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Manufacture and sell to China

Joined
May 29, 2010
Location
Denmark
Just back from a 2 week+ vacation in China and a few things stuck me. OK, I could give some great recommendations about where to spend time and what to see but that doesn’t quite fit PM so I’ll stick to the relevant stuff.

We spent 6 days in Guangzhou (14,000,000 inhabitants), Guilin (170,000) and Shanghai (20,000,000) all in the southern half of China and definately not poor areas.

Not too long ago USA were the leaders in automobile production. Where I was in China there were some American cars but European made cars dominate the Chinese market with Japanese and Korean a rather distant second and third. There were also cars I had never heard of or seen before and were Chinese.

Of the thousands of taxis virtually every one was a VW. I lost count of the number of Mercedes, Audis and BMWs I saw, each one bigger than the other. Ferrari, Lamborghini and Maserati not forgetting Porche and a few Rolls Royces weren’t uncommon either. French cars were popular too - Citroen and Peugot. Electric bikes and electric scooters by the countless thousands. Segway could be extremely popular but I never saw anything that even resembled one :)

Millions of Chinese have money and aren’t afraid of spending it. Owning “western” gives prestige and makes me wonder why the US only seems to export a fraction of what it imports. Am I missing something? As I’ve mentioned in other threads Europe seems to be benefitting more by trading with China than the USA and with the current rate of exchange with the US$ against the Euro € you should be beating us hands down. The bottom line to me is that CEOs in too many US companies seem to be sitting on their thumb but maybe it’s just me being naïve or ignorant.

Production of car license plates can't seem to follow the number of cars being sold so many cars drive around without plates. Old plates are being sold at up to $10,000 so money as said, isn't an issue.

Anyone have any thoughts or comments? I’m neither pro China or anti American - just wondering why what could be and is a huge market seems to get ignored by the USA.

There were other things I noticed but I’ll see how this thread progresses before adding more.
 
Just back from a 2 week+ vacation in China and a few things stuck me. OK, I could give some great recommendations about where to spend time and what to see but that doesn’t quite fit PM so I’ll stick to the relevant stuff.

Gordon, seriously??? :toetap:

I cut out a lot of your post just to make my point, but I see nothing here as being relevant to "Shop Management and Owner Issues".


Millions of Chinese have money and aren’t afraid of spending it. Owning “western” gives prestige and makes me wonder why the US only seems to export a fraction of what it imports. Am I missing something?

Yes, you are.

All the diplomacy, and trade agreement meetings between those two countries that you were not invited too.

So in essence you have absolutely no clue as to what is going on with regard to trade between the two. Yet you maintain you have a finger on the pulse of the two economies.


The bottom line to me is that CEOs in too many US companies seem to be sitting on their thumb but maybe it’s just me being naïve or ignorant.

How do you possibly gather that opinion just by going on vacation there for two weeks, and seeing people driving around in cars with no license plates? :confused:

So I guess you are correct in stating the second half of your comment. ;)


Anyone have any thoughts or comments? I’m neither pro China or anti American - just wondering why what could be and is a huge market seems to get ignored by the USA.

My thoughts or comments? Sure......

You go on vacation for two weeks in China. Fantastic, hope you had a great time. Would love to go someday myself.....it's on my "Bucket List."

You are neither an economist, nor a CEO of a multi national corporation doing business with China, yet you apparently think all U.S. CEO's are clueless, and the USA is ignorant of the fact that there may be billions to be made trading with China.

You come back home and right away you remark that all the United States CEO's are sitting around with their thumbs up their asses totally clueless as to the business goings on in China. :skep:

WTF??? Gordon......how can you possibly think that for even one second??


I don't know what the hell you drank in the water over there, but your assumptions are not only baseless, but clueless as well.

Have a couple shots of scotch and get off your high horse. You are NOT the international trade guru as you seem to have self appointed yourself.


By the way.......it having been Patriots Day here in New England on Monday 4/18/2011, Patriots' Day - Wikipedia, the free encyclopedia I am feeling especially proud of my country and to see you in here again with negativity towards the USA based on your ridiculous assumptions gets my feathers in a ruffle!

