Ep2: Kimberly Kirkendall-The Real Deal with China

In this episode, we sit down with Ms. Kimberly Kirkendal, an expert in international supply chain and the founder of International Resource Development. Kimberly shares her extensive background and experiences in China, Hong Kong, and the United States. She discusses the evolving landscape of international trade and offers valuable insights into the concept of "China plus one" and regional supply chain models.

We also touch on the misinformation surrounding China and the US-China relationship, as well as the aging population in China and its potential impact on the country's economy. Kimberly sheds light on her role as a Beachhead Advisor for New Zealand Trade and Enterprise, where she helps New Zealand companies navigate the complexities of international business.

Get in Touch with Kimberly here:

https://www.linkedin.com/in/kimberly-kirkendall-cpa-92b8664/

For information on passive income for supply chain professionals:

chaininvestor.pro
multifamilyadvice.com
https://www.bridgestoneinvest.com/3-big-reasons-to-invest-in-oil-and-gas-tax/
https://www.bridgestoneinvest.com/join-the-supply-chain-investor-club-2/

Instagram- @jeffdavis_bridgestone
YouTube- JeffDavis_Bridgestone
Twitter- @bridgestonecap

Instagram- @jeffdavis_bridgestone
YouTube- JeffDavis_Bridgestone
Twitter- @bridgestonecap
https://www.youtube.com/@ChainReaction-vh7rm
www.bridgestoneinvest.com

