#458 – Beyond China: Smart Sourcing Strategies with Vietnam Insider Jim Kennemer
Curious about global sourcing dynamics amid trade wars and tariffs? We have Jim Kennemer from Cosmos Sourcing on board to unpack these complexities. Discover how businesses have been navigating the trade landscape since the Trump administration, with Vietnam emerging as a strategic alternative to China. Jim shares his expert insights on why having a backup plan is crucial in this unpredictable environment and how companies have effectively dealt with unexpected tariff changes. Dive into the fascinating shifts in manufacturing, where Chinese companies are setting up shop in Vietnam, preserving factory setups to ensure business continuity.
Join us as we explore the vibrant landscapes of Vietnam and China from a cultural and economic perspective. From the bustling streets of Ho Chi Minh City to the incredible garment industry in Hoi An, Jim’s personal experiences shed light on the evolving manufacturing scene. We also discuss the industrial clusters in Vietnam and its reliance on Chinese raw materials, offering a glimpse into Vietnam’s potential as a burgeoning manufacturing hub. With anecdotes and insights, we bring to life the realities of working in these dynamic regions, including Vietnam’s growing prowess in textile and apparel production.
Looking ahead, we touch on global manufacturing shifts and future trends with Jim’s expert forecasts. From Mexico to Africa, we examine the potential and limitations of various regions in the evolving manufacturing landscape. Discover how robotics might revolutionize the industry and why Africa is seen as a promising future hub as wages rise in Vietnam. For anyone keen on understanding international trade, sourcing tips, or the promise of Vietnam as a reliable partner, our discussion with Jim offers vital insights to stay nimble and informed in today’s global market.
(Timestamps) –
In episode 458 of the AM/PM Podcast, Kevin and Jim discuss:
- 00:00 – Trade Wars Impact Vietnam Sourcing
- 01:55 – Fluctuating Tariffs Trend Discussion
- 11:53 – Manufacturing in Vietnam vs China
- 17:00 – Logistics and Industrial Clusters in Vietnam
- 20:19 – Vietnam Impressions
- 25:47 – Manufacturing Labor Turnover During Holidays
- 33:24 – Global Manufacturing Shifts and Future Trends
- 41:25 – College Football Fanatics Discuss Past Games
- 49:31 – Forecasting Global Sourcing Trends
- 51:06 – Product Sourcing Tips for Beginners
- 53:42 – Tech Pack Details in Clothing Design
- 57:48 – Sourcing in Vietnam
- 1:00:03 – Vietnam Sourcing and Negotiation Insights
- 1:01:11 – Building Relationships With Overseas Manufacturers
- 1:04:14 – Kevin’s PPE Sourcing Success in Vietnam
Transcript
Kevin King:
Welcome to episode 458 of the AM/PM podcast. You know, since Trump took office earlier this year, it’s just been all the talking has been trade wars and tariffs going up and down, and it’s hard to discuss those because you don’t know what’s gonna be happening in the next day. But one thing that’s better discussed is what are the different options out there that you should be looking at trade war or not trade war and that’s our discussion today with Jim from Cosmos Sourcing. He specializes in Vietnam. He started off in China and then has been in Vietnam for about the last 12, 13 years before it was cool to actually source in Vietnam, so he’s super well connected about the ins and outs of what’s happening in Vietnam, what’s appropriate for Vietnam, what you should maybe not do in Vietnam and so that’s what we’re going to talk about today is the options of Vietnam as a possible sourcing destination for you and your e-com business. Enjoy this episode with Jim. I got Jim Kennemer on the podcast. This guy goes back. I know a lot of you probably haven’t heard of him in the Amazon space, but he’s been around for a day or two doing this sourcing. How are you doing, Jim? Glad to have you here.
Jim:
Doing great, doing real good. How about yourself?
Kevin King:
I’m alive and kicking, as my buddy, Mark Dawn, would say. Perfect, it’s all good. I met you. You’re speaking at an event that I went to in Florida back in May and you’re talking about this hot topic right now. I think there’s like 26 of you out of the 27 speakers that were speaking about tariffs.
Jim:
Yeah, I was not the only one talking about tariffs.
Kevin King:
It was a hot thing back in May at the time of your talk, I think were we at 145? And then I think it was like shortly after that it went to the 30%.
Jim:
Yeah, I gave the speech on speech on month or on a Wednesday. At that time it was 145 percent tariffs on Chinese goods and then by that Monday they announced a night-to-day pause. So it’s down to 30 percent for goods from China to United States. So constantly changing. I feel like pretty much what I said.
Kevin King:
It’s hard to like, what do you? I mean, it’s been all over the place. First it goes from nothing to then Trump put on a 25%. Was it 2018 or 2017? Somewhere back in there.
Jim:
Yeah, 2018 and 2019.
Kevin King:
And then everybody thought Biden would take it away when he took over president. He kept it on and added a few to it, and then Trump comes in and starts every day. It was like what was it? Went to 40, then 60, then 90.
Jim:
45, 84 then 45 I think.
Kevin King:
Whatever number you roll on the dice.
Jim:
Yeah, some very random numbers, I feel like.
Kevin King:
And it’s very difficult to actually do any any like. What do we do? We got stuff on the water should I put in orders or whatever and everybody’s freaking out but part. But some of the big boys weren’t freaking out. They were like they were ahead of this because they’re they were pulse on the, on the wind and see which way it’s directed uh, what’s going. And they were had already placed some bigger orders, already got some stuff in. But and some of them had already been mitigating their risk by looking at other countries, which is what you specialize in.
Jim:
Yeah, that’s right. Yeah, we, I’m Jim. I don’t know we really got a proper introduction, but yeah, I run a product sourcing company. We’ve been operating in Vietnam since 2014 and expanding globally. But yeah, we’ve had a lot of clients that were already sourcing from Vietnam just in anticipation of more trade chaos. And then other people who kind of worked with us find alternative suppliers and never really placed an order up until April when the 145% tariffs went in effect, and so they, a lot of people, were really prepared and ready to move. But we also, throughout last month or throughout April, several months ago, we talked to several clients who big sellers to seven, eight figure sellers, who had no backup plan on China and just were, quite frankly, scrambling. So we I’ve seen sellers that had all different types of preparation some that had very well-detailed plans of alternate sourcing locations, alternate inventory strategies, other ones who just had their company running on autopilot and did not expect to have experienced turbulence like they did.
Kevin King:
Well, I think what caused a lot of people to freak out is they kind of expected Trump to do something crazy. Maybe not to that extent. But what they did not expect is when he rolled out this long scroll of like all the hundred and something other countries and Vietnam was on that at 46%.
Jim:
Yeah, they were.
Kevin King:
And everybody’s like, oh, I thought I was just going to bypass this, I’ll go to Vietnam. Now I’m at 46%. Now he put that on hold and that’s being negotiated. At the time of this recording. That’s being negotiated, but so that freaked a bunch of people out too. So how let’s back up a couple of steps here. So this sourcing in Vietnam has not it’s not new.
Jim:
Not at all.
Kevin King:
People are talking about it more now and it gets mentioned a lot of times in there with India and Indonesia and Mexico. It seems to be the common ones that people have at the tip of the tongue. There’s plenty of other options, but that’s the ones that people seem to be focused the most on. But you originally was when you started sourcing. You were based in what? Shanghai or somewhere right, and you were-
Jim:
Yeah, I started sourcing-
Kevin King:
You saw, like the writing on the wall 13 years ago.
