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Well, hello and welcome to another edition
of the E-Commerce Evolution podcast.

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I’m your host, Brett
Curry, CEO of OMG Commerce,

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and today we are talking about
optimizing your supply chain outside of

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China. How do we think about tariffs?

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How do we think about supply
chain optimization and what
opportunities are there

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for us outside of China? Obviously,

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this is very timely and this
is a topic where the game is

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changing on the field, daily,
hourly, all of those things.

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So we’ll try to keep the conversation
pretty high level and also make this

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useful regardless of what the tariff
news is when you decide to hit play on

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this. But my guest today is Jim Kiner,

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and Jim is the founder managing
partner of Cosmo Sourcing.

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I met Jim at Seller Summit
in Fort Lauderdale last week,

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I guess it was at Steve Choose Events.

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Steve and Tony running a great event
down there, one of my favorites.

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And so Jim was a speaker, I was a speaker,

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and he talked about tariffs
and I was like, man,

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I got to get you on the pod because
everybody’s freaking out about this or at

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least wondering about this. And so with
that, Jim, welcome to the show, man,

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and how’s it going?

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Hey, it’s great to be here and doing
great. Yeah, thanks for having me here.

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It’s been a whirlwind for you.

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You picked the right time to
specialize in sourcing outside of

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China. I picked 10 years ago,

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so to you saw the future
years ago when you map

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that out and you’ve had quite
the couple of weeks, man,

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you were on stage before Lauderdale,

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you got quoted in the Wall
Street Journal about this topic.

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And so tell us a little bit about that.

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How did you end up getting mentioned
in the Wall Street Journal?

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Yeah, Hannah reached
out to me, Hannah Mao.

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She’s the reporter for Wall Street
Journal, and she obviously covers tariffs,

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supply chain, manufacturing and
Vietnam. So yeah, reached out.

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She’s doing a six part story
actually about manufacturing Vietnam,

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the whole on the ground and whatnot.
But yeah, we helped for the first story,

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she visited a couple of factories that
we put her in touch with, and yeah,

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she interviewed the factories and
featured one of them pretty prominently in

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their story. And then, yeah, the one I
was featured in was the second of six,

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I believe so, yeah. But yeah,
it keeps changing with the news.

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So.

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Keeps changing. We were
just talking about,

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so we kind a casual comment the president
made recently that who knows what

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that’s going to do to the markets,

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but I think we’re just all our
tolerance level for chaos is

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just going to be pretty
high here for the foresee.

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Future, future, be adaptable right now.

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You’ve got to be adaptable.

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And so I think there’s a few
things we’re looking at here.

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I just record a podcast
with Andrew Ferris,

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who’s just a legend in terms of
marketing and media buying and e-comm in

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general. And he and I were
both talking about, Hey,

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in times this times of uncertainty,

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there are always opportunities to grow
actually to get better than you were

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before. And I think one of the things,

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and this is something
that Andrew mentioned,

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one of the potential benefits or
silver linings in this is going to

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force brands to optimize their
supply chain look for better,

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more stable, more affordable ways
to enhance their supply chain.

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Every point or couple of points you
can save on your supply chain makes a

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huge, huge difference as you can
make your supply chain more stable,

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more reliable, that
makes a huge difference.

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You increase your quality of product,
that makes a huge difference.

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And so it’s a time to
look at your supply chain.

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And you’ve been doing
this a long time, Jim.

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Oh, absolutely.

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When did you first start looking
outside of China and was it because you

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were predicting something like this
could happen or was there something else

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that was driving that?

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Yeah, I moved to Vietnam
and started sourcing from
Vietnam in 2014. At the time,

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everybody was sourcing from
China. I just felt like saturated,

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there were plenty of people doing
it. And then I visited Vietnam,

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fell in love with country, and yeah,

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2014 at the time I was trying to get
ahead of the transpacific partnership,

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which was at the time the largest
free trade agreement in history.

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It ended up not getting
ratified in the past,

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but I still had a lot of people reach
out to me about finding manufacturers in

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Vietnam. And at that
time, 10 years ago, 2014,

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it was much less developed manufacturing
wise than it’s today. I mean,

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we were doing industrial wood goods and
some really kind of basic cheap stuff,

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to be honest at that time. But yeah,
I mean there’s still a demand for it.

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And yeah,

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definitely kind of saw Vietnam as
being the future early and kind of got

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lucky in a sense, but yeah. Yeah.

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Love it. You were ahead of the time and
man, it has really paid off for you,

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especially now.

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For sure.

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And so there’s a few things
I want to talk about.

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We’ll talk about minimus with you. We
want to talk about tariff engineering,

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we want to bonded warehouses.
We’re talk about what not to do.

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You really were dropping some bombs of
knowledge in the talk in Fort Lauderdale

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that a lot of people were like, wait
a minute, wait, I can’t do that.

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Are you sure I can’t do
that? And you’re like.

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Yeah, for sure. Yeah, I found
out some people were doing it.

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I never named names, but I had awkward
conversations with some people.

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I’m like.

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Yeah. They’re like,
wait a minute. Careful.

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So there’s several things
to talk about there,

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so stay at tuned for that.

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But I want to talk a little
bit about why Vietnam,

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why did you go there?
But more importantly,

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why should we consider Vietnam right
now? Because as I’ve learned from you,

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and actually one of our top
clients in ports from Vietnam,

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their product is phenomenal.
Why should we consider Vietnam?

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And I know there are other
places to consider as well,

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but you’ve got a special place
in your heart for Vietnam.

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Yeah, I mean for Vietnam
mean they definitely,

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you have to pick what they specialize
in, but what they do specialize in,

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they do excellent job.

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And two biggest categories we
do are anything textile cut.

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And so based that ranges from clothing,
apparel to bags, luggage, tool belts,

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our mutual client that we work with.

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And then also we do a lot of
wooden good and furniture.

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And they’re definitely growing
in several other industries.

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We’re starting to do electronic
more electronics, OEM, electronics,

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but it’s definitely, I don’t want to
say hit and miss, but it’s growing.

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It’s probably the
fastest growing industry.

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But when we’re doing a lot more plastic
ejection molding, silicon parts,

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we’ve been doing a lot of industrial
metal projects, St metal goods,

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starting to do some car parts too.

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And all those industries I
think are definitely growing
more developed industry,

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but you really got to figure out what
Vietnam can do and then target in on those

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products.

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That’s great. And so I think it’s
always important to understand, hey,

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what are maybe the misconceptions about
a country or where are the stereotypes

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true or not true?

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So any misconceptions out there
about Vietnam right now or

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anything you like to set
the record straight on?

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Yeah, for sure. I think a lot of people
do private label manufacturing in China,

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which is fine.

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Just find a factory that
makes a pre-existing products
slap your logo on it and

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sell it, which everybody’s
been doing for years.

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But Vietnam and honestly anywhere
outside of China just does not do that.

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So the overall, I mean,

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majority of what projects we do is going
to be contract manufacturing where you

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supply the factory with your product
specs, sheets and tech packs,

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and they’ll make it to your specs,

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but they’re not going to have
existing designs on hand.

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Got it.

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Got it. That’s probably the biggest
one. Other one too, Alibaba.

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And those alternatives just aren’t
good or don’t really exist there.

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So when you find factories, you
can’t just put an RFQ on a website,

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have a dozen factories come to you.
You have to do your own research,

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really follow up with
’em and chase ’em down.

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I know a lot of people
get turned off by that.

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They expect factories to be tripping
over fine or work with clients,

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but it’s not the case. And
they’re also higher MQs.

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I know a lot of people say low MQs and
there are kind of boutique handmade

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dress factories and whatnot. They
do small, but for the most part,

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I would say MOQs tend to be higher
in Vietnam outside of China as well.

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Interesting. So higher, MOQ is
a little more legwork upfront.

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You’re going to have to supply the
specs, it’s contract manufacturing,

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that sort of thing. But then
what are some of the benefits?

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Because I know in talking to our mutual
client who manufactures in Vietnam,

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they actually moved from the
US to Vietnam a few years ago,

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and they said their quality went up,

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cut their cogs by 70%, quality
went up, that sort of thing.

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But speak to us about

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how does it compare manufacturing Vietnam
for the things they’re good at to the

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rest of the world.

