Global Sourcing Project

A Sourcing plan for women’s outerwear in shanghai, china

by: Anna Rose Souther and Kiara Lopez

table of contents

4-5

case study importer

6-7

imported products

10-22

Step I

23-27

Step II

28-29

Step III

30-32

Step IV

33

Step V

34-35

Step VI

36

Step VII

37-56

Step VIII

57-59

works Cited

part I:

the case study importer

4

5

part II:

the imported products

6

7

the 8 steps:

developing a plan to import merchandise

STEP I:

Profile the country selected to export merchandise

STEP II:

Analyze the country selected to export feasibility

STEP III:

Research business etiquette for the country

of export

STEP IV:

Examine import/export agreements

STEP V:

Classify the product to be imported product

STEP VI:

Complete separate cost sheets for the

imported product

STEP VII:

Determine the shipping route for the

merchandise to be imported

STEP VIII:

Finalize the entry process of the

imported item

9

step I: Profile the country selected to export merchandise

shanghai,

peoples republic of china

KEY FACTs Geographical area: 6340.5 sq. km

Total population: 23,474,600

Total national population living in the city: 1.7 % Education level – with degree level or higher: 42.9 %

GDP per capita in 2008 (PPP): US$ 15,300

Creative industries employment: 7.4% The history of Shanghai spans over a thousand years. Originally an agriculture village, the city of Shanghai was developed during the late Qing Dynasty into one of China’s principal trading seaports.

According to official government sources, Shanghai first became a city in 1291 during the Yuan dynasty. By the early 15th century, Shanghai had become important to the Ming dynasty and the government had people dredging the Huangpu River to build a city wall around the Old Town (Nanshi) as a defense against the Japanese pirates known as wokou. By the end of the Ming dynasty Shanghai had already become a major cotton and textile center with a growing population of almost 200,000 people. During the Qing dynasty, Shanghai’s economy began competing with the market in Suzhou, a major city located in the southeastern Jiangsu Province of East China and it’s also a major point of commerce and trade. Later, during the 18th and 19th century, exports of cotton, silk, and fertilizer, reached to as far as Polynesia and Persia.

10

history

1832 – the British East India company, an English and later British joint-stock company formed to pursue cotton, silk, salt, and opium trade with East India and China, explored Shanghai as a potential trading center for tea, silk and opium but were rejected by the local government.

1839 – 1842 – the British forced the Chinese to import British opium by waging the First Opium War. 1842 – the British established a concession by a forced treaty with the Qing Dynasty after China lost the first Opium War. The war finally ended with the Treaty of Nanjing or the Treaty of Peace, Friendship and Commerce between Her Majesty the Queen of Great Britain and Ireland and the Emperor of China. and Shanghai was one of the five cities to be opened to British consuls, merchants and their families.

Early 1900’s – Japan emerges as foreign power in Shanghai and they build their first factories in the city.

1920’s – 1930’s – Shanghai was known as “The Paris of the East, the New York of the West”. The city’s industrial and financial power had been increasing because the merchants were in control of the city.

1930’s – Shanghai has already become the most important port in Asia and the largest in the world for trading and baking firms; also one of the largest cities in the world with almost 3 million habitants.

1930’s-40’s – As other cities closed the door to refugees, Shanghai becomes a city of asylum for Jews seeking refuge from the Nazi’s.

1937 – During the Battle of Shanghai, Japanese bombs hit Shanghai.

Late 1940’s – Most foreigners have left Shanghai and the Chinese communist state takes control of the city and what were privately owned businesses.

1970’s – Shanghainese locals are sent to work in rural areas throughout China during the Cultural Revolution, which would set ground for the China of today.

1976 – the advent of Deng Xiaopeng’s open door policy allowed a commercial revival to take place in Shanghai.

Present – Shanghai is still growing into one of the multicultural cities in Asia, being one of China’s most open cities, economically, ideologically, socially, and culturally. The city is dynamic, innovative and most importantly strives to help China’s developing economy.

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social and cultural shanghai,

peoples republic of china • Largest city in china with estimates of 24 million habitants • Meaning: “Above the Sea” • Port city on the Huangpu River • It was originally a fishing and textiles town, the city gained identity after the previously mentioned Treaty of Nanjing.

• The city flourishes a multicultural commercial and financial center also known as “the Paris of the West, the New York of the East.”

• The city has served as the inspiration for many movies and books being the most reminiscent city in all China.

• Shanghai’s status as the cultural and economic center of East Asia is popularly seen as the birthplace of modern China.

• The Huangpu river, also known as the commerce river, is lined up with a collection of different architectures known as The Bund.

