COUNTRY PROFILE PROJECT

COUNTRY PROFILE PROJECT FASM 420 - GLOBAL SOURCING FALL QUARTER 2015

BY SHANG YUAN | JADE HARPER

THE IMPORTED PRODUCTS

China: Majority of Lacoste’s jacket, knit shirt, cotton shirt and sweater form China.

Other countries include: Argentina, Indonesia, El Salvador, Malaysia, Hong Kong and Vietam.

ABOUT LACOSTE

Recognized by green croc logo Product Mix Footwear, Perfume, Leather goods, watches, eyewear, and famous for polo shirts, also added sheets and towels

Lacoste Style Codes Color Block - Solid Blocks of color are boldly yet elegantly placed side by side.

Piping - the brands strong tennis heritage, season after season, piping is the graphic signature for many of our products.

Punch - Inspired by the tennis rackets grip, the punch is innovative and instantly recognizable.

The monochrome - Our distinctly unique choice of monochromatic colors has been designed to suit anyone, anytime, for any activity.

The Net Pattern - An obvious to our tennis heritage, the net pattern is as playful as it is elegant.

Stripes - classic or perfectly modern, depending on the circumstance, stripes form the backbone of many products.

LOCOSTE TIME LINE | 1921 - PRESENT

1921 | THE DEBUT | BORN IN 1904, RENÉ LACOSTE WINS HIS FIRST TOURNAMENT AGED 17 AND THE FRENCH OPEN FOR THE FIRST TIME IN 1924. THE PRESS NOTE HIS PERFECTIONIST APPROACH AND PREDICT A PLAYER OF GREAT CLASS. 1926 | THE FIRST CROCODILE | INSPIRED BY HIS NICKNAME, LACOSTE ASKS HIS FRIEND ROBERT GEORGE TO DESIGN A CROCODILE. THE FAMOUS LOGO MAKES ITS FIRST APPEARANCE EMBROIDERED ON THE BLAZER OF RENÉ LACOSTE. 1928 | THE TENNIS BALL MACHINE | RENÉ LACOSTE INVENTS THE TENNIS BALL MACHINE TO IMPROVE HIS SKILLS. 1933 | INDUSTRIAL PRODUCTION | RENÉ LACOSTE AND ANDRÉ GILLER LAUNCH THE LACOSTE L.12.12 POLO SHIRT. MADE OF A NEW BREATHABLE FABRIC, PETIT PIQUÉ JERSEY, AND FEATURING THE CROCODILE LOGO, THE SHIRT IS FLEXIBLE AND LIGHTWEIGHT. 1951 | COLOR | LACOSTE LAUNCHES A COLOUR RANGE FOR THE PETIT PIQUÉ POLO, INFUSING THE BRAND WITH A CHEERFULNESS TO MATCH ITS ELEGANCE. 1958 | THE LACOSTE SHOE | LACOSTE CREATES A LIGHT YET RESILIENT TENNIS SHOE COMBINING PERFORMANCE AND COMFORT WITH ELEGANCE. LACOSTE LAUNCHES ITS FIRST COLLECTION FOR CHILDREN. 1961| THE POLO COLLAR | RENÉ LACOSTE PATENTS HIS POLO COLLAR. THE UNIQUE, THICKER COLLAR CAN BE UPTURNED TO PROTECT THE NECK FROM SUN DURING THE GAMES. 1968 | FRAGRANCE | LACOSTE LAUNCHES ITS FIRST FRAGRANCE, “EAU DE SPORT”, IN A MINIMAL WHITE BOTTLE FRAMED BY THE BRAND’S ICONIC GREEN PIPING. 1969 | LEATHER GOODS | LACOSTE LAUNCHES THE FIRST BAG RANGE, A FUNCTIONAL YET ELEGANT LINE. 1981 | 1ST BOUTIQUE | THE FIRST LACOSTE BOUTIQUE OPENS ON AVENUE VICTOR HUGO, PARIS. 1994 | GILLES ROSIER FASHION DESIGNER| GILLES ROSIER IS APPOINTED FASHION DESIGNER OF LACOSTE. 1995 | OPENING OF THE 1ST US BOUTIQUES | THE FIRST AMERICAN LACOSTE BOUTIQUES OPEN IN PALM BEACH AND BAL HARBOUR, FLORIDA, FOLLOWED BY NEW YORK. 1996 | WEBSITE | THE FIRST LACOSTE WEBSITE IS LAUNCHED AT WWW.LACOSTE.COM. 2002 | NEW LOGO | THE WORLD-RENOWNED CROCODILE LOGO MEETS CONTEMPORARY TASTES.

