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Soobin Lee Korlynn Mulligan Global Sourcing-Term Project


Context Part I-The Case Study Importer Part II-The Imported Products part III- Eight Steps of Import Buying Plan STEP I. Profile the country selected to export merchandise STEP II. Analyze the country selected to export feasibility STEP III. Research business etiquette for the country of export STEP IV. Examine import/export agreements STEP V. Classify the product to be imported product STEP VI. Complete the cost sheet for the imported product STEP VII. Determine the shipping route for the merchandise to be imported STEP VIII. Finalize the entry process of the imported item


Part I


Nike Industry: Apparel, accessories Nike is an American brand that incorporates design, development, manufacturing and worldwide marketing and selling of athletic products, including footwear, apparel, equipment, accessories and services. It is one of the largest suppliers of athletic apparel, shoes and sports equipment. With their successful revenue, the brand’s value itself was $19 billion, which lead the company to most valuable brand among sports businesses. Product lines Athletic footwear for both gender Apparel Sport Equipments Athletic/Recreational products


1964 •

Timeline

Blue Ribbon Sports, is founded on a handshake agree ment between Phil

Knight and Bill Bowerman in Portland, Oregon on January 25.

1970 •

The Swoosh first appears on a football/soccer boot called the Nike.

1972 • The first line of Nike footwear is introduced, including the so-called “Moon Shoe” that features a waffle sole, which is distributed to athletes competing in the US Olympic Track & Field Trials in Eugene, Oregon.

1980 • Nike completes an initial public offering of 2,377,000 shares of Class B common stock on December 2. • Nike hires the first industrial designers into the footwear industry to work out of their Exeter, NH R&D facility. • BRS, Inc. merges into Nike, Inc. on December 31, and the company officially becomes known as Nike, Inc.

1986 •

Corporate revenues surpass $1 billion for the first time.

1989 • Nike enters the European football market, signing a kit deal with Paris Saint-Germain


1990 •

The first Niketown store opens in downtown Portland.

1995 • Nike signs long-term partnerships with the Brazilian and United States soccer teams, and moves into English foot ball, signing a kit (uniform/apparel) deal with Arsenal.

1998 • Phil Knight commits Nike to standards for its affiliated manufacturing facilities, including: minimum wage; air quality; education programs; expansion of microloan program; factory monitoring; and enhanced transparency of Nike’s corporate social responsibility practices.

2002 • Nike purchases Hurley International, an action sports clothing company, for an undisclosed amount.

2006 • Nike and Apple release the Nike+iPod sports kit, enabling runners to log and monitor their runs via iTunes and the Nike+ website. • Nike reports annual revenue for fiscal year 2006 (ending May 31) of $15 billion.


Part II


The Imported Products The three main product lines of the Nike brand are footwear, apparel, and equipment. Nike has nearly six hundred factories that employ 800,000 workers in forty-six countries around the world. We specifically studied Nike’s footwear, which is all primarily made out of the USA. As of Nike’s 2009 fiscal year: China manufactures 36% of their Nike-Branded footwear, 36% from Vietnam, 22% Indonesia, and Thailand 6%. These do not include the manufacturing agreements with independent factories in Argentina, Brazil, India, Italy and South Africa that manufactures footwear to be sold in those countries particularly. One of the most important aspects of manufacturing for Nike are its workers and factories. They strive to improve working conditions in their global supply chain and the industry as a whole. Nike pays huge attention to “lean manufacturing” where the focal idea is worker empowerment. This idea gives Nike’s factory employees the skill set and abilities to manage production and properly handle issues. These issues include quality or process improvements, this allows employees to feel the support they need to make the necessary decisions and provide for a better work environment. Another huge area of importance for Nike is sustainable manufacturing and sourcing. Nike’s vision for sustainability centers on the idea of “bringing people, planet and profits into balance”. Taking control of sustainability will allow Nike to receive greater profits as well as contributing to the needs of the environment. According to Panjiva Nike’s top three suppliers are based in China, Taiwan, and Hong Kong. With their biggest shipment of the 2014 year coming in January with five hundred and sixty-nine shipments being imported.


Part III


Step 1 Traits of the country- China Social/Cultural

Marriage and Family Chinese people think that it is important to keep the lineage and family ties. They would prefer for women to have boy child rather than girl because their major goal is to carry their family name. Mostly, it is the firstborn sons’ responsiblity to take care of parents when they become old, either provide money to send them to the nursing home or often they live with their parents. Gender Relations The gender roles and equality is not fair in China. The traditional social hierchy has always been men ahead of women. It became more aggravated after the Communist Government’s one- child policy. The result of not having a boy child made the women to leave the family or abandoned by them. Behavior, Etiquette and Values Most of the Chinese have traditional values based on Confucianism. They think respecting and being obedient to the elders are the most important. Youngsters should not be rude to adults and always use formal language. The communism has enforced the chinese culture to be more like a group over just one individual. Religion, Customs and Holidays They celebrate religious festivals, such as the Spring Festival, Moon Festival and Tomb-Sweeping Day, which is honoring ancesters. Also, the Chinese New Year that includes symbolic rituals and foods celebrating with their whole family.