Jim:
Yeah, so, yeah, in 2012, I started Cosmo Sourcing in 2012 in Shanghai. So, yeah, I was like every other company I feel like was product sourced from China. But yeah, in 2014 actually 2013 was when the first time I visited Vietnam. But I just fell in love the country. No one’s really saw Vietnam as an opportunity then and so, yeah, I had a chance in 2014 to move to Vietnam. I at that point, already quit my job, was working on Cosmo Sourcing full-time. So 2014, August 2014 I decided to move to Vietnam and primarily focused on sourcing from Vietnam and at the time, no one was really even had on the radar maybe a few companies, um, and we got a few clients like right off the bat. But, yeah, it was definitely something you really had to convince people, hey, Vietnam is also can make stuff. Because everybody at the time was just looking only at China, exclusively at China, like they made everything for everybody at that time and no one else was really even close to competing. And what we could do in Vietnam was pretty limited in 2014, like, see, the changes in growth in 10 plus years is, quite frankly, insane. Like we were doing really basic industrial wooden goods, some clothing or whatever-
Kevin King:
Lacquer stuff and-
Jim:
A little bit of lacquer the most. The big things we were doing, like the very first project I did, was actually I don’t know if you’ve seen wire like on big trucks, the big, like like electric wire on the big spools. We did the big wooden spools. That was our first project we did in Vietnam. The second one we did was, uh, wooden wheelbarrow handles and shovel handles. Um, so we kind of was industrial wood was kind of what our first niche was in Vietnam, and then we started expanding a lot of apparel and textile and then a lot of backpacks and luggage after that. But yeah, since then we started last few years we started doing more electronic manufacturing services, which what is even something I thought Vietnam could do five-plus years ago.
Kevin King:
Yeah, I have a buddy, a Vietnamese guy. His name is Dui Nguyen. It’s pronounced Nguyen. If you see it’s not Nguyen. People always say N-G-U-Y-E-N Nguyen and now it’s pronounced Nguyen like W-I-N. But he was a coder for me and did a lot of my coding on some old sites that I had before I was doing the whole e-commerce. I had some other businesses, yeah, and then he developed this sprinkler system and this was like I don’t know 15 years ago or something, or 12 years ago. He’s developed a sprinkler system to control, kind of like a, you know, control all the sprinklers in your house, and had a little electrical device and he was an electrical engineer. But he was manufacturing in Vietnam and at the time I was like dude, why don’t you just go to China? He’s like, no, Vietnam’s better, it’s cheaper. I, I can speak the language, it’s my people, uh, I want to help them out and but he was kind of early to it. But when did the Chinese? A lot of people don’t realize that, yes, Vietnam has their own infrastructure of manufacturing, but a lot of what’s happened and a lot of reason for the boom is the Chinese have gone there and set up factories and brought in some Chinese people to actually run those, and even some of the labor is Chinese. So can you tell? Can you walk us about, tell us how, when, about did that really start happening and what you’re seeing going on in that?
Jim:
Yeah, that was really the first trade war back in 2019. The first 25% tariffs Trump did and yeah, I mean so, Vietnam is different from China in that they allow foreign ownership of factories. So there are a lot of foreign-owned factories and by our estimation, it’s probably about 20, maybe up to 25 now percent of factories in Vietnam are owned Chinese. But yeah, after that first boom, a lot of Chinese companies were setting up pretty much clones of their factories in Vietnam literally same machinery, same management and actually kind of a funny story about that in 2019. Yeah, probably 2019, maybe 21. I had a client who wanted to move his factory from Vietnam to or from China to Vietnam, and we took him on a couple of tours. He makes he makes political signs, um. So he had like corrugated plastic, chromoplast, chromo printing and a few other specific requirements for these factories. But yeah, we went to like three or four factories that could do it. But one of these factories, as soon as he walked in, he was like, oh, this factory can do it because he saw the machinery is the exact same machinery that his factory in China had. So we tour it, get to meet the management. Um. So he was like, yeah, this is like really weird, it’s like same machinery, a lot of same things. So at the end of the tour we were just like you know, it’s a plant man, floor manager kind of walking us around, but we could at the end of tour we get to meet the management. Turns out the exact same factory, um, that he was working with the China same owners.
Kevin King:
Oh really.
Jim:
Yeah, it was up. It’s a Vietnamese name, so all Vietnamese structure. So when he looked it up it was, like you know, been to one printing sign printing company or something along that lines. But yeah, it was the exact same owner. Ended up like setting up a clone, pretty much exactly as factory in China was, and he didn’t know that, like he never talked to you, didn’t want to talk to his Chinese factory because he didn’t want to get on the radar that was looking at moving to Vietnam, which is why I never asked. But yeah, it turns out it’s the exact same factory.
Kevin King:
It’s the exact same factory that they own, so did they catch on to that before they gave him a price, or did he get a price before they caught on to that?
Jim:
Well, he got a price. It’s the same factory, so I mean he’s doing business with the same people now. So yeah, so yeah, it’s the same factory yeah.
Kevin King:
I’ve been to Vietnam. I’ve been uh to the north end of the south, uh, Vietnam, and so I’m familiar with it. But a lot of people are not. They really love Americans there, they love the west.
Jim:
They do.
Kevin King:
I mean, a lot of people think, well, there was this war 50 years ago and, uh they, they hate us. They actually don’t they. They are very, they really like the west.
Jim:
Never been an issue. I’ve lived there for years. No issue.
Kevin King:
But are there regions of Vietnam that are industrial? Like you know, China has pockets and regions. Does that exist in Vietnam too, or how does it work?
Jim:
Yeah, there’s definitely big clusters of factory. I mean our office. We say Ho Chi Minh City but it’s actually in Binh Duong province, which is about an hour’s drive to Ho Chi Minh City and that’s the largest single industrial area in Vietnam. But even around Ho Chi Minh there’s Longan Dong Nai. So within about a one to two hour radius as all the factories and there’s definitely clusters. And then up in Hanoi has a bunch of several clusters like around Hanoi. I mean, Apple has their own and Samsung have their own clusters where they make galaxy phones and a bunch of Apple products. So yeah, it’s definitely clustered um predominantly in those two areas. Ho Chi Minh has about by about 55 percent of the industrial production in the country in the about a two, three hour radius of the city. There’s not much in the city center itself but it’s all more or less a circle around the city of manufacturers.
Kevin King:
So are the parts being made? Is everything being made from scratch in Vietnam, or is a lot of the raw material still coming from China into Vietnam, where the labor is being done?
Jim:
A lot of raw materials, a lot of components are still coming from China. But yeah, the final products made in Vietnam and the actual production is done in Vietnam, like we’re on backpacks, like the zippers, the buckles, some fabrics like nylons certain nylons will come from China, but the actual production that will be done in Vietnam. And when you get molds, like talking do one luggage product project, it’s kind of hard because all the molds for this ABS hard shell luggage all come from China. So we’re trying to find mold manufacturers outside of China and that’s kind of hard to do. There’s some in Taiwan so we might go with Taiwanese manufacturer for the molds. But yeah, I mean a lot of stuff like that still comes from China and it helps because the proximity is pretty close to China and it’s relatively easy to move stuff from China to Vietnam.
Kevin King:
So Vietnam, basically, is where China was maybe 20 years ago, where the labor is. If China, if the average person in the US I think maybe you or somebody showed this it’s 30 bucks in China, it’s 18 bucks in Vietnam, it’s six bucks an hour or something like that, they’re still at that.
Jim:
Yeah.
Kevin King:
So that’s the main advantage is the labor cost right?
Jim:
Yeah, labor costs. It’s definitely getting higher and higher every year. Before 2019, it was significantly cheaper than China, but after 2019, I feel like it started. Labor costs which is good for the workers has been going up and starting kind of relatively near the same level. I would still say it’s cheaper, but I mean it’s going to be cheaper than a tier one city in China, but also potentially even more expensive than tier four or tier five city in China, so it’s, but yeah, it’s generally cheaper.
Kevin King:
So as a labor pool, I mean the people doing the menial work are most likely Vietnamese. But what about, like the design engineer system, the engineers and stuff? Are those having to come from China, or is there a lot of education that’s really ramped up in Vietnam where they’re producing their universities?
Jim:
It’s a mix um, honestly, and like we said this, like they do allow foreign ownership of factories, the countries actually own the most foreign factories tend to actually be Japan, Korea, Taiwan, more than even China.
Kevin King:
Vietnam?