2006 | THE FOUNDATION | THE RENÉ LACOSTE FOUNDATION IS CREATED. ITS MISSION IS TO SUPPORT AND FUND PROJECTS FOR CHILDREN TO TRANSMIT KEY VALUES THROUGH SPORT: TEAM SPIRIT, PERSEVERANCE, TENACITY, MOTIVATION AND RESPECT FOR OTHERS. 2010 | FELIPE OLIVEIRA BAPTISTA | FELIPE OLIVEIRA BAPTISTA TAKES OVER AS FASHION DESIGNER OF LACOSTE. 2012 | 1ST WOMEN’S BOUTIQUE, PARIS| FOR THE FIRST TIME IN ITS HISTORY, LACOSTE OPENS A BOUTIQUE AND LAUNCHES A SEASONAL COLLECTION ENTIRELY FOCUSED ON WOMEN. | 10 MILLION FANS | THE LACOSTE FACEBOOK PAGE ATTRACTS 10 MILLION FOLLOWERS. 2013 | 80TH ANNIVERSARY | TO MARK THIS HISTORIC OCCASION LACOSTE RELEASES AN ANNIVERSARY LOGO ALONG WITH SPECIAL COLLECTION OF SPORTSWEAR AND ACCESSORIES. 2014 | THE OLYMPIC GAMES | LACOSTE, PARTNER OF THE FRENCH OLYMPIC COMMITTEE, DESIGNS THE TEAM’S FORMAL ATTIRE AT SOCHI, THE PARALYMPIC GAMES AND RIO, IN 2016. THE BRAND IS AT THE HEART OF SPORTING EXCELLENCE, ASSERTING ITS CORE VALUES OF AUTHENTICITY, AUDACITY AND “JOIE DE VIVRE”.

Felipe Oiveria Baptista was born in 1977 in Portugal.

1997, he graduated from Kingston University University or Fashion Design.

1997 - 2001 he was the designer for MaxMara.

2002 Festival D’Hyères: Grand Prix.

2003 LVMH fashion award and the launch of Felipe Oliveria Baptista.

2005 another LVMH fashion award and first show in Haute Couture Paris fashion week.

2006 he did a capsule collection.

2007 he did an exhibition in Musèe D’ART Modern DU LUXEMBOURG. 2008 He designed Nike “AW77” and launched a accessories line.

2009 he did his first show for for Ready to Wear Fashion Week.

2010 he launched a capsule collection FOB (Felipe Oiveria Baptista) (SS11); and also became the creative director for Lacoste.

Lacoste Marketing Strategy Lacoste generally markets their products via tennis and gold pro’s, since that is their main focus with the brand. They also advertise in popular movies, TV shows in the U.S. Lacoste also advertises in social media as well as magazines, posters, and billboards.

MISSION STATEMENT

“TO HAVE A PERFECT BALANCE OF COMFORT AND ELEGANCE WHICH CAN BE ADOPTED BY ALL.”

COUNTRY PROFILE

COUNTRY - CHINA China, officially the People’s Republic of China (PRC), is a sovereign state in East Asia. It is the world’s most populous country, with a population of over 1.35 billion. The PRC is a single-party state governed by the Communist Party of China, with its seat of government in the capital city of Beijing. 1It exercises jurisdiction over 22 provinces, five autonomous regions, four direct-controlled municipalities (Beijing, Tianjin, Shanghai and Chongqing), and two mostly self-governing special administrative regions (Hong Kong and Macau); while claiming sovereignty over Taiwan. 2

1. Walton, Greg; International Centre for Human Rights and Democratic Development (2001). “Executive Summary”. China’s golden shield: Corporations and the development of surveillance technology in the People’s Republic of China 2. https://en.wikipedia.org/wiki/China

SOCIAL /CULTURE

China is the most populated country, more than 1 billion people live in China and there are 56 ethnic minority

groups. The largest group is the Han Chinese. There are five official religions Buddhism, Taoism, Islam, Catholicism and Protestantism are illegal in China but Buddhism is more popular. There are different languages in China but 71.5 percent of the population speak Mandarin, followed by Wu, Yue also called Cantonese, Xiang, Min, Hakka and Gan. Food in China influences geography and ethnic diversity. Rice is not only a major food source but also a major element, and tofu is a main source of protein for the Chinese. Since ancient times the Chinese culture has been influenced by Confucianism and conservative philosophies. For much of the country’s dynastic era, opportunities for social advancement could be provided by high performance in the prestigious imperial examinations, and they have their origins in the Han Dynasty. The literary emphasis of the exams affects the general perception of cultural refinement in China, also the belief that calligraphy, poetry and painting were higher forms of art than dancing or drama. Chinese culture has long emphasized a sense of deep history and a largely inward looking national perspective. Examinations and a culture of merit remain greatly valued in China today.

1. China: Understanding Its Past. University of Hawaii Press. 1997. p. 29.

2. “Historical and Contemporary Exam-driven Education Fever in China” (PDF). KEDI Journal of Educational Policy 2 (1): 17–33. 2005.

POLITICAL

The People’s Republic of China is one of the world’s few remaining socialist states openly endorsing communism. The Chinese government has been variously described as communist and socialist, but also as authoritarian and corporatist, with heavy restrictions in many areas, most notably against free access to the Internet, freedom of the press, freedom of assembly, the right to have children, free formation of social organizations and freedom of religion.

Its current political, ideological and economic system has been termed by its leaders as the “people’s democratic dictatorship”, “socialism with Chinese characteristics” (which is Marxism adapted to Chinese circumstances) and the “socialist market economy” respectively.

