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Bamboo Packaging – Strong, Versatile and Sustainable

Industry Insights / admin / Packaging, Sustainability, Sustainable Packaging

Bamboo packaging is a great sustainable option and has become a staple choice in the modern, eco-conscious world.

The Rise of Sustainable Packaging

Sustainable packaging is becoming an important topic for companies all over the world. The primary reason is that it is becoming important to the Consumer. In fact, recently IBM released a study on global consumer trends — revealing that the importance of brand purpose now surpasses cost and convenience for shoppers. This means that Consumers are now prioritizing goods that are sustainable, transparent and aligned with their core values when making these purchase decisions.

A Challenging Choice for Businesses

The challenge for all businesses is to develop packaging which meets the objective of sustainability, but also performs the tasks for which the packaging is required. So not only should it keep the product safe but also respect the environment. Let’s think about the origin of materials, recyclability of the final product, not to mention ethics and compliance factors. In addition, it should stay within the budgetary reach of manufacturers, distributors and consumers. In a nutshell, it should still be able to meet any company’s market requirements in terms of cost, performance and safety.

Bamboo Packaging

Because of these new market trends, manufacturers around the world are beginning to implement eco-friendly materials in their manufacturing processes. Amongst several options, they increasingly choose bamboo as the material of choice because it has is durable, can be used in different forms and has less environmental impact.

We already explained the reasons why Bamboo is a great material in the Furniture industry. But why is it so popular now also in packaging?

The Great Features of Bamboo

1. Locally available

There are over 1,000 different species of bamboo that grow in many different parts of the world. Consequentially, this allows manufacturers to locally source bamboo for their packaging and reduces our packaging carbon footprint.

2. Low-Cost

Bamboo cultivation itself does not require a lot of land, resources, or time. This means that it’s much more easily accessible for manufacturers.

Also, bamboo is not a tree, but a plant. Growing and cultivating bamboo requires less land and resources than other materials. Since bamboo grows around the world, it’s much easier to access. Alternatively, companies can source bamboo in many countries around the world and they can also recycle the material. This reduces the impact on agriculture whilst reducing production and transportation costs.

In addition, this plant does not require pesticides, irrigation, or replanting to achieve this growth. In fact, in a crop-friendly harvest, it does not have to be replanted afterward. That means lower impact and higher sustainability.

3. Biodegradable and Compostable

Bamboo fiber is a natural cellulose fiber and it can totally biodegrade in the soil in the presence of micro-organisms and sunshine. The decomposition process does not pollute the environment. Depending on the type of composting, the bamboo handle can take from 3 years to 4 months to compost.

4. High Renewability

Bamboo has a rapid growth rate, making it an abundant resource easily.
In fact, bamboo grasses are the fastest growing woody plants in the world. They can grow up to almost 61 cm (24 inches) per day. The bamboo can be harvested after just three to seven days – much faster than hardwood. Therefore, bamboo is highly renewable and an ideal alternative to foams, corrugated board, and molded paper fiber materials.

5. Environmental Friendly

Bamboo plants promote soil health. The deep root systems protect the soil from erosion. In addition, bamboo is naturally pest-resistant and can be grown without any chemical fertilisers or pesticides.
Moreover, bamboo absorbs 2x more carbon dioxide than trees, which is why they are known to act as carbon sinks. It also generates a vast amount of oxygen, totaling up to 30% more than most plants and trees.

6. Durable and Sturdy

Bamboo has a higher compressive strength than wood, brick, and concrete. In addition, many compare it often to steel for its rigid strength. In fact, like steel, bamboo can withstand heavy loads and can be stretched and pulled enormously. This material can also withstand heat up to 400 degrees Fahrenheit.
Importantly, bamboo has an astounding strength and lifespan whilst remaining light and easy to carry around.

7. Anti-bacterial

Bamboo fibres are naturally anti-bacterial without needing any toxic chemical treatments, all thanks to its substance called ‘bamboo kun’.
Bamboo kun is found in bamboo fibre and is an antimicrobial bio-agent which gives bamboo its natural antibacterial properties. This prevents bacteria and microbes from growing on bamboo products making it the perfect plant for naturally hygienic products such as bamboo straws and cutlery, keeping them sterile and fresh.

Advantages of Bamboo Packaging for Companies

Certainly, bamboo is a great material because of it multiple characteristics. But why should a company opt for bamboo packaging and how would it benefit from it?

Versatility & Innovation

Bamboo has quickly become a significant alternative in the sustainable materials market. It’s an eco-friendly replacement for metal, plastic, hardwood, paper, and cotton. This material has made it into nearly every corner of our lives from being used in toothbrushes and fabrics to toilet paper and everything in between. It offers a high level of durability and when used as a material for packaging, it keeps this important feature of with versatility. For this reason, you can use as packaging for many industries, like apparel, food, cosmetics and more. Moreover, designers are truly innovating the packaging sector by experimenting new great design adopting this material.

Sustainability

With the increased awareness and concern over climate change, consumers and companies are constantly searching for environmentally responsible options for their everyday needs. Consumers want to support companies that are prioritizing the earth’s health, and bamboo packaging is a sustainable option.

From a positioning perspective, by incorporating eco-friendly practices into your business operations, you will be able to engage more environmentally conscious customers and this will help you widen your customer base. Sharing the same values as your customer will definitely allow you to strengthen your relationship.

Price

Bamboo is essentially a ‘weed’ and to that extent is abundant across many countries – particularly within Asia. One of the challenges of looking for sustainable alternatives is that for some materials, the costs can be prohibitive, possibly outweighing the benefit should the consumer not want to pay the additional cost.

