Going Global

Business Processes and Investment in China's SOE's -- The American Export that Won't Show Up in the Balance of Trade

There is an interesting article in the current issue of Strategy + Business entitled "China: Reform from the Outside In" which discusses the reasons behind and the impact of the change in policy initiated last year allowing direct foreign investment in China's state-owned enterprises ("SOE's").  The authors argue that the change was initiated not as a means of attracting more investment capital to China's state run operations, but rather to accelerate the adoption of western business management practices and more transparent financial controls in order to make them more competitive in China's increasingly open markets -- as well as putting them on firmer footing for competing in markets outside of China.

I am not quite ready to assume that there is no need to attract foreign investment capital as argued in the article.  While China certainly has impressive reported foreign reserves, with many remaining vestiges of state socialism still in place and given China's massive investments in infrastructure and urban development against a still small relative tax base, I think its difficult to assess the size of China's budget deficits and whether its foreign trade surpluses are sufficient to create a large enough total surplus that its state run business operations in fact do not need equity infusions.

Nonetheless, I think the transition to allowing direct foreign ownership can only be positive.  Certainly modernized management structures, business processes and financial controls will make the SOE's easier to do business with, whether as a customer, a supplier or an investor. 

Also, assuming the foreign investors do not grossly overpay for their ownership interests, these investments should provide a return of capital plus an attractive investment premium through the investors share of the SOE's profits.  The premium represents in some sense the payment by the Chinese for importing the business expertise that they are trying to instill in the SOE's.  It seems to me that this kind of transaction represents a very real export of intangible goods to China (largely from the U.S.) that will never be accounted for in the balance of trade statistics.

A Debate about the Not-So-Great Wall

In an earlier post on immigration policy, I called into question the efficacy (or perhaps even sanity) of an effort by Tom Narum to raise private funds in order to build a massive wall along our border with Mexico.  The blog-o-sphere being the remarkable vehicle that it is for circulating information, Mr. Narum himself found and read the post and proceeded to leave several very lengthy comments in his role as executive director of his wall funding project -- Citizens for a Secure Border. Each comment, for reasons that I think will be apparent upon reading them, warranted a reply by me.   

The result I have been told by some of our readers is an entertaining debate which touches on many of the critical issues around immigration policy and reform.   Because of the extent of the comments I am not going to reprint them here in this post, but I thought it worthwhile to call your attention to them and by going to the permalink for the earlier post you can read the entire exchange.

A few useful links to information referred to in the comments but which do not have functioning links in the comments themselves are as follows:

Comments which I think are illustrative of the mindset of at least some of Mr. Narum's supporters as published on his organization's website;

The Cato Institute article profiling the positions of former Colorado governor Dick Lamm whom Mr. Narum quotes at length as providing reasoned support for his own world view (if for some reason this link takes you to the Cato Institute's search page instead of to the article itself, type the title of the article "The World According to Dick Lamm" into the "Find results with all the words" box and the search will take you to the article).;

Rankings of countries by GDP (courtesy of Wikipedia) and rankings by GDP per capita (courtesy of World Facts and Figures).

As you will see by the end of the exchange of ideas, Mr. Narum has done nothing to convince me that his idea makes sense and has said much to heighten my concern about where our country and world is headed if this is the state of fear and loathing we're in.  But that's my opinion -- I encourage you to read the debate and let us know your conclusions.

Protectionism and the Food Chain

The Doha round of multi-lateral trade talks being held under the auspices of the World Trade Organization (more formally known at the WTO as the "Doha Development Agenda") were formally suspended this week amid much acrimony among the negotiators and finger pointing as to who was to blame for the impasse.  Some commentators are suggesting that the failure of these negotiations signals a greater failure with respect to multilateral free trade agreements generally.  This pessimism is captured in the headline on the WTO's own news site -- "Talks Suspended. 'Today there are only losers'." 