Communist Party

The country is ruled by the Communist Party of China (CPC), whose power is enshrined in China’s constitution. The Chinese electoral system is hierarchical, whereby local People’s Congresses are directly elected, and all higher levels of People’s Congresses up to the National People’s Congress (NPC) are indirectly elected by the People’s Congress of the level immediately below.[162] The political system is decentralized, and provincial and sub-provincial leaders have a significant amount of autonomy. There are other political parties in China, referred to in China as democratic parties, which participate in the National People’s Congress and the Chinese People’s Political Consultative Conference (CPPCC).

The Great Hall of the People in Beijing, where the National People’s Congress convenes Compared to its closed-door policies until the mid-1970s, the liberalization of China has resulted in the administrative climate being less restrictive than before. China supports the Leninist principle of “democratic centralism”,[165] but the elected National People’s Congress has been described as a “rubber stamp” body.As a single-party state, the General Secretary of the Communist Party of China holds ultimate power and authority over state and government.

Government

The President of China is the titular head of state, serving as the ceremonial figurehead under National People’s Congress.[n] The Premier of China is the head of government, presiding over the State Council composed of four vice premiers and the heads of ministries and commissions. The incumbent president is Xi Jinping, who is also the General Secretary of the Communist Party of China and the Chairman of the Central Military Commission, making him China’s paramount leader.The incumbent premier is Li Keqiang, who is also a senior member of the CPC Politburo Standing Committee, China’s de facto top decision-making body.

There have been some moves toward political liberalization, in that open contested elections are now held at the village and town levels. However, the Party retains effective control over government appointments: in the absence of meaningful opposition, the CPC wins by default most of the time. Political concerns in China include the growing gap between rich and poor and government corruption. Nonetheless, the level of public support for the government and its management of the nation is high, with 80–95% of Chinese citizens expressing satisfaction with the central government, according to a 2011 survey.

ECONOMIC China is the largest of all Asian countries and largest population of any country. China is also the second largest importer of goods and services and also is the fastest growing market. China is global for manufacturing as well as the largest economy for manufacturing and the largest for exporting goods. China’s market economy has a high degree of income inequality. The Chinese exports have also risen and they are also making more of the things that go into the goods. Wages rise and some low-cost activity are leaving the country. Capital is deepening and the population is continuing to rise. China’s growing openness to the world’s economy has made manufacturing in China more cost effective.

Population: 1.4 billion GDP (PPP): $13.4 trillion 7.7% growth 8.9% 5-year compound annual growth $9,844 per capita Unemployment: 4.6% nflation (CPI): 2.6% FDI Inflow: $123.9 billion

http://www.heritage.org/index/country/china

GEOGRAPHIC Located in Southeast Asia along the coastline of the Pacific Ocean, China is the world’s third largest country, after Russia and Canada. With an area of 9.6 million square kilometers and a coastline of 18,000 kilometers, its shape on the map is like a rooster. It reaches Mohe in Heilongjiang Province as its northern end, Zengmu Ansha (or James Shoal) to the south, Pamirs to the west, and expands to the eastern border at the conjunction of the Heilongjiang (Amur) River and the Wusuli (Ussuri) River, spanning about 50 degrees of latitude and 62 degrees of longitude. China is bordered by 14 countries -- Korea, Vietnam, Laos, Burma, India, Bhutan, Nepal, Pakistan, Afghanistan, Tajikistan, Kyrgyzstan, Kazakstan, Mongolia, and Russia. Marine-side neighbors include eight countries -- North Korea, Korea, Japan, Philippines, Brunei, Indonesia, Malaysia and Vietnam. 1 Capital: Beijing Major Cities: Shanghai, Guangzhou, Chengdu, Tianjin, Hangzhou, Hong Kong, Shenzhen Area: 3,705,407 square miles (9,596,961 sq km) Coastline: 9,010 miles (14,500 km) Highest Point: Mount Everest at 29,035 feet (8,850m) Lowest Point: Turpan Pendi at -505 feet (-154 m) 1. http://www.travelchinaguide.com/intro/geography/

CONTRIBUTING FACTORS

Labor The working age population is 16-59; it fell 3.71 million in the last year. China’s economy grew 7.4%. The working Chinese age population decreased by 3,710,000 in 2013 and 2014. In fact it has fallen for 3 years straight now. The proportion of the workforce has fallen for 3 years straight now. The proportion of the workforce has steady declined. In China there is 4.1% unemployed. Over the past decade in China it has been the destination for global corporations due to the low-wage rates and labor. The Chinese industrial workers are coming up with their own system of industrial relations; without the assistance of the existing law and labor relations. The Asian country now creates almost half of the world’s goods. China has the cheapest labor cost than other countries and the unemployment rate has topped 41%.

2011: 790,183,023 2012: 795, 863, 202 2013: 801, 790, 592

Inputs There are several inputs that are important to china’s economy like electrical and other machinery, oil ad mineral fuels, optical and medical equipment, coal, iron ore, natural gas, tin, plastics, organic chemicals, aluminum, lead, zinc, rare earth elements, uranium, magnetite and others.

Products China is the 2nd largest importer in the world after importing 1.56 trillion in goods. China’s imports have increased at an annualized rate of 12.7%. China imports electrical and other machinery, oil and mineral fuels, optical and medical equipment, metal ores, plastics, and organic chemicals.