• The Bund or Waitan is a famous waterfront area in central Shanghai and it runs along the Western section of the Huangpu River, facing the high, modern skyscrapers of the city. Needless to say it is one of Shanghai’s most famous tourist destinations due to the amazing variety of architectural styles including Gothic, Baroque, Romanesque, Classicism and the Renaissance.

• It is safe to say Shanghai is one of China’s wealthiest city’s and is also leading not only in trendsetting fashion, design and arts, but also in shopping and dining. It is said that Shanghai residents are considered efficient and progressive and are striving to create the country’s most apparent looking and modern city’s with futuristic and flawless architecture and skyscrapers, bars, hotels, restaurants with the potential of surpassing their competition with other Asian cities such as Hong Kong, and Singapore.

• Shanghai is an international city that merges with different cultures from all over the world, it is also known as Shanghai Regional Culture. Shanghai culture is original from traditional China culture merged with the Wu and Yue Dynasty Culture. Shanghai has created its own regional culture, absorbed from cultures from all over the world which shares basic characteristics such as innovation, creativity and diversity.

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language The Chinese characters for the city are 上海, which

who moved to Shanghai during the late 19th century,

means Shanghai. The first character上 (shang) means

early 20th century. The population of those regions

“on”, and the second character 海 (hai) means “ocean”.

speak different dialects of Wu Chinese and since the

Because Shanghai is in located in the People’s Republic

early 1990’s many migrants of outside Wu-speaking

of China, the official language of the citwy is Standard

areas have moved to Shanghai for work. Shanghainese

Mandarin. However, the native or tradwitional language

is spoken by about 14 million people and it has retained

spoken in the city is Shanghainese, wwa dialect of Wu

its cultural significance despite the introduction of

language. As previously stated, the official language

Mandarin Chinese as the official language in 1949. Even

nationwide is Standard Mandarin, however, most

though Shanghainese was banned in some schools,

Shanghai residents are descendants of immigrants from

recently there has been a movement to protect the

the two adjacent provinces of Jiangsu and Zhejiang

language and re-instate it into the education system.

local customs • Nodding is seen as an initial of greeting • Bowing is seldom used except in ceremonies • Handshaking is a formal greeting that should be firm and brief • Avoid making expansive gestures and using unusual facial expressions • Using whole hand instead of one finger to point • Public display of affection is frowned upon • It is considered vulgar to put your hands in your mouth • Spitting in public is not acceptable and it can result in a heavy fine • Guests invited to an event who are arriving late are considered rude and offensive • Tipping in restaurants is considered not polite • Some of the biggest national Holiday’s are Chinese New Year and the Chinese Moon Festival

13

social and cultural

(cont.)

cost of living According to the 2015 Mercer Cost of Living Survey,

“the cost of living in Shanghai is the highest in China. It is also the 6th most expensive city out of 207 of the cities that were polled around the world.”

Mianzi Commonly referred to as “face”. The concept of face refers to one’s own sense of dignity or prestige in social contexts. In context, it describes the extent of which a person may to to in order to preserve their reputable position in society. Mianzi, or face is an instigator among Chinese business people. To be able to do business in China it is important to have an understanding of the concept. In china, it is not just people that have face, the concept most certain applies to companies and government organizations as well. In the case of companies, it refers to a company’s desire to maintain a good reputation.

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geographic information

Shanghai’s geography is characterized by its location on the Yangtze River on China’s East Coast and its closeness to the Pacific Ocean via the East china Sea. The city is centered around the Huangpu River and extends in all directions. The majority of Shanghai’s land is flat apart from a mountainous area in the southwest section. The city is covered in lakes and rivers and it is well known for their water sources due to its coastal, riverside location which provides easy access to China’s and the world’s largest port.

• Largest city in China – population estimated 24 million • 17 Districts and 1 county – 220 towns • Located on China’s Central Eastern Coast at the mouth of the Yangtze River • Originally a fishing and textiles town • Shanghai has a humid subtropical climate with four distinct seasons

Location: • Located in the middle of China’s East Coast on the Yangtze River • Bordered by Yangtze River to the North, the East China Sea to the East, Hangzhou to the south and Jiangsu and Zhejiang Provinces to the West.

