For the only barely related part I of this post, go here.  

I just got back from a very long and very fruitful trip to Tokyo. I was there with co-blogger Steve on behalf of the Sea Shepherd Conservation Society, assisting with the trial of anti-whaling activist Peter Bethune. If you want to see some television interviews of my on this case, click here or here. Then, pretty much out of the blue, I ended up staying in Tokyo (with Steve having to run off to Manila) to assist on a Japan vessel arrest. A little known fact about Steve is that he is fluent in Japanese as a result of having worked a number of years with one of Japan’s leading law firms at the beginning of his legal career.

My staying in Tokyo did give me a number of great opportunities to meet with clients and potential clients who I had not seen for years. With the Honda strike in China getting so much news, we found ourselves talking a lot about where manufacturing would be going as China continues to get more expensive. The consensus regarding various countries seemed to be as follows:

1. Thailand. No. Not cheap. Politically unstable.

2. Indonesia. No. Too corrupt. Too much poverty. Too much violence. 

3. The Philippines. See Indonesia.

4. Sri Lanka. For the most basic of clothing manufacturing and the like. Maybe.

5. Mexico. See Indonesia and the Philippines.

6. Vietnam. Great place to visit. Great demographics. Good labor force. But, horrible logistics and just not quite there yet. Oh, and much smaller consumer market. Great place for some things though, like furniture.

7.  Malaysia. See parts of Thailand and parts of Indonesia, above.

8.  Cambodia. Come back in ten years.

9.  Laos. Come back in twenty years.

10.  Haiti. “You are not being serious, are you?”

In the end, the consensus was China, even with increased costs. “If you are going to make something that requires sourcing components from other facilities, it almost has to be China.” China is just so established for that. It just works. Yes, we are going to look at going inland in China but the more you do that, the more it starts looking like Vietnam and the more you start facing the same sort of problems.

David Wolf over at Silicon Hutong just wrote a very interesting post on these same sort of conversations by clothing manufacturers. His post is entitled, “Not So Easy to Replace,” and its conclusions do not differ much, if at all, from those here.

So is the next place the present place? I think it is, and I have to say that not a single one of my firm’s clients has even mentioned leaving China because of rising wages there.  But I do remain bullish on Vietnam. But for how much longer will China be THE factory to the world?

Let’s get your views….

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Dan Harris

I am a founder of Harris Bricken, an international law firm with lawyers in Los Angeles, Portland, San Francisco, Seattle, China and Spain.

I mostly represent companies doing business in emerging market countries. It has taken me many years to build my network and it takes constant communication and travel to maintain it. My work has been as varied as securing the release of two improperly held helicopters in Papua New Guinea, setting up a legal framework to move slag from Canada to Poland’s interior, overseeing hundreds of litigation and arbitration matters in Korea, helping someone avoid terrorism charges in Japan, and seizing fish product in China to collect on a debt.

I was named as one of only three Washington State Amazing Lawyers in International Law, I am AV rated by Martindale-Hubbell Law Directory (its highest rating), I am rated 10.0 by AVVO.com (its highest rating), and I am a SuperLawyer.

I am a frequent writer and public speaker on doing business in Asia and I constantly travel between the United States and Asia. I most commonly speak on China law issues and I am the lead writer of the award winning China Law Blog (www.chinalawblog.com). Forbes Magazine, Fortune Magazine, the Wall Street Journal, Investors Business Daily, Business Week, The National Law Journal, The Washington Post, The ABA Journal, The Economist, Newsweek, NPR, The New York Times and Inside Counsel have all interviewed me regarding various aspects of my international law practice.

I am licensed in Washington, Illinois, and Alaska.

In tandem with the international law team at my firm, I focus on setting up/registering companies overseas (via WFOEs, Rep Offices or Joint Ventures), drafting international contracts (NDAs, OEM Agreements, licensing, distribution, etc.), protecting IP (trademarks, trade secrets, copyrights and patents), and overseeing M&A transactions.