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For what they’re good at? I think they
excel because yeah, the tool belt,

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I’m not going to name who, but yeah,
the tool belt is pretty high end.

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And I mean they have a pretty good,

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the quality they have in
place is pretty good. Yeah.

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And then, yeah, I mean just overall,

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I think the quality is quite good
for a lot of what they excel in.

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We do a lot of furniture too,

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and we can do some very high
end custom hardwood pieces that

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they go for thousands,

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00:10:00,540 –> 00:10:03,960
thousands for a single piece and go in
literally multimillion dollar homes we’re

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doing.

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Interesting.

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00:10:04,890 –> 00:10:07,020
The projects in Palm, Palm
Beach, Florida right now.

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And then another comes to home builder,
custom home builder out Palm Beach.

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So they’re doing literally
10 million plus they doing.

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00:10:13,110 –> 00:10:14,580
All that in Vietnam. Yeah.

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They’re doing a lot of it, not all of it.

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So m OQs are a little higher, but prices,

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00:10:19,560 –> 00:10:22,770
and I know it’s hard to compare prices
talking about it depends on the category,

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depends on the good,
depends on so many things.

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00:10:24,780 –> 00:10:29,040
But pricing general comments on
pricing, how does it compare?

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00:10:29,040 –> 00:10:33,450
Yeah, pricing for apparel and textiles
tends to be cheaper in Vietnam than China

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00:10:33,450 –> 00:10:37,470
outright. And same with wooden goods.
Because Vietnam is a tropical country,

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there’s lots of access to high
quality tropical hardwoods.

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And with Asia Association
of Southeast Asian nations,

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00:10:45,030 –> 00:10:47,940
which all the Southeast Asian
nations have free-trade,

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00:10:47,940 –> 00:10:50,820
so it’s pretty easy to move wood
from one country to another.

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00:10:51,690 –> 00:10:54,750
So the quality of wood you
get in Vietnam is excellent.

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00:10:55,410 –> 00:10:57,960
So for that is definitely one
of the big things they sell on.

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00:10:57,960 –> 00:11:01,560
And pricing for textiles, bags, backpacks,

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00:11:01,680 –> 00:11:05,460
even shoes we consistently find is be
about the same price and oftentimes

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00:11:05,460 –> 00:11:08,340
cheaper than China and the
price to quality ratio,

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00:11:08,640 –> 00:11:12,180
like you’re buying a $5 sweatshirt
from Vietnam versus $5 in China,

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00:11:12,180 –> 00:11:13,230
the quality is going to be higher.

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00:11:13,470 –> 00:11:17,340
China does have a lot of very cheap low
quality. So people are like, I can get,

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00:11:17,970 –> 00:11:21,690
we were talking to clients
getting t-shirts for like
83 cents in China and ours

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00:11:21,690 –> 00:11:22,830
were coming in about one 30,

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00:11:22,830 –> 00:11:27,690
but the one 30 shirts were
decent versus very low quality

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00:11:27,690 –> 00:11:31,230
t-shirts for that 83 cents. And
that was as cheap as we could find,

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00:11:31,230 –> 00:11:34,740
but it is definitely at
the price to quality ratio.

219
00:11:34,740 –> 00:11:37,890
So the cost of quality ratio is really
good there, which goes a long way.

220
00:11:38,640 –> 00:11:42,060
So lots of opportunities in Vietnam and
we’ll continue to talk about that as we

221
00:11:42,060 –> 00:11:45,330
go and as we go through our other
topics, we weave that back in.

222
00:11:45,330 –> 00:11:47,940
But what other countries
should people think about?

223
00:11:48,150 –> 00:11:51,660
I know basically you specialize
in anything outside of China,

224
00:11:51,660 –> 00:11:53,980
so what other countries should
we consider and for what?

225
00:11:54,400 –> 00:11:55,390
Yes, for sure. So yeah,

226
00:11:55,390 –> 00:11:59,470
we’ve been in Vietnam for 10 years and
we’ve been expanding since last year to

227
00:11:59,530 –> 00:12:02,440
all of Southeast Asia, Mexico, and
looking to expand even more this year.

228
00:12:03,640 –> 00:12:07,330
I mean, Southeast Asia is great.
Indonesia has a lot of great factories.

229
00:12:07,330 –> 00:12:11,110
Thailand, we’re doing a lot of higher end
auto parts and appliances in Thailand,

230
00:12:11,560 –> 00:12:14,530
some rubber goods, some natural
rubber. So pretty eco-friendly stuff.

231
00:12:15,550 –> 00:12:19,660
Malaysia does appliances and some really
good metal furniture and Mexico too.

232
00:12:20,380 –> 00:12:21,670
A lot of interest in Mexico.

233
00:12:21,760 –> 00:12:25,480
But I will say Mexico is a
little difficult to source
from because they’re very

234
00:12:25,480 –> 00:12:27,340
limited in what they could
produce. Much more limited.

235
00:12:27,340 –> 00:12:31,330
People expect more people want
Mexico work than it’s suitable for.

236
00:12:32,920 –> 00:12:35,410
What are those limitations
and why for Mexico?

237
00:12:35,560 –> 00:12:38,200
So we’re doing a lot of stamp
metal and industrial goods,

238
00:12:38,200 –> 00:12:41,980
some aftermarket car parts,
some work wear denim,

239
00:12:42,130 –> 00:12:45,430
so we can do stuff like that. But
we get a lot of requests for scrubs,

240
00:12:45,460 –> 00:12:49,030
which we do a lot of scrubs in
Vietnam, and the quality is great,

241
00:12:49,030 –> 00:12:52,390
but then people specifically want
Mexico just for the use of shipment,

242
00:12:52,390 –> 00:12:55,000
but it’s just not a good
quality scrub suppliers there.

243
00:12:55,000 –> 00:12:59,950
And there’s definitely a few
other products that people

244
00:12:59,950 –> 00:13:02,650
really want to get from
Vietnam, or sorry, from Mexico.

245
00:13:03,580 –> 00:13:06,880
I really think Mexico is going to get
more and more investment over the coming

246
00:13:06,880 –> 00:13:11,230
years just because the
demand is absolutely there.

247
00:13:11,230 –> 00:13:12,940
It’s just the supply has not caught up.

248
00:13:13,120 –> 00:13:17,860
And I will say a lot of new factories
are getting or have Chinese backed

249
00:13:17,860 –> 00:13:20,230
investment to Mexico, but there’s still a.

250
00:13:20,590 –> 00:13:21,940
Portion of it. Interesting.
Makes sense, right?

251
00:13:21,940 –> 00:13:23,770
China’s going to diversify themselves.

252
00:13:23,920 –> 00:13:27,460
They want to avoid the tariffs and so
profit and from what they’re really great.

253
00:13:27,460 –> 00:13:30,400
I was just manufacturing.
So makes a lot of sense.

254
00:13:31,300 –> 00:13:35,890
One of the things that I know
has caused some confusion,

255
00:13:35,890 –> 00:13:37,900
you talked about this
during a talk at seller.

256
00:13:37,900 –> 00:13:38,733
Summit.

257
00:13:38,830 –> 00:13:43,330
Is country of origin because I think
there’s going to be some creative

258
00:13:43,330 –> 00:13:45,190
things that people are going to try to do.

259
00:13:45,250 –> 00:13:45,820
Oh, for sure.

260
00:13:45,820 –> 00:13:49,000
Skirt around country of origin and stuff
like that. But can you talk about that?

261
00:13:49,000 –> 00:13:52,420
What constitutes country of origin
and what do we need to know there?

262
00:13:52,900 –> 00:13:57,850
Yeah, I mean what’s really
kind of annoying is it’s
very broadly written in the

263
00:13:57,850 –> 00:13:58,330
law.

264
00:13:58,330 –> 00:14:01,990
Basically the law states that a new
article of commerce has to emerge in the

265
00:14:01,990 –> 00:14:05,890
country. So it’d be, I import raw fabrics
from China having made in t-shirt,

266
00:14:05,890 –> 00:14:08,560
that’s a new article,
commerce, and you actually do,

267
00:14:08,740 –> 00:14:12,370
so the fabric making everything
in Vietnam, it’s a new article.

