While geographic barriers these days don’t present much of an obstacle for global companies that wish to do business with each other, cultural barriers may be another matter.

Sure, there is periodic concern when differences in what is considered “ethical” among trade partners result in unwelcome media attention. Remember the heat that Wal-Mart and Kathie Lee Gifford took when a flurry of stories emerged concerning the dismal working conditions in overseas factories where Gifford-branded clothing was produced?

Yet corporate ethics remains largely an abstract “big picture” concept that gets short shrift in contract negotiations – and in ongoing management of supplier relationships. This disconnect is coming keenly into focus with the growing unease over numerous product recalls involving goods produced in China – from pet food to children’s toys to tires to toothpaste.

China’s offshoring star continues to rise – despite a problem that the author of a fascinating Knowledge@Wharton article calls “quality fade:” Chinese manufacturers’ deliberate dilution of quality in the name of boosting their profit margins.

Quality fade is enabled by several key dynamics, notes the author, a businessman with 15 years of experience in China. And suppliers and their customers share the blame.

Some U.S. customers appear more willing to risk poor quality – or even dangerous – products than the more immediate loss of competitive advantage they could suffer by cracking down on suppliers. “The chance of a product failure is usually remote, but the penalty for late delivery is an almost certain loss of business,” writes the author.

In an effort to keep the best suppliers to themselves, customers don’t share details about their experiences – good or bad – with other customers, which makes it fairly easy for unscrupulous suppliers to evade detection.

Fearing intervention from the Communist government and/or outside groups like the World Trade Organization, Chinese suppliers are eager to profit before the boom goes bust – even if that means scamming customers.

China has a long record of looking the other way, although that may be changing. The government is adopting a tough stance on enforcing product quality guidelines, dramatically illustrated by its recent execution of the head of its food and drug safety agency.

And Western companies are pushing reform to help protect their business interests in China, the EVP of IT services firm DarwinSuzsoft told IT Business Edge in a May interview, Western Influence Boosts Outsourcing Opportunities in China.

Though his remarks specifically address the issue of intellectual property in software development, it seems to us they could also apply to other ethical concerns:

The multi-nationals have come in and really cracked down on the government in terms of protecting their investments in China. And the WTO and other spotlights on China have helped guide China’s position. Last year, they had the highest judicial claims on record for infringement. So that means they are now actually prosecuting cases.

Any business owner or employee can agree with the idea that increasing profit margins and reducing operating costs are critical to sustaining business success. This concept becomes especially important when you are a company that specializes in manufacturing and selling your own product.

Compared to a service company, manufacturing companies are not only faced with fixed overhead expenses, but other variable costs as well. For example: changes in raw materials pricing, production down time due to faulty manufacturing equipment, expensive second- shift labor, and worst of all, product waste resulting from the production of a defective product. Whether you are a small factory or a large conglomerate, the goal for your production business should be centered on streamlining your manufacturing and minimizing those variable costs. So, a couple of questions to ask are: “how does one begin to outsource manufacturing and/or product sourcing” and “which country will provide the best service, raw materials and price for mass production?”

To answer these questions (and more) listed here, are points to consider when choosing foreign vendors:

