Chairman’s Mid-Autumn Festival Message

This week we celebrate the Mid-Autumn Festival, also known as the Harvest Festival or the Moon Festival. This is a special holiday in Asian cultures. Next to the Lunar New Year, this holiday is the second most important. I’ve always thought of it as the equivalent of Thanksgiving in the U.S. It is a time for gathering family and friends, give thanks for the harmonious times, and pray for good fortunes.

Here in the Midwest, we are far away from the warmth of this holiday and the smell of fresh baked mooncakes, the soft glows of lanterns, and the days-off to celebrate. As an immigrant of more than 20 years, I have grown accustomed to the lost and longing. But I remind you, our member companies, and the good people of this Greater Cincinnati region that this is a special time for those who do celebrate. I ask that you share your smiles and open your hearts. Learn about the traditions and folklores of this important festival. Ask about the ten suns and the story of Chang-E. Don’t be afraid to try a piece of mooncake, and no it is not the same as a moon pie. Welcome and embrace the difference, celebrate together the meaning and substance to your diversity and inclusion efforts.

And for all those who do celebrate this Mid-Autumn Festival, I wish you:

月到秋分明,一年团圆日,祝你中秋事圆,身体安康, 万事如意,心想事成!

Jin Kong (孔进, 德昌)

Chairman, Greater Cincinnati Chinese Chamber of Commerce

MEMBER PROFILE: FBT & G4C BOARD MEMBER Rhonda Schechter

Chinese Chamber Member Profile

Frost Brown Todd is a full-service law firm serving some of America’s top corporations and emerging companies. With attorneys regularly identified by clients, peers and industry organizations as leaders in their practice areas, the firm advises and protects clients in business transactions and litigation in many industries, including insurance, financial services, manufacturing, real estate, construction, energy and health care. More than 500 attorneys in 12 offices in Indiana, Kentucky, Ohio, Pennsylvania, Tennessee, Texas, Virginia and West Virginia provide unparalleled service to meet clients’ needs; deliver the insights and solutions available only from a diverse group of professionals. Our international team helps U.S. businesses grow and operate abroad and assists foreign businesses with expansion into the U.S.  To learn more about our range of services, visit frostbrowntodd.com.

Rhonda B. Schechter, Senior Associate, Frost Brown Todd LLC.

Rhonda is an attorney in the Health Law and Corporate/Business practice groups at Frost Brown Todd LLC, and serves as the Secretary of the Greater Cincinnati Chinese Chamber of Commerce. She assists clients, particularly those in the health care industry, with a range of business issues including mergers and acquisitions, vendor and physician contracts, and compliance with Medicare/Medicaid conditions of participation and other regulatory schemes. She has broad-based experience advising clients on hospice care, medical residency programs, and meaningful use of electronic health records.

Rhonda received her J.D. in 2009, graduating first in her class (summa cum laude) from the Salmon P. Chase College of Law, where she served on the editorial board of the Northern Kentucky Law Review and as a justice of the Moot Court Board. Prior to receiving her J.D., she taught college language courses and worked with various international businesses as an administrator and consultant. She holds a Bachelor of Arts degree in Japanese Studies and French from Earlham College and a Master of Arts degree in East Asian Studies from Indiana University. Rhonda is fluent in French, conversational in Mandarin Chinese and also speaks some Japanese.

Rhonda is a graduate of the “Boardway Bound” program offered by ArtsWave (formerly the Fine Arts Fund) to train individuals to serve as board members for local arts organizations. She served on the board of Bi-Okoto Cultural Institute and currently serves on the board of directors of The Children’s Law Center, an organization based in Covington, KY that works to protect and enhance the legal rights of children.

New shipping requirements for China: ZIKA anti-mosquito treatment

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China’s AQSIQ (China’s Quality, Inspection and Quarantine Authority) recently released new shipping requirement from Zika affected countries (the USA falls into this category) as follows:

In order to prevent the spread of the ZIKA virus, transportation and containers from all involved countries and regions to China Ports shall be required to anti-mosquito treatment, without mosquito treatment proof must subject to treatment at Port of Discharge by local inspector immediately. China Entry-exit inspection and quarantine authorities will follow the quarantine regulations strictly for shipments from these countries and regions to China.

Click here to download the China AQSIQ Announcement – ZIKA anti-mosquito treatment

Weakening of the Chinese Yuan

by Kevin Kahn and Jin Kong

Photo by Seongjoon Cho/Bloomberg

Photo by Seongjoon Cho/Bloomberg

China’s gradual devaluation of currency has gotten much attention lately. It has stirred speculations from deliberate currency war to a weakened economy signaling troubles ahead. In all likelihood, China is trying to stimulate more exports and remain competitive domestically against foreign imports. But as the RMB becomes a reserve currency, China is also very keen on keeping it stable and the fluctuations narrow.

A weaker RMB against the dollar does mean higher prices for selling US-made goods in China. Although China is transitioning into a consumption based economy, the pace of consumption is nowhere near where it would be if China was still on double digit growth. As of late, China’s growth is mostly concentrated in exports and it is questionable if importing into China is as easy and lucrative as others would make us believe.

Not surprisingly, the RMB has strengthened against the British Pound. China and Britain have also been forging ever-closer relationships. While we can speculate whether China can be the saving grace to the controversial Brexit vote, we are certain the currency fluctuations have made British-manufactured goods more competitive in China than US-manufactured goods.

It is important to remember China is still a centrally planned economy and its currency devaluation is very much deliberate and strategic, likely independent of any foreign influences. It is important to be proactive; after all, it is much more productive to flow with the changes than to complain against it. There is not much one can do about the Chinese government’s policies but as Bruce Lee once said, be like water.

Frequent evaluation of the exchange rate and aggressive negotiation of prices is key to staying ahead and maximizing your margins. If you are sourcing from China and you have not received a price reduction from your vendors, now is a good time to push for one. Generally accepted revaluation practice, if not outlined in a contract, is a 3% swing in pricing. With a 4.6% devaluation in 2016, it is worth the effort to ask for a reduction in pricing on Chinese purchased goods.

If you are selling to China, you may want to reevaluate your business operations and hedge against risks where you can. Since you will need to evaluate the structural and transaction risks more carefully, diligence and completeness is key. Adjusting the sales price is only one way, the key is to focus on cash-flow, supply chain, competitor actions, and consumer preferences in China. It may be difficult to hedge against risks with pricing adjustments alone, but process innovation and efficiency improvements together can be helpful.

For those seeking investors from China, now would be a very advantageous time to reach out, as Chinese businesses and personal investors alike are looking for opportunities to invest in foreign denominated investments – to hedge their assets against a declining Yuan.

If you would like to explore ways to strengthen your business opportunities with China, Kevin Kahn of K2 Industrial Controls Int’l Ltd and Jin Kong of Kong Esq., LLC can be of assistance. Just contact us at info@china-midwest.com to get connected.