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	<title>PassageMaker China &#187; China Sourcing</title>
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	<link>http://www.psschina.com</link>
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		<title>The brand is the hard part</title>
		<link>http://www.psschina.com/2011/12/the-brand-is-the-hard-part/</link>
		<comments>http://www.psschina.com/2011/12/the-brand-is-the-hard-part/#comments</comments>
		<pubDate>Mon, 19 Dec 2011 06:55:27 +0000</pubDate>
		<dc:creator>whit</dc:creator>
				<category><![CDATA[Sourcing Showcase]]></category>
		<category><![CDATA[Whit's China Business Blog]]></category>
		<category><![CDATA[china assembly]]></category>
		<category><![CDATA[china logistics]]></category>
		<category><![CDATA[china packaging]]></category>
		<category><![CDATA[china quality control]]></category>
		<category><![CDATA[China Sourcing]]></category>
		<category><![CDATA[Dan Harris]]></category>
		<category><![CDATA[Renaud Anjoran]]></category>

		<guid isPermaLink="false">http://www.psschina.com/?p=4769</guid>
		<description><![CDATA[&#160; I suck at blogging.  Dan Harris does it better.  Renaud Anjoran does it better.  Tom Lasseter does it better.  If you have not already &#8230; <a href="http://www.psschina.com/2011/12/the-brand-is-the-hard-part/">Continue reading <span class="meta-nav">&#8594;</span></a>]]></description>
			<content:encoded><![CDATA[<p>&nbsp;</p>
<p>I suck at blogging.  <a href="http://www.chinalawblog.com/">Dan Harris</a> does it better.  <a href="http://www.qualityinspection.org/">Renaud Anjoran</a> does it better.  <a href="http://blogs.mcclatchydc.com/china/">Tom Lasseter</a> does it better.  If you have not already done so, subscribe to those blogs.  Today.</p>
<p>I have not done much blogging this year, as the news has been so universally awful that I&#8217;ve been unable to summon the enthusiasm to comment.  Short version, <a href="http://www.zerohedge.com/news/psssst-france-here-why-you-may-want-cool-it-britain-bashing-uks-950-debt-gdp">it is ugly out there</a> and it will only get worse before it gets better.  Plan accordingly.</p>
<p>However, as someone who works with entrepreneurs and inventors on a daily basis, there is reason for hope.  People keep coming up with cool new ideas they want to bring to market, and they ask for our help.  PassageMaker had a solid growth year in a bad economy, so I guess I should be Chatty Cathy these days, but a combination of so much work and so little global good news as dampened my blogging spirit.</p>
<p>My one comment for the day deals with bringing a new product to market.  Our contributions to the value chain &#8211; <a href="http://www.psschina.com/about/virtual-tour/services-and-pricing/sourcing-feasibility-study/">sourcing</a>, <a href="http://www.psschina.com/about/virtual-tour/services-and-pricing/vendor-coordination/">supply chain management</a>, <a href="http://www.psschina.com/about/virtual-tour/services-and-pricing/assembly-inspection-packaging/">contract assembly</a>, logistics &#8211; are really the easy parts.  The hard work is building a brand and getting it recognized in the marketplace.</p>
<p>If you are thinking about launching a new product, <a href="http://www.psschina.com/">PassageMaker</a> can take the headaches out of the production process.  But we don&#8217;t (and can&#8217;t) help you sell it.</p>
<p>Too often in the last few years, I&#8217;ve seen clients invest thousands in engineering, patents, sourcing, tooling, etc., with little thought given to how to get the product in front of buyers.  If you are planning a new product launch, assume that you are the only one who thinks it is the greatest idea since the wheel and focus on how you are going to convince the rest of the world. And budget accordingly.</p>
<p>My advice:</p>
<p>1 &#8211; The internet is great, but not everyone knows how to use it.  If your plan is social media and SEO, make sure you are really the expert you think you are.  Or have the money to hire that expert.</p>