As sustainable materials go, Bamboo is well priced given the abundant supplies, and is therefore an alternative packaging material that companies are working with.

Eco-friendly packaging solutions from O.Berk Company

Are You Looking for Sustainable Packaging?

At ET2C we care deeply about the environment and are doing what we can to understand more about the broader sustainable packaging market. We are working hard to understand what is best suited to our clients. It is a complex environment that requires specific market, product and even segment knowledge to get both the right option at a consumer level but to also be relevant to the regulatory environment of a specific market. Wasting less and being mindful of the amount of materials used in packaging is a good start.

For all your packaging queries, please contact us at contact@et2cint.com

Cover photo credit: O.Berk Company

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Quality Assurance & The “Consultants”

Industry Insights / admin / Audit, quality assurance, Quality Control

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Find Wholesale Suppliers in China: Useful Tips

Industry Insights / admin / sourcing, suppliers, Wholesale

Find Wholesale Suppliers in China with these useful tips.

The internet has enabled much greater access to overseas markets and their supplier bases. At the touch of a button, one can access lists of suppliers and what products that they manufacture. But this is only one part of the sourcing process. Companies need to know how best to identify the right partners and what this really entails to truly benefit from offshore manufacturing.

The biggest and most obvious advantage of purchasing in bulk is paying a lower price for your products. Companies that buy direct from China know this very well and leverage the benefits of larger volumes. However, there are also several challenges for those who want to buy ‘wholesale’ volumes that people need to be aware.

In the past, we already mentioned the importance of building up strong and trusting relationships with suppliers. But first of all, how to find the right wholesale supplier in China for you?

We already released a guide to “find the perfect match” between buyers and suppliers and mentioned the importance of these 5 key factors to consider:

Location
Communication
Quality control
Delivery
Culture.

How to find wholesale suppliers in China?

There are a number of different options to search and find wholesale suppliers in China, and we set out the main ones below:

Online research

The first, instinctive way to look for wholesale suppliers in China is through online searches. Unfortunately, just googling something like “best suppliers in China” can lead to a dead end. Let’s admit it, finding product suppliers for your business through an online research can be difficult and time-consuming.

In most cases, you are better placed to look for online wholesale supplier directories, which usually list thousands of suppliers. While some of these directories are completely free to use, others require merchants to pay a fee in order to gain access. It goes without saying that the list of the “best suppliers” are those you have to pay for.

Bonus tip.

Be aware that you will need to qualify any supplier that you think sounds right for your business. There are often instances where companies may not be quite what they say they are. So be careful and always investigate the suppliers.

Chinese Marketplaces

As many know, there are two highly popular Chinese marketplaces: Alibaba and AliExpress. In particular, Alibaba.com is one of the largest B2B marketplaces of manufacturers, importers, and wholesale distributors.

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This platform was founded in 1999 and today presents millions of products spanning 40 different categories. Given its breadth of wholesale products, Alibaba is not an easy platform to work with if you are a beginner. Certainly there are suppliers on these platforms that warrant skepticism and may present pitfalls when it comes to product quality. If you’re planning to deal with an Alibaba supplier, there are a couple of issues you need to keep in mind.

Obviously, since most suppliers on the platform are Chinese companies, you’ll experience a noticeable language barrier. In addition, there is a large number of middlemen on Alibaba who try to pose as manufacturers, reselling goods from legitimate manufacturers while marking up prices. Again, do you research to ensure you are working direct with the supplier, or with who you want to partner with.

Trade shows

Over the years, trade shows have been an important tool for sourcing and introducing thousands of new products. Used as a starting point for buyers to build a solid network of vendors and select the right suppliers with whom to do business.

As well as preparatory work (creating contacts and meetings in advance), buyers have the advantage of being able to visit booths and touch and look at product opportunities – something that has been missed this past 12 months!. In a lot of cases, buyers can visit the shows and actually place orders in person based on pricing given at the booth.

Find Wholesale Suppliers China Trade show sourcing ET2C — photo credit: Shinsuke Ikegame

On the other hand attending a huge trade show in China, like the Canton Fair for example, could be exhausting. Beside the trip to China, be prepared to walk several kilometers in a daedalus of aisles and stands, in a crowd of 200,000 people (not joking).

However, with the current travel restrictions in place, many trade shows have been cancelled. The biggest ones like the Canton Fair, have survived thanks to a conversion to the digital format. Obviously, without any chances to meet in person the vendors.

Sourcing Company

Certainly, if you are planning to outsource manufacturing to low-cost countries all by yourself, you might need additional assistance.  Should you need to identify new factories, then it is important to look to a local partner who you can collaborate with to visit the sites, engage with the owners and undertake the pre-screening work that you are not able to currently do. This will provide greater visibility and allow you to still go through an objective onboarding process.

Whether you have just started searching or are looking to enhance your vendor penetration and supplier management capability, sourcing companies present opportunities that a direct sourcing model may struggle to find.

Qualified sourcing companies in China, or Asia in general, introduce expertise capable of saving time and money along every step of the process. From identifying cost-effective sourcing materials to conducting audit-level quality control checks, professional sourcing agents/companies devote care to managing their clients’ sourcing needs.

Moreover, they can arrange quality assurance checks along every step of the process to ensure early identification of any issues and present viable solutions.

Do you need help?

Certainly, the best option is partnering with a product sourcing company which has a presence on the ground in the sourcing market, product knowledge and can add value when it comes to managing the supplier from development through to shipment.

