception. Dumping Meaning and Effects- The simple meaning of dumping is to sell your countrys products in other countries at unfair lower rates than the domestic rates prevailing in the country of Export leading to losses to domestic suppliers. China has indulged in large scale dumping all across the world; India being majorly affected. Here it has to be remembered that everything you complain against will not be qualified as dumping. According to WTO, if Investigations prove for such goods falling in the anti dumping bracket that the exporter is charging a price below than what he charges in his domestic market or if the volume of imports is too high so as to cause a disadvantage to the local producers can be called as dumping. Thus, we conclude that not any and everything will be classified as dumping. Once a complaint is filed, it has to be investigated by a designated agency taking into account the WTO laws. Dumping wars have gained strong ground especially in the times of recession, with India filing maximum number of anti dumping cases against China. A growing insecurity for India in resorting to levy of high anti dumping duty is the current high trade deficit with China. Can we forget to mention here the case of green veneer tape, where the Interest of the local monopolist was protected at the cost of consumers getting a better product at more competitive prices?

MARKETING OF CHINA PRODUCTS

Besides dumping is not the only way Chinese goods enter India, much of it enters through Illegal route of Nepal. China leads in the number of anti dumping cases filed against any country in the WTO. Between 1995 and 2005, India filed more anti dumping complaints against China than any of the developed nations of US and Europe. Anti dumping measures have become more popular today to offset unfair competition, in relation to other measures such as QRs and import quotas which are non discriminatory in nature and require injury in severest form. To India, the pinch is more in those areas where it is also a large producer such as chemicals, toys, electronics, leather and textiles. Recently anti dumping Import duties have been filled on acrylic fibers, Analgin, potassium permanganate, paracetamol, sodium nitrite, caustic soda and green veneer tape. From 1995-1999, India initiated 140 anti dumping investigations which are highest for any country. Many feel this is not fair. It is also seen that the amount of anti dumping duties levied are against the basic rules. This also arises due to the non market economy (NME) status of China in countries such as US. As we examine, we find out that the entire amount of duty which is levied against the Chinese goods is flawed. Here it is pertinent to understand the meaning of a Non Market Economy. In very simple terms, a Non Market Economy is one which does not operate on market principles of cost and pricing. For NMEs, the value of its goods do not reflect the true price. In most cases in US, it is seen that where the Chinese companies fail to respond against the AD case, (Many a times due to Ignorance of the legal structure) it gets more of an unfair deal. Chinas relation with US- It has already been mentioned that the boom in China is made in USA. Another question which is being asked commonplace today is Are Economies such as US and Europe overly dependent on cheap Chinese products? The answer is no as Stephen Dunaway rightly points out, that due to intense competition, the cost differentials between China and other counties has indeed narrowed down. Another point which needs mentioning is that Chinas Economy is highly export dependent on countries such as US, so we may as well study the dependence the other way. China is facing strong opposition of dumping from the European countries as well. These Countries are levying a high import duty on vast scales Chinese dumping of leather goods. To salvage their own domestic Industries countries like Japan are resorting to high level investment