Transcript

0:01

Welcome to Chain Reaction Tales from the Supply Chain Frontline, the podcast that takes you behind the scenes of complex and fascinating world of international trade supply chain and global logistics. From the raw materials that make our products to the factories that turn them in the finished goods, did the shipping routes that transport them across the globe. The supply chain touches nearly every aspect of our daily lives. In each. We'll dive into a specific aspect of the supply chain and hear from the people who make it all happen. We speak with executives across all sectors to understand the challenges occurring and solutions put in place. Whether you're an executive with a solution or in need of one, stay tuned because chain reaction is something or someone for. And of course, please like, subscribe and share our podcast with your friends. Hey everybody. Welcome to Supply Chain Podcast, and with us today is Ms. Kimberly Kirkendal with International Resource Development and we've actually been talking for a few minutes about a lot of things from China to the China plus one. To even hear domestically on the Ohio rail and just everything going on, all the way into Southeast Pacific, into New Zealand. And so Kimberly, maybe you can kind of kick us off into a little bit about your background and how you got started into international supply chain. Sure. Thanks Jeff for having me. Hello. So I always say I moved to China in 1986, and I'd like to say I was 12 at the time, but it's not true. I'd graduated from college, studied international business in Chinese, and the first year was an exchange program my university had with the university in China, that number one language school there. So I was there and then I ended up working for a US company with two factories in a very small village outside of Shanghai. So my first. Was really overseeing two factories and a Chinese team in Shanghai, and then these two factories out in the countryside. Fabulous opportunity and experience. You know, really learning China on the ground, manufacturing on the ground. And then for that same company, I ran their Asia-Pacific headquarters in Hong Kong. Started my career in Asia and then I moved back to the US was on the west coast managing all Asian manufacturing for a company there. Moved back to the Midwest. I like to say Ohio's largest export is its students, but eventually they come home. I worked for a group of catalog companies, all their fulfillment center operations, management, purchasing, supply chain. Worked went to became a C P A, worked for a regional c p a firm, doing consulting with C F O for our company. Started my own consulting business, which I've had about 20 years now. the first 10 years of, which was a lot of companies going to China, setting up factories in China for them, distribution, supply chain import. And the last five years are what I call, oh shit. Projects of, you know, Three factories over there and the general manager's leaving and how do we hire a new one and what are we gonna do? Or we're running into trouble. We are firing this distributor, we're onboarding another one. How do we move the goods between one and the other because they don't wanna buy them. Do we move them across borders? How do we move the money? How do we document the ownership? A lot of technical international trade transaction contract negotiation. Agreements, that is an extensive background and in a lot of different fields, from management to supply chain to C P A, which is a, I'm gonna say that's a leap. Right where you really specialized and then you even went into crisis management, right? Into your project crisis management. So you kind of went back and forth Asia-Pacific, and then you even came back here. Yeah, I've lived back here pre C O V I D. My life was a few weeks in China, five or six weeks in the us, a few weeks in China, five or six weeks in the US with a little Europe or central America thrown in. So in a way it's nice not to be haunt that constant travel mode, but still I'm missing it. No one's been in China, it's been very hard to travel there for a few years. And we're gonna get into that because I think it's opening up right now. I just had a meeting yesterday we were talking about that Visa thing is a little bit hanky right now, and I think. People are ready, right? Companies are ready to go back and China's opening up. Before we talk about that, I want to know you've been there since 86 who have seen what seems like an extensive expansion between the relationship of trade of China to the US and probably China and a lot of other countries. Can you give us a 50,000 foot view of what that has looked like? Well, let's talk about the travel first because China. Issued some announcements that effective January 8th, they were going to open. And I put that quotation marks because what that really means, or what they really said was they're gonna start considering it. So there's three fundamental things that have to be true for most business executives to be able to travel back into China. One is that there would be no lengthy quarantine when they arrived, and that's already. Right, they've eliminated the quarantine. Secondly would be that there's enough flights and we're still operating at about 10% of the normal flight schedule. So 90% of the flights that were happening five years ago don't exist today, and the airlines don't have, it's not like they're sitting on excess staff. An excess equipment that they're just waiting to deploy back into these routes. They're really busy. They're making money hand over fist. So starting these new, these routes back up again and allocating equipment and allocating staff, they're moving very slowly. So that means there's not gonna be a lot of flights, which means they're gonna be hard to book and they're gonna be expensive. And then the third issue is visas. Visas are being approved now, but they're on a very subjective case by case. So basically what's happening is you send your application and your passport to the Visa agency and there's multiple agencies you can use for every consulate in the United States. And these are private companies. They do the work, so the consulate doesn't have to, and this has been the case for a long time. India's the same way, right? They, their consulate officers don't wanna really look at these applications. So they work, they allow these agencies to do the work that you pay them. And then they're basically pre-qualified when they come to the consulate. So what's happening now is that these Visa agencies are reviewing your