Are we done in China yet? Presented by Richard Jia Ex Zarpac Inc. Executive

Pain ≥ Gain  Low cost = low quality  Consistence  Surprises  Total cost of ownership  Overheads up  Gap in cultures

Case study-1  Client in NA required bulky standard conveyors hundred of meters  For any standard section, NA local vendor is cheaper than from China after including shipping cost and timing on delivery, plus risks on final quality and after sales service  No chance to win in such game

Continued  Meanwhile the client had some customized project going on though still part of conveyors  Our Canadian headquarters was auditing and supervising all drawings and production and FAT in China including crating.  Brain labor and overtime is still competitive  Plus this sort of low end projects do not need much on services and parts.

Case study-2  High end soup filler, build to print  Imperial to metric  Understand NA style drawings and documentations  Risk started from raw material, such SST, food grade plastic or rubber  There was almost no manufacturing practice  You have to be on site to watch

Continued  Rework due to ill preparation, under estimate from both sizes and mindset  It took 2 years to deliver the filler on site  Not worth it  One time right from the very beginning

Where is the opportunity  Industrial base and tradition  Hundreds of graduates on mechanical and automation from schools  Seek and train up local partner, or establish your own team  We have learned enough from past, know short cut

Case study - 3  Complex automated system for secondary packaging involved robotics up to 6 axis  We suggested the 1 st prototype to be provided in Canada, roll out in China. Rejected  Nightmare started at this point  Local R&D, electrical programming capability, supply chain, education, mix up lead to mess up

Continued  More investment in cash from both sides  Longer delivery  OEE failure  So much indirect expenses, expats, FAT staff  Mentally suffered

Best value model  Fully understand what is the best from West and China  How to pick up and combine  Quality, flexibility, safety and cost effective  Well prepared home work is a must  Communication is not easy at all  Supply chain management  Focus on valued added areas  Professional 3 rd party service  Localized team with international thinking

What can we do  Bridge, toll and shortcut  Connections with vendor, government  Direction of approaches  Be 3 rd man or contractor  Influences on both sides