At ET2C, we provide our clients with the transparency needed to best manage their suppliers across Asia and help with any risk mitigation strategy. For more information on how we can help you, please contact us at contact@et2cint.com.

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Sourcing Trends for 2021

Industry Insights / admin / Industry, sourcing, Sourcing Trends, Trends 2021

Sourcing Trends for the upcoming year are mired in economic uncertainty but there are definitely opportunities to watch out for.

Sourcing Trends 2020

It is true that our 2020 sourcing trends predictions failed to foresee the impending Pandemic. But, in our defense, there are not many that predicted Covid-19 and its consequences. The Pandemic had a significant impact on global sourcing. Certainly, it has highlighted the need for companies to build in greater resilience and spread risk more widely. It has been an extraordinary year for so many reasons and one which highlighted the necessity to understand the local market when sourcing from Asia both from a quality and regulatory perspective.

The global political landscape has continued to fracture, at a time when harmony rather than discourse would be a much more effective weapon against the spread of this virus. With protectionism unleashed, disputes and tariffs are on the rise. Australia and America are n revisiting their trading status with China for a range of different reasons.

So, what does this mean for 2021? What will be the legacy of Covid-19 on sourcing markets? What technological trends will come to the fore? Which markets will have additional tariffs added? We have again been sitting around our crystal ball to see what sourcing trends will be evident in 2021. (Obviously, we will again be pointing to our disclaimer that no one can, clearly, predict the future.)

Sourcing Trends 2021 – Our Predictions

The End of Covid-19.

A bold statement. With mass vaccination programs starting to roll out, markets should begin normalising by the end of Q2/beginning of Q3.

Prediction. We, therefore, expect categories that have been hit particularly hard due to lockdowns (such as fashion/shoes) to pick up dramatically in the second half of the year. Probably, people will start to enjoy their freedoms once more and to spend time going out and having fun. Categories that have done well during the pandemic such as DIY, homewares, kitchenware will be flat as people inevitably spend time out of the house.

Travel.

Although we expect the Pandemic to die down, it is likely that due to the differences between Governments’ approach to vaccinations, policies in place and State affordability, access to different countries will continue to be restricted. The rise of ‘vaccination diplomacy’ will lead to Governments rejecting certain vaccinations as legitimate based on political relationships.

Prediction. Expect to not be able to visit your sourcing markets until the autumn (Q3) at the earliest. Make sure you have sufficient resource in place to therefore manage your suppliers.

Ex-China Sourcing.

The Pandemic, as a supply chain shock, highlighted the need for companies to de-risk their sourcing markets. Tariffs likely to stay in play for China/US although a de-escalation is likely between China/Australia. Both will mean spreading risk where possible across multiple markets.

Prediction. Companies will continue to embed greater resilience within their supply chains. Certainly, they will look to remove dependency on any one market where it makes sense to do so. Make sure you have the capability and reach to manage suppliers in different markets.

Blockchain.

One for all you ‘Crypto-gurus! Although on a small scale, we anticipate that the technology will begin to be implemented within complex supply chains that require greater transparency and security from a ‘track and trace’ perspective.

Prediction. Blockchain will be deployed in large corporates as key component of supply chain visibility and integrity.

Radical Supply Chain Transparency.

A key element of a sustainable supply chain and providing the consumer with complete transparency of factories, raw material origins, ethics and even carbon footprint will continue to be sourcing trends that should not be ignored. It is becoming an increasing component of any buying decision.

Prediction. There will be increased focus on visualisation of supply chains and the ability to collate information on every aspect of the supplier network. Look for this to become more prevalent to give consumers more of a choice when it comes to buying decisions (think Arket by H&M).

Sustainable Materials.

This will be an area that will continue to develop. Particularly the use of sustainable materials as substitutes for known ‘problem materials’. The Consumer will expect this.

Prediction. Alternative sustainable materials to start moving into the mainstream. A result of innovation as well as scale allowing for a reduction in costs that were previously prohibitive for some product categories.

The Sourcing Function.

For many companies, the Sourcing function came to the fore during the pandemic and showed agility to deliver strategic benefits to organisations during a tough trading period (if only for the survival of the company in some cases!).

Prediction. The Sourcing Function will move from a cost leadership focus (intake margin) to contributing to the overall strategy and competitiveness of an organisation. In a short time, it will include innovation, agility and resilience as key value drivers.

England to win Euro 2021.

It was not to be in 2020, and unfortunately, it is unlikely to be in 2021 with the expected cancellation of the tournament, and if not, they are not good enough anyway! Belgium, France or Italy to be the likely victors!

HAPPY NEW YEAR of the Ox.

We finished last year’s article suggesting that ‘An Air of Predictability would help manage any sourcing trends in 2020’. An ‘air of predictability’ we certainly do not have as we stare down 2021. But what we do know is that companies need to be bold, look to invest in technology and make sure the learnings of 2020 have been acted upon.

At ET2C, we are always looking to the future to ensure that we are providing our clients with the most relevant services and products. Please contact us at contact@et2cint.com.

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Brexit Impact on Global Sourcing for UK Companies

Industry Insights / admin / Brexit, sourcing, UK

“Brexit impact” will change how the UK ultimately purchases products from overseas but what are the immediate implications on Trade.