268
00:14:12,370 –> 00:14:16,870
Commerce cause T-shirts fundamentally
different from fabric. But yeah,

269
00:14:16,870 –> 00:14:19,630
I mean broadly speaking, you
have to have substantial change.

270
00:14:19,630 –> 00:14:22,660
And I try to advise people
at least 50% of value,

271
00:14:23,740 –> 00:14:27,010
but as long as it me as a new
article of commerce is new,

272
00:14:27,010 –> 00:14:30,370
but you can’t simply put a new label
on something. If you get a mug,

273
00:14:30,370 –> 00:14:33,340
you can’t just put your logo
on it and ship it from Vietnam,

274
00:14:33,700 –> 00:14:36,250
from China or just add
logos or change colors or.

275
00:14:36,250 –> 00:14:39,520
It was a mug. It is a mug.
You added a logo that is not.

276
00:14:39,580 –> 00:14:41,020
The same thing with
commerce. Same. And people,

277
00:14:41,620 –> 00:14:46,270
I’ve gotten a request for people to do
repackaging multiple times and I either

278
00:14:46,270 –> 00:14:48,100
turn ’em down or nor ’em. But yeah,

279
00:14:48,100 –> 00:14:50,200
they think you can just have
this product shipped from China,

280
00:14:50,380 –> 00:14:52,760
find a package supplier in
Vietnam, package it in Vietnam,

281
00:14:52,820 –> 00:14:55,610
and then ship it to us is a
new product. But it’s not,

282
00:14:55,820 –> 00:14:59,780
the product is still fundamentally
the same thing. So yeah,

283
00:14:59,780 –> 00:15:04,220
I mean you have to have
substantial transformation
of the product and generally

284
00:15:05,210 –> 00:15:07,520
if you get audited, you have
to document it. So I mean,

285
00:15:08,660 –> 00:15:09,920
if you have a factory in Vietnam,

286
00:15:09,920 –> 00:15:13,220
you just simply have the factory write
a certified letter. Yeah, we made it,

287
00:15:13,220 –> 00:15:16,430
here’s the invoice, here’s the
letter we here’s the factory.

288
00:15:16,430 –> 00:15:19,580
You can maybe even take videos of
your product being made in Vietnam.

289
00:15:20,090 –> 00:15:23,840
That’s some nice Vietnamese worker saying,
yep, look, I making this. But yeah,

290
00:15:23,840 –> 00:15:27,350
just document it. It’ll go through
fine. But if you’re just like we said,

291
00:15:27,350 –> 00:15:30,320
doing the repackaging or
pass through transshipment,

292
00:15:30,320 –> 00:15:32,360
it’s definitely something to get caught.

293
00:15:32,360 –> 00:15:36,860
And they’re definitely with CBP and
Customs of Border Protection who enforces

294
00:15:36,860 –> 00:15:37,693
customs.

295
00:15:38,270 –> 00:15:42,830
They’re doing 50% more audits now
just last month more in April,

296
00:15:42,890 –> 00:15:45,770
50% more in April than they were,
I don’t know what the timeframe,

297
00:15:46,250 –> 00:15:47,870
I guess probably during
the Biden administration.

298
00:15:48,440 –> 00:15:51,740
And they’re planning on increasing that
more and more and they’re planted here

299
00:15:51,740 –> 00:15:52,100
and whatnot,

300
00:15:52,100 –> 00:15:56,930
have contracts with CBP now and
countries like Vietnam and most other

301
00:15:56,930 –> 00:15:58,880
countries share import data.

302
00:15:58,940 –> 00:16:02,060
So what’s getting imported into
Vietnam is getting shared with CBP,

303
00:16:02,720 –> 00:16:06,440
so they know what’s getting shipped in
and then they can hypothetically use AI

304
00:16:06,440 –> 00:16:11,120
or whatever to match it.
So it’s definitely, yeah,

305
00:16:11,120 –> 00:16:13,970
don’t do transgender just actually
make the product in the country.

306
00:16:14,390 –> 00:16:18,410
It’s going get more about the fines are
pretty steep. And once you get called.

307
00:16:18,410 –> 00:16:19,370
Ones, yeah.

308
00:16:19,910 –> 00:16:20,090
Yeah.

309
00:16:20,090 –> 00:16:23,870
Once you get called once you’re pretty
much red flagged for the rest for ever.

310
00:16:23,870 –> 00:16:25,850
And they can look back on
previous shipments too,

311
00:16:26,330 –> 00:16:28,430
so it’s not like they get caught one time,

312
00:16:28,430 –> 00:16:29,870
they’re only looking back
at your previous shipments.

313
00:16:29,870 –> 00:16:32,870
Yeah, yeah. It’s just one
of those things where,

314
00:16:32,870 –> 00:16:35,540
and I think one of the
analogies you use is like, Hey,

315
00:16:35,540 –> 00:16:39,290
we would never cheat on our taxes. Right?

316
00:16:39,290 –> 00:16:43,040
Or not file our taxes or something like
that. We know, dude, you don’t mess.

317
00:16:43,040 –> 00:16:45,860
I mean, yes, I’m going to
take every advantage, every
deduction that I can take,

318
00:16:46,490 –> 00:16:50,210
but I’m not going to screw around
with the IRS, right? Oh, absolutely.

319
00:16:50,210 –> 00:16:51,860
And CCB P is the same,

320
00:16:52,190 –> 00:16:56,450
maybe going to get more intense and
it’s going to be such a huge revenue

321
00:16:56,960 –> 00:16:59,960
generator for the US government tariffs
that they’re not going to be messing

322
00:16:59,960 –> 00:17:02,870
around here. And so it makes
sense to do it by the book. Yes,

323
00:17:02,870 –> 00:17:04,130
look for advantages,
but do it by the book.

324
00:17:04,520 –> 00:17:06,980
Yeah, absolutely. You do it by the book.
So make sure everything’s compliant.

325
00:17:06,980 –> 00:17:10,940
You’ve got paperwork and documentation
support, everything you made. Yeah,

326
00:17:10,940 –> 00:17:14,360
I mean they’ll look at
payments potentially to the
factory and I mean they have

327
00:17:14,360 –> 00:17:15,410
as much capability,

328
00:17:15,410 –> 00:17:19,760
more or less than as the IRS to
look at your finances and why not?

329
00:17:20,420 –> 00:17:23,720
Yeah, I mean Trump wants to have the
external revenue service, which is,

330
00:17:24,620 –> 00:17:25,460
I mean as far as I’m.

331
00:17:25,460 –> 00:17:28,070
Concerned, basically cvp, right? I mean
they’re going to be connected. Yeah.

332
00:17:28,460 –> 00:17:32,930
Absolutely. So yeah, if you don’t cheat
on your taxes, don’t cheat on shipments,

333
00:17:32,930 –> 00:17:34,310
your taxes, period.

334
00:17:34,670 –> 00:17:38,540
Love that. Love that comparison. I think
that sets the right frame for folks.

335
00:17:38,720 –> 00:17:41,810
Let’s talk about di minimis. This is
something that’s talked about a lot.

336
00:17:41,810 –> 00:17:42,680
It’s come up a lot,

337
00:17:43,370 –> 00:17:46,220
but explain that for folks that
are still maybe a little bit fuzzy,

338
00:17:47,060 –> 00:17:49,680
how has that impacted and what
should we know about that?

339
00:17:49,980 –> 00:17:50,130
Yeah,

340
00:17:50,130 –> 00:17:55,020
so minimis was a rule in place that
basically shipments under $800 in

341
00:17:55,020 –> 00:17:59,220
value, would not have a tariff
duty rates applied to it.

342
00:17:59,250 –> 00:18:02,220
Just at that point they were like $800.

343
00:18:02,400 –> 00:18:06,450
That tax and duty collect is going to
be less than what or less than what the

344
00:18:06,450 –> 00:18:09,600
actual cost administrator calls
to get in and figure stuff out.

345
00:18:09,600 –> 00:18:13,230
Was that rule’s gone away
for China and Hong Kong?

346
00:18:13,320 –> 00:18:16,080
But it’s still in effect for the rest
of the world. And I do want to get,

347
00:18:16,080 –> 00:18:19,680
the big caveat is definitely something
the White House and the people in charge

348
00:18:19,680 –> 00:18:24,660
have talked about getting rid of some
point in the future, but as of today,

349
00:18:24,660 –> 00:18:29,340
may probably about 10:00 AM a few hours
ago, I’m checking news in a few hours,

350
00:18:29,940 –> 00:18:30,810
it’s still in effect.