• Equidistant to Beijing and Hong Kong • Located at 31°41’ North latitude and 121°29’ East longitude

Municipality: • Total: 6,340.5 km2 (2,448.1 sq mi) • Land: 6,218.65 km2 (2,401.03 sq mi) • Water: 121.85 km2 (47.05 sq mi)

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social and cultural

(cont.)

political information The communist Party of China are the ruling party in the

press freedom, the right to follow a religion and the right to

country. The People’s Republic of China replaced the Taiwan-

vote, in reality political censorship is prevalent. The politics

based Republic of China in the United Nations in 1971 and is

of Shanghai is structured in a dual-party government system

now considered the sole representative of China. The country

like all other government institutions in the mainland of the

maintains diplomatic relations with most nations of the world,

People’s Republic of China. Many of the country’s eventual

although it insists that these countries recognize that they do

senior leaders such as Jiang Zemin and Zhu Rong ji have come

not have any contact with the Republic of China’s government.

from the city of Shanghai. The Mayor of Shanghai Municipal

China’s international relations are controversial, the country

People’s Government is the highest ranking authority official in

has had diplomatic incidents with the United States, Japan

Shanghai. Because Shanghai is a direct-controlled municipality

and other nations. Even though the People’s Republic of

of China, the mayor occupies the same level in the order of

China guarantees freedom of speech, the right to fair trial,

antecedence as provincial governors.

current standing committee: communist party

list of mayors

16

economic information Shanghai is the economic center of China and it is a

Exchange. In more recent years, the city launched

center of technology, finance, information and culture.

the first free trade zone agreement in mainland China

The previously mentioned Bund, located in central

known as the China (Shanghai) Pilot Free-Trade Zone.

Shanghai, has become a finance and trade center. In the

The purpose was to create a preferential environment

last two decades, Shanghai has become one of the fastest

for foreign investment. In 2011, Shanghai’s total GDP

developing cities in the world, owning one of the world’s

grew to 1.92 trillion yuan ($297 billion USD) with GDP

busiest container ports. Since the early 1990’s, Shanghai

per capita of 82,560 yean ($12,784 USD). The three

has recorded double-digit growth every year, except during

largest contributors were the financial services industry,

the global recession in 2008 to 2009. In 2009, the

retail industry and real estate industry. On the other

Shanghai Stock Exchange ranked third among worldwide

hand, manufacturing and agriculture sectors accounted

stock exchanges in terms of trading volume and sixth in

for 39.9%. As recent as 2014, Shanghai was reported to

terms of total capitalization of listed companies, and also

attract the highest volumes of financial sector foreign

ranking first was the trading volume of key commodities

direct investment in the Asia-Pacific region.

such as rubber, copper and zinc on the Shanghai Futures

17

contributing factors labor Shanghai is the economic center of China and it is a center of

Exchange. In more recent years, the city launched the first free

technology, finance, information and culture. The previously

trade zone agreement in mainland China known as the China

mentioned Bund, located in central Shanghai, has become a

(Shanghai) Pilot Free-Trade Zone. The purpose was to create

finance and trade center. In the last two decades, Shanghai

a preferential environment for foreign investment. In 2011,

has become one of the fastest developing cities in the world,

Shanghai’s total GDP grew to 1.92 trillion yuan ($297 billion

owning one of the world’s busiest container ports. Since the

USD) with GDP per capita of 82,560 yean ($12,784 USD).

early 1990’s, Shanghai has recorded double-digit growth every

The three largest contributors were the financial services

year, except during the global recession in 2008 to 2009.

industry, retail industry and real estate industry. On the

In 2009, the Shanghai Stock Exchange ranked third among

other hand, manufacturing and agriculture sectors accounted

worldwide stock exchanges in terms of trading volume and

for 39.9%. As recent as 2014, Shanghai was reported to

sixth in terms of total capitalization of listed companies, and

attract the highest volumes of financial sector foreign direct

also ranking first was the trading volume of key commodities

investment in the Asia-Pacific region.

such as rubber, copper and zinc on the Shanghai Futures

18

19

contributing factors

cont.

inputs Natural Resources o

Shanghai is known for its rich water resources such as rivers and lakes

o

The water area accounts for 11% of Shanghai’s total territory

o

Total water reserve of 2.7 billion cubic meters

o

The river is home to over 108 species of fish

o

Known for storage and production of coal, oil and water

o

Secondary energy production – oil, oil products, coal, gas, biogas, tidal and solar power.

Climate o

Short seasons are to the advantage

o

Average annual temperature of 63°F

products The following export products groups represent the highest dollar value in Chinese global shipment and the percentage share each category represents in term of overall exports in China in 2014.

