"For Westerners eager to do business in China, here is the last word:
Move now, and learn the rules of the game by developing the Guanxi needed to grow your business there. Don't expect immediate results.
Old friendships work their magic through time; every year invested in China now will pay off in the future - because in a world of millennia-old memories, relationships of the moment need long and patient nurturing."
~ Harvard Business Review
October 2003
The Truth About Sourcing: Download Our White Paper in Adobe's PDF Format (70k)
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The Top 5 Sourcing Concerns
Questions to Consider and Answers to Behold:
 "The Top 5 Sourcing Concerns" are comprised of brief extractions from The Truth About Sourcing white paper. For in-depth details regarding the top concerns, be sure to download the full white paper.
1.) I'm told that if I go to China to get my products manufactured, I will get a good price, but my quality will suffer - is that true?
When there are 5 levels of profit built into the cost of an item and pressure is constantly coming from the customer for a cheaper price, every one on the supply chain will be giving up dollars and thus will give up some level of quality. What companies are quickly learning, however, is that the Chinese are capable of producing the highest quality products.
2.) Why is it that I am intimidated about manufacturing in China when so many companies and most of my competitors are already doing it?
If you're not intimidated by China, you should be. It is immense, complicated, ever-changing, and inherently different than the West. Many companies erroneously believe that if they are simply buying from China they are doing what they can to stay price competitive. In reality, no company without a presence in China, whether themselves or with a viable partner, can ever know much about the supply chain or negotiable costs of their items.
3.) Is sourcing from China a never-ending battle with quality control and materials, plus things I would probably never think of?
In China, as with the West, there are always issues that arise, from raw material procurement to fabrication concerns. The most common problem is companies that do not conduct the due diligence to truly understand the processes at work in the Mainland, and to maintain the type of oversight that they would demand in the West.
In summary, you cannot foresee all the issues that will arise. Many problems will be endemic to the situation in China (facilities, local officials), and you need to have very good partners to solve such problems.
4.) How many layers of people do I really work with when I try to get product out of China?
It could be a small as one layer or as large as 5 or more. Only the largest producers with millions of dollars invested in China are one layer away. The vast majority of companies that work with China go through a number of middle men.
The importance of interpersonal relationships is a deep-seeded aspect to life in China and has been a defining element of the Chinese psyche for over 3000 years. It is ingrained and unavoidable. For this reason when a company enters into China in search of providers it must do so via a conduit. This conduit will be a person or company that knows the factory owners, socializes with them, drinks with them, does favors for them, and has somehow maintained what we would think of as a close personal friendship.
Many times such a person is not easily accessible to a Western company and they must go to yet another firm or individual that has a relationship with this secondary player - or sometimes a third or a fourth party. Each one of these steps represents a layer and another level of profit, not to mention a step further away from the fabrication floor.
5.) Do I have any recourse if my product is not delivered on time, or if the product that was delivered is not what I ordered or expected?
It depends greatly on how you structure your payment details with your supplier. Opening a Letter of Credit is probably the safest and easiest way. Within the parameters of the letter of credit you can dictate shipping windows, acceptable quality levels, necessary certificates and forms, proper packaging and carton markings, and any necessary EDI materials. If these terms are not met it will be up to you to decide weather or not to release shipment and thus release payment. The price you pay for this is having access to a credit facility and the 1% a bank will charge - well worth the price.
Industry Week quotes Vital Sourcing on China Cultural Challenges Article
Writer, John S. McClenahen, looks to Vital's Jason Sprong for an expert opinion:
The following exerpt is taken from the April 1, 2004 publication of Industry Week: In China, culture counts. And for U.S. manufacturers seeking success in this 26th year of China's experiment with modern capitalism, no aspect of culture counts more than guanxi, the ages-old practice of continuously cultivating and valuing relationships. The bottom line: U.S. manufacturers that don't create and maintain networks of respect, trust and value-adding interdependence with customers, suppliers and distributors in China, those companies that focus on low-cost labor and fail to embrace China's 5,000-year cultural heritage, are putting their investment dollars at considerable risk.
U.S. manufacturing investment in China is about $6 billion or about $12 billion -- depending on who's counting and what's being counted. Although the investment is quite small compared, for example, with U.S. manufacturing investment in Europe, in this Chinese Year of the Monkey it's not exactly chimp change.
"Most people understand that it is difficult to do business in China. What they don't realize is that . . . deep cultural differences are at the root of most problems," bluntly states Jason Sprong, a partner at Vital Sourcing LLC, a Boulder, Colo., company that has two consumer-products plants in China. "Without a thorough understanding of why Eastern and Western differences exist, companies will be at a strategic disadvantage in any China efforts."
He's right...
To access the full article go to Industry Week online
Vital Sourcing Selected by Entrepreneur Magazine as the Industry Expert to Speak on Sourcing at Ebay Live 2004 in New Orleans on June 24-26.
Jason Sprong and James Clark to speak on Finding New Sources for Product and Time Management and Organization:
Ebay invites you to make the leap to a more successful future by joining us for the eBay Live! 2004 Community Conference in New Orleans. eBay Live! is the annual gathering of the eBay community: from buyers and sellers just like you to experts, exhibitors, and the eBay staff. PowerSellers! Shooting Stars! eBay execs! At eBay Live! you can meet them all, attend classes and executive panels, and become a savvier shopper or a more successful seller.
For more information pertaining to the event, visit Ebay Live! 2004
Vital Sourcing's Jason Sprong to Speak at Wharton China Business Forum
Selected as Guest Speaker on the Credibility and Accountability in Business Panel (3/27/04):
 The goal of the 2nd Annual Wharton China Business Forum is to provide a multifaceted view of China’s active and unique business climate, exploring challenging issues through discussion among leading experts on business in China.
The 1st annual conference held at the Ritz Carlton Philadelphia was a great success. There were more than 400 participants, both MBA and undergraduate, and about 15 speakers including the Chairman and CEO of Dupont, Charles Holliday, and Former Chairman of Exxon Mobil (China), Stephen Goldmann. The forum received numerous acclaims from the media and publications such as Harvard International Review and Knowledge@Wharton for the dedicated focus in promoting a comprehensive view of business development in China.
For more information pertaining to the forum, visit WhartonChina.com
Aquascape Designs Selects Vital Sourcing
Aquascape CEO Greg Wittstock Featured on Cover of November Issue of Inc. Magazine:
 Aquascape Designs, one of the fastest rising companies in the field of water gardening, has selected Vital Sourcing as a partner to assist in high-quality product sourcing from China.
The initial efforts will focus in on specific new, or growing product lines for Aquascape Designs. Vital Sourcing will manage the sampling, pricing, manufacturing and delivery of products to Aquascape Designs.
The buying team at Aquascape needed a trusted partner in China to allow the company to remain price competitive while providing the highest quality products to the growing water gardening market. Ponds and water gardens are the fastest-growing segment of the $46 billion lawn and garden industry.
Vital Sourcing Launches Business Optimization Program
For Companies Experiencing Rapid Growth:
Vital Sourcing clients experience an acceleration in growth, revenues and market competitiveness due to the increased margins realized from China sourcing. The growth is exciting, but a company can only grow as fast as its systems grow to support it.
Approximately 90 percent of the results produced in the workplace are a function of the systems, not the people within them. This does not dilute the fact that "A players" are the single most important aspect to a business, but an A player in a faulty system will not perform at the level of excellence expected of them.
Having seen how companies can create death from their own success, Vital Sourcing launched its Business Optimization program to assist our clients in identifying and addressing the key business systems affected by growth, and shifting those systems to align the company with its growth. » Learn more...
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