The Doha round (named for the city in Qatar where the negotiations received their formal mandate in November 2001) were intended in large part to include under-developed nations, particularly in sub-Saharan Africa, in the economic bounty of globalization.   Unfortunately, the talks were doomed to failure due in large part to the juxtaposition of two opposing economic realities.

On the one hand, most under-developed economies such as the ones sought to be energized through this process tend to be predominantly agrarian.  As a result, their principle source of exports that can generate development dollars from international trade is agricultural products.  On the other hand, agriculture is the one industry on which even the most developed countries seem absolutely unwilling to loosen their grip.  I imagine that this has to do with an unspoken realization that whatever else one might think, if all hell breaks loose and global chaos ensues, the one area in which a country must endeavor to be as self-sufficient as possible is the ability to feed its population.

Of course the two entities with the greatest agricultural fail-safe capabilities to protect are the U.S. and the E.U. -- and whatever vestiges of nationalism they have each forgone in the areas of technology, basic industry or energy resources, they continue to guard jealously their agri-business.  The U.S. supports its agri-business through a wealth of government "farm" subsidies.   The E.U. protects its agri-business through a variety of market access limitations. 

In order for developing agrarian-based countries to stand a chance to be competitive and gain any possibility of success through enhanced international trade, they need both the U.S. and the E.U. to forgo what would be considered anti-competitive measures in any other segment of global trade.  But both developed regions cling tenaciously to their respective agri-business advantages, each refusing to blink before the other and each blaming the other for being anti-competitive and unreasonable.   And in the end, there are only losers.

   

Japan's Roots in the U.S. Automotive Industry Grow Deeper

The last post suggests that there are a number of ironies in transporting American management expertise to the German automotive industry given the Japanese leadership in the car business.  There is an interesting piece in the current issue of BusinessWeek entitled "Japan Takes a New Bite Out of Detroit" which suggests that the Japanese dominance of this industry runs deeper than one might see from the surface.

Despite Detroit's historic complaining about Japanese competition in their market space, it seems that even your American car is increasingly more than a little Japanese under the hood.   According to the BusinessWeek story, Japanese parts manufacturers, competing with the likes of Delphi and Visteon, have 25% of the $26 billion automotive parts market, with a significant percentage of those sales going to American car companies.  Aisin Seiko, an affiliate of Toyota, saw its sales in North America grow 37% to $2.4 billion with an estimated 45% of those sales going to companies other than Toyota.  Another Japanese supplier, Denso Corp., had $5.9 billion in North American sales and was GM's supplier of the year.

Of course it is getting harder to discern who is an American car company now that on the one hand Chrysler is owned by Daimler-Benz, and on the other Toyota has 11 U.S. manufacturing facilities spread over 7 different states.  Also, as argued in a previous post on Japan as an export market for U.S. goods, one reason that Japan is so successful at exporting to the U.S. is that they have created a value proposition that appeals to the tastes and preferences inherent in a fully developed market economy -- which is why U.S. companies can have success selling the other direction if they invest the time to explore the market opportunities.

A Further Integration of the American and German Automotive Industry -- Joining Forces to Fend off the Japanese

The first major step in the efforts of American and German car companies seeking a joint defense to the Japanese automotive juggernaut came with the historic merger 8 years ago between Daimler Benz and Chrysler.   Daimler brought German engineering and discipline to Detroit's perennial number 3 car maker and eventually, as so often happens when a "merger of equals" meets the reality of cultural integration, an entirely new management team with allegiance to the German parent.

A second step is now in the offing, except that this one involves the export of American management techniques to Europe's largest car company, Volkswagen AG.   The imposition of this less continental style of running a company comes courtesy of the relatively new head of the flagship Volkswagen brand, Wolfgang Bernhard, as profiled in a story in today's Wall Street Journal entitled "Top Volkswagen Executive Tries U.S.-style Turnaround Tactics."    Although Mr. Bernhard is German, he received his MBA from Columbia University and cut his teeth in business with McKinsey & Co.   He was instrumental in instilling the Daimler way at Chrysler before jumping ship to join VW.

