China lawyers
Because of this blog, our China lawyers get a fairly steady stream of China law questions from readers, mostly via emails but occasionally via blog comments or phone calls as well. If we were to conduct research on all the questions we get asked and then comprehensively answer them, we would become overwhelmed. So we usually provide a quick general answer and, when it is easy to do so, a link or two to a blog post that provides some additional guidance. We figure we might as well post some of these on here as well, which we generally do on Fridays, like today.

One of the questions our international manufacturing lawyers are constantly asked is where other than in China “should we make X  product and can you give us the names of some factories that make X product in any of those countries.” Our answer to that question is usually as follows, we have seen some companies that make similar products go to X, Y and Z countries, but just because they are going to those countries does not necessarily mean that you should or even can. Truth is that the country and the factory you choose needs to be the one that makes your product at the price point and at the quality that makes sense for your business and there is usually no way to determine what country or what factory within any country that will be. Jeans are a great example as we are seeing many companies move their jeans production out of China. SeeJeans Sourcing Landscape Sees Major Changes as China Fade Continues,  which describes what is happening with worldwide jeans production as follows:

Imports of the category from China dropped 10.44 percent in the six months through June to a value of $369.97 million. This brought China’s market share of the category–97 percent of which are denim jeans–down to 22.82 percent, a 5.11 percent decline for the year ended June 30.

All of the other Top 5 suppliers posted gains in the amount of denim they shipped to the U.S., with each growing their market share. Mexico, the No. 2 denim supplier to the U.S., inched up on China to hold a 22.16 percent market share. Jeans imports from Mexico rose 14.44 percent to $410.07 million, leading a Western Hemisphere increase of 12.03 percent to $509.74 million, which also included a 28.02 percent gain by Nicaragua to $55.19 million, and a 12.06 percent advance by Guatemala to $16.22 million.

Among the major Asian apparel suppliers, Vietnam and Pakistan are the big winners so far this year, while Cambodia and Indonesia lost ground, and Bangladesh maintained the status quo.

Jeans imports from Vietnam jumped 29.36 percent to a value of $142.36 million. The country’s market share rose 36.39 percent to 8.38 percent for the 12 months, as makers look to capitalize on its apparel manufacturing expertise.

Pakistan, which benefits from also being a major supplier of denim fabric, saw its first-half imports to the U.S. rise 15.49 percent to $119.72 million. The country’s market share increased 16.27 percent to 6.69 percent.

On the downslide, jeans imports from Cambodia fell 8.47 percent to a value of $45.89 million and Indonesia’s shipments were down 2.54 percent to $35.57 million. Denim apparel imports from Bangladesh rose just 1.13 percent in the period to $247.5 million, although its market share grew 4.96 percent to 14.5 percent.

In other words, for jeans,  the production leaving China has been replaced by countries literally all over the map, usually depending on each company’s familiarity with a particular country and their price and quality requirements. Our international manufacturing lawyers see the above sort of pattern (really non-pattern) with many sorts of products. But then there are some products where just about everyone leaving China is heading to one or two other countries. Smaller backpacks, for instance, we see going almost exclusively to Vietnam. Wood toys, we see going mostly to Thailand and India and Indonesia. Auto parts to Mexico and Thailand.  Electronics to Taiwan, Korea, the Phillipines, Thailand, Vietnam and Indonesia. See The US-China Future: Meet Vietnam, Thailand, Mexico, Malaysia, Turkey, and the Philippines.  Oh, and then there are those companies that try and try to move their manufacturing out of China, but end up not moving a single widget. For them, China is the new China. Which always begs the question, Has Sourcing Product From China Become TOO Risky?

In other words, it really just depends.

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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.