Best Regards,
Russ
 
I was hoping for a discussion and yet again I end up defending what others read into what I write. I'll give it my best shot and only ask for an open mind.

Gordon, seriously??? :toetap:

I cut out a lot of your post just to make my point, but I see nothing here as being relevant to "Shop Management and Owner Issues"
.


That is true but after a moderator in a more relevant area deleted more than 500 of my posts and informed me that he'd delete anything else I wrote then my options became limited.

Yes, you are.

All the diplomacy, and trade agreement meetings between those two countries that you were not invited too.

So in essence you have absolutely no clue as to what is going on with regard to trade between the two. Yet you maintain you have a finger on the pulse of the two economies.


True I wasn't invited to "summit meetings" but I know quite a few influential Chinese who do travel and get to see much of the world so I also listen to what I hear. I'm assuming you don't think me naive enough to believe everyting I'm told? Much of it is easy to verify or discard.


How do you possibly gather that opinion just by going on vacation there for two weeks, and seeing people driving around in cars with no license plates? :confused:

So I guess you are correct in stating the second half of your comment. ;)


This wasn't my first visit to China although I've been to the USA much more often. I have eyes, I ask questions, I listen and don't just talk. As I also wrote there were many other examples I could mention but just chose to start off with cars. Among tose Chinese I know are Factory owners and directors plus some government employed officials and they seem to appreciate my comments. Sure I was on holiday with my wife and two friends but the Chinese who showed us around were extremely hospitable and open.

My thoughts or comments? Sure......

You go on vacation for two weeks in China. Fantastic, hope you had a great time. Would love to go someday myself.....it's on my "Bucket List."


You won't really know what I mean until you get there yourself but the parts I visited were nothing like what most media give the impression of. I don't doubt for a second that there are injusticies and all that goes with it but what country doesn't have that? Even a little thing like the fact that there were many police I didn't se one that was armed. Of course some will be armed - I just didn't see one that was.

You are neither an economist, nor a CEO of a multi national corporation doing business with China, yet you apparently think all U.S. CEO's are clueless, and the USA is ignorant of the fact that there may be billions to be made trading with China.

Again the "all". I didn't write "all". There are cetainly some CEOs that seem to be sound asleep though.

You come back home and right away you remark that all the United States CEO's are sitting around with their thumbs up their asses totally clueless as to the business goings on in China. :skep:

WTF??? Gordon......how can you possibly think that for even one second??


Americans, and always with the best intentions, get involved in as good as all other countries politics and businesses and yet I'm not allowed to express an opinion? C'mon man, what the Hell happened to equal rights? I expressed some thoughts and opinions and if I'd been American you'd probably be the first to defend my right to do so :)

I don't know what the hell you drank in the water over there, but your assumptions are not only baseless, but clueless as well.

Have a couple shots of scotch and get off your high horse. You are NOT the international trade guru as you seem to have self appointed yourself.


I'm neither on a high horse or a donkey for that matter and the only time I've ever stood on a soap box was to get something down from a high shelf.

By the way.......it having been Patriots Day here in New England on Monday 4/18/2011, Patriots' Day - Wikipedia, the free encyclopedia I am feeling especially proud of my country and to see you in here again with negativity towards the USA based on your ridiculous assumptions gets my feathers in a ruffle!

Best Regards,
Russ

I certainly hope you are proud of your country just as I am proud of ours. It still doesn't mean that I think there isn't anything that can be improved here in good old Denmark. However I wait until election time.

Once again here is something I've included several times in threads and makes Denmark unique.
Rebild Festival - 4 July in Rebild and Aalborg - Aalborg - VisitAalborg - Denmark.The official guide to Aalborg with tourism and travel information. Facts on attractions, hotels, restaurants, events, transport, booking etc.

The last thing I want is to make this issue political but (and here I appeal to all "foreigners" and Americans with first hand knowledge of what is going on around the globe), is there any other country except the USA that has trouble exporting to China?

There probably isn't a town in China (the big cities have thousands) that does doesn't have a MacDonalds, KFC, Starbucks etc. and Coke, Sprite and 7 up (even 7 - 11s) are prolifereous so some American influence is certainly there.