Besides cross fertilizing production expertise and facilitating problem solving teams made up of empowered employees, one of the moves that turned heads was Mr. Bernhard's initiative to bring American quality control experts into VW's plants to improve the company's lagging record on the consistency and dependability of its vehicles.   This in itself says something about the pecking order for quality in the auto industry as among the Japanese, Americans and Europeans.

Another "American style" management ploy engaged in by Mr. Bernhard was obtaining union cost concessions on a new vehicle platform by threatening to outsource production to one of its plants outside of Germany -- in Portugal.  Of course if one buys fully into the notion that the European Union is an integrated and unified market which competes with the U.S. on equivalent terms, this wouldn't be outsourcing anymore than it would be for Ford to move production from say Kentucky to New Jersey -- but that's another story.

Perhaps the final and ultimate irony in all this is the financial reality that has caused VW to import from the U.S. what some European observers see as radical management tactics in the first place -- namely that while the company posted a net profit from its global operations in excess of $1 billion for 2005 on nearly $30 billion in sales, it  lost over $1 billion in North America.    At least when it comes to the automobile industry, my sense is that both Americans and Europeans would do well to focus on Toyota as a source of management ideas.

 

From Globalization to e-Globalization -- A Further Evolution in the Model for International Business

With the unfortunate passing of long-time marketing and global business visionary Ted Levitt  a couple of weeks ago, I was taken to re-read a number of his most influential works, including "The Globalization of Markets", originally published in the May-June 1983 issue of the Harvard Business Review.   Although Professor Levitt did not coin the term "globalization" as incorrectly asserted in a number of articles memorializing his contributions ( e.g. "Global Small Business Blog", Boston Business Journal, New York Times -- the miscue was corrected in a subsequent erratum to the NYT article), he certainly was instrumental in popularizing the term's use as part of understanding the emerging model for business success in the global market place.

As Levitt construed the term, globalization represented an evolution from the model of the "multi-national" corporation to a new global paradigm.  Whereas the multinational company operates in many different countries and its forte is a facility for adapting to local consumer preferences and marketing strategies, the global company "operates with resolute constancy . . . as if the entire world (or major regions of it) were a single entity."  Using the "hedgehog and the fox" analogy (given new currency in Jim Collins's "Good to Great" -- on this blog's "must read" list at right), Levitt states that "the multinational corporation knows a lot about a great many countries and congenially adapts to supposed differences", while "the global corporation knows everything about one great thing.  It knows the absolute need to be competitive on a worldwide basis as well as nationally and seeks constantly to drive down prices by standardizing what it sells and how it operates."

In a stark reminder of how prescient much of his work was, Levitt subtitles one of the sections in his article "The Earth is Flat", presaging the title of Thomas Friedman's recent best seller by more than 20 years.   In one of his boldest conclusions deriving from his analysis of the impact of globalization and the flattening of the earth, Levitt proclaims "different cultural preferences, national tastes and standards, and business institutions are vestiges of the past."

Although much of Professor Levitt's writings on marketing and business remain as current and insightful as when he first wrote them, I got to wondering whether his concept of globalization as an inevitable driver of standardization has survived the radical impact of the maturation of the internet on global commerce.  Although, he was alive to see the internet bloom over the past 5 to 10 years, his health had been failing for at least the past several years, and to my knowledge he never expressly addressed his view of the internet's effect on the continuing relevancy of his globalization paradigm.   In a post note to his original article, he did anticipate the impact of technology on supply chain logistics and plant change overs and the transition from "economies of scale" to "economies of scope", but he dismissed the impact that this would have on his model, stating that "there is no conceivable way in which flexible factory automation can achieve the scale economies of a modernized plant dedicated to mass production of standardized lines."   On the other hand, he did condition his argument somewhat by stating that his theory held "at this stage in the evolution of globalization".   

