Today China is an acknowledged early leader in pursuing green economic development. From having an almost non-existent renewable energy industry in the early 2000s, China is now a leading exporter of renewable energy equipment and machinery. Here we highlight three factors contributing to the explosive growth of China’s renewable energy industry.Active government supportRenewable energy will be a key focus of the 12th Five Year Plan and of China’s plans to achieve energy independence and reduce pollution. The 11th Five Year Plan already mentioned natural resource depletion as a challenge and up to 40% of China's RMB 4 trillion economic stimulus package is targeted at green projects. Not surprisingly, China is now the world’s largest investor in renewable energy. In 2009, China invested close to USD 35 billion in clean energy, almost twice that of the US. Today, renewable energy accounts for 4% of China’s total energy capacity and close to 20% if we include hydroelectric power. Still, despite the impressive progress, China still has a long way to go before boosting renewable energy capacity to 10% by 2020 and hence we can expect continual government investment in this sector for the foreseeable future.

All international purchasing managers try to minimize import risk. As a China sourcing expert, in order to achieve this goal we will always recommend you to undertake plant visits to China before you place an order, for the following reasons:　

 

• It makes sense to meet the people who you will be working with before you place an order. You will get to know their personality and will start building a relationship with them. As we know, good relationships (or guanxi in Chinese) play a crucial role in business in China - hence the value of a face-to-face meeting can never be underestimated.

• You can inspect manufacturing areas to get an idea of raw material quality, workers’ skills, production capabilities and the internal QC process of the manufacturer. There is nothing better than to see it with your own eyes.

• You can find out to what extent your manufacturers subcontract their production to other plants by checking their work areas and warehouses, or by asking them during meetings.

• You can experience the working environment and meet the workers to be sure that your suppliers are not using child labour and are providing protection masks etc. 

• By making the trip to China, you can give your suppliers a sure signal that you are really serious about quality issues, and more so if you emphasize quality during your meeting. When they produce and deliver products, they will put you in a ‘Picky clients’ list and will therefore be more careful with your products.
  

 

Some extra benefits you can gain from visiting your China plant:

• You may find out that you can actually source many other products in China besides those in your current plan. I had a client before who saw good packaging material during his plant tour in a steel tube plant and finally ordered some packaging materials as well.

• You may see your competitors’ products in a production line during your plant tour. This happens a lot in the top equipment manufacturing plants of China as they get orders from all major international players.
  

IFPSM recently published an article 'Central and Eastern Europe not taking advantage of purchasing in low-cost Asia.' TBA consultant Kevin here summarises the key points for Chinese readers and adds some new insights.

国际采购与供应商管理联盟(IFPSM)近日发文称，中国及其他亚洲地区的低生产成本国家近年吸引了很多欧洲采购者的眼球，但是中东欧国家却并不在此例。

在此文中，位于布拉格的西门子采购中心的国际采购负责人Miroslav Pavlicek说，“中欧的买家关注中东欧的程度远远高于其关注亚洲”。而其原因被归结为：发展程度相对低的中东欧国家传统上来说更加愿意从欧洲内部采购。而其中最大的原因笔者认为是由于欧洲内部的统一化标准。比如文中说，农业非常发达的摩尔多瓦，如其需要农业类的机械设备，一般会倾向于从欧洲国家采购。因为这些机械的生产标准与欧洲国家内部的规定是一致的。而这也同时造成了欧洲之外的国家，特别是亚洲供应者向欧洲供货的门槛障碍。

同时，总部位于德国杜塞尔多夫的国际采购中介--Kerkhoff Consulting公司的合作人，在华沙办公的Gerrit Scharke认为， 他看到了近年从中国采购的趋势的增长，特别是纺织品，电脑零部件及棕色家电(电视机、录像机、录音机、收音机等)。他说：“中东欧国家也正在经受这次金融危机的困扰并意识到最好的解决途径之一就是从新的渠道采购来降低成本。同时他也提到中东欧从中国的采购行为要比从印度明显的多。