To get things a wee bit back to "machinist" I visited a couple of factories and although there were very many foreign machines I don't recall seeing any American ones. Even most metros were of European origin.

Russ, I have no intention of ruffling your or anyone elses feathers so try reading what I write with your positive glasses on and not the negative ones. It's OK to disagree with me but don't twist what I write into what you interpret as anti American sentiment - it just isn't there :cheers::cheers:
 
Most of the United State's trade deficit is due to an influx of capital, not an influx of Chinese made products.

I might be about to verify Russ's idea that I'm not an economist (I'm not - it's my wife that controls our economy and she's great at it :)) but isn't a capital influx usually investments? There are many European countries that are really happy with the fact that foreign money is invested.
 
Russ.... YIKES!

I didn't any of that into it...

I read it as:
China is Huge, there is a lot of money.
I didn't see a lot of American products and tooling. Why not?
What would it take to increase sales in China, what am I missing?

Now, the answers to those questions may lead to a loaded discussion.

I didn't find any bashing, or assumptions. Just an observation, and question about that observation.
 
Gordon,

You did not drive far enough west past Wohan, to Jinghoug City, that's where I've been. There are several factories there that are building oifield equipment. Yes, very few American made machines. The factory that I deal with now has two Devig jig mills that have been converted to CNC before they left the states severar years ago. Another plant had several G & L HBM's, equivalent to 650's of the old days, being used, and new ones being installed. I was told they were built in Europe somewhere. Of course the goods being made were going to mainly US and Europe. It was definitly a eye opener!

Ken
 
Oh no not this again!!!!????

I read a thing the other day that GM was the biggest car producer in China, could have been mistaken though....

You seem to imply that since you went on a 2 week vacation to that pit (that I lived in for 12 years) that somehow American goods are inferior/unwanted or that we are all just too stoopid to realize that maybe a market of 1.6billion is out there. Or that all we come up with is KFC (cause we're all fat too)? Must be that the Europe is blessed with inherent intelligence and a sense of 'worldliness' that allows them to design and market superior goods that appeal to Chinese regardless of exchange rate. All because of some anecdotal evidence that you saw a bunch of VW's? Is this really just honest an curiosity of 'I'm wondering why America doesn't apeal to the Chinese' or just another one of your annoying quips meant to aggravate the Mericun' readers of this forum?

Did you see the 'Intel Inside' any of those Fanuc controllers or the Metros? Did you visit any of the power plants? Did you see any of the equipment used in exploration for energy? I could go on and on, but I don't have the time and this is tiresome.

I find a lot of useful information on this site and I see that you have thousands of posts that litter this site with nothing to do with Machining. Please take your comments to a site dedicated to economics/politics or that God awful Manufacturing in America section.
 
In my 50 years I have only known one person who worked for a company that exported anything to China. They sold circuit board testing machines and did onsite upgrades. My friend was the one doing the installations and upgrades. The big complaint was all tariffs they were hit with and all the people that needed to be paid to get the machines and upgrade parts to their final destination. These machines were expensive (Up to $1 million U.S.) and they were constantly hitting snags, no machine delivery was ever the same, sometimes they could move through in a matter of days with just a few thousand here and there, sometimes it took $10,000 to get a crate worth $40,000 away from being held hostage.
I don't see any reason to attack Gordon over his comments, he was basically just reporting what he saw with his own two eyes. Funny someone would "defend" the CEOs of the USA. Most of them just want to cut costs by outsourcing and then of course put all the "saved" money in their own pocket.
 
The American companies have not ignored China, if you looked a bit deeper, you would have found many American branded products, but I doubt many were made in the US. You will find many of the American brands in the shopping malls, especially kids toys. Many of them sell for more then they do in the US, the one child policy has a lot to do with that by having two sets of grandparents spoiling one child. I bought a bunch of HO scale trains over several visits, made in China and about half the price of the same thing here. Didn't get the chance to look on our last trip to see how much the prices have increased.

We sell a lot of industrial equipment to China, companies like Joy Global, National Oilwell, Caterpillar, John Deer, etc sell a lot of products in China. You won't see that on you visit unless you visit industrial companies.