Jim:
So we actually work with, yeah, in Vietnam so like when we do like yeah, when we do like screws and whatnot. Like we work with Japanese factory owned factories. There’s like two or three of them that just do screws and fasteners and, yeah, all the management there would be, in that case, Japanese engineers as well Japanese. We were with some EMS manufacturers and this mix some Chinese, some, but the biggest one are actually Taiwanese owned and so it’s the same deal like Taiwanese manufacturers and engineers. So it’s definitely kind of will be a mix. So, yeah, when there’s foreign investment in the factory, they tend to have their management from the respective country. We even do like Danish owned factories. Like we do a lot of workwear, for instance, like some work outerwear, and that’s a Danish-owned company and they again have Danish engineers and managers, Danish designers and whatnot.
Kevin King:
How? Are the factories in China still mostly I’m sorry in Vietnam still mostly human labor, or are they getting robotics? Like you know, I see stuff all the time on TikTok and on on online how China’s just ramping up the robot. I mean Amazon and people doing here in the west too, but they’re ramping up crazy robotics. Is that happening in China, or is it still more the, the manual, menial type of stuff?
Jim:
It’s still mostly manual but there’s definitely been some advancements. When we do even fabric cut and sew projects, in the old days they’d get literally paper patterns for the fabrics, draw it out on a piece of chalk and then have a bandsaw basically cut it, and even now I’m seeing they just put the fabric in a big pile. Then it’s actually a lot of. It’s not even laser cut now. Um, so that’s getting more advanced. Like a lot of furniture factories have more CNC machining and we’re seeing some 3d printing and more CNC um machining, but overwhelmingly it’s still majority is um people focus. Yeah, I know, in China I’ve seen like videos of the dark factories and it’s crazy and we don’t know what dark factories are. They’re literally the factories where they don’t have lights or they turn off the lights because there’s no people on the floor, so they save electricity, just turn off lights, and so, yeah, they call them dark factory and I really want to see some. I know some of the car factories over. There are basically very few people, almost entirely robots in China now, which is just insane.
Kevin King:
What about the infrastructure? I mean in China the wheels are well greased to get raw materials to the factory. If another factory down the street needs something they’re all in the same area they can get things easily. And then, once it’s ready to get to the ship, the transport and the packaging and then getting everything out, it just works. It works like a clockwork. Yeah, does the same happen in Vietnam? Or do we have some stumbling blocks where it’s like oh, there’s a little bit more issues, a little bit more trouble, some things can go wrong, a little bit more not quite as well greased, or what are you seeing there on logistics side?
Jim:
It’s gotten much better in the last few years. Everything is kind of clustered so that similar industries tend to be in the same area, but yeah, I mean in the last several years the ports have expanded massively, like pre-2019, pre-2020, like a lot of the ports were just overcrowded, like literally trucks will wait days outside the ports just to load on on containers, and I have not seen that issue as much anymore. Brownouts were occasional, but again, last few years it’s not been an issue at all. So they’re definitely getting more and more advanced investments into infrastructure. Vietnam’s definitely spinning big to make sure everything goes smoothly, but it’s still not on par with China, because China, I mean the infrastructure is just insane, to be honest, but it’s getting better and still pretty good.
Jim:
And yeah, what clusters like? Anytime we do wooden goods, you’ll find that everything from the raw logs to processing, from the raw logs all the way into the finished furniture no matter if it’s like high-end or low-end MDF furniture all those factories are like clustered within the same industrial park, like basically there’s a raw log processor who takes the logs, make the boards and then they sell it off to the next person and then so on and so on until you get the finished furniture product. So, yeah, you definitely see that cluster and same with fabric. Like there’s a couple of fabric mills and they get clustered together, um, but yeah, I mean, yeah, definitely wooden goods. It’s extremely clustered. They just really kind of figure out where the port is, because it comes down the river a lot of times, from plantations up in the Mekong river delta and then right where they unload it, they pretty much process it right next to the port and then it’s all within a mile radius or so, five or six different factories working one after the other. Take it all the way from we’re all out to the finished furniture product.
Jim:
It’s quite impressive to see because we were talking about like one client just at a furniture factory, talking about because he wanted seven layer plywood for his product, and factory was like, yeah, we just buy our plywood from the factory next door, let’s go check them out. So he called up the factory manager, went next door, the factory next door where they made the plywood, and so we started talking about with that factory about their plywood standards and how they could do seven layer plywood and he had like specific thicknesses and all that and so, yeah, it was basically just extra 30 minute mini with a different factory at it all because it’s literally next door and you guys, plywood how he wanted it.
Kevin King:
What are the big ports in Vietnam where most things ship it out of?
Jim:
Yeah, I mean we ship out of Vung Tau. Saigon has their own port. Up in in Hanoi is Katmaw and a couple others. Da Nang is a pretty decent-sized port. So yeah, I mean, yeah, the ports tend to be pretty close by. Yeah, we tend to mostly do Saigon port or Vung Tau when we do from Ho Chi Minh City. Our team is based in Ho Chi Minh City. So I feel like most of our projects in that area.
Kevin King:
Ho Chi Minh City, is what used to be called Saigon.
Jim:
Yeah, up until a little over 50 years ago. On April 30th of this year was the 50th anniversary of the fall of Saigon and the end of the Vietnam War.
Kevin King:
That’s true. Yeah, my father served in Vietnam. He was on. I don’t know if you ever saw the movie Apocalypse now? A movie from like the 70s Little riverboats.
Jim:
Yeah.
Kevin King:
I don’t know six or eight guys, or something. Yeah, these little riverboats and he would. He was in the Navy, so he was in charge of a fleet of six of those and their job was to take seals up the river, up the Mekong Delta, and drop them off of darkness under the bushes. They go in, they do their mission and usually come running back under fire, being chased, and they have to evacuate. So I went back with him. I went to Vietnam in 2009. So it’s been 16 years, but I went back with him. It’s his first time back. So we toured around where some of the bases used to be. One of them is now a hotel and it was kind of weird for him. But he wouldn’t go to the north. He’s like north, that’s enemy. I’m not going to Hanoi, I’m not going up there to Heilong Bay or any of that stuff. So we skipped that part and I went there by myself later. But I was impressed with Vietnam wasn’t what I expected. I think a lot of people that’s never been to China have this mental picture in their head of like a bunch of rice fields and, uh, you know something you saw in the movie the Bruce Lee movies 30 years ago that’s China. China in particular, is more modern than its tier one. Cities are way more modern than any city in the United States. Any city.
Jim:
Yeah I mean living in Shanghai, just explaining to people how like advanced their metro system and all the electric buses and everything. People just didn’t believe me or have a concept to even understand what it was like.
Kevin King:
Yeah, no, it’s, because it’s all new. I mean, it’s all been built with the latest technology, but they’re way advanced. Vietnam is not at that level yet, but it’s more than rice fields.
Jim:
100%.
Kevin King:
And cart pulled, pulled. Ox is pulling carts, um, so I mean it’s, yeah. The thing that always sticks out to me is, uh, the freaking motor mopeds everywhere. I mean yeah you play frogger you play frogger in Ho Chi Minh city to cross the street.
Jim:
Um just walk at a consistent pace and look, make eye contact and that’s-
Kevin King:
Is that what it is? Make eye contact?
Jim:
Well, just look at the way so you actually see them coming, and make sure they go around and walk at the same pace. If you like, stop, cause they’re anticipating you moving, so they’re going to go where you were. If you were like, freak out and stop. That’s when accidents happen. If you just move consistently, that’s the trick.
Kevin King:
Yeah, that was crazy, but I got some really nice artwork hanging in my house and I bought a couple of marble statues in Da Nang.
Jim:
Oh nice, yeah.
Kevin King:
I had those shipped back from Hoi An.
Jim:
Right by Marble Mountain.
