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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

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.

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.

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

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.

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.

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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Trump Vs Biden: impact of the US election on Asia Sourcing

Industry Insights / admin / sourcing, Trump, US Election

Trump has focused on his domestic agenda to the detriment of foreign policy and global trade has suffered as a result.

Uncertainty is never a good thing for business. But it is even worse when it becomes a pervasive feature of our daily lives (like the past 18 months). The Pandemic has wreaked havoc on global business and economies as Governments have lurched from one lockdown to another. But, perhaps just as difficult for business, has been the global Politic and the rise of protectionism that has led to global trade becoming more disjointed, disparate, and more frequently caught in the cross-hairs of world leaders’ political agendas.
Now we have the US election that has gone down to the wire. At the time of writing, we are still waiting on the final votes from four states to determine the winner.

The outcome is important because it will likely have an impact on global trade. There is an expectation that, under a Biden administration, relations will likely be less fractious. Probably, there will at least be a pathway for alliances across the world stage to be restored. President Trump has focused on his domestic agenda to the detriment of the US’ foreign policy. This election should lay the foundations for greater clarity of policy and to that extent enable US business to make more informed decisions.

The Sourcing Landscape

It is a complex picture. For the past 2 years, US businesses that leverage the benefits of outsourcing manufacturing in Asia have had a sword of Damocles hanging heavy over their heads when manufacturing in Asia. Of course, the main thrust of President Trump’s focus has been the US’ relationship with China. Also, other markets have at different times been pointed to (India and Vietnam for example). Tariffs only reinforced the need for US companies to reassess their sourcing strategies to understand how to diversify their risk or move assets out of China.

What’s next?

However, a lot of US companies with a China-centric supplier base found themselves facing a range of challenges. These point to the latent complexity in a global supply chain that is often neglected as well as the current market conditions (both domestically and overseas). It is worth running through some of these to better understand the path for US Sourcing strategies moving into 2021.

Challenges of Diversification

For many sectors, President Trump forced Asian-US supply chains to look at diversification away from China (pre-Phase 1 tariffs). Some of the issues that currently need to be addressed include:

1. Entering a New Market.

Just as with moving to a new supplier, there is a cost of moving to an alternate market in terms of set-up (molds), learning curve but also potentially understanding a new way of doing business, standards, raw material supply, lead times and cost base. That is not to say that that there are not opportunities, but all these factors need to be considered and managed properly.

2. Alternate Sourcing Strategies.

President Trump has consistently talked about reinstating manufacturing across the US rust belt as part of a ‘reshoring strategy’. He may have been partly successful for large corporations, but from an outsource OEM basis, it is probably a fair assessment to say that most manufacturing sectors have not ‘reshored’ and leveraged the US manufacturing base. Similarly, although there are clear ‘Near Sourcing’ opportunities (Mexico for example), the breadth and capacity of the Asian manufacturing base exceeds any near sourcing opportunity.

3. China’s Supply Base.

Regardless of Tariffs, China is well set up for export with the investment in infrastructure, raw material availability and labour pool. It still, therefore, remains competitive (a lot of the tariff cost was passed back up the supply chain when initially introduced) and with China’s investment in ‘Made in China 2025’ may continue to be relevant for US businesses for the foreseeable future. Of note, the majority of US shoes are still manufactured in China even with the tariffs in force.

4. The Pandemic.

Company survival is the main focus at present with the US economy hindered by the impact of Covid. The appetite for moving to a new market at this time, with the potential costs of moving suppliers/markets, has diminished.

5. Locked Out.

Travel restrictions only compound the difficulty in making significant changes to one’s supply chain at this time. Without the ability to identify new suppliers through trips to Asia, there is a heightened risk of moving suppliers. Again, particularly where the appetite for change now may be diminished.

So what does this all mean?

Of course, US companies should be looking to diversify their supply chains out of any one market. It is more a question of how this is done in this current business environment. An obvious answer is to make sure that you are working with a partner who has reached across Asia and is able to do the ‘on the ground’ work required to access new markets during this period. It is another way of managing the risk and lack of visibility born out of a lack of market access whilst giving you the ability to source and manage suppliers.

That is not to say that China will not still be an important component of any supply chain, and US companies should not adopt a ‘move at all costs’ approach. Chinese manufacturing will broadly still provide opportunities for US companies as well as help embed some resilience in supply chains.