Quality: Be sure that your outsourced vendors will maintain the same quality and safety standards you are producing in house. Try to obtain physical proof (certificates) that the factories are certified and recognize such quality production processes as CCC (China compulsory certification mark), PPAP (Production Part Approval Process) and ISO-9000 series certifications. Also, be sure factories are open to allowing third party inspection companies into their facilities to conduct quality control investigations. Location: When you begin the offshore manufacturing process, stick with one country of origin for your manufacturing. Preferably select a country that has ample supply to your required raw materials and favorable labor rates. Customer References: Work with suppliers that are willing to provide customer references. Export Experience: Insist on working with foreign suppliers that have prior experience exporting product into the United States. Working with a vendor that has knowledge of USA export documentation and procedures is invaluable. Letters of Credit: Work with vendors that accept payment by foreign letters of credit. You want to be sure that your foreign manufactured products appear (as promised) at the USA port. Foreign Credit Check: Work with foreign credit companies to obtain real time credit reports on your chosen manufacturing vendors. Manufacturing Capacity: Know that every manufacturing company is different. Make sure that your foreign supplier is capable of producing the demand/quantity your company will need for long term sales. Also, be aware of lead time (30, 60, 90 days) to produce your desired products. Manufacturing Design: Ask if the facility can offer manufacturing design services. This will help perfect your initial product design. This step will help to prevent further rework after manufacturing begins. This is also a good time to ask about their costs for sample production. Culture: Can the factories speak English and are they knowledgeable of Western business practices? Site Visits: Work with suppliers that will allow you to visit and communicate with them on a regular basis.Choosing the right vendor/supplier for your outsourced manufacturing is truly an exercise in locating a long-term partner that will help lower your manufacturing costs. Take the time early in the process to perform the necessary due diligence and educate yourself about every facet of the factories processes, certifications, credit worthiness, and experiences with foreign customers. Your company will gain critical knowledge and respect from the potential suppliers. Any reputable supplier will be willing to share appropriate business information as well as ask for information from you. So, be prepared to share your business information in return.

Today consumers all across the world can have access to affordable and high quality electronics items – all thanks to wholesale supplies from China.

The role of technology

Technology today has really changed the face of modern electronics. Today the Wholesale manufacturers in China are providing a whole new range of electronic products with trendy new features and sleeker aesthetics than ever before. This is also being lapped up by consumers who find that the price tags on the products are lower than ever before! With the help of wholesale drop ship agents today consumers as well as importers can have access to a full range of high quality electronic goods at a fraction of the original cost!

Types of electronic products

The range of wholesale products in the electronics segment is truly overwhelming. From cellular phones to media players to different innovative gaming devices – the range is truly comprehensive. You can buy wholesale any electronic product of choice at a very reasonable cost and then resell it at the regular price in your country. Therefore as an importer you get to make a tidy profit in the process. The whole trend of going wholesale in China has literally peaked today. More and more consumers are avoiding the middleman route and instead approaching these suppliers directly. This not only reduces the overall costs but also avoids having to pay extra commissions or fees to these agents.

The race against each other

Today competition in the wholesale electronics segment is so fierce that even before manufacturers are introducing products in the market, the Chinese wholesale supplies seem to outdo them both in terms of price and features! This is virtually a race against time where most of the time the China Wholesale segment wins.

Dealing with taxes

Let’s face it – while you will undoubtedly get to buy wholesale electronics items at a low cost from China, you will need to pay custom duties and taxes while importing them into your own country. However there are some ways in which you can deal with this issue in an effective manner.

- Make sure to do a fair bit of research on the prevailing tax laws and rates in your country. This will enable you to be prepared for the price of the wholesale from china being imported into your country.

- You could discuss these concerns with a government agency so as to get a better idea of the wholesale products prices when they reach your country.

Ambulance financing has become a need of the day considering the escalating need for ambulances in the healthcare industry. Getting financial help to acquire an ambulance needs to be within the operational budget of the hospital or the health care institute. Therefore it is necessary to seek a genuine financing company that offers help at low interest rates and through easy procedures.

Patient transport ambulance financing is necessary for a health care institute or a hospital as it is one of the most important functional instruments in the industry of health care services. An ambulance is well-facilitated and has a number of advanced features owing to which it carries a high price tag. Hence it is essential to seek help from a company that has a vast experience in the field of ambulance financing.

Level 2 ambulance is not just a vehicle but also a mobile hospital. It comes in various configurations to meet various types of emergency purposes. It is based on modern cargo van category and has sophisticated features that can help in providing advanced medical care in case of emergencies. Owing to its specialized nature, it is highly expensive. As a result ambulance financing is the best option to acquire a Level 2 ambulance.

Level 4 ambulances are too are highly sophisticated in nature and can be rightly termed as mobile hospitals. They can be used for handling certain emergency situations like disease break outs or radiation injuries. They comprise of several advanced features that help in providing life support to those who need it. Because of their sophisticated nature, they are quite pricey and as a result, ambulance financing for them from a specialized financial institution is essential.