China’s Top 10 Exports o

Electronic Equipment: $570.9 billion (24.4% of total exports)

o

Machines, engines, pumps: $400.8 billion (17.1%)

o

Furniture, lighting, signs: $93.4 billion (4%)

o

Knit or crochet clothing: $92 billion (3.9%)

o

Clothing (excluding knit and crochet): $81.4 billion (3.5%)

o

Medical, technical equipment: $74 billion (3.2%)

o

Plastics: $66.8 billion (2.9%)

o

Vehicles: $64.2 billion (2.7%)

o

Gems, precious metals, coins: ($63.2 billion (2.7%)

o

Iron or steel products: $60.6 billion (2.6%)

Gems and precious metals are the fastest-growing categories among the 10 with a value of 403.7% for the 5-year period starting in 2010, principally led by higher international revenues for Chinese jewelry and diamonds. In second place was plastics which reached a 92.5% led by plastic packing items such as lids, stoppers, caps and also plastic tableware, kitchenware and toiletry articles. In third place came Chinese furniture, lighting and signs in value with an 84.6% gain. On the other side, the slowest-increasing category among the top 10 exports was machinery which increased in value by 29.4%.

2 0

transportation Water Shanghai is one of China’s major transport centers, being a seaport and a river port with the Huangpu River serves as a port, the largest in China.

During the early 1950’s the port was divided into sections. Pudong, located in the east bank of the Huangpu River is used for the storage of commodities, for transportation maintenance and repair facilities. Puxi, located in the Nanshi district of the west bank, and Fuxing Island are the sites of general cargo. Since then, terminals along the Huangpu River have been constructed at Zhanghuabang, Jungong Lu, Gongqing, Longwu, and Zhujiamen. Other ports were constructed at the southern bank of the Yangtze including Baoshan, Luojing, and Waigaoqiao.

Public Transport Shanghai has an enormous public transport system, based on metros, buses and taxis. There are more than 1,000 bus lines in Shanghai and about 50 lines are being opened, adjusted or lengthened every year. The system includes the word’s oldest trolleybus system and bus fares starts at 2 RMB (0.3 USD)). Taxis are also a frequently used resource with a base fare of 14 RMB ($2.12 USD) with a 1 RMB fuel charge, prices fluctuate.

Shanghai is also a major hub of China’s expressway networks since many national expressways pass through or terminate in Shanghai. In recent year, private car ownership in Shanghai has increased, however private cars can’t be driven in the city until the owner of the car buys a license in the private car license plate auction. The license plate cost is about 45,291 RMB ($6,867.42 USD) and the purpose of this policy is to limit the growth of automobile traffic and to alleviate congestion.

Train Shanghai’s Metro system carries about 5 million passengers daily. The system incorporates both subway and light railway lines and extends to every core urban district as well as neighboring suburban districts. As of 2014 there are 14 metro lines, 329 stations and 334 miles of operation, making Shanghai’s Metro system the longest in the world. The fare depends on the length of the distance of travel, but it starts at 2 RMB (0.3 US Dollars).

Airport Shanghai is one of the leading air transport connectors in Asia and it counts with two major commercial airports, Hongqiao Airport, located on the southwest region of Shanghai mainly used for domestic flights, and Pudong International Airport, located southeast of the city has become one of China’s busiest airports. Shanghai is one of the leading air transport connectors in Asia. In 2010, both airports served an estimate of 71.1 million passengers (Pudong – 40.4 million, Hongqiao – 3.7 million) and handled 3.22 million tons of cargo in Pudong and 480 thousand tons of cargo in Hongqiao.

21

contributing factors

cont.

business climate China attracts a growing number of business visitors from the United States. and all over the world. Business culture in China is different from the United States and it is important to have an understanding of some of the fundamentals about the Chinese culture, which is seen as sharing a set of core values. The following are several guidelines for effective communicating in business in Shanghai:

o

Small talk is important at the beginning of a meeting

o

Be conscious about body language during business meetings in China.

o

Always pay attention to numbers and their significance in the Chinese cultures.

o

Respect for age and hierarchical position

o

Group orientations rather than individual

o

The concept of face

o

The importance of establishing and keeping relationships

o

The importance of taking the time to learn about the Chinese culture and learning basic greeting in mandarin to

quickly get close to your Chinese business partner.

o

Making appointments and attending them on time.

o

Consider working hours – regular business and government hours in Shanghai 8:30am – 5:30pm, Monday through

Friday. o

Business Attire – conservative suits and ties in soft colors are the norm, bright colors are considered inadequate.

o

Small gifts, taking into consideration and researching about gift giving in the Chinese culture. For example, never give

a clock, umbrella or white flowers because these signify tears and death.

o

Behaving on informal occasions.

effects of quota removal The abolition of quota did not result well for all developing countries. When the quota was eliminated it resulted on the 55 countries with quota limits on the number of goods they can export aren’t bound anymore by restrictive trade policy. As a result, the economic leaders of the world, such as China and India, will be able to manufacture and export as many goods as they demand. However, on the down side some of the world’s least developing countries, such as Nepal and Cambodia, will see their textile industry plummet down. This includes middle-developed countries, such as Mexico and Malaysia, also Bangladesh and Turkey.