MARKETING OF CHINA PRODUCTS

in China to sell back in their own domestic economies. This will soon be followed suit by many other Economies. FDI is playing a big role in Chinas technological process with China becoming an attractive destination. India and China are considered at par in terms of investments. India with its paranoid behavior is lacking in many respects to provide a suitable ground to MNCs to invest in the country thus losing big on FDI. Current Strategy The Protectionist path: What stand has India taken on Chinese Dumping? Indias strategy revolves around Imposing high tariffs and taxes on Chinese goods whereas countries like Japan have resorted to a high level investment in China to counterfeit Chinese dumping. How does this work? Does it affect level of FDI in our country? With the dumping allegations against China Increasing; what holds good for India now? Is putting high level of tariffs the only solution? One, a high level of tariffs does promote a menace called smuggling and offers no solution. Indian consumers end up paying more for products they could have brought cheap. Doesnt the simple theory of comparative advantage tell us that two countries should produce and exchange products with each other in which they have a comparative advantage in? Also trade between two countries should be a multiple of their GDPs. Antidumping tariffs are not a solution, for one as suggested by many an economists, the line between protecting the producers and consumer welfare is very thin. Anti dumping games only prevent the competition rather than the competitors. In some cases where the product is being used as a raw material and an anti- dumping duty is levied on it, the end user industries suffer because of the cost of rise in their raw materials. They come at the mercy of the monopolist, duopolistic or the cartelized arrangements in their own country; thus the entire arguments of levying the anti-dumping duty become a faade. This is clearly illustrated in the case of imposing a safeguard duty on soda ash. It was vehemently opposed by the detergent and glass manufacturers. Their arguments being that imports of soda ash are less than 10% of the total domestic production and it doesnt qualify for dumping. These imports just help in keeping a reality check on the prices. The Government recently imposed a 6 month ban on the import of Chinese toys to India and withdrew it within two months after Beijing warned of going to WTO. The Domestic industry is now alleging China of becoming a price predator (Price Predation refers to selling at lower prices

MARKETING OF CHINA PRODUCTS

to acquire market share and increasing prices in future) this time. Is it a case of artificial pricing or high intensity of competition amongst Chinese products which make similar products cost upto70% less is to be seen. Another Important fact to be mentioned here is that anti dumping Investigations take long time for final settlement which can easily damage the domestic Industries. This has to become faster paced especially in authentic cases wherein the domestic producers are affected. Where does the solution lie? Are not increasing the Tariffs an easy solution for India or does it needs to work on its own domestic problems? How competitive is Indian manufacturing? Why are we not able to offer price parity with the Chinese? India has a rather dismal rate of competitiveness. The World Bank gives India a low rank of 40 out of 46 countries in terms of its manufacturing prowess. What is it that is holding the manufacturing sector? These are but a few questions we may ask in context of the given study. It is very clear that there is a trade off between the benefits to the consumers and the producers and a balance has to be maintained for the sanctity of justice in trade is to prevail but easier said than done, the solution isnt that simple. It is time the Government of India examines its own policies. All fallacies do not lie with the manufacturing sector. 1. Indian manufacturers do not get adequate Infrastructure. 2. They have to pay high level of taxes. 3. To remain in the reserved sector to get certain privileges by the Government they have to remain small and cant then enjoy the Economies of scale as enjoyed by their Chinese brethren. Time has come to develop and enhance inter industry trade with China; knowing that Chinese exports have substantial complementariness with Indian imports. FDI in India till now has not entered the way it has entered China; owing to Chinese tax breaks, business tax exemptions given to foreign firms which has not happened in India. These are few of the factors which raises the cost of production for Indian goods making it difficult to compete on price basis with

MARKETING OF CHINA PRODUCTS

Chinese. Imposition of anti-dumping and safeguard duties are not solutions; Time has come to raise the efficiency and Competitiveness of our own Industries. Unfair Methodology adopted by US, India and other Countries - We discuss some unfair practices adopted by countries in the anti dumping war against china. 1. The anti-dumping margins are grossly overstated 2. The domestic producers use them as their weapon to get advantages to the hilt. 3. The zeroing methodology is widely criticized.( Zeroing methodology means that when the Indian price is higher instead of assigning a negative value to this, it attaches a zero, thus eliminating the negative trade margin) This is against the basic rules of WTO 4. The going of the collected anti dumping duty to the domestic producer in the US doubly hurts the Chinese companies. They have to pay penance in the form of anti dumping duty and their revenue is dispersed to their domestic competitors. Market Economy status for China and Impact on India- With Chinas entry into the WTO, there is much talk happening about granting of MES to China. (MES-When the exporting country is treated at par in terms of transparency and prices are known to be decided by the economic forces. What forbearing it has for India? For once a market economy status doesnt take the anti dumping prowess from you. It will be in the best interest if India does it earlier rather than becoming a mere follower to other countries. This has more political considerations rather than economic. It is also to be remembered that granting of MES to China will not have any effect on the trade deficit. On the upside, it will ensure that Indian manufacturers improve their efficiency at the earliest possible along with substantial developments in the infrastructural development. Investment linkages between India and China will also grow in coming times. Reforms need to be Implemented by WTO- The need of the hour is not the complete dismantling of Anti Dumping duties but some reforms to be implemented at the WTO level. The WTO rules and regulations in terms of the anti dumping measures are entangled with many rules and regulations. Reexamination of duties imposed after a certain time period, a maximum