Political Chinese are under a communism ruled by committee and Xi Jinping, who is a president and also a secretary general of the Chinese Communist Party. The CCP is a huge bureaucratic machine, which is under the dual leadership system with local leader of the coresponding office. There are more than 80 million members in the Communist Party. In the government, the central party control has the strongest and tightest control in urban economic, industrial and cultural settings. The most power belongs to the president, National People’s Congress (NPC) and the State Council. China’s political system is not a dictatorship, but the goverment does monitor and control citizen’s lives. They have many restrictions for their citizen including, Internet, social media and free speech.

Economy China’s economy is growing very slowly as the structural transformation of the economy continues. The grwoth in china decrease to 7.6 percent in 2015 from 7.7 percent in 2013. They have a wide gap between rich and poor; in urban areas, wealthy Chinease own luxury cars and designer clothes that half of the Chinese can’t afford. China’s GDP is 10.355 trillion USD and their GDP per capita is 6807.43 USD. Their currency is renminbi Yuan. China’ unemployment rate is constantly growing each year, it was 4.4% in 2009, now it is 4.5%. China is mostly keeping their economy from exporting the products, reaching $2.21 trillion in 2013. They also import as well reaching $1.95 trillion.

Geographic China is the fourth largest country and have the largest population (20 percent of Earth’s population) overall. Because of their population, the government restricted the citizens to move freely to another area. The geography of China is diverse with highlands, lowlands, hills, plains,rivers and deserts. Mountains are two-thirds of the land. Their map looks like a rooster, the area of Chia is 9.6 million square kilometeres and a costline of 18,000 kilometers. Chinese divide their land into four different regions, which are North, South, Northwest and the Qinghai-Tibetan. Each regions, the residents have their own style of living and customs. Also, China has many rivers and lakes.


Contributing Factors Labor China’s average age of working is between 15 and 59 years, and the population is 933.55 million. The population has decrease 3.45 million from previous year, which is the first time. There are 767 million are employed, which was increased of 2.84 million.The number of workers especially in urban areas has increased while the rural areas decreased to six percentage employment rate. The total labor force in China was 787,632,272 in 2012 and it is contantly increasing. A number of regions are rasing the wage for employees and starting in April, the minimum wage will increase to $293 per month. The minimum wage is $3-4, but some regions, it is less than that. They have bad working conditions and low wage, also they can illegally hire childeren to do the labor. Natural resources are an important component of natural conditions. They include mainly land resources, water resources, climatic resources, biological resources and mineral resources. China has rich natural resources.

Input Since the land is wide and huge, China is a rich land resources and carries various of kinds. Agriculture is highly developed where those farmland is located, which are northeast China, north China, the middle and lower reaches of the Yangtze, the Sichuan Basin and the Pearl River Delta. Those lands produce wheat, corn, rice and cash crops. The country also has mineral resources, the fresh water lakes and seas produce fish, shrimps and other aquatic products. China has rich plant, animal and marine resources. China has many minerals that only they can find, which include tungsten, titanium, zinc, etc.


Products Since China is one of the strongest and largest country that produces many products, their export rate is fairly high compare to other countries. China’s export is about 16.5% of its total economic output. The top 10 exports • Electronic equipment: $561,703,550,000 (25.4% of total exports) • Machinery: $383,310,504,000 (17.3%) • Knit or crochet clothing and accessories: $96,810,372,000 (4.4%) • Furniture, lighting , signs and prefabricated buildings: $86,435,683,000 (3.9%) • Optical, technical and medical apparatus: $74,689,712,000 (3.4%) • Agriculture including tea,rice, wheat, fish, potatoes, cotton,etc: 75,000,000,000 (3.5%) • Plastics: $61,775,281,000 (2.8%) • Vehicles excluding trains and streetcars: $58,588,779,000 (2.7%) • Iron or steel articles: $57,368,576,000 (2.6%) • Footwear: $50,766,207,000 (2.3%)


Transportation Transportation in China has a well system of modern transportation,especially in urban area. Transporations in China: • Buses • Railways • Subways • Taxies. • Bicycles • Rickshaws (three wheeled modes of transport) China’s transportation industry is constantly expanding and developing in both scale and quality. Developing transportation sytem is contributing to advance in both society and national economy of China. The transportations are becoming more important, reliable, and easily accessible to people. As the number of people who use transportation increases, they are mostly full and people complain about lack of spaces, especially in larger cities. Most of the days, it looks like a rush-hour and it passes the limit of people. Additionally, during the holidays, national days or festival creates mess of crowds.