Summary

Whether a Biden administration will change the US stance against China remains to be seen. There is hope that we may at least find ourselves in a business environment that is less uncertain. And that can only be a step in the right direction.
At ET2C, as your sourcing partner, we are constantly looking to provide tangible solutions to our clients. We are already helping our US clients with their sourcing strategies during this period of disruption. Please contact us at contact@et2cint.com for more information how we can help you.

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Food Packaging & Beyond: 4 Innovative Ideas to Replace Plastic

Industry Insights / admin / Innovation, Packaging, Sustainability

Packaging is a hot topic nowadays and food packaging is a key part of this. Considering that over the past ten years, we have produced more plastic than during the whole of the last century. There is therefore growing concern at a consumer level of its usage in food packaging and the potential impact on foods.

Is Plastic Bad for Food Packaging?

As a general point, plastic is an amazingly durable and flexible material that offers many advantages. For this reason, it is certainly difficult to replace it with alternatives. For the food industry, plastic protects food, guarding it against pressure, humidity, light, and the bacteria that accelerate rot.

Given how we live, the food we expect and the distances produce has to often travel to get to us, plastic has become an essential part of the Food industry. Often this is for single-use purposes and this is part of the issue with plastics; its end-use. Ironically, a product that is intended to be used only once (such as the majority of food packaging) is made of compounds that will last a hundred lifetimes.

Sustainable Packaging: opportunities in a new market

Green consumers are making consumption choices amongst an ever-growing selection of ‘green products’, which extends beyond the product itself. This would include food packaging. In particular, consumers, with the support of Governments in many markets, are losing their tolerance for packaging that is not easily recyclable or have other properties that lessen its impact on the environment.

What are, therefore, some sustainable alternatives to plastic packaging?

1.Bioplastics

(Excuse the technical terminology in advance !).

These plastics contain some ingredients from renewable biological sources, such as vegetable fats, plant starches and wood fibres. We can list them into two main categories:

A. PLA (polylactic acids)

Currently, the cheapest bioplastic on the market, commonly found in food packaging. It is a form of polyester made by fermenting ingredients like corn starch or sugar cane.

B. PHA (polyhydroxyalkanoates)

This is a form of polyester created and stored by bacteria when fermenting sugar or fats. Compared to PLA, it can withstand higher temperatures.

Pros and Cons of Bioplastics

Creating bioplastics requires less energy than more conventional plastics. This means that a substance like PLA, for example, produces less carbon dioxide during its production. In addition, some bioplastics use less water during production compared with conventional choices and generate fewer greenhouse gases when they biodegrade in the landfill. An important point to note is that biodegradable plastics often require certain conditions and it, therefore, requires Government-backed incentives that provide specific managed sites for the biodegrading process to be effective.

Under these right conditions, microorganisms can convert biodegradable bioplastics into water and carbon dioxide in a few weeks. But many biodegradable products may still contain conventional plastic, making them more difficult to break down.

Classification of Bioplastics.

According to their particular proprieties, bioplastics can be classified into the following categories:

• Non-biodegradable bioplastics (BIO-PET, BIO-PE, PA)
Although made from natural materials like sugar cane, they are chemically identical to some petroleum-based plastics.
• Partially biodegradable or “durable” bioplastics
Microorganisms can break these down into smaller pieces of plastic under the right conditions. However, this process generally takes longer than 3-6 months.
• Biodegradable bioplastics
They can break down into carbon and water due to the work of microorganisms. However, they are not compostable.
• Compostable plastics
Most of these plastics need industrial facilities to fully decompose.

2. Dissolving Packaging

Designers are working on new forms of food packaging to replace the unsustainable designs. Some new ephemeral alternatives to plastic, for example, can actually dissolve. This type of packaging covers a wide range: bowls made of mushrooms, cups fashioned from seaweed, and detergent-style pods for food.

Packaging that disappears is now an emerging market and definitely a trend. The water-soluble bags made from food-grade ingredients for pre-portioned oatmeal or rice are more and more frequently used. Moreover, innovative solutions that might seem bizarre but are definitely succeeding in merging functionality and sustainability. Imagine an oil bottle made from caramelized sugar, coated with wax, that cracks open like an egg. Or a smoothie container made from seaweed that will wither at the same rate as its contents, and a peelable beeswax package for rice or other dry goods.

Definitely, innovation is not the complete solution to the problem of plastic waste, but it is a critical start.