application and then they're kind of sending it to the consulate and saying, if we were to give you this person's visa application in these circumstances, they're vice president of a company that owns a factory in China. This is where the factory is, this is what they do. Would you approve it? And then the consulate says yes or no. And if it's yes, then they send the application in. But it's very, very subjective right now. So I'm hearing a trickle. Somebody I know in Italy, somebody I know in Canada, I know someone in the US that's sent in there is sending in their application. They haven't gotten any feedback yet. So we're really not, it's not. In my opinion, they're not, the tenure visas are still suspended. We don't know if they're gonna give out single entry or multiple entry. It's very up in the air. You could have your passport, you know, in their possession for a month and get it back with or without a visa. I do think that by the fall it will have worked itself out and there will be more people going, I don't know that we're gonna be more than 50% of the normal. By fall, if even that, and I don't know that the visa situation won't continue to be subjective, but I think there will be more people going by that, but definitely not today. Today it is not open. That's interesting. So I'll have to tell. My customer, cause I think he's very bullish on May trip. In your opinion, what does that mean for China to US trade and its ultimate effect on the US economy. Right? Does that increase trade? Does that help? Does it have an effect? I think between all of the supply chain disruptions directly from Covid and then indirectly with the transportation and logistics issues and just companies going out of business or pivoting in different directions. We're in a very different landscape than we were before. I do think even before Covid, a lot of my clients were in China for. Right. So fewer companies were in China to export back to the United States. That transition happened 10 years ago. Most companies are in China, for China, so their customers are in China, their customers are in Asia, and their customers might still be Ford or ge, general Motors, or General Electric, or Train, H V A C. they can still be American-owned companies, but they're supplying those American-owned companies, Chinese. Or they're Chinese customers. There's just less of that China for export. That's already been, been evolv. We're evolving away from that. You know, even before Covid hit. So I think where we're going is there's two options and there's some overlap. One is what we call China plus one, and the other one is regional. China plus one is it's basically de-risking. I don't wanna have all my eggs in one basket. I'd like to have a primary be there, my own manufacturing facility or supplier in China, but I'd like a secondary one. Maybe in Asia, maybe in Europe, maybe in North America. That if there's another shutdown in China for some reason, then I can still pivot to this other country and vice versa. Right? Because Mexico, Vietnam, and India are not without risk by any, means. Having this backup plan is, People for a long time. Were looking at supply chains under the lens of lean. We don't wanna hold any inventory. We wanna have just in time. We only wanna have one supplier that we have leverage with. And this is blown that out of the water right now. You want multiple suppliers, you want more inventory. So flexibility and de-risking is like really, I. The other model is the regional hub model. If you're big enough, right? You have a plant in Asia for Asia, north America, for North America, Europe, for Europe, and then that way you're not also shipping everything from one factory all over the world. You're able to reduce your lead time, reduce your manufacturing costs, and in theory, customized product for that regional market market. There's a lot of benefit. To regionalization if you're big enough to be able to have suppliers or your own plants in more than one region. Yeah. Yeah. So where do you come in with international resource development and are you enabling companies to begin, or is that where you guys are? Helping them build out a different distribution network? Yeah, we definitely have. So I have a client right now with the plant in China that's, we've been building, they've been building a supplier base in India, and so they've separated the two by production capability. So they've got one type of product being made in China, then something else in India. So we're looking at their plant in China. How can we. Scale it back, keep it alive, keep it open, scale it back. They've looked at domestic sales in China. This is one of the companies that's actually exporting most of their product back to the us. They don't think they have much of a domestic market in China because they're in a very price competitive, somewhat commodity type of a business. There are other companies that are in China that are looking at Vietnam or already in Vietnam. But you know, my answer to the constant question is, is there another China? And that's been a question for more than 10 years now. Okay. And the answer is no. That's like saying we're gonna take all of the manufacturing and agriculture resources of the United States and we're gonna put them into California. Like there just isn't another place that's that. That's that big, that's that established. The other thing that I point to is kind of in a industrialization history. So companies will come to me and they'll say, we make bandages, like bandaids that go on your boo boo. We make bandages in China and we'd like to find a manufacturer in North America. And I'm like, you're not going to, you're not going to. And they're like, how do you know that? How do you know that? And, and the answer is that very mature over there. They've got it dialed. and not only that, but when China decided to, or try to industrialize, and they've been trying for 30 years, but in the late seventies, early eighties when they really put some muscle behind industrialization, the central government said, okay, we're gonna make a list. And they do this just as higgledy Piggly as it sounds, right. We're gonna make a list of 10,000 products. That we've seen in Russia and Europe and the United States, and we're gonna build factories to make those 10,000 products. There was zero market analysis in China about this. We're gonna make bicycles and we're gonna make tires and lotion and pens and paper, and we're gonna make all these things and then we'll sell them. Right. Not that anybody wanted to buy it, and so we'll make it. We just