Transportation Airports: 507 Roadways: 4,106,387 km Railways: 86,000 km Navigable waterways: 110,000 km Merchant Marine (commerial vessels or ships carrying goods): 2,030

Business Climate There has been an increase in China’s population. 250 million get up to their high school diplomas, doubling the rate of the United States. According to the Chamber of Commerce in the people’s republic of China, China’s ranking as a target for global investment has declined a bit over the previous years. During 2013, China’s foreign investment grew by more than 5%. China has undergone a lot of economic changes, some beneficial, some not; the country is still facing many difficult choices and decisions.

Effects of quota removal system The quota system was removed making developing countries like China boom at the removal. The United States is one of the largest importers of textiles and apparel globally. China’s exports to the United States surged by more than one hundred percent. Overall, China increased its U.S. import market share of the apparel released from the quota removal system from 24 to 86%. China’s textile exports increased 22.8%. The growth with China’s post quota removal had a negative impact on new developing countries.

S.W.O.T Analysis

Strengths • China has now labor cost.

• Second largest importer in the world.

• Good Chinese government • Form respect in business

Opportunities • China makes goods and more of the products put into goods.

• China is successful with apparel and textiles.

• China has a lot of resources • Excellent for U.S suppliers

Weakness • Language and communication barriers • Lack of transparency • Not knowing business etiquette • Competition

Threats • Large amounts of production in factories causing pollution • Increase in Chinese labor cost • Turmoil in the region • Transshipment traffic gives completion

Lacoste Code of Business Conduct

CODE OF ETHICS FOR PRINCIPAL EXECUTIVE OFFICERS AND SENIOR FINANCIAL OFFICERS I. Introduction This Code of Ethics is applicable to Lacoste Corporation’s chief executive officer, chief operating officer, chief financial officer, principal accounting officer, controller and any person performing similar functions. References in this Code of Ethics to RL mean RL or any of its subsidiaries.

While Lacost and its stockholders expect honest and ethical conduct in all aspects of our business from all employees, RL and its stockholders expect the highest possible standards of honest and ethical conduct from you. You are setting an example for other employees and are expected to foster a culture of transparency, integrity and honesty. Compliance with this Code of Ethics and all other applicable codes of business conduct or ethics adopted by the Board of Directors of Lacoste is a condition to your employment and any violations will be dealt with severely.

II. Conflicts of Interest Conflicts of interest are strictly prohibited as a matter of RL policy. You must be scrupulous in avoiding any action or interest that conflicts with, or gives the appearance of a conflict with, Lacoste’s interests. A “conflict of interest” exists whenever an individual’s private interest in any way interfere or conflict with, or appear to interfere or conflict with, the interests of Lacoste or make, or appear to make, it difficult for the individual to perform his or her work for RL objectively and effectively. Conflicts of interest arise when: • your personal interests interfere, or appear to interfere, in any way, with the interests of Lacoste (for example, you compete with Lacoste); • you take action for your direct or indirect benefit or the direct or indirect benefit of a third party that is inconsistent with the interests of RL (for example, you cause Lacoste to engage in business transactions with a company you control or with friends or relatives); • you, or a member of your family, receive improper personal benefits as a result of your position in Lacoste (for example, you receive a loan or other benefit from a third party to direct Lacoste business to a third party).

There are other situations in which conflicts of interests may arise. Conflicts of interests may not always be clear-cut. If you have questions or concerns regarding a situation, please contact our General Counsel or Corporate Counsel.

III. Accurate Periodic Reports As you are aware, full, fair, full, accurate, timely and understandable disclosure in the reports and other documents that we file with, or submit to, the Securities and Exchange Commission (“SEC”) and in our other public communications is critical for us to maintain our good reputation, to comply with our obligations under the securities laws and to meet the expectations of our stockholders and other members of the investment community. You are to exercise the highest standard of care in preparing such reports and documents and other public communications, in accordance with thefollowing guidelines: • all accounting records, and the reports produced from such records, must be in accordance with applicable laws and regulations; • all accounting records must fairly and accurately reflect the transactions or occurrences to which they relate; • all accounting records must fairly and accurately reflect in reasonable detail RL’s assets, liabilities, revenues, and expenses; • no accounting records may contain any false or intentionally misleading entries; • no transactions should be intentionally misclassified as to accounts, departments or accounting periods; • all transactions must be supported by accurate documentation in reasonable detail and recorded in the proper account and in the proper accounting period; • no relevant information should be concealed from the internal auditors or the independent auditors; and • compliance with RL’s system of internal controls is required.

IV.Compliance with Laws You are expected to understand and comply with both the letter and spirit of all applicable laws and governmental rules and regulations.

V. Reporting Violations You are expected to report any violations of this Code of Ethics promptly to the Chairman of the Audit Committee of the Board of Directors.

VI. Compliance of Non-Compliance with this Code Violations of this Code of Ethics will be reported to the Audit Committee. If you fail to comply with this Code of Ethics or applicable laws, rules or regulations (including without limitation all rules and regulations of the SEC) you will be subject to disciplinary measures, up to and including discharge from RL, and any appropriate legal action.

