A Letter About Tariffs.

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Does the threat of tariffs make China a bad choice for sourcing?

Sometimes yes, and sometimes no.

Tariffs are a very justifiable concern. And any decision about where to manufacture a product should be thoroughly analyzed.  But the rally cry from a bunch of so-called experts and fake gurus, to stop sourcing from China is simplistic, uniformed, and often self-sabotaging.

When you come to China quite a few things will quickly become clear.  

First, China is very technologically advanced. In some cases, exceeding the United States. In every case, far exceeding the “alternative countries” being recommended by so-called experts.

Second, you will quickly realize that many of the so-called gurus, even some of the famous ones, have never stepped inside of a Chinese factory. No matter what they claim from stage or on podcasts. In fact, you will see (and possible touch and feel) things during your first factory visit that are so shockingly different than what some gurus describe that you will start to question everything you have ever heard from certain “experts.”

The true purpose of the factory visits, however, is to educate. The same purpose is true of many of the things we do together in China. Education.

China has spent the last 40 years building up its manufacturing sector and infrastructure. There are high speed trains all over China, ready to transport goods to ports.  In fact, seven of the top ten busiest ports in the world are in China.  Roads and bridges are constantly being built, and maintained, to ensure easy transport. Even small factories have added automation and robotics to keep down costs. In fact, robots are so common that you will often see them in restaurants, hotels, and malls. China’s infrastructure enables it to provide fast and consistent production. Its easy to overlook something when it runs smoothly. But most of the alternative countries offered as alternatives to China, cannot guarantee on-time completion of products, and easy transportation to the ports, and to the US.

Factories are much brighter and cleaner than they were twelve years ago, and larger factory complexes include dormitories for workers so they can live right onsite.  China developed special economic manufacturing zones where similar industries co-exist in the same city or region. There was a situation a few years ago when Foxconn in Shenzhen needed 40,000 temporary workers and was able to hire them all within 24 hours.  Many on loan from competitive factories, all working together to get production complete and on time. There is no other country in the world that could find and employ 40,000 skilled workers in one day.

So one reason to remain in China, despite tariffs, is production capability and infrastructure.

Another reason is cost.

A simple cotton T-Shirt can be made anywhere in the world. Often for very low cost because of the very low wages paid to their workers.  That’s easy and obvious. However, if you make that T-shirt out of a synthetic fiber, such as polyester, or a poly-cotton blend, things become more complicated.  The ‘alternative country’ that you source the synthetic fiber T-shirt from has to import the rolls of the synthetic textile. Guess where they import them from. China.

What if you are doing something with electronic components? The components are probably imported from China. What about plastic? Plastic injection can be done in many countries, yet the plastic pellets often come from China. Even in the US, may mods are made in China and then transported to the US.

Do you remember the shipping crisis in 2022? Many US factories almost ground to a halt because components coming from China were delayed due to the shipping fiasco.

The harsh reality is that the alternative countries many gurus are pointing go have higher product costs than China. Even with tariffs.

That brings us to the third point. Product price.

The experts mentioned earlier, who talk about manufacturing without ever being in a factory, also teach you how to negotiate without ever sitting face to face with a Chinese supplier. Many have only sourced online and from Alibaba. Many have never made a private label or OEM product. In fact, some have never sourced or sold anything and are only treated as experts because they have large internet audiences.

These folks are frauds, and can be easily dismissed.  But even among the credible and experienced experts, people are still often paying too much for products. They use, and teach, methods that are good. But not great.

Everyone who comes to China with me is taught how to get a 7X multiplier at a minimum. Update: Due to potential tariffs, starting in April 2025, we will teach you how to achieve a 9X multiplier.

Unsurprisingly, almost everyone who hears me talk about a 7X multiplier the first time thinks I am crazy. After they come to China on the Canton Fair Trip, they change their minds and start sourcing at 7X too.  Look at these videos and find out for yourself.

China has unmatched infrastructure, workers, automation, raw material, and components.  After coming on our Canton Fair Trip, you will have the best prices.

Selling products profitably is a battle. According to Sun Tzu in the Art of War, every battle is won before it is fought. In respect to products, that means the battle for sales is won by getting the best products at the best cost.  Come with us and find out how.

One other consideration deserves to be mentioned. 

Some suppliers exhibiting at the Canton Fair have built an additional branch factory in a neighboring country, like Vietnam. You would interact with the supplier the same way as any other Chinese supplier. However, your specific production run will be made in Vietnam, and shipped from Vietnam (or whichever country the branch factory is located in.) This removes the concern of Chinese Tariffs. 

We teach you the correct way to ask this, and address this, while at the Fair.