Is China rolling out the red carpet or hiding a trap door?
With a population of more than 1 billion people, China presents an opportunity like no other for companies looking to sell products. All the big American brands are already there: McDonald’s, Pepsi, Ford, Wal-mart and Microsoft. It’s not really surprising the RV industry is headed there, too.
Freedom is universal and the desire to get away from it all and enjoy the great outdoors, for which China has plenty, is a basic tenant in the heart of every man, woman and most children.
The RV Industry Association is planning a trip to China this year to participate in a trade conference in which RVIA President Richard Coon is reportedly the featured speaker. The country is sending signals that they are in the market to buy RVs and they are rolling out the red carpet to American manufacturers. But is the red carpet a welcome mat or is it hiding a trap door?
It’s no secret the Chinese have become masters of the knock-off product. Just ask Hollywood, which has been screaming for years about movie DVDs being copied in China and sold throughout the world.
Part of me thinks the industry should embrace the Chinese market simply for the sheer opportunity to sell our products to a group of people who have been so oppressed for so long that they’ll need RVs to reconnect with families, relax, explore God’s creation and, of course, house the in-laws over the Chinese New Year.
Yet, another part of me sympathizes with RV suppliers for whom several are seething over the fact that an association they pay to join is extending a hand of friendship to a country they fear will destroy their business. They suspect the Chinese will extend that helping hand long enough to get American firms to pay the big bucks to build factories and train staff only to pull the plug a few years from now and use their investment to flood the world with cheaper imitation products.
And they have plenty to worry about. Business Week says “The China Price” are the three scariest words in business today. The China Price is the absurdly low rate at which a product or service can be provided. Business Week says manufacturers and even retailers like Wal-Mart approach companies with The China Price and insist that American firms meet it – or else.
We’ve already seen the impact cheap Chinese-made tires are having on the RV industry as blowouts and accidents are increasing warranty claims and liability costs for manufacturers and dealers alike. Before we get too excited about doing business with the Middle Kingdom, we should approach the opportunity with a wary, skeptical eye and not the open full-run embrace we may be tempted to employ in other emerging markets.
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Ironically, I learned recently that many companies that once embraced Mexico as a source for cheap labor are moving jobs to Honduras now that Mexican workers are discovering the sweet, but empty promises made by labor union executives.
Isn’t that just typical of what America has become? As entrepreneurs seek to expand opportunity throughout the world and improve the lifestyle of depressed workers, American socialists seek ways to stifle competition, reward mediocrity and burden employers with excessive costs.
Perhaps it will work to everyone’s advantage if American unions successfully export their ilk upon the rest of the world’s economies. We’ll still have a global market, but at least the field will be level.
July 31st, 2007 at 4:55 pm
With 20 years of experience China Trade, I would suggest the following:
1. IT IS TOO EARLY TO EXPORT RV’s TO CHINA. Crime in the countryside is too high for families to risk riding around in a big target that says, “we have money”.
2. IF US MANUFACTURERS WAIT FOR BUSINESS CLIMATE TO RIGHT, THEY WILL BE TOO LATE. . The Japanese, Germans, Koreans and locals will have the market sewn up by the time you learn the market is ripe.
3.There are plenty of opportunities to export and manufacture in China right now. Ignoring the threat and opportunity that China presents will only speed the addition of this industry to the list of business gone East.
July 18th, 2007 at 4:54 pm
Go to http://www.urvusa.com and look what’s on it’s way! Sure looks a lot like a Dutchmen T@DA.
July 18th, 2007 at 12:00 pm
Gee, sorry to say that I passed over this chapter of Greg’s blog the first time it came up on the screen. But, that aside, a great big HOORAY for all who have contributed their thoughts so far. I’ll throw in mine for good measure…
Who ever in the RVIA that suggested a junket to China to try to sell RVs should have a friend make them an appointment with a “headshrinker”. Maybe Mr. Coon and the RVIA folks think that spending the Association’s money on a trip to China should first question how many RV manufacturers and Dealerships support their plan. To my way of thinking, a junket to China is throwing away a lot of good money.
Maybe Mr. Coon still has some of his previous employer’s thougts in the back of his mind.
As one of my favorite old mentors was fond of telling me when we would visit a new customer, “keep one hand on your wallet at all times”.
Personally, China may look good on the outside, but there is no infrastructure. They are pretty much a tiger made of straw and paper. However, the China Tiger also has teeth. Thus, never try to pet the Tiger. Remember, Tigers bite….
July 17th, 2007 at 9:14 pm
Road Guy, you’ve been lingering at to many truck stops lately! Have you looked inside, outside or underneath a few RV’s recently? Have you strolled up and down the aisles of a Camping World store and checked out where the products are being made.
If the RV industry takes your advise and sits on their hands for the next ten years and does nothing there will be irrevocable damage inflicted on this industry that will be very difficult to reverse.