The supermarkets have many American brands, toothpaste, cookies, beer, etc, but most of that is made in China since it makes more sense to manufacture it locally. I saw a few GAP stores in Shanghai with plenty of shoppers in there spending money. I doubt any of those products are made in the US. All the major fast food restaurants were there as well as some of the casual dining restaurants, but didn't make it to Hooters, wife would not give me directions to it for some reason LOL. Things like Buicks, Cadilacs, Harley Davidson, etc are big status symbols in China, and sell very well, but a typical American sized fridge does not fit very easily in a Chinese apartment, and they do not need something that big since they can easily shop several times a week. If we built more of the smaller sized units, then we might get some of the market share from the Europeans, Koreans and Japanese. I did not see any American branded appliances in the stores during my last visit in 2010, we need to build what the customers want if we want to make any sales over there.

Car registrations are very expensive in the major cities, I seem to recall my wife's uncle paying $3,000-4,000 range for Shanghai. That was several years ago and can be higher now that so many more cars have been sold. They keep the price high to limit the number of cars in the city, but as you found, some people will drive without a registration and take the chance of getting caught. The $10,000 figure you heard is simple supply and demand, the government will only allow so many car registrations for each section of the city and demand is high for the people with money, and there are a lot of affluent people in the cities, so if someone doesn't need the car registration, they can sell it to someone that is willing to pay.
 
Russ.... YIKES!

I didn't any of that into it...

I read it as:
China is Huge, there is a lot of money.
I didn't see a lot of American products and tooling. Why not?
What would it take to increase sales in China, what am I missing?

Now, the answers to those questions may lead to a loaded discussion.

I didn't find any bashing, or assumptions. Just an observation, and question about that observation.

3t3d, my heartfelt thanks for that :cheers: You've read it as I intended it to be read. There are times when I wonder if I should go back to school and learn English all over again :D
 
Gordon,

You did not drive far enough west past Wohan, to Jinghoug City, that's where I've been. There are several factories there that are building oifield equipment. Yes, very few American made machines. The factory that I deal with now has two Devig jig mills that have been converted to CNC before they left the states severar years ago. Another plant had several G & L HBM's, equivalent to 650's of the old days, being used, and new ones being installed. I was told they were built in Europe somewhere. Of course the goods being made were going to mainly US and Europe. It was definitly a eye opener!

Ken

Ken, I'll be the first to admit I only saw a fraction of an enormous country and the little I did see was a wealthy sarea.

Where there is money, and it's growing daily, the average Chinese seems more than willing to buy and invest.

To me it's a question of finding out what they want and being ready to supply it. I was told on several occasions that farmers were doing extremely well and many had money to burn.
 
I read a thing the other day that GM was the biggest car producer in China, could have been mistaken though....

You seem to imply that since you went on a 2 week vacation to that pit (that I lived in for 12 years) that somehow American goods are inferior/unwanted or that we are all just too stoopid to realize that maybe a market of 1.6billion is out there. Or that all we come up with is KFC (cause we're all fat too)? Must be that the Europe is blessed with inherent intelligence and a sense of 'worldliness' that allows them to design and market superior goods that appeal to Chinese regardless of exchange rate. All because of some anecdotal evidence that you saw a bunch of VW's? Is this really just honest an curiosity of 'I'm wondering why America doesn't apeal to the Chinese' or just another one of your annoying quips meant to aggravate the Mericun' readers of this forum?

Did you see the 'Intel Inside' any of those Fanuc controllers or the Metros? Did you visit any of the power plants? Did you see any of the equipment used in exploration for energy? I could go on and on, but I don't have the time and this is tiresome.

I find a lot of useful information on this site and I see that you have thousands of posts that litter this site with nothing to do with Machining. Please take your comments to a site dedicated to economics/politics or that God awful Manufacturing in America section.

All I'm getting from your post that I have a knack of getting people to agree with me or violently disagree :)

I could be wrong but the richest countries thrive because they export. Only a few and small companies can survive on a home market.

If you find me so annoying and/or boring why read my posts? You can also easilly just block my posts from appearing and continue to enjoy life as you see it. I've written many posts but thousands? :crazy: :eek:
 
Did the sticker show where any of those cars were made? Does VW have a plant in China?
How much of it is really coming from Europe? I bet very little other than the ferrari's..
Seeing a ford in china doesn't mean its from the US.
 