351
00:18:33,960 –> 00:18:37,440
Any single shipment under
$800, no customs or no tariffs.

352
00:18:37,440 –> 00:18:40,620
There does not apply to China
or Hong Kong. But right now.

353
00:18:40,980 –> 00:18:41,490
But yeah,

354
00:18:41,490 –> 00:18:44,580
you can ship from Vietnam and get
under that $800 value and that’s each

355
00:18:44,580 –> 00:18:48,990
individual shipment. So you have to do,
I don’t know, it’s a lot of people just,

356
00:18:49,260 –> 00:18:53,160
but there are companies like port lists
and whatnot that does warehousing in

357
00:18:53,670 –> 00:18:55,650
Vietnam. You can ship to
the warehouse in Vietnam.

358
00:18:55,650 –> 00:18:57,240
Each time a customer plays it
order to the United States,

359
00:18:57,240 –> 00:18:59,520
they ship each item out to the customer.

360
00:19:00,870 –> 00:19:05,280
And it scripts around as
of now the di minimus law,

361
00:19:05,430 –> 00:19:08,130
assuming your product’s lightweight,
but I mean there is cost.

362
00:19:08,130 –> 00:19:11,310
Cause when you ship each individual
item versus the container,

363
00:19:11,700 –> 00:19:14,460
you want to have small lightweight
stuff like t-shirts and small electronic

364
00:19:14,460 –> 00:19:17,310
items. Cause once you get
large heavyweight items,

365
00:19:17,610 –> 00:19:19,050
let’s just say flat pack furniture,

366
00:19:19,500 –> 00:19:22,770
the shipping cost per item to do
air shipping, it’s going to get.

367
00:19:23,100 –> 00:19:25,560
Prohibitively you worth
to save on shipping costs.

368
00:19:25,560 –> 00:19:28,710
It’s worth the 10% tariff for whatever
because you’re saving more on shipping.

369
00:19:28,710 –> 00:19:33,660
So you got to kind balance that out.
Great. Well, speaking of warehouses,

370
00:19:33,660 –> 00:19:36,450
I know something you’ve talked about and
I’ve heard a few people talk about is

371
00:19:36,900 –> 00:19:38,460
bonded warehouses.

372
00:19:38,460 –> 00:19:43,410
And so explain that and then when should
we consider that versus when is that

373
00:19:43,410 –> 00:19:44,850
maybe not advantageous to.

374
00:19:44,850 –> 00:19:45,930
Us? Yeah, for sure.

375
00:19:45,930 –> 00:19:50,580
So custom responded warehouses
are warehouses that are
more or less connected to

376
00:19:50,580 –> 00:19:51,413
the port.

377
00:19:51,540 –> 00:19:54,840
So what you can do is you can ship a
product to the port and then from the port

378
00:19:54,840 –> 00:19:57,240
will get shipped to the custom
responded warehouse directly.

379
00:19:57,540 –> 00:20:00,630
And then when it leaves the
warehouse, so each shipment,

380
00:20:00,930 –> 00:20:04,860
that’s when it gets to tariff
rate applied to it. So yeah,

381
00:20:04,920 –> 00:20:06,120
the sample I use.

382
00:20:06,180 –> 00:20:09,000
So that way if you have a hundred
thousand container with a hundred thousand

383
00:20:09,000 –> 00:20:13,800
dollars worth of goods, I guess new
tariff rate is 30% typically goes to port,

384
00:20:13,860 –> 00:20:15,060
leaves the port through customs.

385
00:20:15,060 –> 00:20:19,950
You pay 30,000 on tariffs
on that shipment at one time

386
00:20:20,070 –> 00:20:21,150
before product sells.

387
00:20:21,150 –> 00:20:24,540
But you can ship that shipment
straight to a cost of bond warehouse.

388
00:20:24,540 –> 00:20:26,790
And then each time a customer
placed an order on a product,

389
00:20:27,150 –> 00:20:29,370
you get revenue from the customer
and then it leaves the warehouse.

390
00:20:29,370 –> 00:20:32,310
So let’s just say as a
hundred dollars items,

391
00:20:32,430 –> 00:20:36,300
you pay $30 in tariffs each time the
product leaves the warehouse and you get

392
00:20:36,300 –> 00:20:39,720
cashflow in from your customer.
So there’s not that one big hit,

393
00:20:39,780 –> 00:20:42,030
you’re going to still pay
tariffs, but it splits it up.

394
00:20:42,030 –> 00:20:46,080
So you pay the tariff as you get cashflow
coming in from the clients or your

395
00:20:46,100 –> 00:20:46,300
customers.

396
00:20:46,300 –> 00:20:47,110
Yeah, it makes a lot of sense.

397
00:20:47,110 –> 00:20:52,060
I know especially when tariff were
154% from China there for a hot minute,

398
00:20:52,060 –> 00:20:53,440
people were like, whoa, bond warehouse,

399
00:20:53,440 –> 00:20:58,120
I’m only going to pay that on a per item
basis as much as I can. That is 30%.

400
00:20:58,120 –> 00:20:59,380
Maybe people are a little more flexible,

401
00:20:59,590 –> 00:21:04,180
but it’s so nice to have that flexibility
of it’s there now you can absorb

402
00:21:04,450 –> 00:21:06,970
the hit because you got cashflow
coming in from the customer.

403
00:21:06,970 –> 00:21:08,470
So a lot of benefits there.

404
00:21:08,740 –> 00:21:13,420
And if you shipped it in April, like late
April, early May when it’s still 145%,

405
00:21:13,420 –> 00:21:16,480
you shifted customs on their
warehouse, you can ship it out now,

406
00:21:16,510 –> 00:21:19,900
pay the 30% tariffs instead of
paying what would’ve been 145%.

407
00:21:20,500 –> 00:21:25,030
And I know a lot of people are trying,
30% is manageable for a lot of people,

408
00:21:25,030 –> 00:21:26,860
so they just want to get
it out and pay what they.

409
00:21:26,860 –> 00:21:29,050
Need to at the time. It’s
still painful but manageable,

410
00:21:29,050 –> 00:21:32,950
especially in comparison.
But so the customs,

411
00:21:32,950 –> 00:21:35,140
modern warehouses are close to a port.

412
00:21:35,560 –> 00:21:37,870
I know there’s some extra
costs associated there too.

413
00:21:38,110 –> 00:21:40,300
So what do we need to consider?
When would we not want to do.

414
00:21:40,300 –> 00:21:42,730
This? I mean, for the most part, I mean,

415
00:21:42,730 –> 00:21:45,670
just kind look at your cashflow
and how you want it managed. Yeah,

416
00:21:45,670 –> 00:21:48,160
customs on a warehouse, they’re
definitely in demand right now.

417
00:21:48,160 –> 00:21:52,240
So they’re going to be more expensive
on a per square footage rate than a trip

418
00:21:52,240 –> 00:21:54,760
to pull warehouse. But I mean,

419
00:21:54,760 –> 00:21:59,560
if you’re looking at the tariff rates
and it’s more cost advantageous where you

420
00:22:00,520 –> 00:22:02,980
just want to preserve your
cash flow for the time being,

421
00:22:02,980 –> 00:22:04,510
it’s definitely going to
be advantageous to do.

422
00:22:04,510 –> 00:22:06,490
And I know a lot of people are
probably shipping out of customs,

423
00:22:06,490 –> 00:22:08,590
modern warehouses like
I mentioned earlier,

424
00:22:08,590 –> 00:22:11,200
just moving a traditional one
and just pay the tariff now.

425
00:22:11,200 –> 00:22:15,880
But it gives you that flexibility to kind
of adjust as the tariff rates changes.

426
00:22:16,180 –> 00:22:18,850
Because right now, as every
day is a new announcement.

427
00:22:19,330 –> 00:22:21,610
Every day, a new adventure for.

428
00:22:21,610 –> 00:22:23,560
Sure, he’s going to have new on.

429
00:22:23,560 –> 00:22:26,410
Scores of country check tariff
news. It really is every day.