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step 11:

country analysis- the sourcing decision: strategies used for importing

SWOT ANALYSIS

a. Strengths o

Product quality

o

High profit margin

o

Low manufacturing costs

o

Unique products and styles

b. Weaknesses o

Quantity > Quality

o

Differences in culture

o

Customer Service

o

Lack of innovation

c. Opportunities o Demand o

Emerging markets

o

New online market

o

International expansion

d. Threats

23

o

Intense Competition

o

Chinese Government– People Republic of China

o

Competitive industry

o

Imitations and Knockoff

step I11:

country’s business etiquette

The Chinese culture relies largely on the concept of “Guanxi”. Although, the direct interpretation of “guanxi” is “relationships”, the idea as it is utilized and connects the Chinese culture is a bit more intricate. Guanxi speaks to the type of person you are, your character, values, morals, etc. It will be conveyed in each Chinese business interaction regardless of your profession. “Guanxi” expresses the relationship of one individual to another, or one group to another.

However, the term also communicates a commitment of an individual or group to another. This commitment and trust is built over time through the reciprocation of favors. If a person has “guanxi” with another, they will immediately offer to help out and do anything they can. By setting up this sort of bond with someone, the other party is implicitly agreeing to be available if there is ever a need. It could almost be considered as a sort of currency that can be used between people.

Like most things, “guanxi” can be depleted over time, so one must careful not to overuse the “guanxi” that has been established.

2 4

saving face

Also referred to as Mianzi. The concept of face refers to one’s own sense of dignity or prestige in social contexts. In context, it describes the extent of which a person may to to in order to preserve their reputable position in society. Mianzi, or face is an instigator among Chinese business people. To be able to do business in China it is important to have an understanding of the concept. In china, it is not just people that have face, the concept most certain applies to companies and government organizations as well. In the case of companies, it refers to a company’s desire to maintain a good reputation.

25

country’s business etiquette

cont.

The Chinese are more non-confrontational and less likely to tell someone “no� than people from most other countries they prefer face-to-face communication. They are firm believers in dressing for success.

However, that does not mean flashy. They tend to be much more modest and simplistic than most. The men usually wear a standard suit and tie while women wear business suits or conservative dresses with flats or a low heel. High heels can sometimes be frowned upon.

The Chinese are not keen on doing business with strangers so it is common to use already established relationships as well as go-betweens known by both sides to make the initial contact. Introductions are always formal. You should be standing throughout the introductions and address everyone by professional title and surname unless otherwise advised. If you are aware who the senior level executives are, you should address them first. Handshakes are common but wait for your Chinese colleague to initiate the greeting.

The presentation of business cards is done immediately following the initial introduction. They are to be given and received with both hands. Be prepared; one side of your business card should be in English whereas, the other side should be in Chinese. It is also a plus if the Chinese side is printed in gold because the Chinese view gold as a sign of prosperity. Even if you are not able to read the card given to you, you should study it out of respect and do not immediately put the card away.

26

Never address someone by his or her first name or surname alone. If speaking in Chinese, you should address someone by their surname followed by their professional title. On the contrary, if speaking in English, they should be addressed title first, surname last. Frequent travelers who do a lot of business with companies abroad may sometimes adopt a Western first name. Only once a relationship has been established and they have requested, you can call them by their Western name.

Gift giving is a very common Chinese practice that like we discussed before is normally related to someone’s gaunxi. One should decline a gift politely two or three times before accepting it and do not open the gift right when received unless the giver insists. Unlike Westerners, a Chinese person may be offended if you do not respond to their gift in a likely manner, but instead with something such as a simple thank you note.

The Chinese prefer to never discuss business at the table. It is also smart to stray away from any political related issues.

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step IV: Importing Trade Agreements, Laws, and Policies

AGREEMENT ON TRADE RELATIONS BETWEEN THE UNITED STATES OF AMERICA AND THE PEOPLE’S REPUBLIC OF CHINA The Government of the United States of America and the Government of the People’s Republic of China; Acting in the spirit of the Joint Communiquй on the Establishment of Diplomatic Relations between the United States of America and the People’s Republic of China; Desiring to enhance friendship between both peoples; Wishing to develop further economic and trade relations between both countries on the basis of the principles of equality and mutual benefit as well as nondiscriminatory treatment; Have agreed as follows: ARTICLE I 1. The Contracting Parties undertake to adopt all appropriate measures to create the most favorable conditions for strengthening, in all aspects, economic and trade relations between the two countries so as to promote the continuous, long-term development of trade between the two countries.