Kevin King:
I mean Hoi An is one of my. I love Hoi An. My ex-wife. I told her at one point we were going to go have a bunch of custom clothes made and I said, oh, we got to go to Hoi An. She’s like, why Hoi An? I said because you can take any picture from any magazine, anything that’s been on the red carpet, go there and say I want this and then two or three days you get a hotel and you go tour the city and enjoy the food, the pho and all that kind of stuff. It’s not pho. Everybody that’s listening. Pho is not pho. When you order that locally it’s called pho. Pronounce it right, you know you’ll. You’ll get a better tasting pho anyway. Uh, so we I was like we’re gonna go to Hoi An because the garment stuff there yeah, city’s cool number one and then just all the garment. I had a complete out like five outfits made suit. Oh yeah, head to toe custom fit like in a day or two. I mean it was and it was. It was cheap. I mean it would. This would have cost me five thousand bucks or something. Here it cost me like three hundred dollars or I don’t know what. I don’t remember the exact numbers, but it was crazy cheap.
Jim:
Yeah, I got the suit that I got married in, made in Hoi An. It was a nice royal cashmere suit and yeah, I think it was 160 bucks but I spent extra at the silk line in the cashmere.
Kevin King:
Well, mine would cost more because I’m a bigger guy, I need more fabric. So you know I’m just kidding, but no, I mean. So there’s a lot of really cool stuff there.
Jim:
Oh, it’s great.
Kevin King:
So do you speak Vietnamese?
Jim:
No, I’ve tried and I’m awful at learning languages. When I lived in Shanghai. I lived in Shanghai for two years. I took Chinese lessons the whole time and beyond ordering food and getting around taxi cabs. I, just I don’t have that process, that ability to learn languages at all. I just I. It’s like my weakness is learning languages. I know the basic, I can get around. I go over a food item, say hello, goodbye, and all that.
Kevin King:
Yeah, I always surprise when I get. I go to some of these uh massage places, sometimes get a massage and, uh, it’s usually run by Chinese here in the states, like the foot massage places. Yeah, I know, not those kind of massage places you’re all thinking about. These are legit massage places. No, don’t get, get your mind out of the gutter, uh, but I go and I, I go into them and at the end you know I’ll, I’ll say shi, shi, which is thank you, and Chinese. I’m probably butchering it, but they’ll always look at me like, oh well, they’re like all surprised. I know, like you know, thank you. In Chinese, the same people always love that when you know a few things. And same thing in Vietnam, as Vietnam have all these holidays, like China seems like they don’t work half the year because there’s a holiday.
Jim:
But there are several big holidays because, yeah, I mean, Tet is the same as chinese new year same dates, um, and effectively same holiday. And yeah, we had two big ones back to back. We had the three unification day, which is what they call the end of the Vietnam war, because it’s when north and south were united. And then Mayday, recently, Chi Ming festival, April had like three April May. Yeah, Mayday was May 1st, but yeah, it’s not as many, but there definitely are a few holidays and you kind of get people kind of get tripped out from it. Yeah, no one expects Tet to be such a big holiday. They were like oh, we just got Chinese new year, so we want to move to Vietnam because we want to get the work done, like it’s actually going to be the same in China or same in Vietnam.
Kevin King:
Do you have the same problem with turnover in the factories? They haven’t like gotten darn in Vietnam, I mean, sorry, in China. During Chinese New Year, a lot of those workers go out of the tier one cities back into the countryside and they don’t, they never come back and you get a fresh group of people that come in after a big holiday and that’s where a lot of problems start happening with manufacturing. No, it’s the same thing happened in Vietnam, or no?
Jim:
Yeah, it’s pretty much the same in Vietnam because, yeah, a lot of the workers are signed a year-long contracts and they begin to end at so, yes, same deal, because people leave early from their contracts, right before and then, right after same deal they have to hire new workers to replace the old ones or renegotiate old contracts. So, yeah, you know it’s a two-week holiday. It’s really a month, because one week of them having labor shortages and a week of them trying to rehire more people for the next year.
Kevin King:
No, the workers staying in dorms and stuff at the uh factories, like they do in China or-
Jim:
Not as much, but it does exist. Yeah, so there are dorms but yeah, most of them tend to live pretty locally, relatively to the factories and kind of commute in.
Kevin King:
So if I was looking now, is anything being done across the border in Cambodia? Are you doing anything there, or just strictly?
Jim:
uh, we do some in Cambodia, but the working conditions in Cambodia are a bit worse. I’m I’ve heard not to do Cambodia, if I have the choice, to be perfectly honest. But yeah, we do do a some in Cambodia. There are a lot of factories. A lot of Vietnamese-owned factories even will have a secondary factory in Cambodia to do extra labor or whatnot, because it is cheaper labor costs even in Cambodia than in Vietnam. So we’re with them occasionally, but don’t do too much.
Kevin King:
What are the good things to do in Vietnam? What is Vietnam like, okay, stay away from this, don’t, don’t ever do. I don’t know what it is, but don’t ever do this in Vietnam. Stick that, leave that in China or somewhere else. But if you got this, this and this, definitely take a look at Vietnam.
Jim:
Yeah, apparel, textile, anything made of fabric backpacks, luggage, purses, stuff like that, and your duffel bags, anything, bed sheets, anything made for fabrics great in Vietnam, it’s their largest single industry. By our estimation, textile industry has about 6,000 factories and 2 million people work there, so it’s the largest industry by far. Then, second, that we do a lot of shoes um Vietnam’s largest exporter shoes in the world. Um, so we do everything from Nike or not Nikes’ um to sports shoes, tennis shoes, pickleball shoes, work boots um leather shoes and everything in between, even like leather shoes with like custom orthotics and insoles, so we can do some good customizations. Um. Second, that a lot of wooden goods and furniture um. Vietnam is a tropical country, so they have excellent tropical hardwoods access, tropical hardwoods um, so sounds like bamboo and stuff like that well, even like acacia antique and um rosewood and rubberwood um, so they have yeah, it’s really good because they’re part of Asian.
Jim:
So there’s plantations all throughout Southeast Asia for everything um, so we can get wood transported pretty easily. But most of it’s even grown grown pretty locally like we do probably no one would work with as acacia. And then we do a lot of rubber which is pretty identical to oak. In fact, a lot of times oak is our rubber. What is called oak? Um because it’s so similar in density and color. But yeah, we do, yeah, a lot of furniture, mainly in home goods um out of wood. And then, beyond that, we’re starting to do more and more plastic and silicon injection molding. That’s kind’s kind of one of the quicker growing industries.
Kevin King:
But yeah, there’s a lot of electronics. What about electronics?
Jim:
Electronics is hit and miss. Like we said, it’s growing. We do some electronic projects in Vietnam Sorry, do more Like we just did a rice cooker project, but it’s very hit and miss on what they can do. We did one project recently that I was quite proud about. We did a there’s a remote or the remote control stand up paddleboard fin. So it had a remote in your hand and bluetooth connection. We actually managed to do majority of that in Vietnam, um which is.
Kevin King:
I know that project, I have that product. That’s a Kickstarter.
Jim:
Yeah, it might be, I don’t know-
Kevin King:
It looks like it looks like it’s white and has like it’s like a little. They have a white one and a black one. It has like a little fin.
Jim:
Yeah, that’s our client.
Kevin King:
Yeah, it’s called um. Uh, I have it. Uh, I just saw it yesterday in my garage I was cleaning stuff up it’s. Yeah, it goes on the bottom of a of a surfboard and then you have a little like watch.
Jim:
Yeah, on the paddleboard.
Kevin King:
And massive delays on that. Uh, and getting that out, because the guys that made that not that’s not your fault, it’s the guys that made that. I’ve never done manufacturing before, so they didn’t understand the process. And then they had did some testing and had to go back to the drawing board and fix a few things.
Jim:
Yeah, they’re yeah-
Kevin King:
So I know that exactly. That’s funny. You say that, yeah, I know the exact product.
Jim:
Nice.
Kevin King:
Um, yeah, yeah. So what? What should I absolutely not do?