Business Climate The business climate in China is actually bad because it is difficult to find reliable data and has limit in finding resources. The reason is that Chinese government restricts all the information about their own country. Their laws and regulations are vague and many people violate the rules. For example, they illegally produce fake brand products, foods using chemicals and medicines. The labor cost is rising from previous year, and they are planning to increase the minimum wage too. Overall China’s business climate is getting better each year and they are making a lot of profit than previous year. According to the China Business Review, the top 10 businesses in China are: 1. (Three-way tie) Human resources: Talent recruitment and retention 1. Administrative licensing 1. Competition with PRC state-owned enterprises or national champions 4. Intellectual property rights enforcement 5. Cost increases 6. Market access in services 7. Transparency 8. Protectionism risks in China 9. Government procurement 10. Standards and conformity assessment

Effects of quota removal

After US dropped the quota system, China was benefit from it because there is no limitation in amount of export. They could export many proudcts including textile and apprel, which increase 2000%. Retailers source many products from China because their industry is the fastest, cheapest and best.


Step 2 Country Anlysis- Code of Conduct/SWOT Analysis

~ NIKE, Inc. CODE of CONDUCT At Nike, we believe that although there is no finish line, there is a clear starting line. Understanding that our work with contract factories is always evolving, this Code of Conduct clarifies and elevates the expectations we have of our factory suppliers and lays out the minimum standards we expect each factory to meet. It is our intention to use these standards as an integral component to how we approach NIKE, Inc. sourcing strategies, how we evaluate factory performance, and how we determine with which factories Nike will continue to engage and grow our business. As we evolve our business model in sourcing and manufacturing, we intend to work with factories who understand that meeting these minimum standards is a critical baseline from which manufacturing leadership, continuous improvement and self-governance must evolve.

Beyond the Code, Nike is committed to collaborating with our contract factories to help build a leaner, greener, more empowered and equitable supply chain. And we will continue to engage with civil society, governments, and the private sector to affect systemic change to labor and environmental conditions in countries where we operate. We expect our contract factories to share Nike’s commitment to the goals of reducing waste, using resources responsibly, supporting workers’ rights, and advancing the welfare of workers and communities. We believe that partnerships based on transparency, collaboration and mutual respect are integral to making this happen. Our Code of Conduct binds our contract factories to the following specific minimum standards that we believe are essential to meeting these goals.

EMPLOYMENT is VOLUNTARY The contractor does not use forced labor, including prison labor, indentured labor, bonded labor or other forms of forced labor. The contractor is responsible for employment eligibility fees of foreign workers, including recruitment fees.

EMPLOYEES are AGE 16 or OLDER Contractor’s employees are at least age 16 or over the age for completion of compulsory education or country legal working age, whichever is higher. Employees under 18 are not employed in hazardous conditions.

CONTRACTOR does NOT DISCRIMINATE Contractor’s employees are not subject to discrimination in employment, including hiring, compensation, promotion or discipline, on the basis of gender, race, religion, age, disability, sexual orientation, pregnancy, marital status, nationality, political opinion, trade union affiliation, social or ethnic origin or any other status protected by country law.

FREEDOM of ASSOCIATION and COLLECTIVE BARGAINING are RESPECTED To the extent permitted by the laws of the manufacturing country, the contractor respects the right of its employees to freedom of association and collective bargaining. This includes the right to form and join trade unions and other worker organizations of their own choosing without harassment, interference or retaliation.

COMPENSATION is TIMELY PAID Contractor’s employees are timely paid at least the minimum wage required by country law and provided legally mandated benefits, including holidays and leaves, and statutory severance when employment ends. There are no disciplinary deductions from pay.

HARASSMENT and ABUSE are NOT TOLERATED Contractor’s employees are treated with respect and dignity. Employees are not subject to physical, sexual, psychological or verbal harassment or abuse.

WORKING HOURS are NOT EXCESSIVE Contractor’s employees do not work in excess of 60 hours per week, or the regular and overtime hours allowed by the laws of the manufacturing country, whichever is less. Any overtime hours are consensual and compensated at a premium rate. Employees are allowed at least 24 consecutive hours rest in every seven-day period.

REGULAR EMPLOYMENT is PROVIDED Work is performed on the basis of a recognized employment relationship established through country law and practice. The contractor does not use any form of home working arrangement for the production of Nike-branded or affiliate product.

The WORKPLACE is HEALTHY and SAFE The contractor provides a safe, hygienic and healthy workplace setting and takes necessary steps to prevent accidents and injury arising out of, linked with or occurring in the course of work or as a result of the operation of contractor’s facilities. The contractor has systems to detect, avoid and respond to potential risks to the safety and health of all employees.

ENVIRONMENTAL IMPACT is MINIMIZED The contractor protects human health and the environment by meeting applicable regulatory requirements including air emissions, solid/hazardous waste and water discharge. The contractor adopts reasonable measures to mitigate negative operational impacts on the environmental and strives to continuously improve environmental performance.