While I would be the first to admit that I am no Ted Levitt (indeed I'm not even playing in his league), and I would absolutely welcome other comments or divergent views on this point, including any insights on Professor Levitt's own thinking on the matter from those who knew him more intimately than I, there are at least two ways in which I think the coming of age of the internet may have reversed the march toward global standardization and ushered in a new phase in the evolution of globalization -- which I would suggest might be called "e-globalization".

The first of these impacts is the extent to which the ubiquitous and near instantaneous access to comparative pricing and sourcing information has inverted the balance of power between producers and consumers.  An express tenet of Professor Levitt's globalization paradigm was that global companies could and should dictate what consumers worldwide should demand.   As Levitt put it:

"The global competitor will seek to constantly standardize its offering everywhere.   It will diverge from this standardization only after exhausting all possibilities to regain it, and will push for reinstatement of standardization whenever digression and divergence have occurred.   It will never assume that the customer is a king who knows his own wishes."

This, of course is in direct contravention of the current "I want what I want, when I want it" consumer mentality that drives marketing success and results in a company such as McDonald's having less than twice the market capitalization of Starbucks despite having nearly three times the revenue and five times the net income.   In a recent presentation entitled "How the Internet is Changing Consumer Behavior and Expectations" by Lee Rainie, Director of the Pew Internet & American Life Project,  the author cites with approval the argument in Steve Rubel's Micro Persuasion blog that "the old, Industrial Era model was built on big companies making decisions about what to produce for passive audiences to consume."  Rainie goes on to summarize the finding of the Pew project rejecting this "top-down system" and stating that "in the new Information Era, there is no difference between producers and consumers. . . . Furthermore, consumers decide what is relevant.

In an interesting countermand to Levitt's admonition that the global company will never assume that "the customer is a king", in the cover story in the current issue of Fortune entitled "Sorry, Jack! Welch's Rules for Winning Don't work Anymore", the author expressly proclaims that one of the "new rules"' of business success is that "the Customer is King".

The second impact that the internet has had is its ability to enable even small businesses to locate, create a presence in, and market and sell to global markets at a cost that does not require a large company's capital where-with-all to withstand the risks of international commerce.  Levitt's paradigm of the global company dictating standardized products to an increasingly homogeneous marketplace expressly envisions global behemoths as the companies that can be most successful at this game, citing McDonalds and Coca-Cola as examples.  Unquestionably one of the miracles of the internet enabled global market place is the ability of small businesses to become effective players in foreign markets.  Perhaps the precept of globalization as dictated by Levitt is still applicable to companies large enough to impress their standardization on consumers.   As pointed out in the Fortune article on the new rules for business success, however, even among large companies agility trumps size. 

I think that Ted Levitt would be among the first to challenge established paradigms, including those that he created.   And there is no question that his seminal ideas still resonate with tremendous currency and wisdom.  Indeed, I've added one collection of his works entitled "Ted Levitt on Marketing" to the "must read" list at right.   Nonetheless, companies looking for the recipe for success in today's international markets need to be mindful of the continuing evolution of "globalization" and its rules.

Will We Lead or Will We Hide – Can the U.S. Seize the Historic Opportunity to Exercise its International Leadership in Addressing Immigration from Mexico?

     I was not planning on doing another post on immigration policy quite so soon – after all this blog is about international business not politics.   But as I pointed out in an earlier post, immigration is a critical issue for companies engaged in global business.   And as I also said in that earlier post, it may well be up to business to “bring a little rationality and sanity to the table before someone starts to wall us off from the rest of the world.”

     The immediate thing that caused me to put aside a post on the paradoxes of the recent spike in international M&A activity that is almost ready for publication and write this post instead was an article in one of Denver’s newspapers this morning entitled “All in All, It's Thrust Another Brick in the Wall”.   Aside from the fact that the headline defiled the classic work by Pink Floyd, the substance of the article got my dander up for the reasons I will explain.   The article profiled the efforts of a Coloradan by the name of Tom Narum, a self described “average guy”, to raise private funds to construct a massive wall along our border with Mexico. Apparently Mr. Narum is not satisfied with the pace at which the government is isolating us from our international neighbors by focusing primarily on unilateral enforcement to solve what is a complex multi-lateral problem.