It has been a journey, or rather a long drawn out political fanfare with bluster and bravado on both sides but ultimately an agreement was reached on Christmas Eve 2020. From the referendum on the 23 June 2016, it took 1,645 days to reach an agreement (“The European Union (Withdrawal Agreement) Act 2020”) and then with only 7 days before there would have been a hard Brexit. Political drama it has been, but what does it now ultimately mean for UK companies buying products from overseas outside of Europe?

A “Global Britain”

One of the overriding central ideas of Brexit, particularly from the perspective of Prime Minister Boris Johnson’s “Global Britain”, is that Britain will be better placed to do trade deals as a sovereign entity. History will ultimately be the judge and jury of this assertion although it is true that in the lead up to Brexit (aside from the EU withdrawal agreement) there have been a flurry of trade deals agreed with the likes of the Faroe islands, Japan Moldova, Georgia, Kenya, Turkey and Vietnam making up some of the 60 agreements reached.

Essentially, what this means is that where there are no ‘bridging’ agreements or actual agreements agreed and ratified, then the United Kingdom will move to World Trade Organisation (“WTO”) rules, tariffs (or taxes). Essentially, this means that the WTO provides the mechanism to what the duty rates are on imported goods into the UK. This is similar to the type of arrangement that Australia currently has with the EU, although they have been eager to agree a free trade deal of sorts with the EU for almost three years (since May 2018).

Therefore, UK companies that have been buying from outside of Europe may now find themselves in a situation where prior import tariffs are likely to change, whether that is up or down will be dependent on the country of origin and the product using the Harmonized System (HS) Codes. So what does this mean for our UK clients currently looking at China, India, Turkey and Vietnam as sourcing opportunities?

ET2C Sourcing Markets

Aside from UK companies buying products from the likes of the Faroe Islands or North Macedonia, we will focus on our own markets; being China, India, Turkey and Vietnam.

1. China Sourcing

Has Brexit opened up an opportunity with regards to new relationship with China on trade? Notably the EU has just reached an agreement in principle on Investment with China on the 30th December 2020, which should lay the foundations for a future comprehensive trade deal. As a smaller trading partner, it remains to be seen if the UK can carve out its own trade deal, particularly in the current backdrop of the global political landscape. Of course, we will now be under a new regime (WTO) in the absence of an agreement, which may mean the base tariffs and duties vary from before.

However, there may also be opportunities where anti-dumping tariffs (ADD) – like those that the US imposed back in 2019 – will now drop off. For example, back in 2018 there were anti-dumping duties added on e-bikes originating in China of up to 83.6%. It’s always a bit political, and in this example, although Britain had confirmed that these duties would be removed, they were reinstated just prior to Brexit as a result of UK representations being made.

2. India Sourcing

Similar to China, there has been no trade deal agreed with India either pre or post Brexit. In fact the EU has been attempting to negotiate a free trade deal since as far back as 2007. The UK will now revert to WTO trade tariffs even though India had been targeted as an opportunity to clinch an early post Brexit trade deal with one of the World’s largest economies. There was a visit planned early this year to India, but Boris Johnson has had to cancel this visit due to the latest Corona Virus surge in the UK.

3. Turkey Sourcing

Having just opened our latest sourcing office in Turkey, it is pleasing to see that the UK has already agreed a Trade Deal with Turkey that continues some of the aspects included in the EU – Turkey Customs union. This includes provisions on preferential tariffs, tariff rate quotas, rules of origin, customs and trade facilitation, intellectual property, competition and dispute settlement. There are some differences between the EU agreement and the current Britain-Turkey agreement so make sure that a further review is undertaken if you were already buying from Turkey pre-31st December 2020.

4. Vietnam Sourcing

In a last dash trip, the Trade Minister, Elisabeth Truss, visited both Singapore and Vietnam pre the year end to sign trade deals. With Vietnam, the UK has been able to largely extend the comprehensive Free Trade Agreement that was finalized in August 2020 (EVFTA). This is significant and will help Vietnam to continue selling products to Vietnam at preferential (if not zero) rates, which will be all removed over the next seven years.

Summary

At least now Brexit is a topic that can be consigned to the past. UK companies are still finding their feet whether it be new documentation for EU originated goods or new tariffs from countries outside the EU. In the main, there should not be too many differences at this stage for UK companies buying from China, India, Turkey or Vietnam but we would anticipate this to change going forward as and when new trade deals are agreed (or not). There will certainly be a period of bedding in but with some insight it will be possible to take opportunities as they arise as well as avoid potential pitfalls with a broad sourcing strategy.

At ET2C, we are well placed to help manage your sourcing needs across multiple markets with teams on the ground. For more information on how we can help you with all your sourcing needs and insight into the impact of Brexit, please contact us at contact@et2cint.com.

Photo credits:
Cover Image: Dunk
Factory in Vietnam: Eric Wolfe

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Turkey Sourcing: Part of a Global Sourcing Strategy

Industry Insights / admin / Office, sourcing, Turkey

Turkey Sourcing now forms part of our expanding network of offices across the global sourcing landscape.

ET2C Turkey

Set amongst rolling hills on the Western Aegean coast of Turkey, sits the ancient city of Izmir. Its history stretches back to around 3,000 BC with the founding of the city of Yesilova Mound by the Trojans. However, it took the name Smyrna from the Greeks for most of antiquity. With its natural harbour, the city has always been strategically well placed for trade. Moreover, to this day it is an important Turkish Port. A growing and dynamic hub, Izmir is now the third-largest city in Turkey. It is easily accessible (unlike Istanbul) and also benefits from a broad range of manufacturers located in the surrounding region. It, therefore, is the perfect location for ET2C to open our latest office. In fact, we are pleased to announce we have commenced trading as of the 17th December.