英国的采购代理Crown Agents的采购领导人Nourilya Moldakhmatova也说，他们注意到欧洲的马其顿王国的很多IT大型项目的设备都是从中国采购的，这其中包括了一项涉及1500万欧元的订单。

由此可见，一方面来说，亚洲供应商，特别是中国的相关厂家近年也在通过各种途径如提高产品质量，扩大宣传力度，办理各种国际认证等途径来得到欧洲国家的认可；另一方面，欧洲特别是中东欧的国家面对席卷全球的金融危机，也在试图寻找各种办法来应对，通过中国采购就是其中之一。我们也相信随着金融危机的加深，此趋势会越来越明显。同时提醒各出口商能够关注此类似商机，抓住机遇。

 

• Specifications

Buyers should always provide detailed specifications, including drawings, chemical analysis, material grade and sometimes samples. Text descriptions should all accord with international standards, and if the drawings or documents are in a language other than English, a bilingual version should also be provided. This is not only for the sellers to save time with translation, but also for the buyers to reduce the risk of misunderstanding.

• Quality requirements

There are many ways to describe requirements on quality. Usually the buyer will combine several ways, depending on the product:

1.  Brands. To use parts or raw materials with well-known brands is the easiest way to ensure that the parts or raw materials will be correct. For example, when we source gensets, if we request Cummins engines and Stamford generators, we can basically be assured we are getting the right genset. Sellers and buyers can also save time on looking for suppliers and on inspecting some parts of the products. However, for most products, to use parts or raw materials with brands will cost more.
2. Equal/Similar products. If buyers allow the seller to recommend other parts or raw materials with equal or similar functions and specifications, this should be noted clearly in the enquiry.
   
3. Standards. The buyer usually requires the product to adhere to certain standards. My clients in South Africa, Australia and Russia usually request the products to meet SABS, AS and GOST specifications. Chinese suppliers, however, are commonly familiar with the Chinese standard GB, Japanese standard JIS, and some US and European standards. It is sometimes not even helpful to include standard requirements in the enquiry, because some sellers will refuse to quote because they are unwilling to study other countries' standards.
   
4. Samples. This is the most obvious way, but it will take some time for samples to arrive and to be analyzed.

In the next part we will focus on the commercial part of the enquiry.  

As a request for a quotation, an enquiry is an unavoidable stage in the sourcing work flow. A good enquiry should provide sufficient information for buyers to quote efficiently and accurately. It can also build up initial understanding between buyers and sellers so as to give impetus to the succeeding procedures like quotations, further contact and transactions. What would then make a good enquiry? The following are some items of information I suggest buyers should include in their enquiries:

• Brief introduction of the buyer and background of the enquiry:

A brief introduction of the buyer will give the seller an idea of who they will be quoting to. Chinese suppliers usually receive enquiries by fax or email with an individual's name and a company name, but no company information. Such enquiries can easily be ignored because the sellers are uncertain whether the enquiry is from a competitor or from a fake company. Providing more background information on the buyer and the enquiry will help the seller understand where the products in question will be used and judge if their products are suitable.

• Product names

All buyers know that they must include product names in their enquiries, but sometimes they just put the abbreviation or just a 'byname', which are all difficult to understand for sellers who speak a different language. One should never underestimate the language barrier, and the most standard product names should always be used. Or, if unsure, all the possible names should be included.

• Quantity

Sellers need quantity information of potential orders to know if their manufacturing capacity can meet the demand and to determine what price they will be able to offer. Quantity information should be combined with order frequency.

Common questions can include the following:
Is it a once-off or a long-term order?
How many orders will the buyer place per year?
How big will the average volume of each order be?

Many buyers often enlarge the order quantity in their original enquiry in order to get better prices. I personally disagree with this practice because once the seller realizes that the order quantity is not as big as promised, the relationship will usually be damaged and the seller could try to reduce after service or increase prices by adding extra charges.