10

MARKETING OF CHINA PRODUCTS

limit to the amount of duty imposed, making the concept of Injury clear, abolition of back to back cases, time taken for the finalization etc need to be worked upon Future Prospects- As all good things come to an end so will the heavenly rights enjoyed by China. The price of Chinese products in near future will be more realistic as IPR is enforced. The west too is realizing the huge trade surplus of China, the recent imposing quotas on Chinese textiles (Better known as the Bra War) bringing China to reality grounds. Also though China has maintained the price of its goods as static to capture large share in world volumes but it is sooner or later going to face the rising cost of raw materials. China would soon increase its prices when it enters the market economy status which is 2016 for US. We must not forget that India and China produce similar kinds of goods in terms of their export basket to the West. China has highly skilled labor and a comparative advantage in the assembly stage of technology. India has to improve its manufacturing prowess; Non tariff measures such as Anti Dumping will only prove to be detrimental. In many cases, it has been observed that the mere filing of a case leads to a total disruption of trade. Trade relations in the coming years between these two BRIC giants are bound to improve, Chinas imports are surging into India on account of their product diversification and competitiveness. The reality is that 72% of the products imported are at par with Indian Quality or even superior. The World today sits back to notice when a professor claims that in 2050 the trade relations between India and China will be the most important economic relationship in the world and these countries will drive the growth of the entire world leaving far behind the Giant four.

11

MARKETING OF CHINA PRODUCTS

WHAT MADE IN CHINA MEANS - PRICE LESS, QUALITY LOW, IMPACT MARGINAL
With the entry of China in WTO the demand of Chinese goods has increased globally due to their cheaper price. These cheap Chinese goods are posing a stiff challenge for Indian exports in the international markets. In the Indian hospitality equipment sector however, despite Chinese and Taiwanese companies making a foray, they have had marginal impact. "Chinese products are not really giving competition to Indian manufactured products, only to American and European products because the pricing is 30-40 per cent lower than western goods. Some three-star, twostar and small standalone properties are going in for Chinese products," informed Rajendra Mittal of Mittal International, a company which imports Chinese products into India. Currently, the share of imported products in the hospitality segment is in the range of 35-40 per cent. American and European products dominate the segment. According to Mittal, the Chinese products have made some inroads in kitchen equipment and refrigeration categories in the lower end of the hospitality segment because price conscious hotels and restaurants do not want to pay for high quality. Yes, quality is the area where the goods from China are taking a beating. "The Chinese products are scoring because their pricing is 30-40 per cent lower, but quality-wise they are much inferior. Even some Indian products are superior in quality," said Sagar Sachdeva of the Butler Hotel Supermarket. Conceded Nirmal Khandelwal of FCML, "Despite cheap price, Chinese products are not a rage because their quality is not really good except for products of European and American companies who have set up their manufacturing unit in China." It is significant to note that well-known brands like Kohler (sanitaryware) and Cisa (security locks) have set up their manufacturing units in China to produce cheaper goods. Mittal explains the situation better, "The general impression about the quality of Chinese goods in the market is not really good because India mainly imports medium quality products, which