Level 1 ambulance is a must for almost all hospitals or health care institutions. It helps in providing basic medical care and also provides valuable service in case of emergencies. It is of the most advanced type and meets standards of OSHA and EPA. It can be used for providing life support in case of crisis like infectious disease break outs. This high-priced essential exceeds the financial budgets of several hospitals. The traditional lenders may not be ready to finance ambulances. Hence it is essential to seek help of a specialized company which has adequate experience in ambulance financing.

Level 3 ambulances help in providing immediate and essential care to those who need it. They provide advanced life support in case of emergencies. They come in different configurations to cater to different emergency purposes. Due to their sophisticated nature, they carry a high price tag. Hence the health care institutions ought to seek help of a reliable financing company to acquire level 3 ambulances.

There are some registered financing companies that have vast experience in financing ambulances. They provide financial help at low interest rates through simple and fast procedures. It is often advisable to seek the help of such companies in order to acquire advanced ambulances.

International iron ore price rise has triggered pains in various industries in China, and many companies have to look for ways to improve their production efficiency to rescue themselves.

Steel price follow suit

As international iron ore price will increase at least 65% in 2008, iron ore imports into China have now increased by RMB 236/ton (RMB:USD = 7:1) on average from 2007 level. Adding in shipping cost increase, raw materials for steelmaking have now increased by RMB 400/ton, equivalent to a total increase of 15%

Jigang Group, a large state-owned steel company located in the eastern coastal city of Jinan, imports more than 60% of its iron ore from Brazil and Australia. “In less than three months’ time, domestic steel price has been adjusted upward for three times, totalling RMB 1000, or a 20% increase,” said Mr Bo Tao, Production Director of Jigang, “In fact, the magnitude of steel price increase has far exceeded the magnitude of raw materials price increase.”

“In March, China’s average steel product price has increased to RMB 5570/ton, up 40% from previous comparable period, and the rise is expected to continue. To some extent, steel price increase is an enlarged effect of iron ore price increase,” said an anonymous person from Jigang, “The strong market demand for steel in China has given steelmakers enough bargaining power on price setting.”

Downstream industries suffered

“We have little bargaining power in front of steel companies,” said Mr Gao Zengdong, a senior manager from Sinotruk, a major heavy duty truck manufacturer in China, “Due to production requirements, we have to purchase a lot of medium and heavy plates. To ensure raw materials supply, it is impossible to bargain on the price.” It is understood that Sinotruk buys more than 20,000 tons of medium and heavy plates from Jigang directly.

“The price for medium and heavy plate was RMB 4800/ton one year ago, but it becomes RMB 6300,” said Mr Gao. Although Sinotruk has long term supply contracts with Jigang, but the price is not fixed. Since January this year, steel companies have been increasing their prices every two weeks, with RMB 200-300/ton per increase. “Not all steel plates can meet our requirements, and due to transportation costs, we have to accept products from the nearby Jigang.”

Mr Gao also used another example of pig iron, a major input for axles. Pig iron price has increased from RMB 2600/ton in 2006 to the current RMB 5000. Especially since this year, pig iron price is almost increasing everyday. To cope with the high cost of casting, casting parts companies have to absorb 60% of the cost increase, while passing the remaining 40% to customers.

“Casting parts companies are facing tremendous pressure,” said Mr Zhang Libo, Secretary-general of China Foundry Association. On one hand, casting parts companies have to bear the pass-on raw materials costs from steel companies. On the other hand, the fully competitive market has forced many of them to absorb the pressure by squeezing their own profit margins. As a result, many small casting parts companies have to close down.

As in another downstream industry, Mr Liu Wei, a supply manager from Jinan Diesel Engine (JDEC), is also feeling the pain. Since February, JDEC’s steel raw materials, such as structural steel, steel plates and general carbon steel, have all become 30% or more expensive. JDEC spent RMB 600 million on raw materials procurement last year, with RMB 450 million for steel materials. The ever-tightening profit margin has affected the healthy development of JDEC, said Mr Liu.