3. Edible Packaging

Let’s face it: plastic is hard to beat for packaging: it is cheap, light, and versatile and has excellent mechanical properties. However, there is broad concern about the plastic waste in food packaging and this is too often visible in the common items that end up as litter and pollution in our rivers and oceans.
Wrappers, straws, cutlery, bottles have been rethought to become a sustainable alternative to classic (polluting) options.
A new brilliant trend to replace these items with sustainable alternatives is edible food packaging.
Some companies and academic researchers are trying carbohydrates from sources other than seaweed and other groups are working with proteins (even milk protein casein to make transparent films).

Pros and Cons of Edible Food Packaging

Customers might not like the idea of eating something that usually they throw away. However, edible packaging comes from renewable sources and even if it isn’t something people actually want to eat, it would still be biodegradable, disappearing much faster than single-use plastics or even compostable bioplastics.

Another aspect worth considering is that packaging generally keeps the food from bacteria and harmful substances. Therefore, eating a food’s wrapper raises potential hygiene concerns.

4. No Packaging

Sometimes, the best solution is no packaging at all and in some cases, we can definitely avoid packaging.
Let’s think about nature, which does edible packaging pretty well! Apple and grape skins protect the fruit from microbes and the environment. Humans have also been making consumable packaging for decades: sausage casings made of collagen and cellulose, and ice cream cones for example.

Changes in the way we buy, consume, and dispose of packaging is important as well. We can therefore opt for plenty of sustainable choices in our everyday life. For example, you can bring your own refillable drink bottle instead of buying disposable, single-use plastic bottles. Likewise, you can use your own reusable bag when shopping. Another option is to buy products that have no or less packaging or that can be refilled rather than those that are single-use.

Are you looking for sustainable food packaging?

At ET2C we care deeply about the environment and are doing what we can to understand more about the broader sustainable packaging market. Whether this is for food stuffs (particularly for our staff in our own offices) and single-use plastic, or packaging for other products, 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 queries, please contact us at contact@et2cint.com

Download the full infographic here.

Cover – photo credits: Holly Grounds.

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Face Masks and Smiles for an Anti-Covid Competition

Company News / admin / Contest, Covid19, Face Masks

Face Masks can be fun if you wear it together with a smile!

Large swathes of people across the Globe are moving into secondary lockdowns and this is not just impacting our way of life, but our outlook on our existence.

This Pandemic has been headline news the world over since March of this year. Seven months have gone by and Governments have remained vexed as to the way forward. Even where there are signs of light, there is always the spectre of additional outbreaks hanging ominously overhead. Our daily life has been disrupted, or rather ripped up and thrown away. Social gatherings – an innate part of our humanity – are in most parts of the world restricted, socially distanced and in some instances shut down. We have even lost the ability to engage with each other and read the instinctive facial reactions as these are commonly cloaked behind a mask.

The result is that there are now genuine concerns around the impact on peoples’ well-being. The 24 hours news cycles are constantly regurgitating the ‘doom and gloom’ of Covid and the impact it is having. Statistics have taken lives of their own and are now free of the shackles of context. At some point, we all need to take a step back, take a deep breath and remember our humanity, our existence as social beings and remember past interactions that have impacted our lives.

Positivity Starts with a Smile

At ET2C, to counter all this negativity, we want to encourage people to smile and let a little positivity into their lives during all this hardship. Given the majority of us are having to wear masks, we thought that we would launch a contest that would make us smile whilst giving out some free cloth masks to keep everyone safe.
We already sent out some cloth masks to our clients and partners as part of this initiative. Importantly, we are focusing on cloth masks, which can be reused, to reduce the amount of PPE waste being put into the environment. We then asked them all to provide some photos to us with them smiling with their masks on. We have had some really positive feedback and now wanted to spread some more positivity through this contest.

The Face Masks Contest – Smile with your eyes

To enter it’s simple! All you need to do is:

1. Choose either Facebook or LinkedIn
2. Follow ET2C’s account
3. Take a picture of you smiling, whilst wearing a cloth mask
4. Share it on your chosen social media channel, using the hashtag #smilewithyoureyes, and mention ET2Cs account and two friends
5. We will pick the top 5 posts (most fun/most shared) and send them their own pack of 10 cloth masks.

It is important to take time out of your day for a little positivity during these trying times. It does not take long and we hope that it will make people feel better about themselves and of course, we hope it is a little bit of fun.

Keep smiling!
#smilewithyoureyes

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Industrial Manufacturing, how to build your Asian Supplier Base

Industry Insights / admin / Industrial, Industrial Manufacturing, sourcing

Industrial manufacturing can significantly benefit from creating a solid supplier base and outsourcing in Asia.