The RVIA isn’t going over there to count the bricks in the Great Wall that were installed during the Ming Dynasty. It doesn’t sound like sightseeing is high on their agenda if this trip actually happens.
If it does happen, then we must assume that YOUR Board of Directors at RVIA have given their full support to this China initiative and must be communicating that typf of message to the suppliers and manufacturers.
I’m honkin’ at ya Road Guy … don’t wait ten years!
July 17th, 2007 at 6:25 pm
Howdy, Ya’ll.
China. Well, it’s about time we got around to talking about COMMUNIST China.
Greg is partly right in his article title - red carpet or trap door? And from my observations I would have to vote for the latter. Why, you ask? Because China hates the United States. Period. And what has been laid out by China for the next many years is a single-minded-of-purpose effort to secure business and industry from all over the world to do one thing - puts its’ nation on a steroids-like program to get as much business from around the world to come in and help the Chinese to literally put the U.S. [and the Dollar] out of business.
China will have its’ economy cruising along in another few years and then BAM! word will come from on-high that all kinds of things have changed and if you, Mr. Business Owner, don’t like the new rules then you can take your company and go home in humiliation because we’ve bled you dry and we don’t need you any more.
However, all that said, the basic issue that will start to rebalance all of the economic and trade deficit damage that American corporations and our infamous government have wrought on this GREAT NATION during the past 20+ years is going to come down to “tariffs on goods and services.” That’s the BIG and very complicated game [that I wouldn’t presume to fully understand.] It’s a process that will take the next 15 to 20 years to have fully implemented itself (and by then China could well be the largest economy in the world if we don’t start hammering China for higher tariffs on goods and services now.]
But with so much of the BIG game years out from making any real difference now, I’d have to say that China selling and/or exporting RV’s (or even a majority of RV components) stands about as much chance of happening as a snowflake lasting for an hour in the Sahara Desert. China has far bigger matters to tend to than to pay much attention to our industry or the subject of putting their citizens in RVs bouncing around on some of the worst roads in the world. Jeez, such an RV would have to be part tank just to withstand the torture. So, Mr. U.S. Supplier and Mr. U.S Manufacturer, you can relax for about 10 more years.
Ya’ll honk as you go by….(and don’t worry, it ain’t gonna be in no ‘Commie Mobile’ just yet)
July 17th, 2007 at 5:00 pm
I agree with most of the statements. Maybe our government ought take notice of these comments. I’m ashamed of how uneven our imports and exports are with China. What are they thinking? America is a wonderful country and I don’t like what all of this is doing to us.
Can you send these letters to our senators and congressmen?
July 17th, 2007 at 3:57 pm
I can think of no logical reason for RVIA to be taking any kind of a promotional trip to China. We have already seen and heard enough about the business issues that are raised and the abuse of relationships and intellectual property that is taking place with the first round of companies that ventured over the Great Wall.
If an American manufacturer wants to sell their products in China then they are free to develop their own relationships and marketing programs to achieve that goal.
I don’t think an industry association, that represents both manufacturers and suppliers, should be out front promoting an opportunity to destroy many of their members. Is this truly what the supplier community expects from RVIA?
There are already plenty of fixtures. electrical components, and various assemblies being built into RV products manufactured here in the US. That is the right and priviledge of the company that has made that decision.
However, every time that decision is made, it further erodes the American manufacturing community and the very foundation of our country.
Associations should be serving the constituents and doing what is right for their members. If the Board of Directors and Executives of RVIA are doing this because the majority of their manufacturers and suppliers have asked them to do it, then they must be fully prepared to suffer the consequences that impact customer service and product liability when the reversal of fortunes comes back to haunt them as it is now doing with the tire and food scandals.
If the manufacturers and suppliers don’t think this is something that their dues and sponsorhip should be funding, then now is the time to step up and say so.
I personally do not think the association should be bringing our technology to China. If China wants it, then let them come here and prospect and compete for the business with their money and not RVIA generosity of bringing it to them. If any manufacturer or supplier wants to have a business relationship with China then let them go there using their own money and marketing staff.
As for the opportunity to market our products in China to a new audience with a tremendous (perceived) upside potential - all I can say is that when we have finally figured out how to make quality products, resolve our domestic customer service issues, provide dealers with the right parts the first time they are ordered, develop the dealer/manufacturing programs that benefit both groups … then, and only then, should RVIA be taking a slow boat to China and chasing another fantasy to replace the realities of the marketplace as we know it today!
July 17th, 2007 at 1:44 pm
All I can say to everyone’s comments, is ditto. But, as we have just recently witnessed with Fleetwood and it’s move into Mexico, can we really believe that China is far off. Or, how long until the Chinese are making RV water pumps, or ovens, etc., after all, we’re already seeing their generators in dealerships right now. Does anyone really believe that the U.S. RV manufacturers won’t buy Chinese parts…and then soon become just a place where RV’s are assembled with cheap imported parts…check out an I.B.M. Computer carton…it says “Assembled In The U.S.A., not “Made In The U.S.A.