The CODE is FULLY IMPLEMENTED As a condition of doing business with Nike, the contractor shall implement and integrate this Code and accompanying Code Leadership Standards and applicable laws into its business and submit to verification and monitoring. The contractor shall post this Code, in the language(s) of its employees, in all major workspaces, train employees on their rights and obligations as defined by this Code and applicable country law; and ensure the compliance of any sub-contractors producing Nike branded or affiliate products. August 2010


SWOT Analysis Strengths • Just-in-time manufacturing • Large supply chain • Contains customer service • Fast growing industrialization • Cheap labor costs, large manufactures Opportunities •Market Size •Growth in the apprel and textile industry •Growing demand •Growth in exports and imports

Weakness • Less knowledge of Chinese government • Air Pollution • Longer date of shipping • Lack of knowledge in culture • lack of knowledge in social customs Threats

•Threats of copycat systems •Chinese government •Wages and payment systems •High Inflation •Unpredictable economy cycles

•Higly competitive industry

Competitive Advantages The competitive advantages of china would be the market size. Also, the inflation rate in China, which is around 2.15% average that are high demand and wide supply gap. Nike is one of the largest athletic manufacturers and the products are developing not only in innovative styles but also incorporated lifestyle technologies. Since Nike is famous and attractive among Asia, they can generate profit using lower and cheaper labor costs. The currency is also the reason because Nike can easily sell the product to other countries at cheaper rate compare to other countries. Due to larger labor force in China, Nike can produce products for cheaper price compare to other countries such as India and the United States, but the quality remains same.


Step 3. China’s Business Etiquette Type of Culture China’s culture is based on the confucianism, which obey and respect the elders. The country has the largest population in the world and has different types of ethnic groups living in China. Their are no official religion for the country since they are a communist state and half of the citizens don’t have religion. Half of the people are believing in Taoism, Confucianism, Buddhists, Muslims and Christians. Their main language is Chinese, which include Mandarin, Cantonese, Hakka, Wu, Min, Xiang and Gan. Also, many of the Chinese are fluent in English. Their food is heavily influenced by their land and geograhpy. Since they are a rich resource land that is perfect for cultivating, they main dish is rice.

Masculine or Feminine The sex role in China, the masculine value more than femininity. The family expect the male members to go out work and make money. Also, they are responsible for the general welfare of the family until their children become independent. However, their culture is different from America because they support their childen’s finance until they die. For female members in the family are generally responsible for house jobs such as cleaning the house, raising child, cooking and nurturing. They always prefer to have boy than girl to carry and maintain their family name and genes.


Negotiation Style and Strategies The word negotiation means to discuss and to judge for Chinese. From a their perspective, negotiation is helping to build trust between the two parties, so they can work together and bring the best result and benefit for both.

4 Strategies to Remember 1. Spend face time When negotiating with China, it is important to build a relationship by spending face to face time to gain personal trust. It is better for you to go have trips to China if the party doesn’t want to come to you. While you are there, try to experience their culture and social customs that will help the process of negotiation smoother and faster. 2. Nothing is settled until everything is settled During negotiations,if the particular item is agreed then it is considered closed. However, the Chinese, they constantly change their minds, so nothing is settle unitl everything for sure is settled.It is important for people to be patient and keep calm for Chinese being uncertainty and ambiguity. 3. Use intermediaries While negotiating, there will be disagreements and hit some point that are difficult to proceed, then it is the best time to use an intermediary. Facing a seemingly gridlock, you may want to try to apply some aggressive influences. It is bad idea not to use an intermediary because you might use some strong disagreements that can offense Chinese. 4. Be patient Being patient is a general good advice in doing business with China in any circumstance. Try to be patient until you reach the point when results are satisfied. Decision-making is the most difficult and long process for Chinese.


Type of Communication The best way to communicate in China is learning their own language. It is difficult to have business without knowing the dialect or having a translator beside you. There are some Chinese who are fluent in English, but it is hard for them to share a deep talk. Sometimes, misunderstanding and mistranslation can lead the business in danger. When your are doing business with another country, it is important for you to check twice if you are understanding correctly and be on the same page with them. The problem communicating with Asians,especially Chinese, is that they have hard time saying ‘no’. Saying ‘no’ can cause for both people to be embarrassed and have lost of faces, so it is better for them to agree instead than disagree. The Chinese are not used to have an eye contact during conversations when they are talking to strangers or to the opposite sex. It can be considered as rude and insistent to look directly into another’s eyes while they are talking. Also Chinese lower their eye level when they meet other people to show respect. Most of Asians conceal their feelings and don’t show their facial expression, so they typically have a blank face. Because of the cultural difference, communicating with Chinese can be ambiguous.