   

This follows on the heels of an exchange earlier in the week highlighted in a post on the Latin Americanist blog in which the Bush administration chided putative Mexican president-elect Filipe Calderon for denouncing plans by the US government to erect a wall along the U.S. – Mexico border.  More specifically as reported by Reuters, Mr. Calderon stated that “One kilometer of road in Zacatecas or Michoacan is worth more than 10 kilometers of wall in Texas or Arizona to stop immigration.”   Personally I think that this is an extremely articulate manner in which the Harvard educated / pro-U.S. president-elect pointed out the critical connection between economic development in Mexico and a sustainable solution to the immigration imbalance.

     Nonetheless, in an all too predictable response, Mr. Calderon’s insightful and timely remarks were brushed aside by the Bush administration in a glib and backhanded response from White House spokesman Tony Snow.   Mr. Snow told reporters “Last time I checked, Calderon did not have any official authority over the activities of the United States government.”   Somehow a sarcastic dismissal of the soon-to-be president of a key ally does not strike me as effective leadership.

     When Mexico joined with the U.S. and Canada to form NAFTA 12 years ago, it made a strong and compelling statement that it did not want to be a struggling developing country saddled by the politics of corruption that characterized many of its neighbors to the south, but instead wanted to be a fully developed capitalism-based democracy along with its North American neighbors.   Since heading down this road, Mexico has made tremendous strides recovering from the near financial collapse accompanying “The Devaluation”, taming its runaway inflation, normalizing interest rates, opening up industries to foreign investment, and lifting an ever increasing number of its population from poverty.  As suggested elsewhere in this blog, the increasing vibrancy of its growing middle class is reflected in the evolution of its political landscape, moving from the single-party stranglehold of the PRI to the passionately contested multi-party elections of last week.

     Since the advent of NAFTA, Mexico’s economy has grown from $375 billion in 1994 to $693 billion in 2005 (actually passing $ 1 trillion for the first time on a purchasing power parity basis as calculated in the CIA World Factbook).  With exports accounting for nearly 30% of its GDP, and over 85% of that trade dependent on the U.S., Mexico’s economy is inextricably linked to ours.  And of course they have been a steadfast political ally as well – and one which I think is strategically important to the United States’s standing in the remainder of Latin America.

     So perhaps the overriding question in the immigration debate is “how do neighbors and allies help each other when confronted with complex problems with mutual consequences?”  Unfortunately from the tenor of the immigration debate to this point, the answer from our side of the border would appear to be “not so well.”

    

It seems to me that the United States is being presented through the immigration issue an historic opportunity to exercise its leadership role in addressing and solving problems of international scope.   Real leadership would involve working with Mexico to address the economic challenges in our neighboring country that underlie the immigration imbalance between the two countries.  Indeed, any attempted solution which does not begin to address these systemic problems will be a short term and near-sighted solution. 

     If we take the visionary high road, the U.S. could cement our position as a country to be admired and celebrated throughout the western hemisphere.   If instead we forgo this opportunity by shirking our global responsibility, focused only on criminalizing, deporting and walling out our neighbors in the hopes that their problems will simply go away, we may irreparably damage our relationship with the most strategic ally we have in working with the predominantly Spanish speaking world that stretches over half the globe to our south.

     I struggle to understand how so many people in the most powerful and successful nation on earth can be so fearful of people from our friendly neighbor to the south that they feel compelled to build a wall to keep them out.   If we are to resolve the immigration problem, we need to lead, not hide behind the walls of the citadel.