430
00:22:27,730 –> 00:22:32,410
Totally makes sense. So then
let’s look at tariff engineering.

431
00:22:32,980 –> 00:22:36,130
So tariffs, I believe we’re here to
stay at least for this administration,

432
00:22:36,130 –> 00:22:38,770
and likely beyond. Just like anything
with the government though, once

433
00:22:40,630 –> 00:22:43,060
Democrats say they don’t like tariffs,
but then once they’re in place,

434
00:22:43,060 –> 00:22:45,820
if people are okay with it,
it’s hard to turn away revenue.

435
00:22:46,000 –> 00:22:48,760
And that’s true for
either party. So likely.

436
00:22:48,970 –> 00:22:49,750
Tariffs.

437
00:22:49,750 –> 00:22:50,740
Hearsay. Hearsay.

438
00:22:50,740 –> 00:22:54,070
Yeah. Biden kept to 25% on
China. There is administration.

439
00:22:54,190 –> 00:22:57,070
Exactly. Yeah. So it’s like, oh, we’re
pretty, well, nobody’s talking about it.

440
00:22:57,070 –> 00:23:01,150
Let’s just keep it. Yeah. So
let’s talk tariff engineering.

441
00:23:02,020 –> 00:23:06,070
How do you coach people or how
do you work with your clients to

442
00:23:06,790 –> 00:23:08,410
engineer tariffs for the least?

443
00:23:08,770 –> 00:23:10,660
Yeah, it a little tricky.

444
00:23:10,900 –> 00:23:14,620
You really have to really dive in deep
on what your product is, the HTS code,

445
00:23:14,620 –> 00:23:16,750
and then look at similar HTS codes.

446
00:23:16,900 –> 00:23:17,850
And what is the HTS code?

447
00:23:18,160 –> 00:23:22,150
Yeah, HTS code. So HTS code
for those aren’t familiar,

448
00:23:22,150 –> 00:23:25,660
harmonized tariff schedule is the code
that assigned to pretty much 17,000

449
00:23:25,660 –> 00:23:26,830
different product categories.

450
00:23:27,250 –> 00:23:29,530
And that’s going to be what the
tariff rate is determined by.

451
00:23:29,530 –> 00:23:31,690
So there’s going to be a list.

452
00:23:33,130 –> 00:23:37,150
So each product falls under a
different HCS code. They’re 10 digits.

453
00:23:38,050 –> 00:23:38,380
But yeah,

454
00:23:38,380 –> 00:23:41,230
what you do is you look at your HT S
code and then look at similar ones.

455
00:23:41,830 –> 00:23:45,190
And then if you have a
similar HCS code nearby,

456
00:23:45,380 –> 00:23:47,990
you can make changes to that,
have a lower tariff rate.

457
00:23:47,990 –> 00:23:51,380
You can fundamentally change
your product to get in.

458
00:23:51,620 –> 00:23:55,280
The example I used was Columbia
Sportswear for all their shirts.

459
00:23:55,640 –> 00:23:58,820
They all started adding a little
pocket on the inside of their shirts,

460
00:23:59,780 –> 00:24:01,130
credit card size pocket, I think.

461
00:24:01,460 –> 00:24:05,270
And the difference is the shirt has a
higher tariff rate than a windbreaker.

462
00:24:06,140 –> 00:24:07,340
And so since it has a pocket,

463
00:24:07,340 –> 00:24:09,830
they can actually classify
the shirts as a windbreaker.

464
00:24:09,830 –> 00:24:13,160
That meets the requirement for
windbreaker change, the HTS code,

465
00:24:13,250 –> 00:24:14,150
lower tariff now.

466
00:24:14,210 –> 00:24:14,720
Exactly.

467
00:24:14,720 –> 00:24:18,440
And they engineer the product to meet
the requirements for a windbreaker.

468
00:24:19,550 –> 00:24:22,730
And I’m sure everybody has a shirt.
It’s nice to have a little pocket.

469
00:24:22,910 –> 00:24:23,810
Nice little benefit as well.

470
00:24:24,020 –> 00:24:25,190
Yeah. So yeah,

471
00:24:25,190 –> 00:24:28,700
they figure that out and they pay a lower
tariff rate on their shirt shipments

472
00:24:28,940 –> 00:24:31,580
because of that change.
And Converse did that.

473
00:24:31,640 –> 00:24:35,630
They put a felt in liner in
their Converse all stars.

474
00:24:36,140 –> 00:24:40,130
Cause the slippers instead of shoes or
sneakers and slippers have a lower tariff

475
00:24:40,130 –> 00:24:42,980
rate than sneakers. That’s probably
one of the most famous examples,

476
00:24:42,980 –> 00:24:46,580
but a lot of people are kind of just
exploring similar products that can

477
00:24:46,610 –> 00:24:51,080
effectively sold the same just
to get a different HDS code.

478
00:24:51,080 –> 00:24:54,830
But this is a little tricky to
do because not every product,

479
00:24:55,220 –> 00:24:58,460
because most of the time products in
the same category get text at the same

480
00:24:58,460 –> 00:25:01,010
array more or less. So
even if you do change.

481
00:25:01,010 –> 00:25:02,570
So not always a lot of opportunities here.

482
00:25:03,020 –> 00:25:06,770
And is this kind of going
back to our IRS example,

483
00:25:06,950 –> 00:25:08,660
this is sort of using deductions, right?

484
00:25:08,720 –> 00:25:12,620
So then it’s like do you
fall under scrutiny here if
you’re getting too cute or

485
00:25:12,620 –> 00:25:13,850
too creative? Or is this.

486
00:25:14,240 –> 00:25:18,560
Relatively should would cause Yeah, I
mean when you submit it through CVP,

487
00:25:18,920 –> 00:25:21,920
you’re going to say, Hey, it’s this HT
S code and there’s going to be some guy,

488
00:25:21,980 –> 00:25:26,090
literally somebody looking at their
database, checking it, the product,

489
00:25:26,270 –> 00:25:29,660
the materials and whatnot. And if
they say it’s something different,

490
00:25:29,990 –> 00:25:32,180
they’re like, Hey, we actually
think it’s this HTS code.

491
00:25:33,290 –> 00:25:34,640
And then there’s going
to be back and forth.

492
00:25:34,640 –> 00:25:38,570
And then ultimately there’s
an arbitration court more,

493
00:25:38,840 –> 00:25:39,920
I don’t know the exact term,

494
00:25:39,920 –> 00:25:44,780
but I know there’s basically arbitrator
where more or less a judge rules on what

495
00:25:44,780 –> 00:25:47,780
the ultimate HS code is. Got
it. We were looking at not,

496
00:25:48,260 –> 00:25:50,120
we didn’t do the ruling,
but we looked at a ruling.

497
00:25:50,270 –> 00:25:51,890
We were doing baby carriers for a client.

498
00:25:53,570 –> 00:25:57,380
It was trying to figure out which HT S
code. Yeah, I mean there was a court,

499
00:25:57,620 –> 00:26:01,520
not court ruling, but customs ruling
from 2013 said, is this HTS code,

500
00:26:01,820 –> 00:26:04,310
which is surprising catchall HT S code.

501
00:26:05,480 –> 00:26:09,500
It was all fabric baby
carriers versus of course,

502
00:26:09,500 –> 00:26:11,870
most baby carriers dot have
some sort of structure in it.

503
00:26:11,870 –> 00:26:15,470
Those structured baby carriers are
actually tax at a different rate or

504
00:26:15,470 –> 00:26:18,560
classified as different than fabric.
Yeah.

505
00:26:20,360 –> 00:26:23,930
So I mean, you got to kind of figure
that out. But ultimately though,

506
00:26:23,930 –> 00:26:26,780
it’s going to be what the custom
says the product is. And again,

507
00:26:26,870 –> 00:26:30,590
if you get cute, it’s not as bad as
fines. It’s just straight up lying to ’em.

508
00:26:30,590 –> 00:26:33,770
But they’re going to say it’s the
HCS code. There’s going to be some.

509
00:26:34,310 –> 00:26:35,340
Got to, you don’t have
to pay the difference.

510
00:26:35,340 –> 00:26:36,940
Everything they correct got to difference.