It’s just like James states, the American Corporate CEO today cares more for their own bottom line bonus or the stockholders, then their own employees (which help create that bonus) or our industry, much less you and I.
Companies need to remember something that Henry Ford realized over 100 years ago: His workers were the highest paid in the industry, at the time and had normal 40 hour work weeks, which was almost unheard of 100 years ago. Not because old Henry was a wonderful guy, but because he knew that then his own employees could afford to buy and have the time to use the very product he was selling! There’s a moral there if the American CEO would open his eys and look.
If the Japanese attack on Pearl Harbor was to take place on December 7th of this year, and not in 1941, there is no way in the world our country could react or recover in the same way it did 66 years ago. Not only have we lost the manufacturing capacity of that time, we don’t have the work force to go with it; and with the present design of inventory control (”first-in, first-out”) we don’t have the inventory of parts, etc., to support that manuracturing capacity.
I’m in complete agreement with Lew. My only problem, just like everyone else is finding what I want, made in America! For example, can anyone give me the name of a U.S. company making kitchen appliances…I would really like to buy an American can opener!
July 17th, 2007 at 12:12 pm
China is rapidly becoming a huge Trojan Horse for the rest of the world’s economies. Yes, they make cheap goods; key word here is CHEAP! The quality may appear to be satisfactory, but one only has to look at the Chinese tire debacle and food recalls to wonder how long it will take for the US to WAKE UP and realize that what ever else thay make will soon follow.
When will US corporate heads realize that the more they depend on China for manufacturing, the smaller their market in the US is getting, since all of the good jobs will end up there!
I don’t shop at Wal-Mart as I don’t have any desire to support the economy of China. I’d rather suport the economy of the US. But it’s getting harder every day to find goods made in the US.
Short range profits are just that….and without considering the larger picture, our insulated corporate executives are writing the script for the demise of the US economy! They will all have their golden parachutes, but the rest of us will be going down with the ship.
July 17th, 2007 at 12:09 pm
I say “Amen” to Barb and James’ comments. Also, perhaps it is time for the members of the RVIA to ask themselves if the leadership of their organization is properly representing them.
July 17th, 2007 at 11:57 am
Is it possible that the RV industry could be the only success story exporting to China? NO WAY! I supply the woodgrain laminates used to make RV cabinets. I import these laminates from Germany, some are made in the US. My primary business was selling to the furniture industry since the late 80’s. There is virtually no market left in furniture. 90% of my old customer base is gone or moved to China. My second market is kitchen cabinets, although still a viable market, we see cabinets and cabinet compnents moving to china each year. The last safe haven in my eyes was RV/MHI. But when I heard the Chinese were showing off-site at the RV show, chills ran down my spine. I thought RV’s were too bulkly to import from China, until one day I was riding around by boat on the Charleston harbor(where I live) watching a ship being loaded with trackors and buses. Immediately I thought how easy the Chinese could load RVs and send ship fulls back to the US.
My advice, don’t give the Chinese clue, otherwise you’ll find yourself building a plant in China to survive or folding up shop and calling it quits.
July 17th, 2007 at 11:53 am
I’m not sure the Chinese market is ready for RVs anyway. I’ve been there, and they’re a seriously oppressed people; what’s more, they accept it as normal, because it’s been that way for so long, they don’t know anything different. They’re even hostile toward people from democracies because our “radical” ideas of personal freedoms are too much for them to even contemplate. It makes them uncomfortable to the point of panic. They have called non-Chinese “foreign devils” for centuries. The Great Wall was meant to keep China isolated as much as to protect them from invaders. How could someone from a culture like that feel the pull of the open road and its inherent liberty?
For that matter, the “open road” over there is almost nonexistent. They don’t have anywhere near the highway system we’ve got, and how would they fuel an RV anyway? Gas stations are not plentiful, nevermind the concept of campgrounds. Hook-ups? What’s that? Dump stations? There’s a ravine over there, have at it. (I’ve witnessed it, and am not exaggerating.)
Besides the practical obstacles of getting the Chinese to become RVers themselves, manufacturing over there is a bad, bad idea, for the very reasons Greg outlined. Many of them hate us, but they’re plenty willing to take our ideas and make money off them. They’re in wretched poverty and aren’t too proud to capitalize on our naive overtures of trust and friendship, as long as it keeps their household from starving. They only deal with us at all because they don’t have a choice.
Sooner or later this whole thing with China as the centerpiece of the global economy is going to implode, and I don’t think the RV industry wants to be at the bottom of that house of cards.
July 17th, 2007 at 11:21 am
Why on earth are we sending more jobs to China. Do we really think they are going to import our RVs and use them on almost nonexistant highways in China.We will not have enough people employed in US to buy anything made anywhwere. Once again American CEOs are looking at THEIR bottom line bonuses not the welfare of the industry or the workers.
JJMcL