12

MARKETING OF CHINA PRODUCTS

are cheap. The reason is five-star hotels in any case go for American and European top brands since under EPCG license they have to pay just five per cent import duty. The high quality Chinese products can compete with western brands, but they are costly. The price-sensitive segment is not ready to pay that price for a made-in-China label." Hence, Indian manufacturers who also tap the lower end of the hospitality segment are facing some competition. For instance, a hotel or restaurant would not mind paying Rs 250 for a Chinese salver because of the imported product tag, though a Made In India label would cost a little less. Products like kettles, salvers, bread slices, meat minces, commercial knives, mixers, hair dryers etc are doing moderate business. "Chinese products in future can give competition to Indian manufacturers because of low price, high production volume and availability in the market," opined Sachdeva. The products manufactured in China are cheap because electricity is cheap. They have highly sophisticated machines of mass production, they have huge domestic volume with no competition from outside and all export is subsidized. Further, raw materials are procured by major import houses and distributed at lesser rates to manufacturers and credits are adjusted against exports. "If Indian manufacturers are to compete, the government should remove duty on raw materials and components and give the EPCG license to manufacturers," according to both Mittal and Khandelwal.

13

MARKETING OF CHINA PRODUCTS

IMPACT OF CHINESE GOODS ON OUR ECONOMY

Because of cheaper prices products made in China are becoming more popular among the Indian masses. This has had a very negative effect on our own manufacturing units and as a result many of them have had to shut shop. There seems to be no way to escape the DRAGON!!! Yes, the Chinese goods have invaded almost all the sectors of Indian market and seem to be bringing tougher times for the Indian Industry. Because of wide availability of cheap and apparently technologically advanced Chinese goods, many economists fear decline of local manufacturing units or the small-scale industry in India. The rise in demand and sudden popularity of Chinese products, which are available at cheaper prices, is giving nightmares to the Indian industry to the extent that they have started sticking Made in China stickers on their products to boost their sales. Chinese manufacturing units produce goods on a large scale. They are using the big Indian market merely to dump their products and by doing so they are killing the Indian units. For example last year during Diwali, China made crackers were sold in the Indian market. These crackers reportedly contained Sulphur. Sulphur is more harmful than Nitrate, which is used in India to make crackers. Since the Chinese crackers were cheaper than the Indian crackers, so they managed to attract gullible and largely illiterate Indian lot. As a result the Indian cracker industry saw a decline in the revenue. China is our major competitor in sectors like software, hardware, electronics etc. We should not allow China to dump their excess produce here. The small-scale industry (SSI) contributes 35-40 per cent to the total manufacturing in India. So it is the SSI, which suffers most because of Chinese goods. For instance, data reveals that 60 per cent of the industrial units in the industrial belts of Thane and Bhivandi near Mumbai have been closed down. Many small-scale Indian companies have stopped manufacturing their own goods as now they import them from China. Thats why many Indian workers have lost their jobs. This shows that the objective of SSIs of providing employment to the rural youth of India is defeated completely.

14

MARKETING OF CHINA PRODUCTS

In the last one decade Chinese labour has developed the skills of manufacturing electronic goods like semi-conductors, telecom equipment, power equipment etc, which helped them to capture big markets of America and Europe. It is no surprise that they have been successful in capturing the Indian market too. Although Indian labour can meet these challenges by improving their skills, the Indian manufacturing scenario is hampered due to stringent and weak labour policies.

It is the high time that our political leaders change their mindset and bring about the right kind of reforms without losing precious time in endless discussions. We must take necessary steps so that we do not fall prey to the DRAGONs designs of capturing a major share of our growth, which could prove to be a setback for our economy in the future.

15

MARKETING OF CHINA PRODUCTS

CHINESE IMPORTS- HOW MUCH HARMFUL AND HOW MUCH USEFUL FOR INDIA?
The cheap imports in every sector- toys, electronics goods, printing media etc has now reached such a proportion that we have much more 'Made in China" things than made in India things in our shops any where in the country. these products have no safety standards, no quality controls and comes without any standard packaging with required information on manufacturing date etc. We keep on hearing of blasts in mobile phones, toys every next day. But the most important thing is the typeof financial frauds being done ...how mcuch of import duties is being cheated and what amount of money is being mde in trading..what about the tax on that? And this is not ruining the manufacturing industry as almost all the big known houses also gets things manufactured in china and just put their brand name...Loosing jobs in manufacturing industry isn;t it? The only good thing is-things have become cheaper. and some innovative product(sans quality) has come to the market.