VII. Amendment, Modification and Waiver This Code of Ethics may be amended or modified by the Board of Directors of RL. Waivers of this Code of Ethics may only be granted by the Board of Directors or a committee of the Board of Directors with specific delegated authority. Waivers will be disclosed to stockholders as required by the Securities Exchange Act of 1934 and the rules thereunder and the applicable rules of the New York Stock Exchange.

BUSINESS ETIQUETTE

Mianzi (“Face” or Social Capital) keep mianzi, keep relationship

In the Chinas business culture, a person’s reputation and social standing rest on a saving face. If Westerners cause the Chinese embarrassment or loss of composure it will unintentionally, it can be disastrous for business negotiations in China. The Chinese notion of saving face is closely associated with American concepts of dignity and prestige. Mianzi means a person’s place in his social network; it is the most important measure of social worth. Sources of face can be wealth, intelligence, attractiveness, skills, position, and, good guanxi. While Americans tend to think in absolute terms a Chinese person either has prestige and dignity or doesn’t, the Chinese think of face in quantitative terms. Face, like money, can be earned, lost, given, or even taken away.

Praising You may ‘give’ face to someone by praising him in front of others, especially the people that he values, such as important customers or government officials. It could also be done through presentation of token gifts, or expressing your gratitude for what he has done on occasions where people important to the receiving parties are around.

‘Saving’ face You may ‘save’ someone’s face by coming to his rescue by saying something to salvage an embarrassing situation.

‘Giving’ face You may ‘give’ face to someone when he seek favor from you by going out of your way to help.

‘Keeping’ face You may ‘keep’ someone’s face by subtly doing something for him. For example, intentionally lose the golf game that you could easily win.

2. Masculine or Feminine

A high score (Masculine) on this dimension indicates that the society will be driven by competition, achievement and

success, with success being defined by the winner and the best in field; a value system that starts in school and continues throughout organizational life.

A low score (Feminine) on the aspect means that the dominant values in society are caring for others and quality of

life. A Female society is one which quality of life is the sign of success and standing out from the crowd is not creditable. The fundamental issue here is what motivates people wanting to be the best (Masculine) or liking what you do (Feminine).

3. Negotiation Style and Strategies

The Chinese word for negotiation which is tan pan combines the characters meaning to discuss and to judge. From

a Chinese person’s perspective, a negotiation exists primarily as a device for building trust so that two parties can work together for the benefit of both. Trust is built through dialogue that lets all parties judge or evaluate the partner and their partner’s capabilities and assess each other’s relative status. The negotiation process also enables all parties to reach an understanding on a specific issue, condition, or transaction in a way that lets both sides feel that a good deal was brokered. But the concept of negotiation hinges on creating a framework for long-term cooperation and problem solving is much more than on drafting at a one-time agreement. Negotiation in China is viewed as an ongoing, dynamic process that takes into account practical matters and context. Many Chinese people prefer this approach over creating contract-based absolutes, which many Chinese people perceive as the primary purpose of Western-style negotiations. Significant differences in negotiation is style and culture can be accompanied by mutually unfavorable perceptions. Americans may see Chinese negotiators as inefficient, vague, and perhaps even dishonest but while Chinese perceive American negotiators as impersonal, impulsive, and overly focused on immediate gains. When adapting to Chinese style negotiations, task-based, time-conscious foreign partners must balance the need for quick settlement on specific issues and also contract terms with the slower-paced and seemingly abstract building of interpersonal relationships. Competing effectively within a Chinese negotiation framework means understanding and accommodating the Chinese-style in order to craft a strategic plan that works on a local level.

3. Negotiation Style and Strategies Take the time to prepare The objective of strategic preparation for negotiations is to gain insight into the negotiating partner’s situation, intent, and capabilities, and to also identify areas of focus for discussions. This may take time and effort, but thorough preparation it will help a company decide the best way to approach the table, increasing the likelihood of a successful negotiation and sustainable business arrangement. There are five main success factors to consider like knowing the context of the deal, knowing your partner, knowing yourself, putting relative strengths and weaknesses in context, and striving for operational readiness.

Negotiations are never “over” All situations involving two or more entities in China require a type of negotiation, ranging from informal, friendly discussions with a long-term partner to formal bilateral talks. The Chinese’s style of negotiation is the process of building and tending relationships to be able to produce benefits for both sides. It is a process that doesn’t end unless the relationship is detached. This approach of negotiation is rooted in the Chinese culture, historical, and practical considerations and they exist throughout modern China. It also differs from the view that the negotiation ends when the contract is signed. From a Chinese perspective, the contract signing indicates the formal beginning of a partnership and with that the commitment to an ongoing negotiation. In this, successful foreign companies commit adequate time and resources to the understanding and tending local Chinese relationships for the long run.

4. Type of communication Unless you speak Chinese, (Mandarin is the most common) it can be difficult to do business in many parts of China without the help of a translator. English language levels are very patchy and although a layer of fluent English speakers exists, the layer is quite thin and levels fall away very quickly. Communicating in Chinese can be a slow difficult activity and fraught with constant dangers in terms of misunderstanding and mistranslation. Do not assume comprehension cover the same ground many times and constantly check for any understanding.