Outsource manufacturing has broadly always been reliant on raw material availability, a supply of labour and a low-cost base. It creates greater flexibility by negating the need to set up manufacturing plants that can require extensive capital expenditure and monthly overheads, not to mention the cost of maintaining safety and health standards. The same applies to industrial manufacturing, which requires significant investment in machinery and tooling and can be labour extensive.

The “New Now”

Asia already has a good supply base for industrial production across casting, forging, machining, metal fabrication, stamping and plastic injection manufacturing processes. But importantly, now at a time when companies have to cope with disruption to their client and the drop off in sales, there is a focus on stabilising their bottom line or reduce overheads where possible. This has resulted in many companies looking to activate Outsource Manufacturing programmes and move to an offshore production strategy. That said, with markets currently closed, looking to manufacture high-quality complex engineered components requires attention to detail and local resource in order to achieve the best outcome. Finding the right partner is absolutely critical to the success of such a move to maintain on-time shipments and more importantly consistent quality but by getting this right there will be significant cost benefits.

The benefits of outsourcing industrial components

In addition, most businesses only look at component level for industrial manufacturing when looking at offshore destinations. With lower labour costs it is important to focus on sub-assemblies or fully-finished assemblies to reduce the touchpoints at destination. This leverages the low-cost advantages by removing local labour directly impacting total cost ownership, which creates a significant competitive edge.

Industrial Manufacturing in Asia

Although there are significant benefits of offshoring your industrial production, there are still challenges that lie ahead given the different markets, culture and business environments. Understanding how these are overcome will be important to the success of implementing this particular strategy. From our perspective, looking to develop relationships over the medium term (and beyond) is a central factor to delivering the product you need.
Here are some key points to consider in working with Asian industrial manufacturers:

1. Define your requirements clearly

The variation of language always poses a challenge when it comes to understanding the project and its parameters, particularly when interpreting technical drawings. However, with clear and defined technical specifications and the right partner it should be possible to get accurate costings at the outset.

2. Quality Assurance

Given the variation in industrial manufacturing processes, it is important to conduct the necessary quality assurance which should cover a technical assessment of machining capability, safety procedures in place and ethical standards. There are a range certifications that should be available for different manufacturing processes such as ISO 9001, ISO 45001 and SA 8000. Make sure that these are also independently verified.

3. Build commitment

You need to commit to forming and cultivating a healthy long-term working relationship. It is important to treat the manufacturer as a partner and to give your full attention to the partnership. Particularly, where there are moulds and upfront charges required.

4. Close contact and communications

Asian factories prefer those who spend more time working closely with them. They expect their partner to get involved in sample making, order placement, quality control, production planning, and shipping. Therefore, it is best to have a team (on the ground) to work with the factory on a daily basis.

5. Business culture

It is still important for foreigners to understand and appreciate Asian business culture. Accommodating these cultural differences is a key component in developing long term relationships. More than ever, have a reliable ‘partner’ within your supply chain will add value and drive benefits.

Overview

There are significant benefits of moving industrial manufacturing overseas but you need to make sure you have the resource and capability to execute this offshore strategy. At ET2C, we have 20 years’ experience in industrial manufacturing out of Asia. We are therefore well placed to help you migrate some of your production into the Asian manufacturing sector. Our team on the ground will walk you through the process and help manage the suppliers and quality upstream. For more information contact us at contact@et2cint.com

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Sourcing Furniture and Outdoor Trends 2021

Industry Insights / admin / Furniture, Outdoor, sourcing, Trends

Sourcing Furniture and Outdoor Trends in the ‘New Normal’
A year ago, our lives were about to change abruptly. The spread of the Covid-19 virus, which has culminated in a global pandemic, has turned everything as we knew it upside-down. The subsequent constraints due to social distancing have impacted our perception of space (both indoor and outdoor).
People have generally been kept in their homes for months and we sought outdoor spaces to feel somehow relieved.

The lucky ones who had access to balconies, patios or gardens found the outdoors as their personal saviour. Certainly, with the adoption of new habits, our use of spaces in the home has changed with them. Private outdoor spaces are a precious commodity more now than ever before. They represent new kinds of freedom, allowing us to accept social isolation without feeling trapped, and also to enjoy fresh air without worrying about breathing in the virus.

