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OIPMAC seminar highlights strategic essentials for successful China sourcing strategy
A half-day Business Orientation Session sponsored in Toronto by the Ontario Institute of the Purchasing Management Association of Canada (OIPMAC) is the first step in a series of China initiatives according to OIPMAC Executive Director Chie Shin Fraser. “As China emerges as a key global sourcing economy for North American companies we must ensure that our members are not just responding to opportunities, but are anticipating them and ready to act.” OIPMAC has initiated discussions in China for joint educational opportunities and will lead a sourcing mission of interested companies to China in November. Anyone interested in joining the mission should contact OIPMAC's Helen Han at hhan@ontarioinstitute.com or 416-977-7566 ext 2147.
By Ken Mark
“Prevention is better than a cure” was the main message attendees took home from an OIPMAC mini-seminar on sourcing in China recently held in Toronto. Speakers offered practical tips on how to head off potential trade disputes because China is far away with a different language and business practices not to mention a legal system in flux. Preparing a sound procurement strategy is a good start.
“Students from China at colleges and universities can help Canadian firms develop their initial plans,” says Margaret Cornish, Toronto-based executive director of the Canada-China Business Council (CCBC). “They have the language ability and often the business experience to surf Websites and pore over reports to create a basic outline for senior executives to review.”
On the payment side, buyers must manage risk properly. “Letters of credit (LCs) may take a little more effort than paying up front,” says Reesa Shurgold, Toronto-based assistant vice-president, trade service for the HSBC Bank of Canada. “But they are worth it, especially if there are problems. As the trustee of documents between buyer and supplier, banks are there to ensure that payment only occurs after the supplier meets all LC terms.
“Banks in China and other parts of Asia do not make pre-production loans to manufacturers based on inventory. However, they will against confirmed sales contracts from known foreign buyers. As a result, Canadian purchasers may be able to negotiate better prices or terms.”
As China's economy roars ahead, the Chinese government is quickly trying to play catch up with its legal and trade system. A major step was its accession to the World Trade Organization (WTO) in 2001. However, WTO membership only helps level the playing field: it doesn't remove all of the bumps.
“There is no WTO Court of Justice,” says Cyndee Todgham-Cherniak, a lawyer with the Toronto firm Goodmans LL, “that will sit down to examine the facts of your particular dispute with a Chinese company. It relies on existing legal mechanisms in Canada and China to deal with it.
“A more effective tool for resolving minor trade disputes is to call upon the CCPIT (Chinese Council for the Promotion of International Trade) - CCBC Conciliation Centre to consider the case. Since the centre is not a court of law, its findings lack the weight of a judicial decision. But within China, the CCPIT has enough clout that if it concludes a Chinese company's position is weak, that might cause the company to back down.”
The long journey of sourcing in China begins with some single steps.
Ken Mark is a freelance business writer based in Toronto.
PMAC CALENDAR
The 2nd Annual Symposium on Supply Chain Management, jointly sponsored by PMAC, McMaster University's MeRC (McMaster eBusiness Research Centre) and the Ontario Research Network for Electronic Commerce (ORNEC), will be held this year from Wednesday, September 29 to Friday, October 1 at the Wyndham Bristol Hotel and Conference Centre at 950 Dixon Road in Toronto.
This 2004 Symposium is entitled "Modern Supply Chain Management: From Theory to Practice." Supply Chain practitioners and researchers from both the private and public sectors will focus over the three days on management issues in supply chain transformation, particularly those issues arising from the rapid growth and influence of e-commerce/e-business.
The Symposium is aimed at CEOs, CIOs, middle management, and other managers responsible for supply chain implementation and operation. Researchers interested in state of the art research and applications in Supply Chain Management also will benefit greatly from the Symposium.
To register visit www.pmac.ca and click on the Register Now link on the right side of the PMAC home page.
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