Frequently Asked Questions
About China Strategies
Question: U.S. firms
are competing worldwide in an increasingly global
economy. How does China sourcing fit into a company’s
William Sinn: “China is a
strategic partner for these reasons:
• Helps companies remain competitive in a
• Improves production capacity
• Foreign workers' skill complements Americans
• Cost savings from cheaper labor
• Cost savings from cheaper components and
It’s a big world. In a global market companies
must locate production where it is most cost-effective.
With its enormous labor pool, it’s an almost
limitless resource. Outsourcing is here to stay.
As a newly awakening consumer society, China is
a major marketing destination. For those who choose
to find the advantages, Sinn & Company can lessen
the risks and help companies successfully take advantage
of China as a purchasing resource, manufacturing
base and marketing destination.”
Question: Many American companies
market or source in China. Is there a right way
and a wrong way?
William Sinn: “A successful
China strategy has to
• Provide access to opportunities in China
• Make sense for your particular business
• Do the right things the right way
• Connect with quality people and firms
Analysis, communication and contacts are everything
in international trade. We back that up with a trip
to China – possibly the most important strategy
for setting up successful operations. Those are
the right ways. The “wrong ways,” are
unfortunately common. Look around and you’ll
see companies struggling with poor quality products
and productivity, distribution and inventory problems.
I make sure those things don’t happen for
my clients. I’m an engineer and marketing
professional, so I understand my clients’
industries and markets. I go to great lengths to
develop the right strategies for their individual
products. There is no one plan for every business.”
Question: There are those who claim
that off-shoring jobs is taking jobs away from American
workers, particularly in manufacturing. How do you
respond to that?
William Sinn: “Effective
globalization creates efficient use of resources
which in turn creates growth and profitability which
creates jobs. The companies I have worked with all
grew in their employment due to successful globalization.
China is an unbelievable asset as a business strategy.
It’s a low cost production machine. Some companies
may lose a relatively low number of employees to
overseas labor, but look at what they gain: a healthier
company and in many cases, the creation of new,
higher paying jobs. My primary objective is to help
U.S. companies stay in business. International sourcing
is wise stewardship of company resources. High-value
jobs—particularly in purchasing and distribution—are
opening up in the U.S. from sourcing, and most companies
grow market share and help grow market as a result.
Sourcing grows revenue, profits, employment and
shareholder confidence. The reason for going to
China is simple: to grow the company.”
Question: We’ve heard a great
deal about the massive industrialization and technical
skills in China today. How can U.S. companies take
advantage of that?
William Sinn: “When China
joined the World Trade Organization in December
2001, they agreed to open their market to U.S. goods
and services. They are following through in passing
new anti-piracy laws to deter counterfeiting of
brand products. China is learning international
trade in ways they never could in the past. They
are graduating IT-skilled workers in record numbers.
Part of their benefit to the U.S. is their well-trained
Question: What are the most common
blunders that occur in China sourcing attempts?
William Sinn: “There is a
danger to not knowing your contacts. Credibility
is so important in the course of protecting institutional
knowledge. I have worked in both U.S. and China
business climates, and have extensive knowledge
of international trade laws, data security, intellectual
property rights, and political risks.”
Question: Would you say then, that
understanding American business is as critical to
successful China trade as understanding Chinese
business issues and climate? If so, why?
William Sinn: “Clients need
clear communications with their partners to fulfill
their goals. As a China native educated in the U.S.,
I am fluent in Cantonese, Mandarin and English.
I’ve successfully operated Chinese/US joint
ventures across the Asian rim. My understanding
of technical, industrial and marketing issues from
both Chinese and American business structures has
been critically important, especially in communicating
the needs of my U.S. clients. In a global marketplace,
it’s often the basic business functions companies
cannot execute that cause frustration, loss of time
and money. I’m the equalizer. I put companies
in touch with opportunities faster and better than
they could ever do themselves.”
Question: U.S. IT executives tend
to think of India when they consider offshore development.
But you think China will become the next outsourcing
William Sinn: “China will
start to boom very soon. Before the 1980s, it was
a communist country and very industrial-based. But
the universities are starting to graduate information
technology students now, and there's an influx of
students who studied in the U.S. and then returned
to China. They're bringing back the wealth of education
they gained and also the contacts they made in Silicon
Valley. China will catch up because it doesn't have
Question: Will there be an advantage
for U.S. businesses to move their IT outsourcing
to China? Will it be a question of lower costs than
William Sinn: “China has
a vast pool of skilled IT workers. As demand for
offshore IT outsourcing services grows, China can
fill the need. China is booming as a country. Anybody
who has a foothold in China will have an edge on
tapping into the Chinese market over the long haul.
For example, if hardware is being developed and
produced in China, there might be an advantage to
having the software developed in the same country.
Most electronics are made by the Chinese, so it's
natural to have hardware and software come back
together. What's more, fluency in English in China
is growing by leaps and bounds. China will be a
formidable competitor to India, resulting in new
options for U.S. companies.”
Question: What are some of the
pitfalls that companies should be aware of when
working with Chinese companies? The country is known
for software piracy.
William Sinn: “The skill
sets for working with China are the same as for
any foreign company. Be patient and do your homework.
Americans need to understand their own company and
what the offshore operation can do. Certainly, trade
secrets and intellectual property are big concerns
right now. There may be parts of the operation that
you don't outsource; you may be able to contain
your IP in a module of your software that you don't
offer for outsourcing. You should protect your U.S.
markets. You should file patents and trademarks
in China even though its protection is weak now.
China supports the "first to file" rule.
And things are changing quickly in China, as in
any emerging market, especially in areas of IP rights.”