One reason why the communication can be such a problem in China is that along with many other Asians, the Chinese find it extremely difficult to say ‘no’. Saying ‘no’ can cause both embarrassment and loss of face and it is better to agree with things in a less than direct manner. Thus anything other than an unambiguous ‘yes’ probably means ‘no’. Be very aware of phrases like yes but it might be difficult’ and ‘Yes, probably’ an it can also be difficult to deliver bad news and this is often done through the use of a go between who can soften, blow, and try to preserve as much good within the relationship as possible.

The Chinese have a reputation for ‘ insensible’ and this is widely based on Western misinterpretation of Chinese body languages. As with the Japanese, the Chinese lack of responsiveness and emotion. The lack of body language does not mean that the Chinese do not show their reactions, more that westerners are not skilled at reading it across the cultural divide.

Also don’t always assume that just because somebody happens to speak good English that they will automatically more competent than somebody who doesn’t.

5. social and cultural elements A. Appropriate Business attire

There are many important rules for proper business attire in China. You should never wear shorts, shorts are consid-

ered appropriate for exercise and never for the workplace. In fact, even during the summer, one will rarely see shorts worn in China, only by the tourist. You should also avoid wearing bright clothing, as bright colors are considered inappropriate in the China workplace. You need to wear dark colors or muted colors. Men and women should dress in a conservative manner and blue jeans should never be worn in the Chinese workplace. On Fridays the Chinese do not have a casual day. Also in China you need to make sure you keep your suit jacket on at all times. It is considered rude and inappropriate to remove your jacket during the meeting at any time, and it will be thought of as a sign of disrespect to the company that is hosting you. You should wear a suit to any business social event that one is attending. Even for a formal event a business suit is appropriate and tuxedos are rarely worn.

5. social and cultural elements B. Introductions

With regard to introducing yourself in China there is little difference between the Chinese and elsewhere. It is considered polite to give your full name, job positions, and the place you employee for, especially on more formal occasions. If someone in China is making the introductions, to introduce your self it is considered disrespectful. When it is your turn to be introduced, stand up, smile and look at the people and also be introduced with ease. After being introduced, you can shake hands with each other and give mutual greetings, sometimes with an exchange of an calling cards. In China, there are many strict conventional rules on introduction to others, the junior should be introduced to the senior first, the male should be introduced to the female first, the inferior should be introduced to the superior first and the host should be introduced to the guest. Doing these first at an introduction is to show high respect to the senior, the female, the superior and the guest and however, if you are in a generally more informal occasion, then the introduction to others can be less ceremonious.

C. Greetings

A handshake or a kind salutation is common in China. When you meet people for the first time and are introduced to them and have made some new friends, you should say ni hao . It is a efficient way to show your respect, break the ice and start a conversation and between close friends, you might start by saying jīntiān ni hao ma? or zuìjìn ni hao ma? which means how are you today and how is it going recently. Chinese people will appreciate it if you use a couple of words in Chinese, but make sure you are aware of the meaning and the appropriate occasions.

– In Chinese culture, the questions “Have you eaten?” or “Where have you been?” are pleasantries equivalent to the traditional “How are you?” in the English-. Therefore, do not take it literally and start getting into details in your answer! Simply answer “yes” if you have eaten - even if you haven’t – or simply smile and saying “thank you!!

5. social and cultural elements D. Presentation and business card Business cards are an essential courtesy in Chinese culture, keep a supply readily available. Have your business card translated into Chinese on one side and English on the other side. Also use two hands to present your business card with the Chinese version facing upward. Your name should face the person you are presenting the card so he can read your name. Use two hands when accepting business cards. Study the name for a few seconds when you receive the card and do NOT write on someone else’s business card.

E. First Name or Title

The names of Chinese people have their own tradition and characteristics. Unlike westerners, the family name in China is put first, followed by the given name. A feme covert does not use her husband’s family name. The given name usually contains one or two Chinese characters but in order to avoid confusion, newly-born babies are now entitled to be given names of three characters.

5. social and cultural elements F. Gestures Chinese people don’t gesture very much and regard a lot of hand movement as excessive. Winking and whistling are considered rude in China. Eye contact tends to be indirect and have the signs thumbs up and tugging on the earlobe are of excellence. A outward pointing and raised pinky means you are nothing, poor quality or not very good at something.

Some Chinese point with their middle finger without realizing that it has a vulgar meaning in the West. Conversely, and a thumb placed between the middle and index fingers means the “nose stealing” gesture) is on obscene gesture in some parts of China.

Do not point or use your finger to beckon someone this gesture is used for dogs. To get someone’s attention in Chinese and tell them to “come here” place your palm down and move your fingers towards you. This gesture is used with children, taxis or waiters but is considered very rude when directed at an older person. The most polite way to attract someone’s attention is to make eye contact and bow slightly.

Holding your fist up is an obscene gesture in Hong Kong and some parts of southern China. Also in southern China, people say thank you by tapping two fingers on the table. Many people in the north, however, are not familiar with this gesture.