16

MARKETING OF CHINA PRODUCTS

POSITIVE ASPECTS

RELATIVELY CHEAPER THAN THE REGULAR/KNOWN BRANDS ADVANCED FEATURES AFFORDIBILITY, COMMON MAN CAN EASILY PURCHASE WIDELY AVAILABLE HIGHER PROFIT MARGINS FOR DEALERS

NEGATIVE ASPECTS

UNSAFE PRODUCTS NON LONG LASTING RESULTED IN CLOSURE OF MANY BUSINESSES, WHICH LEAD TO

UNEMPLOYMENT, LOWER TURNOVER OUTFLOW OF CAPITAL INCREASED IN IMORTS , DECREASE IN EXPORTS

17

MARKETING OF CHINA PRODUCTS

TOP 10 TIPS WHEN IMPORTING FROM CHINA

Pay close attention to business nature of your potential supplier. You may want to make
clear whether they are actual manufacturers or third party suppliers or exporters in China. Dealing with manufacturers and exporters have respective advantages and disadvantages in terms of international trade. Manufacturers in general can have faster responses to your requests for product designs, product development and production arrangements. You may also be able to get more competitive so called factory direct pricing. However, the third part suppliers and professional exporters typically have much broader channels and connections in various industries so they may better satisfy your broader needs for diversified products. In addition, professional exporters in China may be able to save you some hassles as they tend to have much more experiences than manufacturers in dealing with potential issues related to the international trade, among which regulation compliance, quality inspections and logistic coordination are just few example. In general, working with any "fourth-party" suppliers is not desirable so not recommended.

Establishing

close but healthy personal relationship with key staff, preferably the

management of your potential supplier is very important in the process of doing business in China. As the matter of fact, the word "Guanxi", meaning "relationship" in translation, is a very famous and popular term in China's business arena. Please also keep in mind that saving other's face is a very important gesture in Chinese culture.

You must have a good estimate of the landing cost before placing your order with a
supplier in China. The landing cost is the sum of FOB cost of goods, transportation costs quoted by your freight forwarder including the ocean freight, land freight and local freight as well as port/warehouse charges, import duties if any, and any fees imposed by logistic service providers such as inspection charges, agent fees etc. There may be some hidden costs in the chain. We would advise you to consult with a professional import management company to find out what hidden costs could potentially incur in the importing process of your specific products. The simplest way to avoid significant cost surprises is to make a small test order.

18

MARKETING OF CHINA PRODUCTS

Pay attention to import duties. Import duty assessments are based on HS code of the
goods you are importing, the country of origin, which is China in this case, and destination. If your Chinese suppliers have some export experience, they shall have the knowledge of HS code for your product. However, you still should do your homework by checking product descriptions of the HS code corresponding to the product you are importing. In some case, product definitions are somehow vague. A wrong HS code in the bill of lading may delay custom clearance of your shipment.

In term of payment terms, a letter of credit is commonly used and also suggested to use in
trade with the suppliers in China, especially when doing business for the first time. Consult with your bank to obtain detail formality and cost.

There are two types of exporting companies in China. One is actual exporter that directly
handles goods and merchandise for exporting. The other is called "export agent" that is hired by Chinese manufacturers to process exportation documents. The export agents sometimes may also provide certain logistic services to the manufacturers.

Failure to fulfill product compliances can be very costly. It may significantly delay
custom clearing process and force you to pay extremely high and unexpected customs taxes such as anti-dumping duties. Delays in custom will subsequently result in a large amount of storage expenses at a railway station or container yard. Therefore, it is critical to make sure all products you import from China comply with all government regulations of the destination country.

