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www.psi-network.de PSI Journal 5/2016 CHINA’S ECONOMY IN TRANSITION: THE PERSPECTIVE OF THE PROMOTIONAL PRODUCTS INDUSTRY The changes outlined above in a country from which the majority of promotional product imports come and where many suppliers have their own offices, branches and manufacturing facilities, will undoubtedly have a major impact on the industry. That is why, following the recent developments in China, we have examined the question of whether and how the industry is affected by these developments and how it reacts to changes. Our interlocutors assess the situation very differently and reveal what is important to them in doing business with China. »We are feeling the impact of higher labour costs and an increase in the cost of living.« JÖRG HERZOG, ZOGI We are taking the economic slowdown in China seriously and monitoring developments there very closely. That is why they have not taken us by surprise. It was clear from an early stage that China’s rapid growth had to peak. In this context, what is happening at the moment can be seen as a natural regulation of the market. LOCAL PRESENCE IS IMPORTANT Our major advantage is that zogi can quickly react to changes because we are locally present in Shenzhen and Hong Kong. However, both our production site in Shenzen (Special Economic Zone) and Hong Kong (Spe­ cial Administrative Region), where the logistics centre of Zogi is located, have a special status and are not directly comparable with other locations within China. RAPID CHANGES We are feeling the impact of higher labour costs and an increase in the cost of living in our sector, the high­tech segment. The rental rates of our offices in Shenzhen are now similar to those in Munich. The changes in China are rapidly taking place, partly with drastic consequences: For instance, a manufacturing plant with 5,000 workers was resettled within a week due to exploding costs. CREATING A DESIGNATED POSITION Despite this, we are relatively unperturbed because we started investing heavily in proximity and in the stability of our relations with our Chinese colleagues and partners at a very early stage by establishing a designated position for this. Xuezheng Wang, a Chinese émigré, has been responsible for direct communication with China at our company for almost two years, and for quality assurance and Far East project management. Language barriers and misunderstandings can thus be avoided. In our view, the cooperation with China and the professionalism have actually improved considerably in recent years. Weekly video conferences and an open dialogue, including about critical tendencies, also contribute to this. DEVELOPING STABILITY AND RESPONSIBILITY We have established a trustful interaction with one another and a mutual appreciation of everyone involved over a long time. We have been working with the same local partners for seven years and have been present as often as possible. Employees in China and in Germany are promoted in equal measure. Our response to the recent developments is derived from the said principles: Maintaining and developing stability, responsibility and proximity in order to remain flexible and responsive in the future. 13

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