The shipbuilding industry is also a big user of steel in China, and ship plate price has increased by more than RMB 1000 in recent months. “Shipbuilders in China now have delivery orders that are as far as in 2012, and every million ton of ship capacity consumes 40 tons of steel products. So it is impossible for their steel demand to decrease. In fact, some less-capitalised shipbuilding companies are now closing down as they can’t afford the productions costs anymore,” said Mr Bo from Jigang.

Internal solutions

After several rounds of price increases, Chinese steel companies have mostly recouped their iron ore costs. But their downstream customers, most of which are in highly competitive or consumer markets, are difficult to pass on their higher costs. After half-a-year long campaign, China’s white goods companies have now raised their product prices to combat the higher steel price. And auto makers, whose steel cost accounts for 70% of cost base, are also publicly speaking out of their pain.

“Our heavy duty truck industry is extremely competitive, so it is hard to pass down the cost pressure,” said Mr Gao from Sinotruk. Steel products account for 90% of the raw materials used in trucking production. But as many state-owned truck producers are now expanding their capacity to fight for the domestic and international markets, they can’t directly pass down their costs to customers. They can, however, rely on technological innovations, energy efficiency and emission control, in order to contain the production costs as much as possible.

The same cost problem is also faced by the competitive home electronics industry in China.

Mr Wang Zhenggang, Vice-CEO of Haier Group, admitted that “for a competitive downstream industry such as us, we can only digest the high costs by technological innovations, product differentiations, high quality and high value-added products. For example, we have recently launched a premium home electronics set with energy efficient and environmentally friendly features.”

Mr Wang also said that as a result of the rising steel price, many companies are now actively developing new substitute materials, “In addition, we also utilise the global procurement model, which sources raw materials and accessories from the lowest price countries.”

Data from China Internet Network Information Center (CNNIC) shows that till June 2004 Chinese online user has reached 87 million, of which, 7.3% has experience of online shopping.

CNNIC also expects that the percentage will reach 58% in the next 2005 year.

Two factors may limit China’s e-business growth.

1. The low investment on the Internet infrastructure and related soft environment.

2. The shortage of online products

First off, don’t be stupid. The enticing thought of 100M dollar box offices can put your reasonable side into a tailspin and it is a downward spiral in terms of execution. Second, this is not legal advice. This is a matter of pure and simple business structuring.

A production company usually produces a movie, or does it? What is a production company? The production company is the work arm or labor aspect of the film; at least it should be in terms of liability. Think about this, why would the company who continues to be the work force (a liability) hold the rights to any intellectual property that will have residual rights? Residual and derivative rights continue to bring in income and company income is always a risk to creditors who have received judgments from any lawsuit. To answer the question proposed, generally each film or property is its own LLC.

The rights or sometimes the “library” of a production company are often transferred into another company so that the liability of the next production does not affect any future liabilities that have nothing to do with the transferred intellectual property rights.

Having said that, what is the reasonable approach for producers. I am going to assume that you are not Steven Spielberg or Jerry Bruckheimer. Let it be noted that the game changes with success, but the rules are still the same. Each intellectual property that has the potential of residual and derivative rights should be its own legal entity. In essence, if a producer is sued over “production” or “credit” other than the fact that the producer may not have such a good reputation or credit score, it should not have any bearing on the residual income of other properties. A production should be a “collapsible entity” that could be wiped off the earth and the producer still has the ability to move forward.

The other reason for this approach is to protect current investors and future investors. For this reason it is foolish to put together financing for four films or ten films because investors like bigger deals. In this day, this is pure nonsense and it would behoove most producers to lower their budgets and get on successful production or film under their belt. This is the way of the Jedi; conquer one thing at a time. Do you think that Henry Ford could have built the Ford plant before he developed the automobile?

How do you do this? You do this with the help of a good advisor who has knowledge of business structure, tax compliance and intellectual property. The average entrepreneur or filmmaker should realize the independent finance world of filmmaking is like TMZ and The Soup. When a person steps out of the box and looks inside, they will soon realize the ridiculousness of independent filmmakers making their first films for 100M or the business downfalls of ten movie deals. If you meet any directors or producers coming out of the film schools in NYC, they will tell you the same thing about “your first projects.”