2. In order to strive for a balance in their economic interests, the Contracting Parties shall make every effort to foster the mutual expansion of their reciprocal trade and to contribute, each by its own means, to attaining the harmonious development of such trade.

3. Commercial transactions will be effected on the basis of contracts between firms, companies and corporations, and trading organizations of the two countries. They will be concluded on the basis of customary international trade practice and commercial considerations such as price, quality, delivery and terms of payment.

ARTICLE II 1. With a view to establishing their trade relations on a nondiscriminatory basis, the Contracting Parties shall accord each other most-favored-nation treatment with respect to products originating in or destined for the other Contracting Party, i.e., any advantage, favor, privilege, or immunity they grant to like products originating in or destined for any other country or region, in all matters regarding: (A) Customs duties and charges of all kinds applied to the import, export, reexport or transit of products, including the rules, formalities and procedures for collection of such duties and charges; (B) Rules, formalities and procedures concerning customs clearance, transit, warehousing and transshipment of imported and exported products; (c) Taxes and other internal charges levied directly or indirectly on imported or exported products or services; (D) All laws, regulations and requirements affecting all aspects of internal sale, purchase, transportation, distribution or use of imported products; and (E) Administrative formalities for the issuance of import and export licenses.

2. In the event either Contracting Party applies quantitative restrictions to certain products originating in or exported to any third country or region, it shall afford to all like products originating in or exported to the other country treatment which is equitable to that afforded to such third country or region.

3. the Contracting Parties note, and shall take into consideration in the handling of their bilateral trade relations, that, at its current state of economic development, China is a developing country.

4.. The principles of Paragraph 1 of this Article will be applied by the Contracting Parties in the same way as they are applied under similar circumstances under any multilateral trade agreement to which either Contracting Party is a party on the date of entry into force of this Agreement.

5. The Contracting Parties agree to reciprocate satisfactorily concessions with regard to trade and services, particularly tariff and non-tariff barriers to trade, during the term of this Agreement.

appropriate aspects of banking services related to international trade and financial relations. Each Contracting Party will permit those financial institutions of the other country established in its territory to provide such services on a basis no less favorable than that accorded to financial institutions of other countries.

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ARTICLE III For the purpose of promoting economic and trade relations between their two countries, the Contracting Parties agree to: A. Accord firms, companies and corporations, and trading organizations of the other Party treatment no less favorable than is afforded to any third country or region; B. Promote visits by personnel, groups and delegations from economic, trade and industrial circles; encourage commercial exchanges and contacts; and support the holding of fairs, exhibitions and technical seminars in each other’s country; C. Permit and facilitate, subject to their respective laws and regulations and in accordance with physical possibilities, the stationing of representatives, or the establishment of business offices, by firms, companies and corporations, and trading organizations of the other Party in its own territory; and D. Subject to their respective laws and regulations and physical possibilities, further support trade promotions and improve all conveniences, facilities and related services for the favorable conduct of business activities by firms, companies and corporations, and trading organizations of the two countries, including various facilities in respect of office space and residential housing, telecommunications, visa issuance, internal business travel, customs formalities for entry and re-export of personal effects, office articles and commercial samples, and observance of contracts.

ARTICLE IV The Contracting Parties affirm that government trade offices contribute importantly to the development of their trade and economic relations. They agree to encourage and support the trade promotion activities of these offices.

Each Party undertakes to provide facilities as favorable as possible for the operation of these offices in accordance with their respective physical possibilities.

ARTICLE V 1. Payments for transactions between the United States of America and the People’s Republic of China shall either be effected in freely convertible currencies mutually accepted by firms, companies and corporations, and trading organizations of the two countries, or made otherwise in accordance with agreements signed by and between the two parties to the transaction. Neither Contracting party may impose restrictions on such payments except in time of declared national emergency.

2. The Contracting Parties agree, in accordance with their respective laws, regulations and procedures, to facilitate the availability of official export credits on the most favorable terms appropriate under the circumstances for transactions in support of economic and technological projects and products between firms, companies and corporations, and trading organizations of the two countries. Such credits will be the subject of separate arrangements by the concerned authorities of the two Contracting Parties.

3. Each Contracting Party shall provide, on the basis of most-favored-nation treatment, and subject to its respective laws and regulations, all necessary facilities for financial, currency and banking transactions by nationals, firms, companies and corporations, and trading organizations of the other Contracting Party on terms as favorable as possible. Such facilities shall include all required authorizations for international payments, remittances and transfers, and uniform application of rates of exchange.