New needs in this New Reality

People are now designing their living space in line with the adoption of these new habits and ultimately a greater reliance on time spent in their homes. Without a doubt, ‘Staying in’ is the new ‘going out’. The 2021 trends will push the outdoor spaces to create the experiences that we crave in a stylish, thoughtfully designed atmosphere.

So what are the new trends expected for Spring/Summer 21?

1. Indoor ↔ Outdoor

New trends will reflect the reimagined importance of the outdoors as a place where one’s private life can open up to our well-being such as fresh air, natural light and social interaction. The garden, always considered an “outside space”, is now a part of the home, dedicated to specific activities, such as working, exercising, meditating and yoga.

The feeling of intimacy outside is a big part of this outdoor trend. To create a flow from your inside space to the outside area your backyard, porch or patio should support everyday life not just supplement it. As an extension of your internal living space, furniture and accessories such as rugs, lights, mirrors, plaids and will become more commonplace outdoors reflecting this shift in how we interact with this type of space.

Obviously, where design can imitate the living room furniture, the function needs to also factor in external influences such as the weather. Now that you have bridged the divide between them, both your interior and exterior design will work in harmony.

2. Tiny Balconies: Urban Gardens and Permaculture

For sure, the combination of comfort and functionality gives new value to the outside space.
Even those that do not have access to a garden, but just to a tiny balcony, want to get the most out of what they have. For this reason, for Spring-Summer 21, also small spaces outside will be designed like gardens. The style and design will be all about making space look bigger. Such solutions will include using vertical space, laying borders, having clear pathways, and creating specific zones or outdoor ‘rooms’.

What furniture should you choose? Think round to save space. Curves soften and open up space rather than harsh lines and enclosing angles. Choose round tables and stools, for example.

More than a Balcony: An Urban Garden

Not only will the balcony be designed like an additional room of an apartment, but it will be designed like a smart urban garden. In 2021, planting small raised beds and smart vertical gardens on the balcony will be a clear trend. The holistic principles of permaculture will influence these tiny gardens to show they can be both productive as well as ornamental.

3. Eye-catching Outdoor Lighting

A good lighting system is paramount to the enjoyment of outdoor spaces in the evenings. It is important to add the right kind of light to make the outside space visible and safe. While before the white lights were the most common choice, colored filters are now an option to add extra warmth or create cool tones.

Lanterns are a classic that will stay but will be also revisited with new designs and materials.
Spring/Summer 21 will see also small lights, hidden in plantings and walkways, become more popular. Their strategic use will complement plants, accentuate lawn décor and stylize particular areas.

Environmentally Friendly Lighting

Even when it comes to outdoor lights, sustainability matters. Bright LED lights will continue to give a sustainable twist to the outside space. Supporting eco-friendly living styles, these lights are energy-efficient and have incredibly long lives (up to 100,000 hours!). In addition, solar-powered lights are becoming increasingly popular with homeowners who wish to take advantage of natural resources as well as saving on electricity bills.

4. Bright Colours

In terms of colour options, the next season will see the juxtaposition of warm comforting hues and bright color pops. Soft neutral shades of white and grey will be the natural base for the outside décor while bright colored details will complete the space balance with striking accents.

So besides the classic white, grey and the new entry “Shabby Chic”, keep an eye on the recent Pantone Fashion Color Trend Report for Spring/Summer 2021. Marigold, Rust, Illuminating, and French blue will definitely stand out in your gardens, patios, and balconies.

5. Natural materials

For the next Spring-Summer season, expect to see a boost of natural materials. Eco-friendly garden furniture is always in fashion thanks to the aesthetic appearance and the ambience of comfort.
Wicker furniture made of twigs makes it possible to achieve convenient streamlined shapes that add an element of style. Also, rattan Items are robust and generally resist rain or sunlight and are great for outdoor use.

Wooden furniture can also be safely operated in outdoor conditions if its surfaces are treated with a water-repellent coating and varnished. Certainly, woven materials add texture, and you can easily dress them up with bright decorative pillows to create a contrast. Natural options will distinguish not only furniture but also décor elements. You will see more sustainable solutions in gardens. The plastic pots will be increasingly replaced with natural alternatives such as coco-liners.

Sourcing Furniture and Outdoor, we can help!

We have developed our own range of Garden products out of China, Vietnam and India. Taking the best of each market, we have pulled together some great products that are perfect for outdoors, whether it is furniture, coco-liners, hanging baskets or lighting. Moreover, we have attained FSC certification to ensure that our suppliers ethically source their wood raw material. For all your needs, please contact us at contact@et2cint.com

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