Social and cultural Elements

Appropriate Business Attire The apporpriate business attire in China can be either casual or formal. The attire is important because it give you a good first impression and it also shows respect and seriousness. Wearing short is not acceptable because itis considered as inappropriate for you to wear those during the work. Business Attire for Men: -Suits -Ties -Polo shirts -Button-down short sleeve shirts


If you are a woman doing business in China, you have to wear conservatively. For example, the dress length needs to be below the knees and wear high neckline, otherwise the attire will be considered as inappropriate. Business Attire for Women: -Suits for women -Long buisnes dress -High neckline blouse -Formal trousers -Closed toe shoes -low hill shoes Introductions Introducing yourself in China has strict rules depend on the gender and the level of your postion. The lower level should introduce themselves to the higher level position. It is rude when other person is giving their introductions, just be patient and wait until they are finished. The male should introduce to women first and make sure not to ask for handshake unless they want it first. When you are introducing, speak loud enough so other can hear you and in your introduction, include your full name, the job place and job position. Lastly, use formal language when you speak. Greetings There is a traditional way to greet, which is bowing and nodding. However, the bowing isn’t like 90 degrees, but just a slight bow is better. Instead of bowing eachother, many Chinese business man will offer handshake. Presentation of Business Cards In China, the business card exchange happens during the meeting. For the business card, it is better for you to have both Chinese and English, so they can read it. It is important to use “Simplified” characters for mainland China, Singapore, Malaysia and Indonesia. Also when exchanging or giving something, always stand up and use both hands to recieve it to show the respect. Don’t put the business card in your pocket or wallet right away and be sure to put them in the card case. You have to hand the business card, never make Asians to get your business card from a stack you placed on the table. Don’t write something on the business card infront of them, you may do that when they leave.


First name or title Chinese names are usually given in the order of family name, then first name, just like any other Asian countries. The best way is to ask someone their name that they prefer to be called. Addressing their first name can be very impolite, especially when you are younger than the person or if you don’t know them personally. Their cultural influence is the strong Confucianism, so being polite when you are addressing someone is important. They care about the rank and position of your title and respect by that, so never address someone with their first name. Try to use titles such as madam, Mrs, Mr and Miss.

Gestures In Chinese culture, which is based on Confusicanism, when you hand in or receiving something, you have to use both hands. Also when you point something, use your entire hand rather than a single finger. This can be really rude because it is an accusatory gesture. When calling someone, hold your palm down instead of side up and wave your fingers towards your body, make sure not to use single finger. Don’t shake your legs, and fist at someone. Don’t ever touch or look down someone’s head.

Color, Numbers, and Their Meanings Chinese culture cares about meaning of numbers. People select lucky numbers as possible for their phone numbers, residents and important dates. The number 8 is the lucky number for Chinese, which indicates prosperity, Wealth, success or social status. They also prefer even numbers than odd numbers. They don’t like the number 4, which indicates death and out of luck. For colors, red,green and yellow is the lucky colors for Chinese. You will see a lot of yellow and red in China, even their national flag is red and yellow. Yellow symbolized royalty and power of the throne. Red is the Chinese national color and represents happiness, beauty, success and good fortune. Lastly, green symbolizes money.


Gift Giving It is important for choosing a gift, spending money, wrapping and presenting the gift in Chinese culture. Chinese societies, gifts are given for holidays, such as birthdays, during official business meetings. The red envelopes are the more popular choice for Chinese New Year and weddings, gifts are also acceptable. Things to avoid include clocks and scissors or other sharp items such as knives or letter openers. Don’t use wrapping gifts in white or black, which are colours associated with death and funerals. It is best to exchange gifts in either private or an entire group. At business meetings, it doesn’t look good to give a gift to only one person in front of everyone else. If there is one gift, you should give it to the most senior person.

Time Chinese culture on time is very strict. They only not care about their own time wasting, but also about other people’s time. They respect and take time very worthy. So the best way is that you should be on time every meeting, schedule and appointment. It is considered when people show up really late without any notice in advance. Make sure to let them know that you are going to be late for the meeting.

Joke telling Building a relationships in China are mostly formal. When you are doing business, you are representing your company stay on professional level. Don’t become too informal or make useless jokes. Try to avoid humor as much as possible This is not because the Chinese are humourless but rather jokes may be lost in translation