511
00:26:37,400 –> 00:26:39,110
If it gets held up, there’s some demure,

512
00:26:39,110 –> 00:26:41,270
some storage charges too related to that.

513
00:26:42,590 –> 00:26:43,560
And look,

514
00:26:43,560 –> 00:26:47,850
we got to design our product
for a customer and it’s
got to meet our vision and

515
00:26:47,850 –> 00:26:50,130
mission and what we’re trying
to accomplish with the product.

516
00:26:50,130 –> 00:26:52,350
But it’s just another one of
those things where it’s like, Hey,

517
00:26:52,350 –> 00:26:56,550
let me take a look because maybe this
is easy or maybe we have the wrong HT S

518
00:26:56,550 –> 00:26:58,770
code, we need to switch it and
it’s going to work better for us.

519
00:26:58,950 –> 00:27:02,190
It’s something that take a look at
because we could have a meaningful impact.

520
00:27:02,520 –> 00:27:06,480
A lot of small things too, like
synthetic fabrics and natural fibers,

521
00:27:06,660 –> 00:27:08,460
fabrics are sometimes taxed differently.

522
00:27:08,460 –> 00:27:12,180
So you can look at just changing the
fabric of your product, for instance, but.

523
00:27:12,330 –> 00:27:15,240
Just maybe you can change it and get
better performance and now you get a lower

524
00:27:15,750 –> 00:27:20,400
turf. Right? Yeah. Yeah. Interesting.
So let’s talk about what not to do.

525
00:27:20,400 –> 00:27:23,730
And I know there are several caveats
here. This is not legal advice.

526
00:27:24,000 –> 00:27:25,620
You’re not an attorney,
I’m not an attorney,

527
00:27:26,310 –> 00:27:28,470
but what are some things that
we need to avoid right now?

528
00:27:28,470 –> 00:27:30,210
Or at least need to be
very, very cautious of?

529
00:27:30,300 –> 00:27:33,630
Yeah, for sure. Yeah, I think the
first thing I mentioned was DDP and I.

530
00:27:34,530 –> 00:27:35,640
If I were redo that talk,

531
00:27:35,640 –> 00:27:38,880
I would say there’s a right way to
do DDP and a wrong way to do DDP.

532
00:27:38,890 –> 00:27:39,780
Yeah. And what is DDP.

533
00:27:41,220 –> 00:27:44,160
Delivery duty paid? So DDP is ANCO term,

534
00:27:44,280 –> 00:27:46,530
which means you work with a manufacturer,

535
00:27:47,070 –> 00:27:49,410
they’ll give you an invoice
and the manufacturer will
be in charge of making the

536
00:27:49,410 –> 00:27:52,020
product, shipping the product,
paying the dues and deliveries,

537
00:27:52,050 –> 00:27:53,850
everything for you up until it reaches

538
00:27:55,470 –> 00:27:58,260
the ultimate final destination. And

539
00:28:00,000 –> 00:28:04,320
it’s legal. It’s been a thing
for a while the right way.

540
00:28:05,100 –> 00:28:05,933
So in this case,

541
00:28:06,030 –> 00:28:10,050
you just basically pay the manufacturer
one and they handle everything. I mean,

542
00:28:10,050 –> 00:28:12,540
there’s a right way, and like I said,
there’s right way and wrong way.

543
00:28:12,540 –> 00:28:14,760
The right way is trust
by verify your supplier,

544
00:28:14,760 –> 00:28:18,090
make sure you get copies of all the
manufacturers, invoice the shipping,

545
00:28:18,420 –> 00:28:20,100
who’s shipping what HCS.

546
00:28:20,400 –> 00:28:23,610
What they’re classifying is because
what’s happening a lot of times,

547
00:28:23,610 –> 00:28:24,510
not all the time,

548
00:28:24,570 –> 00:28:29,460
but a lot of times is the manufacturers
know that they have the lowest

549
00:28:29,460 –> 00:28:31,140
price they’re going to go with them.

550
00:28:31,140 –> 00:28:35,460
So they’re figuring out ways to
falsify manufacturing invoice so that

551
00:28:36,540 –> 00:28:39,720
because what they use to the bill of
lading or whatnot is what they use to

552
00:28:41,250 –> 00:28:45,660
calculate the tariffs on. So we can
pay 145,000 or 30%, 145, I dunno,

553
00:28:46,440 –> 00:28:49,860
whatever it is today, 30% on
10,000, there’s 20 pay 3000.

554
00:28:49,860 –> 00:28:54,600
But if they falsify it and say 5,000
and we pay 30% is half the tariff

555
00:28:54,600 –> 00:28:55,433
cost.

556
00:28:56,940 –> 00:29:00,210
And so a lot of manufacturers doing that.

557
00:29:00,480 –> 00:29:04,620
What’s happened is ultimately the person
that is legally and liable for it is

558
00:29:04,680 –> 00:29:06,540
the importer, the person
buying the product.

559
00:29:07,290 –> 00:29:09,900
So if you verify that
everything they say is accurate,

560
00:29:09,900 –> 00:29:11,640
the manufacturer’s invoice is accurate,

561
00:29:11,760 –> 00:29:16,110
the shipping bill ladings correctly
listed a CS code is correct, it’s fine.

562
00:29:16,620 –> 00:29:20,370
So no issue there, but they don’t
always supply that information to you.

563
00:29:20,370 –> 00:29:24,120
So a lot of people just turn the blind
eye just accept what everything the

564
00:29:24,180 –> 00:29:25,530
manufacturer is saying is correct.

565
00:29:25,710 –> 00:29:28,560
And they have a lot of times that
they have suspicious low bids.

566
00:29:28,560 –> 00:29:31,770
This what they’re probably
doing. Yeah, trust.

567
00:29:32,340 –> 00:29:33,300
To verify.

568
00:29:33,300 –> 00:29:35,910
But I think that’s the piece a lot of
people don’t dunno is they’re like, oh,

569
00:29:35,910 –> 00:29:40,730
no, no, no, it’s my factor doing it.
Right? So they’re the ones are reliable.

570
00:29:41,410 –> 00:29:46,150
The agent of record is the, or the
manufacturer, and they assume, oh,

571
00:29:46,150 –> 00:29:49,210
since they’re agent of record, they’re
the one legally liable and responsible.

572
00:29:50,080 –> 00:29:53,920
If anybody gets called, it’s going to be
them, but it’s not the case. And yeah,

573
00:29:53,920 –> 00:29:56,680
I got a lot of pushback from it. I’m
not going to name names, but yeah,

574
00:29:56,680 –> 00:30:00,010
there were people doing this and I had
to explain how to do it correctly and how

575
00:30:00,010 –> 00:30:03,040
not to, and I was like, okay, probably
gave a few people a heart attack,

576
00:30:03,040 –> 00:30:04,480
so I want to apologize to those people.

577
00:30:05,560 –> 00:30:07,870
And again, it’s just sort of one of
those things where it’s like, oh, well,

578
00:30:07,870 –> 00:30:11,380
my accountant screwed up my
tax return, not my fault.

579
00:30:11,380 –> 00:30:14,980
I don’t have to pay those taxes. Well,
no, you still do. They’re your taxes.

580
00:30:15,070 –> 00:30:15,903
Oh, absolutely.

581
00:30:16,210 –> 00:30:18,280
And so you got to look
at it that way. Yeah,

582
00:30:18,280 –> 00:30:20,290
you got to absolutely verify
everyth to do, basically,

583
00:30:20,290 –> 00:30:21,430
you’ve just got to look at, hey,

584
00:30:21,430 –> 00:30:25,870
what I’m paying per unit or
total to the manufacturer,

585
00:30:25,870 –> 00:30:27,490
is that what they’re
putting on the invoice?

586
00:30:27,490 –> 00:30:30,820
And is that what the tariff is being
charged to? And if all that looks good,

587
00:30:31,600 –> 00:30:31,960
then you’re fine.

588
00:30:31,960 –> 00:30:36,850
Yeah, yeah. Just trust, verify everything.
Yeah. If it gets caught up as held,

589
00:30:36,850 –> 00:30:40,240
gets red flagged by customs,
they’re going ask for documentation,

590
00:30:40,240 –> 00:30:43,970
ask you more or less. And if you
don’t have that, you’re just, I know,

591
00:30:43,970 –> 00:30:46,810
I just thought they would do a good
job. It’s not going fly. They expect.

