When it comes to setting up supply chain and logistics operations in China, one size most decidedly does not fit all. Candid interviews with U.S. shippers revealed that some have been challenged by shoddy manufacturing practices, while others have been mired in red tape. One reader even tells of how to resist—or at least circumvent—corruption. For many U.S. based shippers, regulatory concerns top the list of issues in moving fright into, out of, and around China.

Many others respondents say that their main worries revolve around core carrier selection. However, one area of agreement surfaced from all of our recent interviews: partnering is crucial.

In a place as multi-layered as China, some of our readers recommend the counter-intuitive approach: Keep it simple. Still, cultural barriers can represent a significant challenge, says Brigitte Smith, transportation and logistics analyst for Trimble Navigation in Dayton, Ohio, a member of GPS positioning hardware and software.

“And I'm not talking about Chinese and American cultures,” she jokes. “Every multi-national company has its own internal culture which has to be unified. It's not an easy task, but it must be done. Erase territories.”

Smith is adamant about integrating departments comprising the logistical framework of any large corporation. The purchasing department, for example, must have open communication with its import and export departments. There must be a shared list of vendors and transport providers, and a common strategy put into place for dealing with China's manufacturer, she recommends.

“It's a very complex country, so all the paperwork must be fully harmonized no matter where you are moving goods,” she says. “That's why we don't use 3PLs at all. Our business is strictly handled by our forwarders or the carriers themselves.”

Kuhne & Nagle is the primary intermediary, says Smith, although several other smaller forwarders are used for specific shipments. “With Kuhne & Nagle, we know that SOPs (standard operating procedures) have been fully put in place,” she says. “They know which preferred carriers we use, and when to put cargo on a specific mode. 3PLs are just not reliable enough for that value-added, and can't give us the EDI tracking we require.”

Smith will use DHL, UPS, and FedEx for smaller packages or express freight. Otherwise, she relies on her forwarder to choose a carrier and route for timely delivery. “They can tell us if the cargo is too sensitive for LTL, for example,” she says. “Or if we should put in on a rail and bring it in from Long Beach or Tacoma.”

In the end, it's choosing the right business partners, she insists. “Forget the other obstacles. Your partners can tell you which airports to avoid, or whether to ship by ocean on an all-water route. Globalization means working more closely with everyone on-site as well. Set up an office in China, and put in only one kind of staff--the best.”

But if sourcing product from China was easy, everyone would be doing it, says Jerry Grunor, president of Global Communications. “And I should know, too,” he says, “since I've being doing it for the past 20 years.”

Based in Dana Point, Calif., Global Communications is a supplier of printed circuit boards (PCBs), power supplies, and other electronic products.

“China is still the place to be if you want to get low-cost, high-quality PCBs,” he says. “Since entering the market, we have been manufacturing power transformers for the banking industry, wire harness cable assemblies, and other electronic products for all industries worldwide.”

While he sources product from Mainland China, he relies on Hong Kong and Taiwan as entrepots. Clearing Customs and expediting freight flow is an easier bet in these two parts of “Greater China,” he says, and he relies primarily on a single forwarder—Morrison Express—to arrange transport.

Finding a Chinese business partner is the first major step one should take, he suggests, and the easiest way to start is, of course, to go through Taiwan.

“It's a business-friendly culture, and you can find people there who know how to build relationships in both countries,” he says. “A Taiwanese counterpart can help set the foundation, and build trust.”

And trust is key, he says, especially when it comes to trade settlement and payment. “Many Chinese companies will expect us to carry debt for an extended period of time, and we simply will not do that,” he says. “We want payment up front, and will not accept any other conditions.”

But not without some risk, he admits. Some Chinese manufacturers have been caught trying to substitute cheaper components, or took shortcuts in assembly, which jeopardized product integrity. Grunor says that he's even seen this abuse when it comes to packaging, with manufacturers using cardboard rather than foam.

“It's all about keeping up on international standards,” he says. “For us, the products must be ISO, QS, or LPS certified and UL approved. One must realize, though, that when all is said and done, we're getting goods costing about one third of identical products made in the U.S.”

While “zero tolerance” for shoddy manufacturing and packaging practices is a given for any logistics and supply chain manager, it's especially crucial for those charged with sourcing medical equipment.

“One bad episode and your company might be ruined,” says Jesse Romo, warehouse manager for Viasys Healthcare, Inc. in Palm Springs, Calif. Recently acquired by industry giant, Cardinal Health, Inc., Viasys utilizes a fully globalized supply chain serving the $4 billion respiratory care market. As one of the world's largest manufacturers of pulmonary function testing equipment, it must guarantee that all instruments are safe and exceed industry standards for reliability.

“Everything we build is 'mission critical,'” says Romo. “It's literally life-or-death in most cases.”

Viasys has been a first-responder to the “bird flu” crisis in the past, for example, and is ready to serve Asia by distributing pulmonary care devices throughout China again in the event of a similar pandemic. As a consequence, says Romo, accurate labeling is also a major issue.