Business Entertaining Proper Use of Utensils Should not put chopsticks vertically into your food when not using them, especially not into rice. That is for death and makes Chinese think about funerals. Don’t play with your chopsticks and wave them in the air. Do not stab foods with your chopsticks. Pick up the food securely and move it smoothly to your mouth or bowl. It is not good for you to drop food, so ensure if the food is gripped securely. It is best for you to learn how to use chopsticks and try them for good impression, but don’t use it unless you are really good enough to grab your food. Some restaurants in China have forks available. If you are not used to chopsticks, just simply ask for fork or spoon. Table Manners When helping yourself to the dishes, you should wait until the hosts or the most elders start grabbing their utensils and eating. After that, it is your time to eat and take food from the plates. It’s bad manners to use your chopsticks to dig through the food to find something that you like. If you found your favorite dish, you should not eat everything or put the plate in front of yourself. Think about others who need to eat the food. If there is not much left on a plate and you want the rest of the food, you should ask others. If they say they don’t want them any more, then you can eat.When elders help you filling your bowl or adding food to your bowl, you should say thanks. You are not supposed to watch television, use cell phones, carry other activities when having a meal with others. Try to concentrate on your meals and companions. Alcoholic Beverages Basic rules for drinking in China 1. Never refuse to participate in a toast unless you are ill, that could be interpreted as being Impolite. All people sitting at the same table have to stand up, upon the initiative of one of the guests, and toast in some speech with succession. 2.Elderly people should be served first or the superior people. You should pay attention not to raise your glass higher than those of the elders. 3.During ganbei, the drinkers need to slam the contents of the glass, and then must show the other guests their glasses are empty.


Appropriate Conversation Subjects You should engage in general conversation with the person you just met for the first time before turning to business. You might want to begin with compliments about China and the culture. Expect questions about your age, marital status, salary, and the price of personal items. However, don’t try to ask about those personal question unless they do it first. You don’t have to answer very specifically. Chinese communication is ambiguous, indirect and highly contextual. Topics to Avoid Avoid mentioning Taiwan and do not criticize Chinese leadership. Also, don’t talk about the goverment and political subjects unless you really know well. Do not talk about something that will be offensive to the Chinese. Chinese do not like to say no, so you should avoid asking them questions that require such a response.


Step 4. Importing Trade Agreements, Laws, and Policies Part 1. China Free trade Agreements The Chinese Government treats Free Trade Agreements (FTAs) as a new platform to further opening up to the outside and speeding up domestic reforms, an effective approach to integrate into global economy and strengthen economic cooperation with other economies, as well as particularly an important supplement to the multilateral trading system. Currently, China has 20 FTAs under construction, among which 12 Agreements have been signed and implemented already. -China-ASEAN FTA -China-Pakistan FTA -China-Chile FTA -China-New Zealand FTA -China-Singapore FTA -China-Peru FTA -Mainland and Hong Kong Closer Economic and Partnership Arrangement -Mainland and Macau Closer Economic and Partnership Arrangement -China-Costa Rica FTA -China-Iceland FTA -China-Switzerland FTA


Part 2. Laws/policies of the united States That affect the Impotation of the products Basic Laws/ policies What is required for importing goods into China? In order to purchase imported goods, an importer in China must have: a. authorisation from the various governmental bodies; b. sufficient foreign exchange; and c. an import license (in some cases). What authorisation does an importer need to obtain? An importer in China must acquire approval from the following governmental bodies before purchasing imported goods: a. the supervising organisation The importer must get approval, at either the county or the municipal level, from the industrial bureau or the industrial corporation that normally administers its activities. b. the state planning commission (SPC) The State Planning Commission determines the general economic plans for each region and any proposed imports must be consistent with the State Planning Commission’s economic development policies. Basically, the SPC determines the pattern of development in various industries and assigns foreign exchange accordingly. More specifically, it is charged with approving the construction of new factories and the importation of equipment and machinery for these factories. c. the economic commission The Economic Commission carries out the economic directives of the State Planning Commission. Once the State Planning Commission decides a product will be imported in order to fulfil one of its economic objectives, the Economic Commission determines which enterprise will import the product. An importer must have the approval of the Economic Commission before purchasing imported products. d. the Ministry of Foreign Trade and Economic Cooperation (MOFTEC) The MOFTEC and its regional branches oversee state foreign trade companies (FTC). As well, this governmental body develops and executes import and export plans for each region, along with the State Planning Commission. e. Foreign Trade Companies (FTCs) An importer in China can have a state FTC sign the import contract with the foreign supplier as an agent of the importer. A FTC may supply an importer foreign exchange quota if the importer lacks foreign exchange, if the purchase is consistent with the general economic plan of the region and considered to be profitable.


When is an import license required? An import license is required for the importation of some goods. Any importer should refer to the MOFTEC’s current list of “restricted goods” that require import licenses. An import license is most often required where: a. a good is listed by MOFTEC as a “restricted good” that requires an import license; b. an importer does not have foreign trade rights; or c. a FTC imports goods that are beyond its business scope as authorised by the government. In the following situations, an import license is not normally required: a. where a state foreign trade company imports goods that are within its business scope as authorised by the government; b. imported goods under agreements that have been approved by a relevant governmental body (Ministry, commission, provincial government) for compensation trade, processing, assembly, or engineering projects outside China; or c. imported goods which are samples from foreign businesses, d. urgently needed products as authorised by the MOFTEC, and e. and in some other circumstances, (please refer to The Import License Regulations, Art 7(3) and Detailed Implementing Rules). Who issues import licenses? The MOFTEC is the governmental body that issues import licenses, and correspondence should be directed to the MOFTEC or one of its regional offices. The MOFTEC has also been empowered to delegate authority to issue import licenses to local governmental bodies and /or officials including: provincial bureaus of foreign economic relations and trade; special representatives in Shanghai, Tianjian, Dalian, and Guangzhou; provincial institutions established by the central government ministries; and Foreign Invested Enterprises (EFI). How does an importer obtain an import license? In order to acquire an import license, an importer must first apply to local bureau officials. Once the bureau has approved the application, the importer applies to the MOFTEC or another governmental body that is authorised to issue import licenses. The following information must be included in the application: the name of the product to be