592
00:30:46,820 –> 00:30:48,400
You to. Yeah, and I think
you mentioned this too,

593
00:30:48,610 –> 00:30:53,020
then once something is flagged
for you, probably future orders,

594
00:30:53,020 –> 00:30:54,370
they’re going to be paying attention you,

595
00:30:54,370 –> 00:30:56,440
you’re going to be scrutinized from there.

596
00:30:56,440 –> 00:30:58,870
On. And again, they can look
back on passion ship too.

597
00:30:58,870 –> 00:31:00,970
And if they find you were
doing that on passionist,

598
00:31:01,030 –> 00:31:03,340
then you can also get paid
fines for pass shipment.

599
00:31:03,340 –> 00:31:07,810
So just know how to do it correctly.
Yeah, work with customers, brokers,

600
00:31:07,810 –> 00:31:11,290
make sure everything goes through
smoothly. Yeah, I always mean just for me,

601
00:31:11,290 –> 00:31:16,240
I always recommend FOB have your own
freight forwarder and then they’ll have

602
00:31:16,240 –> 00:31:19,630
a custom broker and they’ll
handle everything and tell
you what to do and give

603
00:31:19,630 –> 00:31:21,430
you advice for the
shipment and all that. But.

604
00:31:22,330 –> 00:31:23,260
I never, what does FOB.

605
00:31:24,370 –> 00:31:25,030
Free on board?

606
00:31:25,030 –> 00:31:29,020
So it means the manufacturer’s responsible
for having the product shipped to the

607
00:31:29,020 –> 00:31:30,640
port and the country of origin,

608
00:31:32,230 –> 00:31:33,970
and then the freight forward
will pick over at the port.

609
00:31:34,810 –> 00:31:36,760
Got it. Got it. Okay. Well,

610
00:31:37,120 –> 00:31:41,260
let’s talk about you specialize in helping
people diversify their supply chain

611
00:31:41,260 –> 00:31:45,310
or re-engineer their supply chain. And
you’re looking at outside of China,

612
00:31:46,540 –> 00:31:48,220
who should reach out to you?

613
00:31:48,610 –> 00:31:51,940
I know everybody’s kind of scrambling
and looking just because of the chaos

614
00:31:51,940 –> 00:31:52,210
lately,

615
00:31:52,210 –> 00:31:55,900
but who should reach out to you and what
are some of the things they should be

616
00:31:55,900 –> 00:32:00,640
considering as they’re looking at
diversifying their supply chain?

617
00:32:00,640 –> 00:32:05,560
Are you mostly helping people fully shift
their manufacturing to the countries?

618
00:32:05,560 –> 00:32:07,480
Are you looking at, hey, let’s diversify,

619
00:32:07,480 –> 00:32:11,290
let’s have these things made here and
these things made here. Walk me through.

620
00:32:11,290 –> 00:32:14,080
That. Yeah, I mean, the majority
of our clients tend to shift.

621
00:32:14,140 –> 00:32:17,290
The majority of clients tend have
a couple key products, but yeah,

622
00:32:17,290 –> 00:32:20,140
they’re shifting for the most part,
all their manufacturing to Vietnam.

623
00:32:20,170 –> 00:32:20,590
But yeah,

624
00:32:20,590 –> 00:32:23,500
we work with a lot of clients who have
dozens of different product categories,

625
00:32:23,500 –> 00:32:27,670
and we’re just, for those clients, we’re
going through their list saying, Hey,

626
00:32:28,180 –> 00:32:30,550
these three, four categories we
can definitely do in Vietnam.

627
00:32:30,550 –> 00:32:34,150
These two are maybe, and these
probably can’t do in Vietnam.

628
00:32:34,150 –> 00:32:37,360
And then we’re shifting some of the
supply chain. A lot of our bigger clients,

629
00:32:37,360 –> 00:32:39,350
like our eight bigger plus clients,

630
00:32:40,340 –> 00:32:43,100
they have the means to
be more diversified.

631
00:32:43,100 –> 00:32:46,490
So they’re keeping their suppliers in
China for the time being and then placing

632
00:32:46,490 –> 00:32:50,990
new orders with factories in Vietnam
just for the time being. But I mean,

633
00:32:50,990 –> 00:32:51,890
for the most part, yeah,

634
00:32:51,890 –> 00:32:56,300
we’re just ultimately shifting a
lot of clients down to Vietnam,

635
00:32:56,300 –> 00:32:59,960
completely and interesting. A lot
of people, their supply chains,

636
00:32:59,960 –> 00:33:02,210
but they’ve been buying from China,

637
00:33:02,210 –> 00:33:05,150
so they’ll keep ’em for future
orders potentially if things change.

638
00:33:05,150 –> 00:33:06,620
But for the most part,

639
00:33:06,620 –> 00:33:10,400
I think a lot of people
are moving permanently to
Vietnam or permanently away.

640
00:33:10,410 –> 00:33:12,080
From China. What does
the process look like?

641
00:33:12,080 –> 00:33:16,340
So I’ve now decided I’m going to
start shifting my manufacturing.

642
00:33:16,340 –> 00:33:20,840
Some were all from China to Vietnam or
one of the other countries you work with.

643
00:33:21,350 –> 00:33:25,700
What is that process like? How
much time are we talking here?

644
00:33:25,820 –> 00:33:30,230
Is this a six month plan, an 18
month plan? What does that look.

645
00:33:30,230 –> 00:33:32,480
Like? Yeah, it’s definitely
is ballpark six months.

646
00:33:33,260 –> 00:33:35,240
Do you actually get your
first order in hand? Yeah,

647
00:33:35,240 –> 00:33:36,590
once you kind of reach out to us,

648
00:33:36,920 –> 00:33:39,560
we’ll let you know if the product
can be made in Vietnam or not.

649
00:33:39,560 –> 00:33:42,560
But once we get that point, our team
will go out, research suppliers verify,

650
00:33:42,560 –> 00:33:43,820
and that we’ve worked on,

651
00:33:44,450 –> 00:33:47,720
we’ve probably placed orders with a few
hundred factories already in Vietnam.

652
00:33:47,750 –> 00:33:51,560
So we have pretty good
working relationship on
pretty good idea what they can

653
00:33:51,560 –> 00:33:54,980
and can’t do. But yeah, once we get
that, we’ll get quotes for our clients,

654
00:33:54,980 –> 00:33:57,770
do direct introductions to the
clients and the manufacturers.

655
00:33:57,770 –> 00:34:01,370
So everything we do is transparent
in that way. And then, yeah,

656
00:34:01,370 –> 00:34:03,530
once they do that, obviously
there’s samples to be made,

657
00:34:04,610 –> 00:34:08,420
make sure they can make the product.
Exactly. And then purchase order. So yeah,

658
00:34:08,420 –> 00:34:09,320
you’re looking at about four weeks,

659
00:34:09,380 –> 00:34:13,790
actually get the quotes verified that
the suppliers make sure everything’s in

660
00:34:13,790 –> 00:34:17,240
line with your expectations a couple
weeks per each surrounded samples.

661
00:34:17,240 –> 00:34:18,830
And then purchase order,

662
00:34:19,280 –> 00:34:21,800
which place purchase order lead
times tends to be about 30,

663
00:34:21,800 –> 00:34:24,860
45 days for most products. Got
it. Yeah. I mean then shipping.

664
00:34:24,860 –> 00:34:25,790
And so realistically,

665
00:34:25,790 –> 00:34:29,330
you’re looking at actually having the
product in hand from Vietnam in about five

666
00:34:29,330 –> 00:34:31,280
to seven months once you
actually start a project.

667
00:34:31,290 –> 00:34:34,160
Got it. Got it. That actually
does not sound too bad. I mean,

668
00:34:35,740 –> 00:34:40,070
that still seems very reasonable.
Very cool. So what are you hearing?

669
00:34:40,070 –> 00:34:41,480
I’m just curious if
you have a perspective,

670
00:34:42,560 –> 00:34:46,370
how’s the US going to play a part
manufacturing in the us? Is this going to,

671
00:34:46,370 –> 00:34:48,710
are you seeing that there’s going
to be a lot more investment in US

672
00:34:48,710 –> 00:34:52,670
manufacturing? Think that’s something
you guys will eventually help with?