4. Each Contracting Party will look with favor towards participation by financial institutions of the other country in

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step IV: Importing Trade Agreements, Laws, and Policies

ARTICLE VI 1. Both Contracting Parties in their trade relations recognize the importance of effective protection of patents, trademarks and copyrights.

2. Both Contracting Parties agree that on the basis of reciprocity legal or natural persons of either Party may apply for registration of trademarks and acquire exclusive rights thereto in the territory of the other Party in accordance with its laws and regulations.

3. Both Contracting Parties agree that each Party shall seek, tinder its laws and with due regard to international practice, to ensure to legal or natural persons of the other Party protection of patents and trademarks equivalent to the patent and trademark protection correspondingly accorded by the other Party.

4. Both Contracting Parties shall permit and facilitate enforcement of provisions concerning protection of industrial property in contracts between firms, companies and corporations, and trading organizations of their respective countries, and shall provide means, in accordance with their respective laws, to restrict unfair competition involving unauthorized use of such rights.

5. Both Contracting Parties agree that each Party shall take appropriate measures, under its laws and regulations and with due regard to international practice, to ensure to legal or natural persons of the other Party protection of copyrights equivalent to the copyright protection correspondingly accorded by the other Party.

ARTICLE VII 1. The Contracting Parties shall exchange information on any problems that may arise from their bilateral trade, and shall promptly hold friendly consultations to seek mutually satisfactory solutions to such problems. No action shall be taken by either Contracting Party before such consultations are held.

2. However, if consultations do not result in a mutually satisfactory solution within a reasonable period of time, either Contracting Party may take such measures as it deems appropriate. In an exceptional case where a situation does not admit any delay, either Contracting Party may take preventive or remedial action provisionally, on the condition that consultation shall be effected immediately after taking such action.

3. When either Contracting Party takes measures under this Article, it shall ensure that the general objectives of this Agreement are not prejudiced.

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ARTICLE VIII 1. The Contracting Parties encourage the prompt and equitable settlement of any disputes arising from or in relation to contracts between their respective firms, companies and corporations, and trading organizations, through friendly consultations, conciliation or other mutually acceptable means.

2. If such disputes cannot be settled promptly by any one of the abovementioned means, the parties to the dispute may have recourse to arbitration for settlement in accordance with provisions specified in their contracts or other agreements to submit to arbitration. Such arbitration may be conducted by an arbitration institution in the United States of America, the People’s Republic of China, or a third country. The arbitration rules of procedure of the relevant arbitration institution are applicable, and the arbitration rules of the United Nations Commission on International Trade Law recommended by the United Nations, or other international arbitration rules, may also be used where acceptable to the parties to the dispute and to the arbitration institution.

3. Each Contracting Party shall seek to ensure that arbitration awards are recognized and enforced by their competent authorities where enforcement is sought, in accordance with applicable laws and regulations.

ARTICLE IX The provisions of this Agreement shall not limit the right of either Contracting Party to take any action for the protection of its security interests.

ARTICLE X 1. This Agreement shall come into force on the date on which the Contracting Parties have exchanged notifications that each has completed the legal procedures necessary for this purpose, and shall remain in force for three years.

2. This Agreement shall be extended for successive terms of three years if neither Contracting Party notifies the other of its intent to terminate this Agreement at least thirty (30) days before the end of a term.

3. If either Contracting Party does not have domestic legal authority to carry out its obligations under this Agreement, either Contracting Party may suspend application of this Agreement, or, with the agreement of the other Contracting Party, any part of this Agreement. In that event, the Parties will seek, to the fullest extent practicable in accordance with domestic law, to minimize unfavorable effects on existing trade relations between the two countries.

4. The Contracting Parties agree to consult at the request of either Contracting Party to review the operation of this Agreement and other relevant aspects of the relations between the two Parties.

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step IV: Importing Trade Agreements, Laws, and Policies

PDF Document is 211 pages

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step V:

classifying the import

The Harmonized Tariff Schedule (HTS), also referred as Harmonized Tariff System, is the primary resource for determining tariff or custom duties classifications for goods imported into the United States.

The codes were developed by the World Customs Organization and they are used to classify and define internationally trade goods. In order for the products to import or export internationally the good must be assigned an HTS code that corresponds with the Harmonized Tariff Schedule of the country of import.

The HTS code contains 7-10 digits is often unique after the sixth digit and determined by countries of import. These codes determine the tariff rate of the traded product, and also is a way of keeping record of international trade used in over 200 countries. http://www.datamyne.com/whats-an-hs-or-hts-code/

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2.

Tariff Item – 6110.11.0030 – Women’s

3.

Chapter 61 – Section XI – Textile and Textile Articles

4.

