Operating a Successful Small and Medium Size Factory in a World of Giants

On 11 November, I posted a note on birnbaumgarment.com for readers to suggest topics of special interest.

Here is the first request

Dear David
Glad to hear your proposal; always a bit afraid to ask, knowing your tight schedule….
Here is something I will like your to see your point of view: You frequently talked about the big suppliers to macro international factories with capacities in many countries and one buying office for all, like Hong Kong. What do you think of the rest of us (suppliers) small suppliers should do? Do you think we will be swallowed just like Walmart has done with all the small retailers in the US; or do you think we will have hope working with smaller customers that could not reach the minimum of this macro factories?
All the best ! Love the blog
Jaime

Operating a Successful Small and Medium Size Factory in a World of Giants

An average small and medium size factory cannot work with a large customer:

1.    The large customer cannot afford to work with the small supplier because the customer’s overhead costs would be too great.  The factory that ships 100,000 units annually requires the same follow-up as the factory that ships 1,000,000 units annually, with the result that the cost per unit working with the small factory is 10 times greater than working with the large More...

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Posted in Customer Strategies, Factory Strategies, Garment Factories, Garment Prices, Garment Sourcing | 4 Comments

Looking for Input

Dear Reader:

I have been writing this blog for the past three years. According to the usage statistics data, as well as comments from friends and colleagues, birnbaumgarment.com has attracted a surprising large following, for which I am very grateful.

However, to date the conversation has been mostly one-way.

I write.    About 6000+ people read.

A blog should be a two-way .

I would like to suggest the following. If you are a student or a professional, I want your input

If you have a question, let me know.  I will answer.

I you have a topic about which you want information or even an opinion, let me know.  I will try to write an article.

Help me with you input.

DAVID BIRNBAUM More...

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Posted in Uncategorized | 4 Comments

The Decline and Rise of the Buying Office

Twenty years ago major garment importers and retailers began to move away from independent agents to set up their wholly owned buying offices.

In those early days, every customer required their middle man (agent or buying office) to perform the same work.  Every middleman carried out the same work.  For the most part the quality of work differed little from one middleman to another.

Everyone carried out the same 5-basic tasks

a      To select the supplier factories;

b      To allocate orders to those factories;

c      To act as a Nexus between the customer and the factory.  To ensure that the factory received and understood the customer’s instructions and to communicate the factory problems and requests back to the customer;

d      To ensure the factories follow all specifications;

i.         In-process inspection

ii.         Final inspection

e      To alert the customer on a timely basis of existing or impending problems.

If the customer’s annual imports at FOB was in excess of $10 million, the wholly owned buying office made commercial sense. Middleman commissions ranged from 5-10% depending on customer size and other relevant factors. This allowed a total commission of between $500,000 to $1,000,000 — sufficient to pay for a decent size office, and then some.  The large customer, which twenty years ago was defined as importing $100+ million at FOB More...

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Posted in Garment Sourcing, Innovation, U.S. Government | Leave a comment

The Rule of Law and Corruption

To start at the beginning, no one in their right mind would go to court in China to recover losses.  No matter how egregious the event; how crooked the other parties; or how obvious the fraud, going to court is simply an excruciatingly painful way of committing suicide.

To most of us, China has no rule of law, and whatever system of law does exist is totally corrupt.  In this regard the Chinese government’s statements that, “Judicial injustice is fatally destructive to social fairness” or that in future they will weed out corruption in their court system, thus “governing the country according to law[1]”, is just propaganda.

The truth is evident for all to see in the same government report which states, “Socialist rule of law must uphold the parties leadership, and party leadership must rely on socialist rule of law

To us in the West, particularly in the United States, these statements seem to come directly from the pages of George Orwell’s novel 1984 where government statements were in news-speak — a language created to ensure that everyone was aligned with government policy — and where surveillance was pervasive, censorship absolute, and deviant thought criminalized.

There can be no question that China neither now has a rule of law, nor is moving towards the rule of law, at least as we in the West More...

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Posted in China-Greater China, Politics, U.S. Government | Tagged | Leave a comment