Lessons learned from the failure of others are goldmines. It is far beyond reasoning to continue down a path that has proven to be a dead end almost 100 percent of the time. You can play Megamillions or Powerball, but then again, those tickets cost a dollar; certainly a different risk.

Here is a recipe for disaster: China and other Asian countries, being pressured at home by rising inflation, is forced to raise prices on all those goodies we buy at Wal-Mart, but not high enough to encourage us to compete again. This would be a formula for runaway inflation along with job shrinkage, or the perfect storm for stagflation.

The huge problem with this scenario is that we could do nothing to solve the problem! In the past, stagflation would eventually take care of itself as interest rates went up shrinking the money supply and as we eventually produced more, but this time, since the increase in prices has nothing to do with our internal production or our money supply, the genie is out of the bottle – we no longer control our own destiny.

China owns big chunks of our national debt (what we have run up to maintain our leveraged, high-on-the-hog-standard of living while the rest of the world gleefully loaned us the money), and if China ever decides to cash in the chips, replacing the debt with Euros or something, the dollar will sink faster than the titanic. So we can’t be too rough with China, which now could be considered our local banker that is holding our mortgage. I’m afraid that we’ve crested the mountain, and it’s all downhill now. Our good life has been possible because of the backs of poor workers overseas, credit, and is therefore on borrowed time.

We might as well face it; the world is leveling out. Every country that wants to be involved is now trading with everyone else, meaning that whoever can produce a particular good or service most efficiently wins. If they have a billion people, labor will be cheap. If they have intelligent people; scientists and engineers, they will excel in technology. If they have raw materials or oil, they will get rich that way.

As far as America is concerned, only in one area are we certain to do extremely well, and it won’t be in technology, because our educational system is falling by the wayside since we are broke. And it won’t be in oil, or manufacturing because of our limited labor force. Unbelievably, it will be in agriculture. Long after our manufacturing and technology fades, we will become the food basket of the world because of our natural vast plains, our perfect weather, water, and farming methods. America will change.

Free trade, the only thing that will effectively prevent nuclear war, is leveling the waters. Globalization is not just a catch-phrase. America no longer produces electronics, shoes, clothes, or a host of other things we produced previously. We simply cannot compete. This is being played out on the world stage and in the halls of congress every day in many ways, from immigration, to trade policies, to militarization. In China as well, and in Russia, where the development of nuclear weapons makes war unthinkable. War won’t solve our problems this time. We will have to pay our debts, and it will be painful.

Now consider the lowly monk and nun of so many of our religious traditions. They require very little, only a warm, dry place to sleep, some simple food, maybe some medicine and some help when they get sick, and their faith. That’s all, and that’s what we should expect – a quiet place to sleep, some food, health care, an education for our children, and our faith. These are the essentials that all industrialized countries should insure for their citizens, regardless of their social status, because this is enough for spiritual people grounded in their faith. They can be happy with this. Jesus would have been happy with this. This is the spiritual life.

There is only one solution to the problems we soon face -to simplify our lives and find our faith. We need to make sure that everyone, all of our brothers and sisters, have the basics. That no one is left behind regarding basic food, shelter and health care. And to make certain that every child, regardless of their color or status, gets the same education as everyone else, all the way through college, and financed by all of us, which is the government, and not by some opportunistic loan company charging exorbitant interest rates and saddling our kids with a lifetime of debt. Big business is choking the life out of truly spiritual people. Health care, college loans, tuition, medicine, it’s all about money and profits now, not about people. We have gone way off track.

If we don’t simplify and get back to basic principles; how will we ever survive? We will surely blow each other up because of our twisted values and egoism, and because we never have enough.

California’s budget troubles are not going away.  Moody’s Investor Services warned the Golden State it faces a “multi-notch” downgrade to its credit rating if the legislature does not produce a budget that closes the $24.3 billion deficit.  The state’s current A2 rating is the lowest rating for any state’s general obligation bonds.