imported; specifications; unit price; total price; source of the foreign exchange; country of origin; quantity; use of the product to be imported; and the work unit concluding the transaction. Note: The onus of obtaining of an import license rests on the importer. Chinese Customs Authorities may confiscate or return the goods if the importer has failed to acquire a valid import license. How long is an import license valid for? An import license is valid for a term of one year. An importer may apply for an extension if an import is not made within one year. What are sources of foreign exchange? The system of managing China’s foreign exchange is complicated and continually reforming. Foreign exchange is allocated by the State Planning Commission to various sectors of the economy, according to a quota system. However, over time the Chinese government. has been devolving this centralised system of allocating foreign exchange to a more marketoriented approach. A foreign exchange market now exists and importers can convert renminbi to foreign currency, subject to certain controls. Laws of the US affect importation of the Product NAFTA Entry of Goods U.S Customs and Bordeer Protection Invocies Assessment of Duty Import Tariffs Rules of Origin Country of Origin User Fees


JUST DO IT.


Step 5. Harmonized Tariff Schedule


Step 6. Cost sheet

684593-601

LeBron 12 Basketball Tennis Red/White

FW14

Leather

1.5 yrds

$12

$18

Rubber

1.5 yrds

$2.50

$3.75

Polyester

2 yrds 5 yrds

$1.75

$3.50 $25.25

Eva Foam Synthetic Leather Shoe Laces

.25 yrds 1yrd 1 pair

$4 $3.50 $1.60

$1 $3.50 $1.60

$6.10 $1.50 $1.00 $1.75 Thread Top Stitching Loop Laces Labor

$1.50 $2.00 $1.50 $2.75

0 0 $0.50 $12.50 $0.10 $0.15 $0.50 $0.75 $1.50 $45.35 $60 32.3% $200 70%

7-16


705346-335 FW14

Nike Free 5.0 Running Shoe

Leather

1yrd

$12

$12

Rubber

1yrd

$2.50

$2.50

Polyester

1.5 yrds 3.5 yrds

$1.75

$2.63 $17.13

Eva Foam Synthetic Leather Shoe Laces

.25 yrds 1yrd 1 pair

$4 $3.50 $1.60

$1.00 $3.50 $1.60

$6.10 $1.50 $1.00 $1.75 Thread Top Stitching Loop Laces Labor

$1.50 $2.00 $1.50 $2.75

0 0 $0.50 $12.50 $0.10 $0.15 $0.50 $0.75 $1.50 $37.23 $49.25 32.3% $110 70%

5-12


Step 7. Ocean Over Air: Part 1: Ocean Freight • Type of Box Used: cardboard boxes; dry storage • Number of Case Packs (boxes): 550 • Type of Container: 18 x 18 x 32 • Space needed in container: FCL (full container load) • Cost to ship the merchandise: $2, 560.39- $2, 829.91 (subject to additional fees such as taxes, duties, etc…) Part 2: Air Freight • Type of garment carries: N/A • Number of garment carriers: N/A • Space needed in air freight: N/A • Cost: N/A Part 3: Two Timelines Shipping: 7 to 8 Business days Part 4: Maps

Portland, Oregon


Step 8.

Importer’s Documents- Power of Attorney


GSP Form C ertificate of Or igin 1. Goods consigned from (E xporter's business name, address, country)

R eference No GE NE R A L ISE D SY ST E M OF PR EFE R E NCES CE RT IFIC AT E OF OR IGIN (Combined declaration and certificate)

Shanggao Yisen Industry Co. Ltd. Youzidong,jingjiang Town, Shanggao County, Yichun City, Jiangxi Province,prc 2. Goods consigned to (Consignee's name, address, country)

Nike Headquarters 1 SW Bowerman Dr Beaverton, OR 97005

FOR M A

China

Issued in

(country) See Notes overleaf

3. Means of transport and route (as far as known)

4. For official use

From Shanghai, China to Portland, Oregan by Ocean On August 1, 2014 5. Item number

#1

6. Marks and number of packages

N/A

7. Number and kind of packages, description of goods

Mixed material Men’s Basketball shoes Mixed material Women’s Running Shoes

8. Origin criterion (see Notes overleaf)

“P”

9.