wanna be industrialized, just like these other big guys. So we're gonna make all this stuff. So when the US got there and Europe got there in the late nineties, they found all these factories, light factories, and walking cane factories. They found all these factories. They may not be making great products in the late nineties or European quality, but they existed. Now if you go to India or Mexico or Vietnam, the governments didn't do that. So what you'll find there is what an investor thought was a good business idea to manufacture for their own market. So you may not find bandages in Mexico because it wasn't common to use them, and nobody said, I wanna put$2 million to build a factory for them. You know? Or you're not gonna find crayons if they didn't use crayons. Right? Now, over time in those developing countries, some foreign companies will come in and build a. To make crayons or bandages or whatever, but that's for themselves. That's not OEM for anybody. So the industrial development in China, in these other countries is extremely different, and you're just not gonna find the same capabilities all the way through the supply chain, from the finished goods, through the raw, the components into the raw materials. Mm-hmm. It doesn't exist or else it just doesn't. I agree. Doesn't that make sense? It does, and I see it, right. I've been in the supply chain logistics for, for about 15, 17 years now, and I see it and, and I get it. And also I understand companies wanna position and I know of a large chemical manufacturer, a client, they're building over there in China, not for America. Mm-hmm. For Asia and Southeast. That is the reason they can be closer to the end users. So they'll be producing and, you know, you can bring bulk chemicals, a ship, a tanker a month, and produce goods. So that's, you know, that's coming to a factory near you. Yeah. So I, I think I have about two more topics that Okay. That you're, you're perfect for. China's been in the news like a lot here. Weather balloons and, and everything. So there's information about China that the everyday American is subject to, and then there's, there's good and there's bad and there's nonsensical. So there's a lot that is put out there by people who know and people who don't really have a clue what is, you know, the good, the bad, and the ugly. What's the misinformation out there about China? Because you are dialed in to that marketplace. Yeah, I think especially during Covid, we've seen this even for 10 years now with Xi j Ping, there'll be a bunch of articles that Xi Jinping is king for life, and no one's gonna overthrow him, and he's gonna be a dictator ruler. And then three months later, something else happens and they say, oh my God, Xi Jinping is gonna be out and he's done. He'll never work. So it's this back and forth, up and down, and it doesn't really make any. You know, a lot of it, it just depends on, I mean, it sells newspapers, right? That's the idea. It sells newspapers, it's clicks. So, so that's a lot of what happens. And we've been seeing it most recently with Taiwan, and so Taiwan and China, there's a lot of misinformation about this in the US press, and there's a lot of mis misinformation in Chinese press, right? And so I've been saying for a while that yes, China, there's animosity between China and Taiwan. They're still at war because when the K M T lost the Civil War, they went over to the island and they colonized it. They took it over and there were two classes of citizens For the first 40 years, the K KMT held power and the local islanders did not. And they took the local island owners land and just all this stuff that we don't ever read about. In any case, what My point that I think people are missing is that the animosity between China and Taiwan actually helps the US because some of our partners in Asia for the last five or 10 years, were pulling away. The Philippines was saying. We're gonna back off on having US military two years ago or three years ago. They didn't sign a longstanding agreement that allowed US military to be in the Philippines. There was a lot of pressure on Japanese politicians about Okinawa and some of the things that US servicemen have done in that region, you know, and people wanted to push us out or at least reduce the size of the. And just in the last month, the US has signed the strongest, most all-encompassing agreement with the Philippines. We are now back militarily in the Philippines. We have signed a stronger agreement with Japan and certainly the fear of China's. You know, intentions in Taiwan has helped that it's helped the leaders of those countries to not take as much political risk to accept more American military investment. So my hope is now that we've kind of gotten, one of the things we wanted out of this situation, that we back up a little bit on the whole China, Taiwan thing, because China and Taiwan have consistently. Both of them, the president of Taiwan and Xi Jinping in China, we don't wanna change anything. Taiwan has said we don't wanna become more independent than we already were. And China said, we don't wanna take them over imminently. So yeah, I think that there's a lot in that situation people don't understand. But hopefully now that we've gotten, you know, part of that out of it, I don't think the US is ready to go to war over Taiwan. I hope we don't go to war over Taiwan. And so really, I think they're more of a pawn than a goal. So that's a whole thing that I think is interesting. Um, so let's move on from that because we could talk Chinese politics for a long. Yeah. And the next thing you and I didn't get to discuss, I have heard this, and I don't know how true it is, but the Chinese population is aging out and they could see this being an issue in 15 to 20 years and that they're aging out, and I don't have anything more than that, but is that truly an issue for China that they. Oh yeah, it's a big problem. And you know, it's funny cuz when I lecture for universities a lot, I'll talk about what are the challenges affecting China. And they're very similar to the challenges affecting the us. You know, an underfunded pension system, a growing group of aging, people that are retiring out of the workforce, A younger generation that's not having children, but the rates that would help keep the economy going and support the pension system for the elder. There's a lot of the same issues that China has that we have too. And they're the post baby boom generation, right? The post World War II baby boom generation. It's very similar in both countries. So that's definitely a factor that's