Jim:
Oh, man I would do. We get a lot of requests for LED lights, um, and LED lights are almost exclusively made in China, um, so that’s kind of one of the hardest ones to find and kind of some more complex items like this is a simple one. We were looking at keychains, but they had like three different materials and kind of various molds, but the price they were getting was super, super cheap in China. We just couldn’t even come close to reaching those prices. These are like the touristy keychains you see in gift shops, of like yeah every tourist place they were supplying them and they were making exclusive in China got hit with 145 percent tariffs, but it was just the mix of the materials they were using, because they had rubber keychains um metal keychains. All that it was just impossible to find at that such low price, like we couldn’t even come close to their price. That was a little frustrating um to get um. But I mean there’s definitely kind of more and more coming to Vietnam.
Kevin King:
What about IP?
Jim:
Intellectual protection?
Kevin King:
Intellectual property. The Chinese don’t expect it. You can have an agreement in China and it doesn’t mean anything. How’s the situation in Vietnam with counterfeiting and knockoffs and factories stuff going outside the door and sharing?
Jim:
It’s better because, knock on wood, we haven’t really had a big problem with it in Vietnam. You definitely have to protect yourself. Vietnam is nice that you can actually enforce English language contracts.
Kevin King:
Oh, you said it.
Jim:
Yeah, but we still always try to get everything written in Vietnamese and Chinese. It’s not been as big an issue, but it’s definitely, I would say, easier to enforce in Vietnam, but not easy at all. Yeah, I mean, there’s a lot lawyers that can handle ip if you’re really concerned. And, like we said, I kind of mentioned luggage client we had recently. He’s very adamant about ip protection from China. To the point, does he want his molds made in China because he’s convinced that the Chinese factory is just going to sell them. So he’s doing everything in Vietnam that he can or not in China.
Kevin King:
What about other regions? I mean, there’s some other sourcing. People are saying, hey, Mexico is hot right now, and you see someone doing a webinar to the Amazon crowd. Hey, you should source in Mexico. Then someone else is like no, no, no, forget Mexico, it’s Indonesia, Indonesia is the hot spot, yeah. And the next guy comes up we’re leading a trip to Vietnam, sourcing trip to Vietnam, no, no. Next one comes and says no, no, no, you all got it wrong. India is where the hot, where it’s at. Let’s come to a show in India. What’s going on? Where are all those valid? Are you doing anything in any of those or is there one that you really think is like a head shoulder above the rest after China?
Jim:
I mean, I personally Vietnam, like we started expanding to southeast Asia and Mexico since last year, but just in terms of what they can do is very limited. Like we’re looking a lot of Mexico and they can do like industrial metal, aftermarket car parts, some workwear projects, denim stuff like that, but it’s very limited and the amount of people we get request products from Mexico versus what Mexico can actually do is, um, yeah, I mean it’s the demand for Mexico manufacturers much higher than what they can make, because most of what the factories there are they’re set up by. Like GM has their own factories for car parts and sand metals and other big American brands have their factories but they only make exclusively for that brand, so there’s not much contract manufacturing that people like you and me can just.
Kevin King:
Well, you have the Chinese that set up these industrial zones along the border, which Chinese built and managed factories right also.
Jim:
Yeah for sure, definitely yeah. And when I was there, I noticed there was a lot of Chinese just everywhere with factories. Probably should have walked up and asked them hey, what’s your factory? What’d you make more than I did?
Kevin King:
Yeah, I always tell the story. Regular listeners of the podcast probably heard me tell this. About those of you that haven’t, I always remember. What drove this home to me is that the impact of Chinese manufacturing around the world is during COVID. Remember, in 2020, when COVID first broke out, there was a region of Italy that really got hit really hard. It was all over the news and like people were dying left and right. Uh, like, like crazy. And there’s even a documentary, I think, on Netflix or Hulu or one of those that kind of chronicled some of the doctors dealing with this and I was like man, why is this one little area that bad? And then, somewhere, another news story came out and it showed that they didn’t tie the two together. I tied it in my head, but that area is a huge industrial area where all your made-in-Italy sunglasses and made-in-Italy handbags are actually made in Italy true statement-
Jim:
But it’s not in Milan right?
Kevin King:
By Chinese and a lot of the factories. The biggest trade route was Wuhan. So people coming from Wuhan, where COVID originated and broke out from before we knew that this was a thing. They were going back and forth, so that’s why it spread so much. So that’s like ah, okay, that makes sense now. Man, I had no idea that at the time that China had such a presence in Italy, even to actually make stuff, I mean the thing about China is they’re really. They’re not great at innovation, at first-generation innovation, but they’re masters at second-generation innovation. So if someone else creates the brains and that’s not to say that the Chinese don’t have smart people and they do innovate some things, just generally speaking and they’re not they’re behind in innovation and first generation innovation. But once someone from the west particularly figures out, hey, we need to make this iPhone, this is what’s going to do, they can take that and like beat the crap out of it to figure out what’s the best way to manufacture and most cost-efficient way to manufacture this and to put this together and how can we tweak it here and there to actually make it even better. They’re masters at that. Yeah, what about the Vietnamese? What are they? What are they masters at?
Jim:
I mean in terms of like high level. I mean they’re definitely getting there. Um, I mean that’s a good question because I mean we do a lot of like. Yeah, I mean terms of like iPhone level stuff. They’re not really quite at that level at all. Because a lot of like, what I mean like what we said we do in Vietnam tends to be like in peril on textile manufacturing. But they’re definitely good at like figuring out ways to get fabric stitching um products down, like when we do plush toys. They can really get the fabrics or the patterns down just from basic images. But yeah, it’s definitely not at the level of Chinese when it comes like recreating something like the iPhone and figuring out how to do that efficiently. Haven’t gotten there yet. Because, yeah, I mean when I know the apple factory in Vietnam is more or less ran by Apple more directly than even the Foxconn plants and um in Don Guan and Guangdong province, um, so I mean, yeah, I mean that’s that’s kind of good question.
Kevin King:
Well, robotics is going to take away a lot of the human side on a lot of stuff, but it’s where robotics is going to have a hard time catching up is in hand hand stuff like you’re doing little toy, so little toy, soldiers or miniatures, and you got to paint, you know, the boots on this little miniature or something. That’s where it’s. It’s hot. It’s going to be hard to automate a lot of that out and right now you know that’s gone from predominantly China to move in towards other countries like Vietnam. Um, but I think a lot of people are saying Africa is where it’s going. Next, as you just said earlier, Vietnam’s wages are starting to go up. The next place for this kind of stuff is is Africa? Yeah, are you? Are you dabbling in that? Are you seeing any?
Jim:
Not in Africa specifically, but I, yeah, I do know that there’s definitely going to be some, a lot of investment, especially from the Chinese, for setting up factories. I know like some textile factories and whatnot are getting stopped there, but I personally don’t have too much experience source from Africa what that’s going to be definitely worth something checking into because it’s yeah, 2030 is probably when that big shift will probably happen. Because I know China they want to move up higher and higher in the supply chain. What would they make in terms of in country? You know their cars, airplanes, microchips, iPhone, and they’re kind of more or less, from my experience, seem to be fine, actually almost encouraging the lower value production to move outside the country, which is why a lot of this movement in Vietnam and why China’s not being that active and stopping it. But yeah, I mean, if China owns the factories in Africa or Vietnam, that I mean ultimately good for China and China definitely sees that.
Kevin King:
So how do people find Cosmo, find Cosmo Sourcing? I mean, how, when you said that when your first products were back in Vietnam, you said those first two products were the big metal things that they wrap the wires around.
Jim:
Yeah, the wooden spools.
Kevin King:
How did they find you?
Jim:
At that time? I just had friends.
Kevin King:
Are you on Alibaba? Are you on?
Jim;
No. I’m not on Alibaba.
Kevin King:
How do they find you?