Gross weight or other quantity

5crtns 550 boxes

10. Number and date of invoices

Inv #: 12345 August 1, 2014

Total of 5 Cartons

11. Certification It is hereby certified, on the basis of control carried out, that the declaration by the exporter is correct.

12. Declaration by the exporter T he undersigned hereby declares that the above details and statements are correct; that all the goods were produced in

(country)

and that they comply with the origin requirements specified for those goods in the Generalised System of Preferences for goods exported to

(importing country)

Place and date, signature and stamp of certifying authority

Place and date, signature of authorized signatory


Detail sheet

Nike USA Inc. Footwear

684593-601

July 1, 2014

LeBron 12 Basketball Tennis Red/White

Leather/ Synthetic Leather/ etc. 15 ultra-flexible cushioning Translucent rubber outsole for multi-surface traction and durability

Shoe Laces bright red, match red mesh fabric


Freight Carrier’s Documents Ocean Bill of Lading


Insurance Certificate


Arrival Notice


Intermodal Bill of Lading


Manufacturers Document Packing List


Commercial Invoice


Pro Forma Invoice


Banking Document


References


References Business etiquette in China. (n.d.). Retrieved November 13, 2014, from http://www.simplifiedtranslations.com/EN/chinese.html China – Social, Environmental, Ethical and Political Issues. (n.d.). Retrieved November 12, 2014, from http://www.slideshare.net/tutor2u/china-social-environmentalethical-and-political-issues China's Top 10 Exports - World's Top Exports. (n.d.). Retrieved November 10, 2014, from http://www.worldstopexports.com/chinas-top-10-exports/1952 China Unemployment Rate 2002-2014 | Data | Chart | Calendar | Forecast. (n.d.). Retrieved November 11, 2014, from http://www.tradingeconomics.com/china/unemployment-rate Chinese Culture - Teaching Abroad. (n.d.). Retrieved November 7, 2014, from http://www.teachabroadglobal.org/chinese-culture-education Chinese Dining Etiquette. (n.d.). Retrieved November 9, 2014, from http://www.chinahighlights.com/travelguide/chinese-food/dining-etiquette.htm Connect East. (n.d.). Retrieved November 7, 2014, from http://www.connecteast.net/blog/four-strategies-to-negotiat.html Corporate Governance. (n.d.). Retrieved November 8, 2014, from http://investors.nike.com/investors/corporate-governance/?toggle=ethics Cultural Analysis of China for Business Development. (n.d.). Retrieved November 11, 2014, from http://www.slideshare.net/SrikiranCRai1/cultural-analysis-of-chinafor-business-development Doing Business in China. (n.d.). Retrieved November 9, 2014, from http://www.kwintessential.co.uk/etiquette/doing-business-china.html Employment in China. (n.d.). Retrieved November 11, 2014, from http://www.clb.org.hk/en/content/employment-china Freight Calculator. (n.d.). Retrieved November 16, 2014, from


Employment in China. (n.d.). Retrieved November 11, 2014, from http://www.clb.org.hk/en/content/employment-china Freight Calculator. (n.d.). Retrieved November 16, 2014, from http://worldfreightrates.com/freight Harmonized Tariff Schedule of the United States. (n.d.). Retrieved November 14, 2014, from http://hts.usitc.gov How Nike, Wal-Mart And Ikea Save Money And Slash Carbon By Shipping Smarter. (n.d.). Retrieved November 13, 2014, from http://www.forbes.com/sites/justingerdes/2012/02/24/how-nike-wal-mart-andikea-are-saving-money-and-slashing-carbon-by-shipping-smarter/ Lucky Numbers and Colors in Chinese Culture. (n.d.). Retrieved November 8, 2014, from http://www.chinahighlights.com/travelguide/culture/lucky-numbers-andcolors-in-chinese-culture.htm Natural resources. (n.d.). Retrieved November 10, 2014, from http://english.people.com.cn/92824/92845/92876/6442551.html Nike. (n.d.). Retrieved November 9, 2014, from http://nike.q4web.com/files/2011 Inside the Lines online booklet FINAL 11-10-26.pdf Nike CR Report. (n.d.). Retrieved November 12, 2014, from http://www.nikeresponsibility.com/report/content/chapter/manufacturing Top Ten Things to Know About Chinese Communications and Culture. (n.d.). Retrieved November 8, 2014, from http://www.uschinabiz.com/TopTens/ChinaBusinessCommunication.aspx Transportation of China: Civil Aviation, Train, Highway. (n.d.). Retrieved November 9, 2014, from http://www.travelchinaguide.com/essential/transportation.htm US Companies Report Views of China Business Environment. (n.d.). Retrieved November 7,2014, from http://www.chinabusinessreview.com/us-companiesreport-views-of-china-business-environment/



Nike // China Global Sourcing Final