5. social and cultural elements G. Colors, Numbers, and their meanings Always pay attention to numbers and their significance or avoid as appropriate in China: • The number 8 is the luckiest number in Chinese culture. If you receive eight of something, consider it a gesture of good will.

• The number 6 is considered a blessing for smoothness and progress.

• The number 4 is a number of a taboo, because it sounds like the word “death” and is considered a very unlucky number • The number 73 means “the funeral” • And the number 84 or 48 means “having accidents” • Prefer even numbers.

H. Gift Giving In Chinese societies the gifts are given for holidays like a birthdays, during official business meetings, and at special events like dinner at a friend’s home. While red envelopes are a more popular choice for Chinese New Year and weddings, gifts are also acceptable.

I. Joke Telling The Chinese sense of humor is different and most western jokes do not translate that well into Chinese.

Chinese Number Gestures

6. Business Entertaining A. Proper Use of Utensils • • • •

Do not use chopsticks to make any type of noise, draw attention, or gesture.

Do not use chopsticks to move plates or bowls around.

Generally, don’t use chopsticks to impale food.

Do not leave chopsticks standing vertically in a bowl of rice or any other type of food.

B. Table Manners The seating arrangement is probably the most important part of the Chinese dining etiquette. If the guest of honor member is not seated, then other people are not allowed to be seated. If he has not eaten yet others should not begin to eat either. When making a toasts the first toast is made from the seat of honor and continuing down the order of importance. Let the older people eat first and if you hear an elder say “let’s eat”, you can start to eat. When helping yourself to the dishes, you should take food first from the plates in front of you other than those in the middle of the table or in front of others. It is considered bad manners to use your chopsticks to burrow through the food and “dig for treasure” and also keep your eyes glued to the plates and when chewing food, don’t make any noises. It is best not to talk with others with your mouth full of food, be temperate in laughing lest you spew your food or the food goes down your windpipe and causes you to choke. If you need to talk, you should speak little as well as quietly. When you are removing bones or other inedible parts of the meal from your mouth, use your chopsticks or a hand to take them and put them on a side of your plate (or the table) in front of you, instead of spitting them directly onto the table or on the ground. And never eat the last piece from the serving tray.

6. Business Entertaining C. Alcoholic Beverages If the host offers you a drink the you should not refuse. If you usually don’t drink any alcohol, you should explain and use tea to participate in your host’s toasts. Baijiu is a distilled alcoholic beverage. It is usually sorghum-based, but has some varieties and are distilled from huangjiu or other rice-based drinks. Typically have an alcohol content greater than 30% and are similar in color and feel to vodka that baijiu is sometimes known as “Chinese vodka”. There are many varieties, classified by their fragrance, but most are distilled once, permitting stronger flavors and scent than vodka. The prestige brand within China is the “sauce-scented” Moutai or Mao-t’ai, produced in the southern city of Maotai in Guizhou. More common brands have Wuliangye and varieties of erguotou.

6. Business Entertaining D. Appropriate Conversation Subjects Good for discussion include the differences between China and the West, and the advances that the Chinese have made. The landmarks, weather, and geography in China. Expect questions about your age, marital status, salary, and the price of personal items. Although your answers need not be detailed, trying to avoid answering will only invite suspicion and misunderstanding. For the Chinese, the specifics of your answers are not important as your willingness to respond.

E. Topics to Avoid Avoiding mentioning Taiwan and do not criticize the Chinese leadership. The Chinese use silence as a way to avoid saying “no�. Silence also implies, that there are problems, and we would like to reconsider the main issues.� Since the Chinese do not like to say no, you should avoid asking them questions that require such a response. Laughing loudly is not polite or suitable in China specially when people meet each other for the first time. Try not to be talkative, and be sure to take an interest in what your host has to say to you. When meeting someone for the first time for a business meeting one must engage in general conversation before turning to business.

Importing Trade Agreements, Laws, and Policies

Trade Agreements with the United States

China is a member of the World Trade organization; they became a member in 2001 after fighting for 15 years. WTO

bar quotas and other quantitative restrictions, so China eliminated those restrictions over a period of time not exceeding five years. China is the second largest trading partner with 562 billion in 2013. The United States–China agreement, China committed to providing and trading rights as well as distribution rights to the United States. China is the targets supplier of goods to the U.S. as of 2013, exporting machinery, electrical machinery, sports equipment, toys, bedding, furniture etc. Under the United States, China’s agreement committed to providing trading rights as well as description rights to the United States.

Trading rights will be phased in over period of three years. The United States and china have formal and informal bilateral meetings. The trade agreement between China and the U.S is based off of making it an effort to thrive for mutual expansion and attending harmonious development. Between the two countries adopting all appropriate measures to straighten the economic and trade relations. Both countries must give respect to the charges, duties, and customs. Also give respect to their rules and procedures concerning customs, transit, transshipment, and warehousing; taxes and other internal charges, laws, regulations, requirements and administrative formalities. China is also an increasingly important political power. China The partnership between the two is known as the worlds most important bilateral relationship of the century.

http://www.cbp.gov/sites/default/files/documents/Importing%20into%20the%20U.S.pdf http://www.cbp.gov/document/publications/importing-united-states

Laws for imports U.S.A When a shipment reaches the U.S they must have importer of records and they must file entry documents.