Jim:
I mean, I have a website, cosmosourcing.com, and so I SEO seems to be the number one way. And then, yeah, I’ve been around for 10 years, so majority of my clients come from word of mouth, so clients referring to other clients, which has been great, um. But yeah, in those early days I had just cold calling friends and say, hey, do you know anybody looking for products in Vietnam? And that’s how I got started. One of my college classmates worked for the company um, they’re kind of industrial packaging company, you just work for them and just knew the contact. So he put me in touch with their head of procurement and that’s how that first two projects I started. And then I had a mentor in Shanghai who worked for a trooper which is actually a Mexican, basically a Mexican home depot. He was their head of sourcing. So when I moved to Vietnam he just got in touch with me like, hey, we don’t have anybody in Vietnam. Do you want to help us with that projects? And that was the wheelbarrow handles, um, and shovels and whatnot, because they just didn’t have anybody in Vietnam. Or just find us a factory, we’ll work with you. And so that’s how I got started there. But yeah, after doing that for a few years, you build a website, you build a team and then quarter mouth gets out. People start finding you online.
Kevin King:
So what brought you back to the States? So you graduated from Alabama, then you head over there. You’re working for another company, right? You said yeah, in China, and then you end up doing the sourcing uh, moonlighting on the side and then it became full-time. Yeah, and then over to Vietnam for quite a few years and then now you’re back in the states. What, what’s? What brought you back?
Jim:
Well, originally COVID brought me back. Um, so, yeah, then me and my wife basically yeah, in 2021 we had our first kid and ended up settling down and having a family. So just staying stateside for the time being and traveling as needed, but yeah, kind of starting a family really kind of brought me back to the states.
Kevin King:
Have you been back to Vietnam since 2021?
Jim:
Oh yeah, I was there last year.
Kevin King:
Okay.
Jim:
But not as much as I would like to go.
Kevin King:
Is your wife Vietnamese?
Jim:
No, she’s American from Wisconsin, which is why I went Wisconsin, not Alabama.
Kevin King:
Oh, okay, okay, Alabama. I think I was telling you the story when we met about the Alabama-Texas A&M game a couple years ago. This game was Alabama was number one in the country. I think we were like at the beginning of the year. We were ranked pretty high. At the time we had fallen out. At the time we had fallen out of the rankings. I’m a big, huge college football fan, as are you. I was always. That’s like religion, Saturday religion for me and I was going to watch that game and my wife was saying, no, Kevin, Austin City Limits Festival is going on and Billie Eilish is playing tonight. I want to go to Billie Eilish and I’m like, so I did the good husband thing I set the DVR to tape the game. I turned off my phone, literally turned off my phone. I didn’t want anybody messaging me, avoided all radio, avoided everything, made it through the night. We come back. I sit down 11 o’clock at night, 11:30, and like, all right, I’m going to watch the game. I turn on the DVR and the damn thing was like still showing the post game because the game had gone over or something. I’m like, oh no, no, I can’t see it. I can’t see it. I can’t see it. Don’t, don’t turn the sound off. Turn the sound off. And I could not get the dang thing to rewind. So just naturally, I go onto my phone, turn it on and like start to Google. You know how to fix this issue. And all of a sudden texts are coming in left and right about how we kicked a field goal in the last few seconds and won the game, and I was like this is a game we’re supposed to be annihilated in Alabama’s going to destroy us and I’m like never again. Wife, you’re divorced. Bye, no, I’m just kidding. I ended up divorcing her, but not for that reason. So yeah, so you’re a huge follower of Alabama football right?
Jim:
Oh yeah. Went to every home game, even when Mike Shula was coach.
Kevin King:
Oh yeah.
Jim:
And traveled to as many as I could too. Yeah, I loved Alabama football since I was a kid. My parents went there, my grandparents.
Kevin King:
So have you been to every SEC stadium?
Jim:
Not every. I’ve been to pretty much everyone but Missouri, Florida I’ve actually never been to Florida and South Carolina.
Kevin King:
Have you been to college station?
Jim:
No, I haven’t. I’ve been to Austin though.
Kevin King:
Oh, I’m sorry, I mean I live in Austin. I live in Austin, I love Austin as a city. But all these people always say what’s it like as an aggie living in Austin, I said it’s like living behind the orange curtain. Uh.
Jim:
I know. I cannot live in Auburn or Tennessee.
Kevin King:
Yeah, exactly. One of my favorite things to do, though, is when Texas sucks especially for about a decade they were bad is to listen to talk radio here and just listen to them and complain. That was one of my favorite things to do, but you probably the same with Auburn.
Jim:
Oh, absolutely, and Tennessee too.
Kevin King:
Yeah and Tennessee.
Jim:
Yeah the whole NUCO thing is quite nice and all their little head coaching searches, that they’ve gone through. All that drama.
Kevin King:
So the season starts next month, I mean at the end of August. What do you think is going to happen this year? What’s going on? Is Georgia going to reign? Is Texas going to say hey, we just came in, now we got Matt, we’re going to be crushing it? Are you guys going to be back Alabama’s back. Second year coach? Well, y’all have a second year coach. We have a second year coach.
Jim:
Yeah, it’s true. I think we’re back. I don’t know, it’s hard to say. I really hope we’re back. We at least got to make the playoffs and do well because, yeah, missing playoffs last year was just brutal. I don’t think I can handle another sub 10 loss year. I take every loss way too personally. My wife would tell, just like Jim it’s just a game.
Kevin King:
I used to take them. I take it used to take them personally, but I have to remind myself now. It’s just a game yeah, it’s, still it’s still still. It’s. It’s. My blood runs, maroon, I mean your blood runs-
Jim:
My blood runs crimson.
Kevin King:
It’s hard to do that.
Jim:
Yeah, it really is, like I just can’t separate myself. Yeah, my wife only thinks I’m a fan of Alabama because they’re good. But I mean, I grew up in Alabama. So even our three and eight years I was still watching every game through the dark ages, through Mike Shula, Mike DuBose, all the Mikes we had. So yeah, it’s definitely yeah, I mean Saban was excellent, though I definitely love the Saban.
Kevin King:
Jim, you’ve got to fix this problem, because here’s the problem with Alabama football. Y’all don’t got no alumni money. You need to fix this.
Jim:
Oh I know. I need to be the billionaire.
Kevin King:
You need Cosmos Sourcing to blow up you can have the Cosmos Sourcing stadium, the Cosmos Sourcing athletic facilities, so the Cosmo athletics. There it is, Cosmo athletics. Y’all need some money to pay these guys. Now that college football players, that’s your problem. You don’t have rich oil money like we have here in Texas.
Jim:
Yeah, no kidding, we don’t have a single billionaire alumni.
Kevin King:
You don’t have a single billionaire alumni?
Jim:
No oh yeah, we’re like one of the few fan bases. I mean you got a like broad amount of people that donate, but yeah, it’s definitely we’re losing money getting bad.
Kevin King:
Oh man it’s gonna be yeah, it’s gonna be interesting. It’s gonna be interesting here. So how did you do that? When you’re in Vietnam, did you watch the games like?
Jim:
Oh yeah, I woke up at 3 am yeah, VPN or some sketchy pirate sites. Well say, I was ever breaking the law but definitely found some ways to find it. But yeah, I literally woke up at like 3 am watch every single game. I don’t care what time it was, I was up watching it.
Kevin King:
And was your wife with you in Vietnam at the time?
Jim:
Uh, yeah, I met my wife. She was an English teacher in Vietnam, so we actually met in Vietnam. Oh, so we were at the time dating.
Kevin King:
Cool.
Jim:
Yeah, same in Shanghai. There was one bar in Shanghai that showed every college game, the camel, which was excellent because it was. There was no one big fan base there, so, like every single fan of college sports just went to this one bar. They were open 24 7 and you had Notre Dame, Oklahoma, Michigan, wherever all in this one bar watching games. And, yeah, that place is great.
Kevin King:
Oh, that would be fun.
Jim:
Yeah, we used to drop until like whatever time. Like I remember, yeah, kick six. Probably should have mentioned that bad one, but yeah, the kick six game. I remember it was like the perfect fall day and like that game.
Kevin King:
Those, those listing that I’m gonna I’m gonna put a little dagger in Jim’s side right now. The pick six game was like 10. Uh, 2012, 2013, somewhere around in there, maybe. Yeah, 2013, the game was over. Alabama goes down. They score the game’s over. I forget. It’s two or three seconds left in the game, a very short amount of time, so you have to kick off and the chances of running a kickoff.