The Global Sourcing Landscape

Over the past year, lockdowns and disruptions have resulted in many companies questioning their incumbent supply chains and sourcing markets. The need to build in supply chain resilience has become increasingly important particularly as the severity and frequency of these supply chain shocks is trending upwards. Part of this robustness is around spreading the risk across multiple sourcing markets to the point where we believe that companies will be looking to remove dependance on any one market. Of course, this is not going to be feasible when it comes to markets such as China, given its scale and export experience, but it will at least set the tone for sourcing strategies into 2021.

Turkey Sourcing

For these reasons, we have targeted Turkey as our next market to invest in and establish a company. The country has a broad and established manufacturing base which sits on the edge of Europe. This is important from a ‘near-sourcing’ perspective and provides an alternative option for UK/EU businesses to compliment existing Asian supply-chains. The ability to offset shipment times and any capacity constraints will provide strategic opportunities for some companies.

We see the main benefits of Turkey sourcing are:

1. Location

Bridging Asia and Europe, Turkey is situated on the edge of one of the largest trading blocs in the world. It means shipping into Europe and the UK takes days rather than close to a month in most cases out of Asia. It fits into any ‘’Near Sourcing” strategy for European companies. In addition, it has the ability to ship across the Atlantic to the Americas as well. There is a free trade deal with the EU and the UK is also in the initial stages of discussing a separate trade deal on similar terms post the 31st December Brexit deadline. Also, Turkey provides access to neighbouring Eastern European markets

Turkey Sourcing ET2C Int. Office Izmir — The building in Izmir where the new ET2C office is located

2. Broad Manufacturing Base

The Turkish manufacturing base covers a wide range of products including textiles, white goods, furniture, bikes, industrial, plastics, general consumer goods, and the automobile accessories sector. It benefits from its own raw material resources that allow it to manufacture products without complete reliance on importing the raw materials.

3. Cost Advantages

Of course, cost is always going to be important. And it is true that the FOB costs from Turkey are competitive given the cost of labour, raw material availability, and the well-developed infrastructure throughout the country. However, the landed cost, particularly for the EU, will be the determining price to assess given the low shipping costs and tariff benefits. Like China, there are clusters of manufacturing across the country that benefit from the scale of each sector.

4. ‘’Flex”

Simply because of the proximity to the EU, there is greater ‘flex’ in supply chains whether it relates to product development cycles or production. This means that companies do not need to plan so far ahead. In this way, they can leverage the additional time available for quick turnarounds and late adds. This certainly gave the Turkish garment sector an advantage in the context of fast fashion.

Turkey ET2C Office Izmir — ET2C office in Izmir

5. People

In the past, low-cost countries have always relied on cheap factory worker labour compared with more developed economies. In 2020, it is no longer solely about the cost of labour, albeit it is still important. The factory workers need to be skilled and efficient in what they do. This certainly applies to Turkey, which has a skilled worker-pool that is competitively priced benefiting the manufacturing sector and exports more broadly.

Summary

Although it has been a challenging year, we are delighted to have commenced operations in Izmir, Turkey. It will provide our clients with access to a range of Turkish manufacturers in a market that greatly benefits from a ‘boots on the ground’ approach. We plan to quickly expand our supplier network within the market and work with our clients, both across trading and buying offices, to seamlessly deliver our range of services.
At ET2C, we are well placed to help manage your sourcing needs across multiple markets with teams on the ground. For more information on how we can help you with your Turkey sourcing or for other markets, please contact us at contact@et2cint.com.

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Virtual Factory Trips – Manage Suppliers from the Comfort of your Desk

Industry Insights / admin / suppliers, Virtual Factory Tours, Virtual Factory Trips

Virtual Factory Trips give you access to the Asia sourcing market amidst travel restrictions.

A year has already passed since the Covid-19 virus entered our lives and transformed them forever. The consequential changes of the global pandemic have revolutionized every sector across our private and business lives. New restrictions and habits have tested our ability to adapt and be resilient.

According to a recent survey from McKinsey, in just a few months’ time, the COVID-19 crisis has brought about years of change in the way companies in all sectors and regions do business. Undoubtedly, many adopted new strategies and practices to stay competitive in this new business and economic environment.

For example, as lockdown restrictions and social distancing measures continue to shape our daily lives, most businesses (and workers) worldwide have become accustomed to remote working. In this context, from education to retail, companies sought digital support to continue their activities with a sense of “normality”.

Digital Technologies to stay competitive

The digitization of data, information flow and communication has been gaining pace over the past decade. The Pandemic has only accelerated this trend. In the last year, we have even seen global live events going digital and conferences have followed suit. The 127th Canton Fair went digital earlier in the year, which on the face of it resulted in a more efficient, cost-effective and more sustainable trade fair – albeit not sure how beneficial it actually was to overseas buyers. Undoubtedly, with travel restrictions in place, companies have lost access to their suppliers and the markets that they buy from.

Being close to your suppliers is paramount, in whatever guise, to leverage the benefits of buying from Asia. Therefore, considering the current environment, we have launched some new solutions to keep our clients ‘close’ to their suppliers.

Virtual Factory Trips

As part of your Asia sourcing strategy, ET2C has been running ‘Virtual Buying Trips’. This initiative has already enabled our clients to both meet new suppliers as well as catch-up with your incumbents to discuss on-going projects and developments. We are facilitating this across multiple sites/countries ensuring that our staff are always on-site with the factories during these discussions.