 

An Informal Poll of Mexican Taxi Drivers Indicates Positive Results from Last Week's Elections

I just returned from a week in Mexico and thought it would make sense to post a bookend to the earlier piece on the elections in Mexico.  We were staying about a 25 minute cab ride from el centro, so I had numerous opportunities to engage the taxi drivers in conversation -- and like taxi drivers the world over, in Mexico they are more than accommodating if you ask them to share their wisdom and insight.  I asked each one their opinion about the presidential election and each of them had a passionate response one way or the other (although it was generally not as passionate as their opinions on who would win the world cup).  The poll was not scientific, but it was certainly random -- at least as to what taxi we happened to get into.

I would say it was split just about right down the middle between taxi drivers supporting Calderon and those supporting Obrador -- a fair reflection of the 0.58% margin of victory announced for Calderon on Wednesday.  The legitimacy of that result is being challenged with Obrador's PRD camp backing up its formal appeals to the Federal Election Tribunal with calls for protest marches challenging the ballot count -- there will be tense days ahead as Mexico faces a constitutional test of its electoral process ala Bush v. Gore in 2000.   The Tribunal has until September 6 to validate the election results.

The most remarkable reaction stemming from my taxi conversations, however, is that while the driver's were clearly passionate in their choice of candidate, they all seemed confident that the system would play out as intended rather than cynical that their choice made any difference, as might have been the case even 10 years ago.   So while the next president remains in question, the people of Mexico are clearly winners in that they seem to have taken control of the electoral process -- and that, I think, is a very positive development.

(Note: To follow the continuing story of the election process as it unfolds, as well as other stories on Latin American politics, business and culture, keep an eye on The Latin Americanist blog which is certainly among the best english language blogs I've found focusing on Latin America).

Elections in Mexico -- No Matter Who Wins, There Are Positive Signs for Development

I'm heading down to Mexico on Monday and I'll be very interested to hear what people are saying about the results of the presidential elections being held tomorrow.   No matter which candidate wins, the election has the potential to continue the historic shift in Mexican politics that has taken place over the past 10 years along with the country's continued march to being a fully developed economy.

In my own experience traveling around the world, there is an inextricable link between a country's political climate and its place on the continuum of economic development.  Generally speaking, in developed economies, there is a vibrant middle class with a vested interest in political outcomes and that vested interest is reflected in the dynamism of the political process and debate.  Conversely, in countries with much less developed economies, wealth is so concentrated in the hands of the entitled class, that the economic and ruling elite are one and the same and there is very little real vibrancy infused in the political process.

When I first began doing business in Mexico, NAFTA was just coming into reality and the PRI was still entrenched in its 70 year reign of political dominance.  The country was working its way through the effects of "The Devaluation".   The tone of government seemed paternalistic and the average person, although clearly feeling the impact of government policy, seemed cynical about their ability affect that policy one way or the other. 

When the PRI was unseated from the presidency by Vicente Fox and PAN, I believe it was a symptom of the sea change in political empowerment that comes with economic development.  Whatever the outcome, the elections this year continues that trend.  The polls have been shifting continuously throughout the campaign, making this the first election when any one of the three major candidates -- Felipe Calderon of PAN, Andres Manual Lopez Obrador of PRD and Roberto Madrazo of PRI -- have a chance to win.

Perhaps the biggest story is the heated battle between the two front runners, Calderon of the incumbent Fox's PAN party and Lopez Obrador of the left wing PRD.  Lopez Obrador is running on the strength of the 30% of the population who have not yet been pulled along by the strides in economic development over the past 10 years and still constitute a sizable population of the disenfranchised and disadvantaged .  The PAN is painting Lopez Obrador as a Castro-esque leftist who would bring to Mexico an anti-American agenda similar to that of Hugo Chavez in Venezuela.  Acknowledging the impact of both the geographic proximity to the US and the importance of trade with the US on Mexico's economy, Lopez Obrador has denied that such an agenda is practical -- although the terms in which he has denied its feasibility makes one think that in the perfect world, that would be his leaning.  (Another interesting angle on the ties between Mexico and the US is the impact that the 10 million Mexican citizens living in the US may have on the election since they are entitled to vote).