impacting them. I think one of the things that mitigates the effect of China as a manufacturing center on the decrease in the labor pool is. Up until four or five years ago, most factories had not really gone through factories, go through evolutions or industries, go through evolutions of very low cost, simple manufacturing labor, driven to more, slightly more automation, better efficiency, more thought about lean manufacturing inputs and outputs and cost controls. We did that. We went through those phases, right, in our early industrialization, and China's going through that. So some of my friends in China that are investors, a lot of the types of companies where they're investing money are companies that are manufacturing technology companies that will help factories become more efficient and rely more on automation. So I think China still has some productivity gains that they have not realized from technology and automat. So I think that will help to counteract the rising cost of labor and the decreasing labor pool for at least a while before they run out of the ability to maximize those efficiencies. Okay. That is, that's good to hear. And you know, the kind of validated that population thing, and actually we have the. Situation here in America. So tell me, one of the things I found on LinkedIn is Beachhead advisor and it has to do with New Zealand. So can you tell me about how you're involved with Beachhead Advisor or are you beachhead advisor? Yeah, sure. It's a lot of fun. So New Zealand Trade and Enterprise, which is the New Zealand version of US Commercial Services, which helps New Zealand companies export and do business overseas. They started a program a number of years ago where their staff, kind of like US Commercial Services staff are. Market driven. They understand foreign markets and distribution, but they don't necessarily have niche competencies. So New Zealand identified people that they call beachhead advisors who have niche competencies and they bring us on. And then any one of the New Zealand trade officers in the US or in New Zealand or wherever that knows about me, Mexico, I've had some from Mexico, they can hire. Basically to help a New Zealand company, and the New Zealand company doesn't have to pay for that. So it's been, it's been fabulous because New Zealand is a very agriculturally rich country. You know, they have a lot of agricultural products and farming, so a lot of their innovation is in that space. And so there's innovative technology, innovative products. You know, I've gotten calls on a wide variety of products that they want to export into the US or they're looking for a local US manufacturer or a Mexico North America somewhere. Sometimes they have a specific shipping question. They've been told by different people that two different HS codes for their products, and a lot of people don't understand HS codes and should they use the same code? Is it a different code in each country? Like how do they know what's the right code if they change? Now, is it a problem? We just had a New Zealand company that's starting to sell into the US and use it as a base for re-export to other. And they were gonna sell some equipment to Brazil. And the shipping company said to them, this is, you need an E C C N number. And they called and said, what's an E C C N number? Because there's export controls on that product. Absolutely. And so then we identify the E C C N number for them and basically educate. On, here's what it is, here's why it would apply. Here's some opportunities that you have, you know, to get a waiver or this kind of thing. So those projects are, are always a lot of fun doing things for New Zealand and for New Zealand companies. So clearly you have a lot going on and you're. All over the place from China and New Zealand and some fairly diverse companies, and I love how knowledgeable you are and how, you know, if I'm a company and I'm looking to expand or expand my supplier base or my company, how do I get in touch with you? I use LinkedIn, like eels use TikTok. So what is TikTok? No. Right? I'm like, I'm on IG and I think I'm hip. And they're like, oh, that's such a Gen X thing. Not, I had totally figured out ig. I got, yeah. They're like, you're not cool. Four friends on ig. Look out. Yeah, you're not cool. You're not cool at all. I'm like, damn. I thought I was cool. Let me tell you about MySpace. Yeah, I, I don't have that, so, yeah, and, and I can give you an email address. You can drop in there. And then also, we launched our own podcast in the fall. I look at my consulting as training, right? I always tell my clients, I want you to do some of the work. I want your team to really learn and understand whatever it is we're helping you with, so that when we leave, you have that capabil. Right. You have that knowledge base and capability within the company rather than I write you a report and leave and take it with me, and you're not much better off than when I got there. Right? Yeah. So the podcast, international Trade Resources is the name of it. It's the same mentality we wanna bring on guests who can speak in with a lot of experience in a very nichey topic. So export controls is still our number one episode. Foreign companies selling into Europe. How do you apply for a CE mark? What usually do companies get wrong? When they're registering their CE mark for export into Europe. And then what's happened with Brexit, like that's another one of our top episodes. We just dropped one on building an international sales organization. How do you really incentivize and how do you manage an international sales team? Yeah, absolutely. That sounds definitely something that, uh, supply chain geeks will really get into. Cuz only we know what you're talking about when you say b i s and e c. Yep. Code words. Code words, right. Code words, cracking the code, that's that is dialed in SEO O. So, well, thank you so much and definitely everybody, it's Kimberly Kirkendall. I will be dropping her email and her LinkedIn and podcast into the show notes. So thank you so much and looking forward to further dialog. Yeah. Thank you. And that's a wrap on this episode of Chain Reaction Tales from the Supply Chain Frontline. We hope you enjoyed diving deep into the world of international trade supply chain in global logistics with us. If you liked what you heard, be sure to subscribe to our podcast and we're missing an episode. And if you have any feedback, questions, or suggestions for future episodes, we'd love to hear from you. Thanks for tuning in. We'll catch you on our next episode of Chain Reaction.