Visiting trade shows and international business fairs is a great way to meet potential
suppliers face-to-face. You can find the lists of upcoming trade fairs in many China sourcing websites. Most of trade fairs featuring Chinese manufacturers and suppliers are hosted in large cities in Asia, such as Hong Kong, India, Dubai and Shanghai.

If the goods you are going to import from China must be packed in wooden cases, pallets
or crates for safe transportation and easy loading unloading, standard fumigation is required before entering the United States. All wooden packaging for export must meet the nimp15 treated wood specifications. Such compliance must be certified in official

19

MARKETING OF CHINA PRODUCTS

export documentations including "bill of lading". Discuss with you freight broker for details.

Find an experienced and professional Freight Forwarder to manage your requirements

such as Pinnacle.

20

MARKETING OF CHINA PRODUCTS

NEWS ARTICLE FROM TIMES OF INDIA DATED MAY 10th, 2012

China imports losing ground in India

MUMBAI: The share of 'Made in China' goods in India's consumption economy has eased as the dragon struggles to keep its cost-competitive manufacturing story going. China's overwhelming grip over supplies of stationary products, fabrics, toys and lighting products started loosening over the past year. Consider this: ITC sourced 100% of its stationery products like pencils, geometry boxes and scholastic products marketed under Classmate brand from China. But imports will fall below 10% this year as the Indian behemoth moves sourcing back to India in a big way. Chinese products had over 70% share of the domestic toy market, which is falling to about 50%. Fabric sourcing from China by the local garment makers declined 10% in the last 12 months. It's share of the lighting sector - where the market for CFL bulbs was mostly developed by Chinese imports a decade ago -has dropped to 15% from over 50% in 2007. Indian manufacturers are sighting gains even as China's factory prowess weakens on the back of an appreciating yuan, rising inflation and soaring wages in the wake of labour reforms in recent past. Indian companies are bringing production back home, or taking it to other competitive markets part of a broader global phenomenon playing out for almost two years now. "We are developing vendors here now for all our products which we were earlier importing. Imports will now be restricted to select premium products. China used to cater to the world's stationery requirement. Now, some of it will come to India. It is already moving into Vietnam," said Chand Das, chief executive of ITC's education and stationery products business. China's discomforts present a significant opportunity for local manufacturers to serve a robust domestic demand as well as book a pie of the global sourcing from transnational corporations. Funskool, India's leading toy company, has been approached by global biggies to source production from its Goa plant to offset rising costs in China. "All the big players are looking at India for manufacturing support. While Indonesia has already got many orders, some are expected to come to India as well," said John Baby, CEO, Funskool (India), a joint venture

21

MARKETING OF CHINA PRODUCTS

between MRF and Hasbro of USA. "Two to three companies have approached us and are doing audits at our factory. We will be able to add capacity if we get these orders," said Baby. The story is similar for the lighting industry where the Chinese glow is dimming fast. The 350million-unit CFL bulb market in India has witnessed dwindling share of imports from the neighbouring giant. The evolution of the lighting industry in the past decade, from incandescent light bulbs, which did not require much of electronics, to LED lamps, which are entirely made from electronic ballast technology, has encouraged indigenization of the lighting industry. "Chinese CFLs initially flooded the Indian market. But eventually they failed to create an impact because they couldn't meet Indian market conditions where power situation varies in different parts of the country," said Arun Gupta, managing director, NTL Electronics India, one of the largest electronic manufacturing companies in lighting in India. Gupta also argued that electronics, driven by intellectual properties, has become the backbone of lighting industry, where China has lagged behind. But Chinese supplies have made inroads into India's infrastructure and capital goods industry at a time when its hold over the consumer products market has weakened. Anil Ambani's Reliance Group, for instance, has struck major equipment sourcing contracts in China for its power and telecom businesses in return for cheaper loans. Chinese equipment makers have also backed telcos like Bharti Airtel in their recent 4G roll-outs.