“One of our greatest fears is to have the FDA come after us,” he says. “Even the smallest hiccup can raise a flag, and agents will come to inspect—and possibly disrupt—operations. Fortunately, we have a very good forwarder working with us to keep a lot of this in order.”

According to Romo, the company has been relying on Schenker and Pro Service Forwarding, Inc. as freight intermediaries. He also noted that alternative ocean carrier deployment strategies might be put into play from China if there's a labor disruption on the U.S. West Coast. “We're also tracking the progress ports are making toward resolving certain trucking issues,” he says.

For Becky Morris, Orbit Irrigation Product's transportation manager, the paper trail and the “human” element are of equal importance when running supply chain and logistics efforts in and out of China.

“I agree that it is absolutely vital to keep a level of consistency in all paperwork,” she says. “This is especially true when it comes to any security concerns. We are C-TPAT certified, and insist that all our business partners are too. The other emphasis is on relationships. We are constantly at work building and maintaining a culture of care and shared values, so that workers in China feel like part of the family.”

Orbit Irrigation Products, a Salt Lake City, Idaho-based manufacturer of garden irrigation and misting products, is not a newcomer to China. According to Moss, they've been sourcing goods from the country since the late 1950s, and have built a solid network of distribution suppliers.

“I deal directly with all transport providers whether they're ocean carriers or parcel delivery companies,” she says. “And there are not really any shortcuts. It's the same in manufacturing. We have to keep an open channel for communication in every aspect of what we are doing.”

And with customers like Wal-Mart, Home Depot, and Target, the company has to keep a constant eye on quality control.

“We have a highly educated and highly motivated workforce in China,” she says, “and we can't afford a lot of turnover. We regard each and every employee as an 'associate.'” Orbit has one wholly-owned subsidiary in Ninbo, along with another plant operated as a joint venture there. The company partners with a Chinese company in Hong Kong, too, while keeping its accounting office in Shanghai.

“Having one office in China that deals with purchase orders, bills of lading, and other documentation is another big advantage,” she says. “If there are any discrepancies or suspicious transactions, we can launch an internal audit and get to the bottom of it right away.”

In choosing core carriers, Moss looks for those that can bring value-added market intelligence as well as high level of consistent service. She says NYK and K Line have been two particular standouts. “But all the ocean carriers want part of our business,” she says, “and they seem very willing to learn about our wants and needs.”

Got loss and damage? Got corruption? And how, says Joseph Terrio, global supply chain director of Symmons Industries, a manufacturer of commercial and residential plumbing products based in Braintree, Mass. He says that chief among his demands is full-container load service. Anything less, and your exposure is unacceptable.

“In choosing a ocean carrier and/or forwarder, we insist that they not consolidate a shipment,” he says. “That way we can reduce our risk of loss or damage, and we are not as likely to have regulatory delays.”

The company currently uses a landbridge from the ports of Vancouver and Long Beach. So far, Terrio has been pleased with the service provided by Jazz Forwarding, although he has tried negotiating with middlemen in China as well.

“While business relationships are very important to the Chinese, there can be downside, to that as well,” he says. “Some manufacturers will want you to use a friend of theirs for freight forwarding because they might be getting a kickback.”

This poses problems apart from the obvious ethical one, says Terrio, for it interferes with the transparency of the transaction.

“We want to see every element of the supply chain so that we can attack cost while maintaining quality,” he says. “We explain to our partners that Symmons makes premium plumbing fixtures for high-end condos and hotels. There's not much room for compromise after stating that.”

Indeed, Terrio is often asked to provide market intelligence to his suppliers now. He answers questions, for example, about new economic zones in China or new developments in transport infrastructure that will keep China competitive. With the emergence of Vietnam and Thailand as Southeast Asian alternatives, Chinese manufacturers are concerned about losing U.S. business.

“With the WTO bringing these new players into the loop, the whole scene may be changing,” he says. “We simply tell our Chinese partners to avoid back door deals on pricing, and keep everything standardized. In other words, use best practices.”

There are no real shortcuts to setting up successful logistics and supply chain operations in China, says Jason Tomsic, director of inbound logistics for Haverty Furniture Companies Inc, a full-service home furnishings retailer with over 120 showrooms in 17 states in the Southern and Midwestern regions.

According to Tomsic, shortcuts are to be resisted, and he believes that “the keys to the kingdom” will come to those who work above-board and come to define just-in-time delivery in Asia overall.

“And chief among the table stakes is visibility,” he says. “We were an early adaptor to C-TPAT after we realized that there would be business-friendly aspects of this as well. More security translates into greater efficiency.” While Tomsic says there is no real competitive advantage associated with C-TPAT compliance, it's one less detail to be concerned with when mapping out strategies for shipping and sourcing.

His goals for the future of the company's operations in the region are pretty much set: “We are currently looking at a whole host of ocean carriers to do business with now,” he says, “and we're using a third party to do the diligence. We'd been working with NVOs in the past, and that was fine, but data was the weak link. We need to get EDI and other tracking information from a single source.”