China VAT Rebates Raised - But Not By Much

aj — Thu, 28 Aug 2008 20:02:10 GMT

The Chinese government has raised the value added tax (VAT) rebates given to manufacturers of some textiles and garments. It's been reported (see here and here) that the rise is meant to ease cost pressures on China's textile producers slapped with rising costs. The move is minimal (from 11% to 13%) and isn't seen as a trend to reverse the drastic rebate cuts of the past year.

The rebates for some products, including zinc, silver and batteries (seen as highly polluting), were scrapped entirely.

The 2% increase for textiles is half of the 4% requested by China's textile and garment manufacturers.

My sources on the ground in Shanghai confirm that the recent rebates have been met with little attention, compared with the sweeping cuts of last year that that sent shock waves throughout all global manufacturing supply chains.

Virtual Vs. Actual Reality For Manufacturing

aj — Wed, 21 May 2008 19:06:43 GMT

The confluence of the virtual world on linear manufacturing continues to point us toward great rewards, and great uncertainty.

Recently, we've presented some interesting (and very real) influences that are gonna change the manufacturing supply chains and marketing channels as we know them (see here, here and here).

Another case in point: Double Happiness Jeans (DHJ), a "telematic manufacturing" business (as they call it) housed on and run through the virtual world Second Life.

The New York Times covered the Double Happiness debut at the Sundance Festival earlier this year. Here's the NYT's description of what DHJ does:

Stephanie Rothenberg, a new media performance artist, and her collaborator, Jeff Crouse, a digital artist and programmer, started Invisible Threads (parent "company" of DHJ) a year ago while at Eyebeam, an art and technology center in New York. Invisible Threads is intended as art, but they see it as a window into so-called telemetric manufacturing methods of the future.
The jeans are being shown and sold for the first time at Sundance, in a beta version. Customers tell the Invisible Threads staff the size and style of jean they would like, the instructions are sent to the virtual factory inside Second Life, where workers push buttons that generate an image. From that image, a pattern is created and sent to an industrial printer, made by Hewlett-Packard, which spits out the custom-printed canvas cotton patterns. The patterns are then cut and assembled on the spot (at a Sundance Festival venue, that is) with a glue gun and a little stitching for reinforcement. They cost around $35.
The margins are pretty good. The Invisible Threads "factory" has sixteen workers, who are paid 200 Lindens an hour (Lindens are the currency of Second Life) - about 90 cents, which is pretty good pay by Second Life standards. Factory workers are also granted 500 square meters of Second Life "land" on which to build a house.
(+There are many photos of the entire process at the DHJ Web site.+)

While there are real people behind the sales and operations of DHJ, technologies are leveraged to truncate those processes - as well as the actual design and manufacturing of the product - in ways that turn the supply chain and customer experience on its collective ears.

Imagine your own company's interactions with prospects and customers, and how these relationships will change as Second Life, avatar marketing, 3D printing, and on-demand manufacturing principles make their way into the manufacturing mainstream.

Now, imagine your own relationships with your suppliers. What demands will you make of them when you know order time, design processes and costs can be greatly reduced through these technologies? Will you accept the status quo?

This change will come neither with a bang nor a whimper. It never does with manufacturers - most of us, anyway. The signs will all be there, and when they are forced on us we'll act as though we never saw it coming.

Pay attention. Listen to your kids and the smart, energetic youth whose talents we'll need as manufacturers to take advantage of these emerging markets and evolving channels for doing business.

Ignoring the virtual future may come back to bite you in the actual behind.

For more on businesses that market, communicate and manufacture on Second Life, visit The Business Communicators of Second Life.

MFGx Blog

China VAT Rebates Raised - But Not By Much

Virtual Vs. Actual Reality For Manufacturing