Depending on your time zone, we have set-up and managed meetings with factories – bringing the factories to you! Also, we are taking clients to new factories via Zoom and Teams. Our staff are on-site and walk you through the production as well as play an integral part in the discussions with the factory management. No more long journeys or waiting for your train and all from the comfort of your own desk!

5 Advantages of Virtual Factory Trips

1. Transparency

In the current situation, having visibility of what is going behind the Asian “curtain” beyond emails and calls is essential. We have been working with companies who are ‘locked-out’ and struggles to get sight of what is actually going on. We can address this by being on-site and able to address your needs as required.

2. Sourcing Penetration

Obviously, a lot of companies are wrestling with other challenges, like lockdowns, stores being closed, and e-comm capabilities. However, the Sourcing function also can play an important strategic role. Identifying new potential suppliers across new markets is an essential way to deliver cost competitiveness and mitigate risk. Our Virtual Factory trips can help you, even when you cannot travel access these markets and continue looking for new manufacturing opportunities.

3. Product Development

We all know that product development is much more efficient when you are sitting in the factory’s sample room. Without that access, it becomes a much more cumbersome process that involves countless emails, samples being sent back and forth across oceans (see below!) and a pinch of frustration layered over the whole process. We can help manage this through understanding your needs and being virtually with you as you go through the adjustments, drawings, trims and so on. A much more efficient way of operating!

4. Quality

Our Virtual Factory Trips also give our clients visibility – in some cases in real-time – of the quality assurance or control processes. This gives you more than just the report, and allows you to take a ‘closer look’ at elements that you are not happy with. As we have learnt in the past months, the ability to respond quickly to changing circumstances is essential going forward as demand remains elusive and supply challenging.

5. Virtual Samples

Loosely connected, but it is worth pointing out that we have our own in-house photographic capability. The in-house team can take high-quality photos of your samples, saving you both costs and time. Some of our clients are even already using the team to take their photos for marketing purposes. Give us a try!

Make yourself comfortable and start your factory trip!

We hope that this Pandemic will soon be brought under control. The new normal for Asia sourcing needs relies on an upstream capability being put in place as well as the use of technology to take you to the factory gates. More broadly, never has a ‘presence on the ground’ been more necessary and at ET2C we have a range of solutions to give our clients access to Asian markets. For all your sourcing needs, including Virtual Buying Trips and Factory Trips, please contact us at unlockAsia@et2cint.com .

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Freight Rates in the Spotlight

Industry Insights / admin / freight, Industry, sourcing

Freight rates have soared towards the end of 2020, in a year when you would anticipate low demand and low rates.

Freight rates form an integral component of any sourcing decision. They are part of the ‘landed cost’ which can determine the cost-effectiveness of where your products are being purchased from. This combined with minimum order quantities, lead times, shipping duration and any import tariffs (or anti-dumping duties – something which we have seen a fair bit of throughout the Trump Presidency) will determine additional costs on top of FOB prices.

It was back in 1956, when the maiden voyage of Mclean’s Ideal X ship signaled the beginnings of an era of globalisation. Trucker, Malcolm Mclean, had become frustrated with the slow and inefficient loading times. His vessel, the Ideal X, had a fitting system that improved the security and loading times. This led to the invention of the simple shipping container – which is now commonplace across the world’s ports (and sometimes the seas). Certainly, it changed the global economy and transformed global supply chains. In fact, it provides an easy and cheap way to transport goods around the world. By 1973, container ships were carrying approximately 4 million TEUs (Twenty ft Equivalent Units) annually. By 2013, nearly 90% of global trade was seabourne with 700 million TEUs shipping each year. That number has continued to grow with the expansion of consumerism to today.

The market is now largely commoditized against a backdrop of complex international supply chains demanding frequent quick and efficient movement of goods. Freight rates are currently surging towards the end of 2020. There appears to be little respite going into the new year, with rates expected to continue on this trajectory. Given 2020 has largely been a year of lockdowns and economies being put on hold, what is driving this market rise?

Freight Rates during the Pandemic

The Freightos Baltic Global Container Index (FBX), which is a weighted average of 12 major global container has risen to $2,635 per forty-foot equivalent (FEU) container as at the 4th December (the highest on record).

If you look at the indices for specific routes though, you can see that China/East Asia to the US is over $3,800 per FEU and China/East Asia to Europe is just under $3,000 per FEU. Of course, these are only spot rates and when you add on surcharges and other costs, the actual cost to the US on a ‘off contract’ rate is over $5,000. This trend will continue into Q1 of next year (there are whispers of $10,000 per FEU come CNY for China to Europe for off contract rates!) and perhaps only start to ameliorate towards Spring/Summer 2021, although some of the carriers are cautious given the unpredictability of the global demand during this Pandemic.

Freight Graph ET2C Sourcing — The Freightos Baltic Global Container Index (FBX) 4th December 2020

So, what is happening here? Back in February/March, when China went into lockdown, the ocean carriers successfully mitigated the impact of the supply chain disruption by implementing a ‘blanking strategy’ which withdrew approximately 30% of sailings from Asia to the US and Europe. As the virus spread into a Pandemic, and demand dropped away, the carriers continued to hold back capacity. Demand out of Asia is now back (China’s exports are up 11.4% year on year) and with the capacity lag, it is driving up freight rates due to simple supply/demand economics. This demand is driven in part by PPE, but also certain product sectors have recovered (furniture, homewares, etc).