Jim:
What was a kickoff? It was a field goal. It was a field goal that was called in the end zone.
Kevin King:
That’s right. It was a field goal.
Jim:
It was even more unusual yeah.
Kevin King:
That’s right, it was a field goal.
Jim:
It was a 53-yard field goal. I can tell you all the details if you want.
Kevin King:
It’s a 53-yard field goal that fell short and so Auburn had someone back there to field it and usually you know it doesn’t hurt to do that but they fielded it in the end zone, near the back of the end zone, and they ran it 100 plus yards all the way to the other side and won the game, and that’s one of the most classic college football games of all time.
Jim:
Yeah, for the record, I was also there during the Alabama-Notre Dame game where we won the national championship 42-10. That was fun because Notre Dame had a much, yeah, Notre Dame the whole time we were there that year. They had a pretty large Chinese alumni base, so probably 20 people at every game were Notre dame fans and like three Alabama fans all season and they were just so arrogant and that game was just so cathartic because every year Notre Dame fan was there and then just basically me I was belligerently drunk on it. Finally just letting out that frustration of them thinking they’re just beating them before you do 10 so I’ll tell that game instead, and yeah.
Kevin King:
In Shanghai.
Jim:
Yeah, in Shanghai. That’s at the camel bar and yeah, that was another game. Like woke up super early. Yeah, I’m like drunk by like 8 am.
Kevin King:
So what do you see? What else is going on in sourcing? I mean, what do you see? I know we can speculate right now, like what’s happening with tariffs, but tomorrow everything can change. So what do you see? This? What do you see? How do you see this whole thing, not just with China and Vietnam, but globally? What’s your opinion on how this whole thing shakes out? Is there going to just be some 30% just going to stick, even though they may have changed it by the time this comes out, because something can change tomorrow? But what do you see long term? What’s the hedges and what should people be doing?
Jim:
Yeah, I mean 30% right now I think is going to be the base, because I don’t think it’s going to go any lower than that unless something major happens for China. I mean it’s 25 before, it’s only five percent increase and it’s been 25 for what? Six, seven years now. Um, so I mean, honestly, I don’t see that one going any lower. But yeah, I mean it’s going to be a lot more deals with other countries. It’s really hard to say because, um, this is recorded in May and probably in July. So everything we say now with tariffs like what it is now is going to be outdated. Who knows? I expect a trade deal will be announced in some time in the future. There’s been two rounds of talks at the high level with Vietnamese and US officials. But what that trade deal is, I’m hoping. I’m anticipating less than 20% tariffs on any deal announced with Vietnam and probably less than 10%. But yeah, it’s really hard to say. I think, yeah, a lot more countries are going to negotiate and more trade deals are going to be announced sooner than later. But it’s going to be a slow trickle of trade deals.
Kevin King:
So if I want to work with a sourcing company, I’m selling on Amazon, I got a Kickstarter or Walmart or I just, uh, have a TikTok shop. I’m going to try to push and pitch some stuff. What do I need to know? What’s what aggravates you? Like people come to you like, ah, God, dang, amateur. Uh, other people come to you with all their docs in a row and like, yeah, you know. So what? What are some tips that you would give people that, whether it’s your, whether it’s kind of sourcing or somebody else, when they, when they start to look for sourcing, what are some expectations a that they should have and what are some tips to help them actually make sure that you can do your job to help them?
Jim:
Yeah, for sure. I think the biggest one is private label is just not really a thing outside of China. And by private label I mean talking to factory, having their catalogs of goods they already make and just putting your logo on and having them sell it. Pretty much all manufacturers outside of China are going to be contract manufacturers, which means they expect the client to have a fully detailed product spec sheets and bill of materials and their products and they’ll work with you to tweak it for manufacturing. But they really expect the client to provide that for them. Um. So yeah, a lot of clients they have very vague ideas of a product. Um or prospective clients I guess um will have vague ideas of product but not like actually detailed down to the drawings and work with some clients who like have take a broad product and really kind of narrow it down and kind of find some designers for them to actually make the tech packs and whatnot. But you really have to have the tech packs, the materials, what the product’s going to be, to really kind of succeed outside of China sourcing, because the factories by and large there’s obviously exceptions to this, but by and large they don’t have designers on staff. They’ll maybe have some production engineers that can do the tweaking and programming for the machinery or make the patterns for cut and sew items, but they really do expect the client to provide the actual tech packs and product specs for their products.
Kevin King:
So how do I get those? Do I go on Upwork and find somebody? Do I use something like Gimba, or is that something you guys provide?
Jim:
Yeah, it’s something worth looking at. I’m talking to one of my buddies who just got laid off from a, from a kind of tech company, um, possibly adding that service. But yeah, I mean by and large we kind of work with, we have a network of designers we kind of put them in touch with and once we have trust contacts, but yeah, you can go on Upwork or Fiverr and find designers that do a pretty decent job and make pretty decent tech packs and specs from there.
Kevin King:
So what’s a tech pack? Explain that to people listening that like what’s he talking about? Tech pack, what’s that? Break it down for me.
Jim:
Yeah, it varies by product by product but for the most part is more or less instructions on how the product’s going to be made. Um, for a lot of basic things, like we wear a lot of clothing and textiles, um, so you’ll just have the pattern files. We’re just basic ones with scrubs, where it’ll just be the measurements of, like, the t-shirt you just want, what a size, large, and any specific cuts you want, maybe athletic cuts drawn out. Other ones are more detailed, where they have the actual fabric, each piece of fabric that’s gone into a shirt, detailed out of those designs. Um, and then, yeah, same thing with, like, even time we do-
Kevin King:
It’s down to the buttons too right where the buttons are.
Jim:
Oh yeah.
Kevin King:
What the buttons are made of and how the hole should be and like whether the collar should turn in or turn this way or yeah, or have a button, like every little detail is in the, in the tech pack and then down.
Jim:
Yeah, the more detail, the better.
Kevin King:
Fabric and this material and it’s plastic, number 2713 and it’s uh, yeah, PMS color. Uh, the black, it’s not just only a black t-shirt, it’s PMS, uh, whatever.
Jim:
Um, yeah, if you have that much specific things, right yeah, I mean we work with some basic ones like what do you active wear? And then they don’t know the exact material they want. So we’ll get the factories send them swatches of materials, like a dozen different ones, and then they’ll feel the stretchiness and feel which ones have the right thickness, and then there’s some back and forth with that, but it’s definitely take more time. You really got to kind of refine that project. But yeah, the other ones have that, like you said, the exact material, specified, exact colors, exact blends, like it’s 89 polyester, 11 elastilene or spandex or whatever. And then same thing with, like anytime we do anything, silicon injection, molded or whatnot. You got to have the 3d design files for that um prior to it.
Kevin King:
The STL files and everything.
Jim:
Yeah, the STL and step files and whatnot, to actually get it made um. And yeah, just yeah I mean-
Kevin King:
That can be done. I mean just to those listening STL and step files are basically like the CAD. They’re not CAD drawings you can have. When I did my dog bowls, uh, and my my Apple watch charging those were designs I literally sketched them on a piece of paper and sent those to somebody. They did the 3D renderings of it and we got it, uh, to where I approved it. And then they they create what’s called STL. They created what’s called STL and step files, which is then what you give to the actual manufacturer to actually make the mold and the process and everything too. And that caught, that wasn’t. I found a guy on Upwork to do this for my dog bowls for like $400. And and it’s not. It can be expensive. If you go to some big design firms in the United States, it can start adding up to thousands or tens of thousands of dollars.
Jim:
Yeah, you get electronic manufacturing. You get quite a bit because they have to do testing and standards and all that. But yeah, for basic stuff like dog bowl, yeah, 400 bucks is pretty standard.