In my 50 years I have only known one person who worked for a company that exported anything to China. They sold circuit board testing machines and did onsite upgrades. My friend was the one doing the installations and upgrades. The big complaint was all tariffs they were hit with and all the people that needed to be paid to get the machines and upgrade parts to their final destination. These machines were expensive (Up to $1 million U.S.) and they were constantly hitting snags, no machine delivery was ever the same, sometimes they could move through in a matter of days with just a few thousand here and there, sometimes it took $10,000 to get a crate worth $40,000 away from being held hostage.
I don't see any reason to attack Gordon over his comments, he was basically just reporting what he saw with his own two eyes. Funny someone would "defend" the CEOs of the USA. Most of them just want to cut costs by outsourcing and then of course put all the "saved" money in their own pocket.

Of course there will be many American made goods in China. I just didn't see any. How much am I expected to see in a country the size of Canada?

As several realise my observation was that the American "contribution" was way below what could or should be expected compared to as good as all other countries. I saw in fact many Danish produced commodities ranging from toys to shoes to cookies. Go figure.

I'd better add that I was on vacation and not on a fact finding mission :) It didn't stop me though from keeping my eyes open and talking to as many as possible. The average Chinese loves to talk to foreigners and seems to want to learn as much as possible. Hmmm, there's a novel thought ;)
 
Did the sticker show where any of those cars were made? Does VW have a plant in China?
How much of it is really coming from Europe? I bet very little other than the ferrari's..
Seeing a ford in china doesn't mean its from the US.

I just used cars as an example. There are probably "European" cars made in China just as there are Japanese cars made in the USA. My Ford Mondeo (sold 2 months ago) was made in Belgium.

China is Mercedes largest customer. Does anyone know if any Mercedes are made in China?
 
The USA does export a lot to China.
No doubt, we could export more.

But your casual observations dont really tell much.

For instance, Volkswagen is the number one foreign car in China, and sold about 1.9 Million cars there last year- but the vast majority of them were made in China.
VW has over 50,000 chinese employees in 2 joint ventures, and a dozen or more subsidiaries.

So, Germany may not be the best example of a country that is doing so much better than the USA. Yes, they do export some VW's TO China, but many are from Slovakia, not Germany.
In fact, VW is now considering whether to export cars from the USA to China.
VW to export U.S.-built Passat replacement to China?

Contrast that with GM, which sells about 1 million cars a year in China.
Just like VW, the vast majority of those are also made in China.
Just like VW, GM does send some Buicks, and all the Cadillacs and other cars they sell there from the USA.


It is true the Germans sell more cars made in Germany in China that we do- but they have more luxury companies than we do.
The Chinese buy a lot of BMW's and Mercedes, but, once again, both have Chinese factories making the less expensive models, and only import from Germany the higher priced models.


So- we have exactly the same business model for GM and VW- make the majority of their chinese cars in China, and import from home a smaller number of special interest cars- for instance, right now, the Chinese are crazy for the new Cadillac SRX crossover- GM expects to sell half of the output of this car in the USA, the other half in China.

Mercedes is currently building their SECOND factory in China-
http://europe.chinadaily.com.cn/epaper/2011-03/04/content_12115765.htm
the first one has been there since 2006.
They sold 50,000 Chinese made Mercedes in China last year.
BMW has had a 3 series factory in China since 2003, and ALSO is building a second factory there, to augment their current capacity of 40,000 cars per year they can currently build in China.
http://online.wsj.com/article/SB10001424052748703811604574531361034879846.html

Basically, EVERY company that wants to do serious business in China builds factories there.
Caterpillar, for example, has over ten factories there. They do still export, from the USA, the biggest, most expensive models, Just like German or Japanese companies do.
But the USA is no different from the other countries that are making money selling things to China- a mix of US made product, with chinese made subsidiaries.
Lincoln Welders has a half dozen plants in China. Miller, on the other hand, sends US made welders to China.
Haas was at one point selling 100 machines a month to China. Not sure what the current tally is.
 








 
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