Although there is an element of the carriers – in their alliances – now controlling prices to their advantage, the main issue is the time it takes to bring back capacity. And this is not just related to the actual ships. The equipment required to move containers from factories through to the ports. This is currently more of an issue for forty-foot containers, which is causing high surcharges and ‘pinch points’ and delays with bookings.

Freight Rate Tips

Although we are not a freight forwarding company, we do have our own logistics team. This department works with our clients on bookings, shipments, and anything in between. Here are some of our current tips:

1. Book Early

Where possible, order early and book the space early. As much as possible building in ‘flex’ into your supply chain will always present better, likely more cost-effective, options.

2. 20Ft over 40Ft

We are seeing better capacity on the 20 ft boxes. Also, we are advising our clients where possible to split shipments to get the capacity. In some cases, it is actually cheaper once the surcharges are taken into account.

3. Trains, Planes & Automobiles

Always make sure that your freight forwarder is giving you the best and full range of options. Trains out of Chengdu, China, take 12 days to get back to the UK. This may be a viable alternative given some of the other rates currently in the market.

4. Annual rates

For companies doing volumes out of Asia, contract rates will assure fixed prices for the duration of the year. Lock these in where possible.

5. ‘Near Sourcing’

It may be that there are options to adopt a near sourcing strategy as part of your overall sourcing strategy. This means leveraging suppliers closer to your market to counter the increase in freight costs, and ultimately landed cost.

Summary

It has been an extraordinary year in so many ways. Among other things, it has taught us that agility is an important characteristic of any company. Planning and being able to make decisions early, will always help. Freight rates may be rising, but with some planning and foresight, it will be possible to address the next challenge 2020 throws at us.

At ET2C, we are well placed to help manage your Asia Sourcing across multiple markets with teams on the ground as well as work with our clients on their shipping needs. For more information, please contact us at contact@et2cint.com.

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The Buying Office: Unlock Your Supply Base in an Era of Covid

Industry Insights / admin / Buying Office, Covid, Supply Chain

Buying Office Unlock Your Supply Base in an Era of Covid ET2C Int.

A Buying Office addresses the current challenges of sourcing from Asia and drives value back up your supply chain .

Ten months in and the Pandemic still dominates global news cycles. The West is lurching in and out of lockdowns. And even when some countries are moving towards some semblance of normality, there is always a nervousness that the virus will re-emerge; borders are shut, quarantines are in place and travel is largely on hold. With upcoming vaccines (maybe!), we might return to the beginnings of life as it was. However, the reality is that this is unlikely to be until the middle of 2021 at the earliest.

We have been examining how Covid has changed the ‘Sourcing’ landscape over the past 10 months in some of our articles. The inability to travel to sourcing markets and visit suppliers has to be the most significant factor. Of course, there is the added complication of the geo-political landscape. However, with the incoming Biden administration (watch out for any tweets!) and the latest trade agreement with China and 14 other Asia Pacific countries (RCEP) there is potential for some de-escalation on trade protectionism.

Asian markets are normalizing and exports are returning to pre-pandemic levels. China’s exports rose 11.4% in October from a year earlier, and even with this this being attributed in part to medical exports of PPE, it points to demand being on the increase. Whilst at the same time, there are capacity shortages on freight routes with Carriers still not back to full capacity post the China lockdown back in February/March 2020.

How then should companies be managing their supply chains?

Offshore Supplier Management

It is essential to have the ability to manage your suppliers given there is no access to these markets. Companies should position themselves to do this in a way that creates value rather than risking of destroying it. To do this the following should be considered:

1. Presence on the ‘Ground’

To develop a relationship that is meaningful, there needs to be some form of constant presence that can be actively engaged with the supplier. You need to be able to deal with your key suppliers in their language. Moreover, you have to take into consideration their time zone to ensure clarity and efficiency. It will also help with the development of medium-term relationships that are that much more meaningful than arm’s length interactions.

2. Visibility Across Production

Having a high level of visibility across your production is primarily possible through some form or presence be it an office or a partner in the region. There are now digital solutions as well that some companies are implementing to manage production runs. The ability to identify issues early means that you can put in place solutions.

office team ET2C Int. China Vietnam Sourcing

3. Supply Chain Resilience

Supply chain shocks are becoming more frequent (a disruption lasting 1-2 months will likely occur every 3.7 years!) and having a plan B is becoming increasingly important to any sourcing strategy. Continuity builds resilience and having contingency plans is always beneficial. To do this develop a deep understanding of your suppliers beyond Tier 1 manufacturers (ultimate transparency). Look to also multi-source across jurisdictions to eliminate any country-specific risk.

4. Development Cycle Acceleration

For those that do not have access to their sourcing markets, look to accelerate development cycles and reduce sample timelines. A cost-effective would be to rely on different forms of technology to work through sample approvals. For example, something as simple as high-quality photos can help.

5. Upstream Quality Capability

Make sure you are conducting the necessary quality checks on your factories and products to mitigate the risks of buying from overseas. Identifying a problem at the factory allows for corrective action plans to be implemented, whereas shipping a ‘problem’ will only lead to greater costs.

Buying Office ET2C International

ET2C’s Buying Office

One way to address these points is look at ET2C’s unique Buying Office solution. It is the most cost effective way of establishing an upstream capability, whilst giving access to multiple sourcing markets. Where it can be prohibitive to establish your own operations in these markets due to CAPEX, regulations and advisory fees, we can give you a dedicated team within a matter of weeks!