It remains until tomorrow to be seen whether Lopez Obrador and PRD can unseat PAN, or whether PRI can regain power in an improbable come from behind victory.  I tend to think that Lopez Obrador's recognition of the practical constraints of being so closely tied economically with the US will moderate his agenda regarding business relations between the countries if he prevails, although he would certainly pursue a much more restrictive policy concerning foreign investment in certain industrial sectors such as banking that have been opening up over the past 6 years.   Of course if Calderon prevails, then I think Mexico's stance toward free trade will continue to be very bullish.

But i do think that perhaps the most important aspect of this election is the clear investment that the people seem to have in the outcome.  One gets a sense that the average Mexican firmly believes that they can impact government policy -- a sure sign that a majority feel that they own a personal economic stake in the country's future.

Outsourcing and Quality Control -- An Innovative Solution in Asia

If you are relatively new to the rough and tumble world of international trade, a container load of non-conforming goods a half a world away from its plant of origin is enough to make you reconsider  whether any market opportunity is worth the hassle.  At the same time, one way to suck the profits right out of a business plan is to eat up the cost savings you were hoping to realize by moving manufacturing to a lower cost location by having to build up and manage a foreign quality control team.

The problem of effective quality control is amplified further in developing countries where a day in / day out commitment to consistent quality in raw material supplies and on the plant floor is still only developing as well.  Of course these are exactly the countries where an outsourcing strategy is likely to lead.

As a result of the quality control challenge inherent in outsourcing, I'm always on the lookout for potential solutions that can provide effective quality assurance in a time and cost efficient manner.  It is with this in mind that I became intrigued by the business model of Asia Inspection, a company that provides contract quality control inspection, audit and reporting services throughout much of south Asia.

I had the opportunity recently to ask Asia Inspection president and CEO Sebastien Breteau a few questions about what makes the business work for their clients.   He described the company's ultimate goal as making the whole process of remote quality control easier, safer and cheaper.

They make the process efficient by allowing the client to set up the inspection process entirely through the company's web portal.   A new client can set up an account, providing Asia Inspection with the manufacturing and finished product specs by uploading them through the site.   The system will provide an instant quotation in response to a request for an inspection and the client can confirm the order.   Sebastien told me that in his experience the entire process should take about 10 minutes.

They make the process cost effective by charging committed rates -- for example in China the cost is $288 per man-day anywhere in the country.   Sebastien estimates that the cost usually works out to 2 to 3% of the FOB value of a container load shipment.

Asia Inspection has 300 plus experienced QC inspectors across southern Asia, including China, India and South Korea.  To ensure quality, almost all the inpsectors are direct employees of the  company.   Approximately 75 % of the inspectors are full-time, while the remaining 25% have specialized expertise in a particular industry or working in remote regions and are called in on an as needed basis.

I asked Sebastien whether there was a particular inspection protocol which would optimize the effectiveness and efficiency of the service.   While it is obviously dependent on the specifics of the industry, shipment size and manufacturing requirements, he generally recommends an inspection each time a shipment is in production.  With the appropriate notice through their web site, Asia Inspection will generally be at the facility when the production run is about 80% complete, allowing for a thorough review of end product but catching problems that need to be corrected before the shipment is a fait accompli.

I would caution that I have not had personal experience to this point with Asia Inspection's services, but it strikes me as a sound idea and certainly well worth exploring as part of putting together an outsourcing plan.  (If anyone has had experience with Asia Inspection, or has other thoughts on dealing effectively with QC'ing outsourced manufacturing, I would invite your comments to this post).  In addition to Asia Inspection's website which contains a great deal of useful information, you can get a sense of the company's expertise and passion for what they do by reading the related business blog that Sebastien maintains -- Chief Asia Inspector.