673
00:34:52,700 –> 00:34:53,150
Yeah.

674
00:34:53,150 –> 00:34:55,670
Is that just definitely
a lot of things expand.

675
00:34:55,670 –> 00:34:56,030
Yeah, I mean,

676
00:34:56,030 –> 00:34:59,060
our ultimate goal is we want to find the
best buyers for our clients no matter

677
00:34:59,060 –> 00:35:02,930
where they are. And you got to have
expertise in each country of origin.

678
00:35:02,930 –> 00:35:06,710
But I’m American, so obviously I want
to find some great suppliers in America.

679
00:35:06,710 –> 00:35:09,230
So actually, if any Eric
Manufacturers are listening to this,

680
00:35:09,320 –> 00:35:11,000
please feel free to reach
out to me. I want to.

681
00:35:11,420 –> 00:35:12,980
Our database. Yeah, reach gym
man. He’s connecting people.

682
00:35:13,280 –> 00:35:14,510
Yeah, I know. Yeah. I mean,

683
00:35:14,510 –> 00:35:18,620
we looked to a captain woodworker
manufacturer literally last night,

684
00:35:18,620 –> 00:35:22,520
and I really have a couple projects that
I’m willing to recommend to him and get

685
00:35:22,520 –> 00:35:24,170
quotes as well.

686
00:35:24,560 –> 00:35:28,190
So I think it is going to be a good
time to look at American manufacturers,

687
00:35:28,190 –> 00:35:32,540
but it’s still very limited because
what most people need is contract

688
00:35:32,540 –> 00:35:33,050
manufacturers.

689
00:35:33,050 –> 00:35:36,470
Ones you can reach out to with a tech
pack and RFQ and then actually quote and

690
00:35:36,470 –> 00:35:38,730
make it, well, most manufacturers
in the United States

691
00:35:40,640 –> 00:35:43,530
tend to work for brands like
there’s auto power manufacturing,

692
00:35:43,530 –> 00:35:44,370
flashing injection warning,

693
00:35:44,370 –> 00:35:48,780
but they’re set up by a client to
make it for those specific things.

694
00:35:48,780 –> 00:35:52,440
So there’s not as much, even though
there’s a lot of manufacturers,

695
00:35:52,440 –> 00:35:54,390
not as much contract manufacturing in.

696
00:35:54,390 –> 00:35:56,400
Place, they’re manufacturing
for a specific,

697
00:35:56,790 –> 00:36:00,870
it’s manufacturing spun up by a
specific brand and needs type of thing.

698
00:36:01,440 –> 00:36:01,620
Yeah.

699
00:36:01,620 –> 00:36:01,980
It makes sense.

700
00:36:01,980 –> 00:36:05,670
And I mean, people are setting up too.
I know of a laundry sheets manufacturer,

701
00:36:06,750 –> 00:36:09,210
they are buying from all over. They
just weren’t happy with the quality.

702
00:36:09,540 –> 00:36:12,240
Started looking into what it would take
to actually build a manufacturer for

703
00:36:12,240 –> 00:36:13,950
laundry sheets, and
they did it themselves.

704
00:36:14,970 –> 00:36:18,690
I know they sell eco-friendly laundry
sheets made out of North Carolina.

705
00:36:19,200 –> 00:36:20,490
So yeah, people are doing that.

706
00:36:20,840 –> 00:36:23,460
Is that true Earth? Or you may not
be able to say who the company is,

707
00:36:23,460 –> 00:36:25,680
but we used to work with True
Earth, which was fun, but yeah.

708
00:36:25,770 –> 00:36:27,840
Oh man, actually name it might be.

709
00:36:29,040 –> 00:36:31,820
Yeah, no worries. But yeah,
this is one of those things.

710
00:36:31,950 –> 00:36:34,380
I know we were talking
about simple, modern,

711
00:36:34,380 –> 00:36:37,890
I was talking about that on another
podcast, one of the founders there,

712
00:36:37,890 –> 00:36:41,490
and they’re manufacturing some of their
stuff now in Oklahoma where they’re

713
00:36:41,490 –> 00:36:43,590
based, they still get most
of their products from China,

714
00:36:43,590 –> 00:36:46,710
but they’re manufacturing a lot in
Oklahoma now. There’s some benefits,

715
00:36:46,710 –> 00:36:51,210
right to speed and cash flow and m OQs
if you’re manufacturing here and things

716
00:36:51,210 –> 00:36:54,540
like that. So yeah, unit costs
could be higher in the us,

717
00:36:54,540 –> 00:36:58,920
but maybe it’s more cashflow
beneficial to you to manufacture.

718
00:36:58,920 –> 00:37:02,370
Here. With manufacturing, everything’s
getting more and more automated too.

719
00:37:02,400 –> 00:37:05,490
So a lot of stuff like flexion injection
molding is more or less just get a

720
00:37:05,490 –> 00:37:08,550
mold, a machinery, one guy
knows how to program it.

721
00:37:08,640 –> 00:37:12,060
Yeah, yeah. Pressing buttons at
that point, right? I know. Yeah,

722
00:37:12,060 –> 00:37:14,730
totally makes sense. Well,
Jim, this has been fantastic.

723
00:37:14,730 –> 00:37:19,500
This is one of those things where I’m
glad now that people are getting serious

724
00:37:19,500 –> 00:37:20,610
about their supply chain.

725
00:37:20,610 –> 00:37:24,300
I think anytime you can find
margin in your cost of goods,

726
00:37:24,600 –> 00:37:28,140
that opens up opportunity for you to
grow and has been more and marketing or

727
00:37:28,140 –> 00:37:30,810
just to profit more, and so painful time.

728
00:37:30,810 –> 00:37:34,290
But I think the best operators are
going to come out ahead during this.

729
00:37:34,290 –> 00:37:37,740
And so Jim, for those that are
looking at moving outside of China,

730
00:37:38,010 –> 00:37:40,650
how can they contact
you and Cosmo sourcing?

731
00:37:41,010 –> 00:37:45,810
Yeah, so yeah, you send to my direct
email, which is jim@cosmosourcing.com.

732
00:37:45,960 –> 00:37:48,270
You can get the spelling
back there, sander.

733
00:37:48,570 –> 00:37:52,620
And our website is cosmo sourcing.com
or just Google Cosmo sourcing.

734
00:37:52,620 –> 00:37:55,290
We come up first. Yeah.

735
00:37:55,440 –> 00:37:57,750
Awesome. I’ll link to everything
in the show notes as well.

736
00:37:57,750 –> 00:38:01,080
But if you’ve got questions, chip
is a really smart guy, good guy,

737
00:38:01,080 –> 00:38:03,570
knows what he’s doing. He’s
worked with some of my clients,

738
00:38:04,470 –> 00:38:07,380
people that I know trust him and so do I.

739
00:38:07,380 –> 00:38:11,550
And so reach out to Jim
if you have questions with
that, Jim, good luck to you.

740
00:38:11,550 –> 00:38:15,330
Congrats on your amazing
timing and predicting the
future that one day there’ll

741
00:38:15,330 –> 00:38:18,330
be massive tariffs on China or
we want to be moving out. So.

742
00:38:18,660 –> 00:38:19,110
Absolutely.

743
00:38:19,110 –> 00:38:21,990
Kudos to you on that and
keep doing good work.

744
00:38:22,410 –> 00:38:23,790
Great. Thank you. It’s
a pleasure being here.

745
00:38:24,480 –> 00:38:28,980
Awesome. And thank you for tuning in
as always. We’d love to hear from you.

746
00:38:29,430 –> 00:38:33,810
What would you like to hear more of on
the podcast if you have not done so?

747
00:38:33,810 –> 00:38:35,040
We’d love that review on iTunes.

748
00:38:35,110 –> 00:38:38,710
Share this podcast with someone that
you think would enjoy it or benefit from

749
00:38:38,710 –> 00:38:41,320
it. Somebody that’s thinking about
what do I do with my supply chain or my

750
00:38:41,320 –> 00:38:45,850
manufacturing share with them this
episode. And with that, until next time,

751
00:38:45,910 –> 00:38:46,840
thank you for listening.