agenda why manufacture in china types of manufacturers finding a manufacturer what to expect prepare...

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: LButz@gea-consulting.comEmail: LButz@gea-consulting.com

www.gea-consulting.comwww.gea-consulting.com