Kevin King:
When I want to do a slow feed dog bowl, I shouldn’t be coming to you. Hey, Jim, I got a slow feed dog bowl. Help me find some factories. It should be. Let me visualize how I want this dog. Well, sketch it out the best I can. Get someone to render it up, find someone on Upwork or if I don’t know anybody, and to actually do some renderings and then create the step file, because for you to actually get a proper, to find the right factory to actually do this and to actually be able to find the right process and everything you need that I mean. So let me just come into you. I want a slow feed dog. Well, I want it to be round and have this and this and this groove and this groove. That doesn’t really help you from a sourcing point of view. So the more data you have and if I can do a 3D print, I can send you a 3D print of it or several copies so that you can send them out for proposals to the right factories. All those kinds of things help, right. Is there anything else that I’m missing in that that would help when people are going to source?
Jim:
I mean, yeah, building materials, 3D files, tech packs yeah, those are pretty much all you need. Sometimes you need some standards, but that’s about it.
Kevin King:
Like. So a lot of these factories that you guys work with, these are not ones that people are going to find on Alibaba.com or on the internet. These are like. They’re like even some of the bigger ones. They’re like if you don’t know, you don’t know.
Jim:
Yeah, yeah, I mean you kind of yeah, not everyone has a website, which is kind of crazy to me. I feel like that’s the basic that you need. But I mean, yeah, we, our team, we have a team based in Vietnam and they’re constantly going to trade shows. They’re constantly going to trade events. There’s trade organizations like Binh Duong province has kind of maintains a directory of factories and whatnot. So we’re based there, so we constantly kind of check up on new factories, who’s building what, and then something that might we have interest in clients. We’ll definitely reach out to them and get them that way. But yeah, it’s not like like there’s not like Alibaba for outside of China. Obviously Alibaba does have that filter. We can do Vietnamese factories but honestly, a small percentage like 10 percentish of factories are on Alibaba in Vietnam. Otherwise you have to like use multiple different resources, find their contact information and actually like chase them and follow up with them, like find their phone number and then really chase after them. They don’t come to you and a lot of people kind of get frustrated with that. And that’s kind of the value that we as a sourcing company provide is we know the factories, we know which ones can do Lomo queues and do this and that, and we can definitely kind of figure that out for our clients, and that’s kind of what the value that we really add is.
Kevin King:
So the Vietnamese factories are. That’s one of the problems of people they try to come to the United States to source and you call somebody up hey, I need a. I want to make a thousand of my slow feed dog bowls just to kind of proof concept. They don’t even return my call. They’re like that’s not worth my time. In China, they’ll do that. They’ll do even smaller runs. Is it the same with Vietnam? They’ll do very low MOQs?
Jim:
Not low MOQs. Yeah, and actually since the since April, when the 145 percent tariffs on China, a lot of factories just stopped doing low MOQs like we do a lot of like. Before this we had a directory of clothing factories and a few other factories that we knew did low MOQs, like it was specific low MOQ factory lists that we have and yeah, reaching out to those since April a lot of them just say, hey, we’re not taking on low MOQ projects anymore. But yeah, for the most part, like clothing textiles, dog bowl, I would anticipate a thousand units would be the minimal order to get really get a factory interested, um, anything less like they just aren’t, quite frankly, don’t view it as worth their time unfortunately. It’s kind of frustrating because I mean, most of the people that reach out to us they want low MOQs and it’s just not suitable.
Kevin King:
How’s the negotiation with the enemies factors in China? You know the negotiation. You got to go, show up and have dinner with them and eat some weird stuff and then you can kind of get moved up in the queue, the production queue, or you get a little bit better price. Or if you sit down with a Chinese factory and you say, hey, work with us, I know you got, you know the government will insure through SinoSure, you know, so you can work with us a little bit. Here’s our plan. We’re going to sell 30,000 each year but I don’t have the money to cash flow this. But if you help me, you know, give me a better price and all this negotiation stuff where you can try to work your way in. Does that happen in Vietnam, or is the Vietnam very strict, or is it just like, okay, we’ll reduce it a penny or something, or what’s? How’s it negotiating with the Vietnamese factories?
Jim:
It definitely helps, yeah, being in person negotiating. But yeah, I mean, I always find the true price in Vietnam, um or not the true price, the initial price they give is closer to the true price, and what I say by true price is the low price that you actually go. Um, cause, yeah, in China they’ll initially quote like almost double and you really negotiate down and down and down and down, um, and in Vietnam you can negotiate down a little bit, but it’s, like I said, closer to the true price, where they get like 5%. But, yeah, if you visit in person and get to meet the people and actually get to know them and, like you said, go out and eat some weird stuff which I think is delicious a lot of times I mean whatever, I haven’t even had bulac, which is the worst thing I’ve ever eaten.
Kevin King:
That’s Filipino.
Jim:
Yeah, that’s Filipino, but they actually have it in Vietnam too, with little eggs in the middle table. I’m just like, oh, I’m not a fan.
Kevin King:
I don’t think I could do that.
Jim:
No, I’ve done it once I. That was enough for me. But yeah, if you visit a person, you definitely get better price and move it up in the queue and get better terms. So, yeah, I always, always, always recommend, yeah, at least get to face face, get to have an actual relationship, not a working relationship, but actual relationship with your factories. And yeah, if possible, visit. And yeah, the people that visit consistently get moved up in queue, get preferential treatment. If they need, like you said, better pricing terms, cause, you know, cash flow or lower queues on order, for whatever reason, they’re definitely going to be more keen to give it to the people that visit and they know and actually have a relationship with, versus someone they only know because they emailed them half a dozen times.
Kevin King:
So if you work for the tourism board of Vietnam, give me a slogan or give me a couple sentences of why I should be looking at Vietnam to do sourcing.
Jim:
That’s. I find it easier and more straightforward to do sourcing to Vietnam. Cause you know, in China they have the whole corner. The corner cutting philosophy it’s not that prevalent in Vietnam. They’re much more straightforward and to the point and more or less honest doing business in Vietnam than China, and I just find them more reliable, like they’ll tell you no if they can’t do something, which is great, they’re not going to BS you as much as other places. But yeah, it’s just. I mean what they make they do a really good job at. So I definitely think it’s suitable. I’m trying to think of a slogan and a quick little tagline for it it’s a great place to do business, Vietnam.
Kevin King:
And uh, what’s what’s a great place to do sourcing? And if I want to look at Vietnam, where should I go to actually do sourcing? Was it Cosmo Sourcing?
Jim:
Yeah, Cosmo Sourcing. I’ve heard good things about Cosmo Sourcing. So yeah.
Kevin King:
I’ve heard something about them. I’ve heard that they can. They know a lot of people in Vietnam.
Jim:
Yeah we have our team.
Kevin King:
So cosmosourcing.com, right.
Jim:
Yeah, cosmosourcing.com [email protected]. If you want my email, or Jim@cosmosourcing my direct email. Yeah, and just reach out to us. We’re on all those socials as well.
Kevin King:
Awesome. Well, Jim, I really appreciate you coming on and sharing with us today.
Jim:
It’s a pleasure.
Kevin King:
This has been cool. This has been cool. Appreciate it, man.
Jim:
Absolutely.
Kevin King:
You know, all this talk about Vietnam has gotten me hungry. I think it’s maybe time to go eat some chicken pho. It’s one of my favorite soups. I get a really good chicken pho, put some of the little bamboo sticks and everything in there and it’s always good. I think all this Vietnam talk, I think that’s what I’m going to do. It’s a little messy though sometimes, but anyway, Vietnam is someplace that I think you should take a look at. I didn’t mention it in the call with Jim there, but I actually did some of my PPE in Vietnam. We did hand sanitizer in Vietnam. We had a factory in Singapore. They had a factory in Singapore firing it off and a factory in Vietnam and it was really good. The quality came out really good and better. We had done it in China before that and it was like he said they were cutting corners and we took it to Vietnam and had much better results. So Vietnam is definitely an option that you can look at. Depending on what you’re selling, it can be a great place to actually do some sourcing. We’ll be back again next week with another episode, that’s next Thursday another brand new episode of the AM/PM podcast. I hope you have a great rest of your day, a great weekend, and we will talk to you soon.
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