agenda why manufacture in china types of manufacturers finding a manufacturer what to expect prepare...
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Agenda Why Manufacture in China Types of Manufacturers Finding a Manufacturer What to Expect Prepare for the Unexpected Risks & Rewards Experiences
Larry ButzLarry Butz
25 years with Trane specializing in25 years with Trane specializing in– Product DevelopmentProduct Development– Technology & Product GlobalizationTechnology & Product Globalization– Technology Transfer & Factory Start-upTechnology Transfer & Factory Start-up– Environmental SciencesEnvironmental Sciences
Headed Intl Service DivisionHeaded Intl Service Division
Five Years as Engineering Manager for Trane Five Years as Engineering Manager for Trane Europe/Middle East (France)Europe/Middle East (France)
Technology Director for Trane IntlTechnology Director for Trane Intl
Environmental & Technology SpokesmanEnvironmental & Technology Spokesman
China 1982-84China 1982-84Two Shanghai FactoriesTwo Shanghai Factories– Customized ProductsCustomized Products– Equipment SelectionEquipment Selection– Process OptimizationProcess Optimization– Quality StandardsQuality Standards– TrainingTraining– Supplier Qualification Supplier Qualification – Factory Layout Factory Layout – Product Testing CapabilitiesProduct Testing Capabilities
China 1995 - 96China 1995 - 96
Large Chiller JVLarge Chiller JV
Ligang, ChinaLigang, China– CustomizationCustomization– Technology TransferTechnology Transfer– TrainingTraining– Lean/Simple ProcessesLean/Simple Processes– Supplier DevelopmentSupplier Development
China & Asia 1997 - 2002China & Asia 1997 - 2002
Technology Technology Globalization & Globalization &
Environmental Environmental SpokesmanSpokesman
Why Manufacture in China? Lower Cost Product Access to China Market
What to Expect Lower labor costs Lower raw material prices Lower component/sub-
assemblies costs Range of quality levels
available Fewer constraints
(regulations) on factories
Types of Manufacturers State Companies Wholly Owned Locally Joint Ventures Wholly owned Foreign Your Own – Build or Buy
Where to Find
Heavy Industries
Light Industries
How to Find Government Agencies Industry Directories Web Bidding Networking Shows & Exhibitions
Be Prepared for Change Longer Pipeline Reduced Flexibility Change Control Cultural Differences
Societal Value Systems
Business Customs National Laws
Be Prepared For Change More Administrative Personnel
Logistics-Import/Export Banking/LC/Currency International Law
Communication Time Difference Language
Insight & AdviceThe relative cost of equipment vs.
labor is significantly different in China. Expensive labor saving equipment used in the US will not be the best choice in China.
Be prepared to make minor changes in your design specifications to obtain best results.
Risks Currency Variations Proprietary Design Info Political
Environmental ConsiderationsEnvironmental Considerations
Fewer RegulationsFewer Regulations Reduced Use of CoalReduced Use of Coal Clean Air & Clean WaterClean Air & Clean Water Water ShortageWater Shortage Green Beijing OlympicsGreen Beijing Olympics
Environmental Costing
Thank You for Your Time Thank You for Your Time
Larry ButzLarry ButzGEA Consulting, IncGEA Consulting, Inc
2420 N. Pine Creek Rd. 2420 N. Pine Creek Rd.
LaCrescent, MN 55947LaCrescent, MN 55947
Tel: 1-507-895-6826Tel: 1-507-895-6826
Fax: 1-507-895-4001Fax: 1-507-895-4001
Email: [email protected]: [email protected]
www.gea-consulting.comwww.gea-consulting.com