They also need the right to enter. The goods can not be legally entered until the Customs of Border protection has authorized the delivery of the merchandise and the items have been paid for.

Goods from Iraq, Iran, Cuba, Libya, and North Korea cannot be imported from or through The United States has free trade agreements in effect within 20 countries. All the goods that are imported into the U.S are subjected to duty or duty-free entry.

Entry documents, within 15 calendar days of the date, the shipments arrive at the U.S port and the documents must be filled out.

CBP form 7533 CBP form 3461 Evidence of the right to enter Commercial invoice or a Pro Forma invoice Packing List Any other documents that may be needed http://www.cbp.gov/sites/default/files/documents/Importing%20into%20the%20U.S.pdf http://www.cbp.gov/document/publications/importing-united-states

Classifying the Import The Harmonized Tariff Achedule

The Harmonized Tariff Schedule of the United States (HTSUS), also referred to as the Harmonized Tariff Schedule of the United States Annotated (HTSA), is the primary resource for determining tariff (customs duties) classifications for goods imported into the United States.

The tariff schedule has 99 chapters under 22 sections, and various appendices for chemicals, pharmaceuticals, and intermediate chemicals for dye. Raw materials or basic substances generally appear in the early chapters and in earlier headings within a chapter, whereas highly processed goods and manufactured articles appear in later chapters and headings.

For example, Section I and Section II cover animals and plants, while Sections XVI, XVII, and XVIII cover “Machinery and Mechanical Applicances”, “Vehicles, Aircraft, and Vessels”, and “Precision Instruments, Clocks and Watches, and Musical Instruments”.

https://en.wikipedia.org/wiki/Harmonized_Tariff_Schedule_for_the_United_States

Men’s Sweater Chapter: 61 Heading: 6110 Subheading: 6110,12,00 Tariff Item: 6110,12,0011

COST SHEET

style# Season

AH1374-­‐51-­‐166 2015 Fall

COMPONENT COSTS: Fabrics: wool yarn

Generation Description GOLF SWEATER VEST Yds/Qty 3

Unit Prc $ Amt $7.00 $21

Lining: Woven Label/Care

$0.30

(TOTAL FABRICS)

$21.30

Trims:

(TOTAL TRIMS) CMT COSTS: Grading: Marking: Cutting: Make Charges: Thread Sewing

$1.00 $0.50 $1.50 $0.50 $0.50 $2.00

Labor

$0.30

Wash/Type Press/Trim QE/Bag & Tag (TOTAL LABOR) PACKING MATERIALS: Tissue Polybag Inner Box Outer Box (TOTAL PACKING) (TOTAL COST): WHOLESALE PRICE WHOLESALE MARGIN RETAIL PRICE RETAIL MARGIN

$0.30 $0.50 $7.10 1 1 1

$0.10 $0.35 $0.80

$0.10 $0.35 $0.80 $1.25 $29.20 $36.50 25% $110 67.00%

Size Range: 3-­‐9

SHIPPING ROUTE Ocean Freight Type of box used: 7 ply carton which measured 12 x 12 x6, each carton will contain 7 pieces (Size 3-9) Number of boxes: 500 Units: 3500/ 7 per box Tpye of container: 20 ft container Cost: each piece will cost a $0.57 to ship from Shanghai to LA, With a total of 3500 pieces, the cost comes to $1,995.

Timelines A. shipping Delivery time: 25 - 30 days Production, packaging and preparing for shipment is 18 days Shipment taken to port by roadway is 1 days B. Customs On the water: 18 - 22 days Unloading of shipment and loading on to truck for transport: 1 day Shipment will be taken by roadway to the company location: 2 days Total time: 46 days

Importer’s Documents

GSP Form A&Z CO.,LTD. 171 VO THI SAU STR., 3rd DIST., HOCHIMINH CITY, VIETNAM. TEL: 84.8.9326498

A&Z MFG LTD. 17642 GORGOUG, HAMBURG, GERMANY. TEL: 096789900

BY SEA: BACH DANG V.132 FROM: HOCHIMINH CITY, VIETNAM TO: HAMBURG, GERMANY B/L No. 12345 DATE 04/05/2005

VIETNAM

THIS C/O REPLACES THE C/O No. 05012345 DATE 04/05/2005

SHIPPING MARK: A&Z HAMBURG CONT./SEAL No. 12345 / 65432

BAGS

“W”42.02

CUSTOMS DECLARATION FOR EXPORT COMMODITIES No. 12345678 DATE 04/05/2005

1,000 PCS

VIETNAM

GERMANY HOCHIMINH CITY, 09/05/2005

HOCHIMINH CITY, 09/05/2005

12345

04/05/2005

Detail Sheet

Entry Summary

Ocean Bill of Lading

Inland Bill of Lading

Intermodal Bill of Lading

Insurance Certificate

Arrival Notice

Packing List

Commercial Invoice

Pro Forma Invoice

Letter of Credit

FASM-420 GLOBAL SOURCING | NOVEMBER 13, 2015