Agenda Why Manufacture in China Types of Manufacturers Finding a Manufacturer What to Expect Prepare for the Unexpected Risks & Rewards Experiences.

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Agenda Why Manufacture in China Types of Manufacturers Finding a Manufacturer What to Expect Prepare for the Unexpected Risks & Rewards Experiences

Larry Butz 25 years with Trane specializing in – Product Development –Technology & Product Globalization –Technology Transfer & Factory Start-up –Environmental Sciences Headed Intl Service Division Five Years as Engineering Manager for Trane Europe/Middle East (France) Technology Director for Trane Intl Technology Director for Trane Intl Environmental & Technology Spokesman

China Two Shanghai Factories –Customized Products –Equipment Selection –Process Optimization –Quality Standards –Training –Supplier Qualification –Factory Layout –Product Testing Capabilities

China Large Chiller JV Ligang, China Ligang, China –Customization –Technology Transfer –Training –Lean/Simple Processes –Supplier Development

China & Asia Technology Globalization & Environmental Spokesman

Why Manufacture in China? Lower Cost Product Access to China Market

What to Expect Lower labor costs Lower raw material prices Lower component/sub- assemblies costs Range of quality levels available Fewer constraints (regulations) on factories

Types of Manufacturers State Companies Wholly Owned Locally Joint Ventures Wholly owned Foreign Your Own – Build or Buy

Where to Find Heavy Industries Light Industries

How to Find Government Agencies Industry Directories Web Bidding Networking Shows & Exhibitions

Be Prepared for Change Longer Pipeline Reduced Flexibility Change Control Cultural Differences Societal Value Systems Business Customs National Laws

Be Prepared For Change More Administrative Personnel Logistics-Import/Export Banking/LC/Currency International Law Communication Time Difference Language

Insight & Advice The relative cost of equipment vs. labor is significantly different in China. Expensive labor saving equipment used in the US will not be the best choice in China. Be prepared to make minor changes in your design specifications to obtain best results.

Risks Currency Variations Proprietary Design Info Political

Environmental Considerations Fewer Regulations Fewer Regulations Reduced Use of Coal Reduced Use of Coal Clean Air & Clean Water Clean Air & Clean Water Water Shortage Water Shortage Green Beijing Olympics Green Beijing Olympics Environmental Costing

Thank You for Your Time Larry Butz GEA Consulting, Inc 2420 N. Pine Creek Rd. LaCrescent, MN Tel: Fax:

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