China is going all over the world to lock up supplies of key commodities.  This is just the latest example of the Chi-coms flexing their capitalist muscles.  It is not a level playing field, our laws require companies to only do business with certain countries, and cannot pay bribes.  China goes anywhere, ignoring human rights, and plays by no rules except “Do the deal”.

Durable goods orders were up in May for the second straight month.  Orders for non-defense capital goods jumped 4.8%.  This was the biggest jump since September 2004.  These two good economic indicators set an optimistic tone for the market this morning.  New home sales fell, but investors seemed to ignore it, until the FOMC announced they were going to leave rates at 0.00 to 0.25%.   The Fed announcement and accompanying notes caused a sour note, and the market sold off into close.  The Fed’s notes concerning inflation and a slow recovery raised concern.  20-year treasuries dropped like an anvil on thin ice. 

The biggest non-news was the EIA (Energy Information Agency) report on petroleum.  Crude oil continued its inventory depletion that has been the norm since the beginning of May.  We had one weekly increase in inventory (week of 5/29), but the next week we dropped more than the previous increase.  Crude oil closed down on low volume.   The market does not know how to handle the inventory news.  Gasoline inventories continue to build, suggesting that buyers are disappearing at the present pump prices.  It could also be refiners taking advantage of hedging opportunities.  Buy crude now and sell gasoline on the futures market for delivery in August.   Gasoline inventory went up 3.9 million barrels; crude oil inventory went down 3.8 million barrels. Refiners will cut the price of gasoline to move it (unless it is hedged). This puts additional pressure on the refiners, as they will have to squeeze their crack spread (markup in refined products). This would probably not be a good time to own refiners.

One year ago, crude inventory was 301.8 million barrels; present inventory is 353.9 million barrels. Keep in mind that this is down from over 370 million barrels of inventory just a couple of months ago. The inventory line is getting closer to last year’s levels. That is bullish, while there was demand destruction due to high prices last year; present prices are much lower and not to blame for lower use.   Most believe the economy is holding down use, which will increase as consumers gain confidence in their financial situation.  Present gasoline demand is about 200,000 barrels less per day than last year.  One other important fact, did you know we import over 10% of the gasoline that we use?  This acts as an anchor on our refiners prices.  Overseas refiners do not have the same environmental laws, work regulations, or safety requirements that our companies have.   One bearish fact out of the weekly report was that crude oil imports were up 247,000 barrels last week.  Imports had been moving down, in accordance with OPEC reduced production quotas.  If OPEC wants $80 oil it seems like a good bet to agree with them.  I do not like leaks in the dam of supply.

I have been asked many questions with regard to selling a home with Owner Financing.

One typical question I am asked often…”I am selling my home and offering Owner Financing, but having trouble finding a good candidate with a good down payment. Should I take a chance and allow a buyer to put no money down?”

I tell my potential clients that it is never a good idea to sell a home without a down payment from the buyer. You want the buyer to invest some of their own money into the home. If they have their own money involved, they are more likely to take care of the home, keep up with maintenance and pay the bills associated with home ownership.You want the potential buyer to show some commitment to the home.

How many times have you come across a rental property only to see it run down? That renter had no equity in the home. They would not be loosing any of their own money, therefore; might not care about the property or it’s condition. What are they loosing? They can walk away and find another place to live, leaving you with the responsibility of upkeep and making any repairs needed.

If you intend on selling this mortgage note down the road, you want the buyer to have some equity in the home from the start. The more equity your buyer has, a contract buyer is more likely to purchase the note.

Example:
A home is selling for $100,000 and the potential buyer can put down $20,000. This buyer is already starting with a 20% equity position. A contract buyer likes to see that.

You might suggest that a potential buyer secure a personal loan for the down payment. Can they receive a loan from a relative? Do they have a credit union or can they borrow against their 401 ? In some cases, you can receive a hardship withdrawal from a 401 for the down payment towards home purchase and not have to repay the sum withdrawn.

They then give you the money for the down payment. This option gives you the cash down payment, the buyer has the commitment to the home and a contract buyer will see equity.

Before making any final decisions, please make sure you have a good real estate lawyer to help you. Protect yourself.