Summary

Sourcing markets are closed to outsiders and companies need to assess the effectiveness of their supply chains. Ultimately, there is no alternative to having local, on the ground, capability. Where it can sometimes be prohibitive to establish your own presence (legal entity), then selecting the right partner will help alleviate the risk, leverage product and operational expertise and provide the visibility that you require to manage your suppliers. ET2C’s Buying Office solution can provide you with a local dedicated team aligned with your upstream needs.

If you are interested in knowing more, contact us and find out how we can benefit your business and sourcing needs.

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Bamboo Furniture is ‘The New Green’

Industry Insights / admin / Furniture, Materials, Sustainability

Bamboo Furniture will make your patios, gardens and outdoor spaces stand out next Spring-Summer.

As the climate emergency becomes evident to an increasingly wider audience, business leaders in every industry and sector are committing to finding new solutions to preserve and protect the environment.
Without a doubt, consumers have become more conscious of a product’s environmental footprint whether that is the raw material, manufacturing process or even the end-use of the product.

The younger generations, in particular, take greater ownership for the future of the planet and this is evident in their product choices at the point of sale. The environmental impact of raw material usage is becoming as important for them as the look, feel, and functionality of the products themselves. As a result, lots of retailers and brands are focusing their product design and innovation capabilities on sustainable options to both meet their customers’ needs and also have a positive impact on the world. The benefits will cover a range of benefits such as supporting water conservation, reducing waste or carbon emissions, for example.

Building a comprehensive understanding of the characteristics of different materials – their strength, flexibility, weight, and usage life – is an invaluable skill to develop when designing. But, now that designers and product engineers have this new responsibility, these are not the only elements to consider. Consumers are asking product design functions to also make sustainable choices that will lead to an effective, positive environmental change. For this reason, sustainability has become one of the (essential) parameters to value raw materials.

From drawings and design to construction and architecture, sustainability is now more than a trend. It is a “revolution” of consumerism and is revolutionizing markets, production, and consumer behaviors.

Bamboo as an Excellent Natural Material for a Positive Change.

A sustainable and environmentally-friendly use of materials is an important goal of many interior designers, architecture, and construction companies. Among the sustainable building materials that researchers have focused on, bamboo is the most distinctive material in its role within architectural and interior design. The use of this material is fast evolving, which has led many to consider it the “wood of the 21st century”. But it is at a product level that this is more evident.

Bamboo has positive features like mechanical strength, easy processability and an abundance of supply in many tropical and subtropical areas which point to it being a more renewable alternative to wood. Also, bamboos are some of the fastest-growing plants in the world and certain species can grow almost a metre in a 24-hour period (that’s equivalent to 1mm every 90 seconds!). Such characteristics has seen many companies turn to bamboos for sustainable building material and furniture design.

Bamboo Furniture: Natural and Innovative

Furniture designers are using bamboo in innovative designs, either in all-bamboo or composite materials. Bamboo furniture can withstand everyday use and it now comes in more varieties of styles and finishes than before.

Furniture made of bamboo possesses an earthy, light feel that is suitable for open areas like patios, balconies and porches. When properly built, it can possess similar structural integrity as many hardwoods but it is significantly lighter and more versatile. Also, it is far more resistant to damage than traditional hardwoods, which is particularly important for outdoor weathering. These resistant qualities make bamboo an excellent choice to renovate outdoor spaces but it is not out of place indoors either for storage items such as cabinets and bookshelves.

Why Bamboo Furniture is a Great Option

There are many reasons why Bamboo is now being used in greater quantities in furniture, flooring and other products. It is a raw material for this sustainable generation and an outstanding choice for patios, gardens and outside spaces. Aside from its widespread abundance and mechanical strength, some of its key benefits at a product level are:

1. Durability

Bamboo furniture is incredibly durable and perfect for resisting the wear and tear of everyday use. It deals with ‘bumps’ and ‘scrapes’ with much less fuss than other more traditional woods that can be heavily marked and damaged over time.

2. Biodegradable

Bamboo fiber is a natural cellulose fibre and it can totally biodegrade in soil by microorganisms and sunshine. The decomposition process does not pollute the environment.

3. Resistance to Swelling and Shrinking

Unlike other woods, Bamboo does not swell or shrink as a result of atmospheric difference and changes in temperature. Those that have used other woods in furniture design will know all too well that as wood shrinks and swells the integrity of a design/structure can be compromised leading to quality issues. This is not the case with Bamboo and leads to long-lasting products particularly where they are exposed to changing weather conditions.

4. Appearance

Bamboo has a find grain and is therefore to cope with a wide variety of finishes. This means that design does not need to compromise when designing furniture pieces.

Bamboo furniture: a Vietnamese excellence

Certainly, bamboo (and the Panda fast behind) is synonymous with China. But in Vietnam, the bamboo tree is also a significant symbol of their culture and daily life. The solid, straight and high bamboo trees represent resilience, indomitability and bravery for the Vietnamese people. Bamboo trees often grow in clusters with strong vitality. They symbolize the solidarity, diligence and loyalty of the Vietnamese people and their homeland.

Bamboo grows almost everywhere in the country and is used widely in everyday life. For all these reasons, Vietnamese expertise in working this material is used in the Vietnamese manufacturing sector for furniture production.

Summary

Vietnam has an established furniture industry that is already using local woods such as Bamboo. As companies look more to sustainable materials, Bamboo will become increasingly important for the furniture industry.
At ET2C, we can help you with all your sourcing needs across Vietnam, but also using sustainable materials like Bamboo. For more information, please contact us at vietnam@et2cint.com.

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