Heading: 6104 – women’s suit type jackets and blazers

5.

Subheading: 4203.10.40 – goat leather

6.

Women’s Outer Wear -

step VI:

cost sheets

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step VII:

shipping route

Part 1 – Ocean Freight Foreign Port of Lading: Shanghai, China U.S. Destination Port: Port of Long Beach, Long Beach, California Carrier: Matson Logistics (Shanghai) CO LTD Consignee: VINCE LLC, Los Angeles, CA a.

Type of box used – Corrugated Cartons

b.

Number of Case Packs (boxes) – 800 cartons

c.

Type of Container – Standard 20’ x 8’ x 8’6

d.

Weight – 487kg / 1095.7 lbs.

e.

Cost to ship the merchandise

Part 2 – Two Timelines a.

Shipping

o

Production and packaging for the shipment – 10 days

o

Shipment taken by truck to port – 2 days

o

Ocean Travel Time/Delivery Time – 30 – 32 days

b.

Air Freight

o

Type of garment carries: N/A

o

Number of garment carries: N/A

o

Space needed in air freight: N/A

o

Cost: N/A

Part 3 – Maps a.

Shipping Map of Manufacturer

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step VIII: Finalize the entry process of the imported item

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4 2

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4 4

4 5

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4 7

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http://understand-china.com/a-guide-to-manufacturing-wages-in-china/ http://www.travelchinaguide.com/cityguides/shanghai/economy.htm http://www.encyclopedia.com/topic/Shanghai.aspx http://www.britannica.com/place/Shanghai http://worldpopulationreview.com/world-cities/shanghai-population/ http://www.focus-economics.com/countries/china http://understand-china.com/?manufacturing=shanghai-labor-costs *** http://understand-china.com/a-guide-to-manufacturing-wages-in-china/ *** http://www.chinadaily.com.cn/business/2013-01/18/content_16138726.htm*** http://ihscslnews.org/view_article.php?id=331 http://shanghai.nyu.edu/about/labor http://sme.amcham-shanghai.org/en/faq/how-do-chinese-labor-laws-apply-expats http://www.doingbusiness.org/data/exploreeconomies/shanghai/labor-market-regulation http://www.shanghai.gov.cn/shanghai/node17256/node17679/node17681/userobject22ai12744.html http://www.shanghai.gov.cn/shanghai/node27118/node27386/node27400/node27841/userobject22ai38900.html http://www.shanghai.gov.cn/shanghai/node17256/node17679/node17681/userobject22ai12744.html http://www.shanghaidaily.com/business/finance/China-sees-mismatch-in-labor-force/shdaily.shtml http://www.shanghaihighlights.com/essential/where-is-shanghai.htm http://www.travelchinaguide.com/cityguides/shanghai/economy.htm http://www.china.org.cn/english/features/60808.htm https://ustr.gov/countries-regions/china-mongolia-taiwan/peoples-republic-china http://www.worldstopexports.com/chinas-top-10-exports/ http://usa.chinadaily.com.cn/epaper/2015-02/13/content_19578309.htm http://www.chinatravel.com/facts/china-import-and-export.htm http://www.dailymail.co.uk/news/article-2478975/Shanghai-port-worlds-busiest-handles-736m-tonnes-year.html http://www.thetransportpolitic.com/2010/04/15/shanghais-metro-now-worlds-longest-continues-to-grow-quicklyas-china-invests-in-rapid-transit/ http://www.travelchinaguide.com/cityguides/shanghai/transportation/subway.htm http://www.go-globe.com/blog/shanghai-in-numbers/

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http://www.shanghaihighlights.com/shanghai-transportation/ http://www.britannica.com/place/Shanghai http://www.amcham-shanghai.org/AmChamPortal/MCMS/Presentation/Publication/PublicationCustomization/ Article.aspx?&tb_Name=PublicationCustomization&ResourceType=0&Guid={8F396699-6FC4-49E8-962536DB6134F316} http://english.mofcom.gov.cn/aroundchina/Shanghai.shtml https://www.internations.org/shanghai-expats/guide/working-in-shanghai-15427/business-in-shanghai-required-skills-2 http://www.cdi.org.pe/Documentos/Articulos/China_Shangai_Business_Etiquette.pdf https://www.todaytranslations.com/doing-business-in-china http://yaleglobal.yale.edu/content/end-textile-quotas-will-redistribute-pain-and-gain http://waprogramming.com/papers/5197b736e27600.09027261.pdf https://en.wikipedia.org/wiki/Import_quota http://www.cbp.gov/trade/quota/guide-import-goods/commodities http://unctad.org/en/PublicationsLibrary/itcdtab45_en.pdf

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