<p>2 &#8211; If you are going Big Box, understand what that means.  A PO from a major retailer can be a million bucks on paper and negative income in reality when you consider the lead-times, warranty agreements, performance penalties, etc.</p>
<p>3 &#8211; Advertise if you can.  Twenty-some years ago, Coca-Cola assumed that their brand was so strong that they could stop advertising.  They ultimately lost market share to Pepsi and had to spend a fortune to get back in the game.  If you are launching a new product, nobody knows who you are, so you have to get the word out.</p>
<p>4 &#8211; If you can&#8217;t do it yourself, bring in investors who can help.  I&#8217;ve seen businesses with ridiculous numbers of investors, none of whom contributed to making the business a success other than providing short-term financing.  If you are going to add an owner to the mix, make sure they have skills to make the company a success long-term.</p>
<div><span style="font-size: small;"><span style="line-height: 24px;">Basically, setting up a solid China supply chain is an important step, but that pipeline only has value if you can move product through it.  We&#8217;ll help you deliver, but nothing happens until you sell something.  Worth keeping in mind in this tenuous world we live in.</span></span></div>
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		<title>I would have loved to be there&#8230;</title>
		<link>http://www.psschina.com/2011/10/i-would-have-loved-to-be-there/</link>
		<comments>http://www.psschina.com/2011/10/i-would-have-loved-to-be-there/#comments</comments>
		<pubDate>Thu, 13 Oct 2011 19:02:33 +0000</pubDate>
		<dc:creator>whit</dc:creator>
				<category><![CDATA[Whit's China Business Blog]]></category>
		<category><![CDATA[China Sourcing]]></category>
		<category><![CDATA[china trading companies]]></category>
		<category><![CDATA[china vendor coordination]]></category>
		<category><![CDATA[Renaud Anjoran]]></category>

		<guid isPermaLink="false">http://www.psschina.com/?p=4695</guid>
		<description><![CDATA[My friend Renaud Anjoran of the Quality Inspection Blog (which is fabulous, you should subscribe if you have not already done so) posted an instant classic &#8230; <a href="http://www.psschina.com/2011/10/i-would-have-loved-to-be-there/">Continue reading <span class="meta-nav">&#8594;</span></a>]]></description>
			<content:encoded><![CDATA[<p>My friend <a href="http://www.qualityinspection.org/about-renaud-anjoran/">Renaud Anjoran</a> of the <a href="http://www.qualityinspection.org/">Quality Inspection Blog</a> (which is fabulous, you should subscribe if you have not already done so) posted <a href="http://www.qualityinspection.org/trader-manufacturer-china/">an instant classic today</a>.  Just when I think the chutzpah and sleaziness of Chinese trading companies can&#8217;t get any worse, it does.  Forgive me for quoting at length:</p>
<blockquote><p>My friend Gaetan, from <a href="http://www.eyo-green.com/" target="_blank">Eyo Green Alliance</a>, told me about an incredible story. I mean, incredible to people who don’t know the Chinese business environment. He gave me some photos as illustrations, and he blurred them to avoid any dispute.</p>
<p>Last month he scheduled two factory visits over the same day, in the city of Shenzhen (between Hong Kong and Guangzhou). He was looking for a good manufacturer of LED lamps.</p>
<p>The factory he saw in the morning seemed to have a storage problem — they even placed some cartons in the reception area.</p>
<p><a href="http://www.qualityinspection.org/wp-content/uploads/2011/10/morning-trader.jpg"><img title="morning-trader" src="http://www.qualityinspection.org/wp-content/uploads/2011/10/morning-trader.jpg" alt="Factory lobby in the morning" width="512" height="390" /></a></p>
<p>In the afternoon, Gaetan noticed he was driven to the exact same building. It was the same place!</p>
<p>Below is a photo of the same reception area. You will notice two things:</p>
<ul>
<li>The cartons had disappeared, and revealed a large logo.</li>
<li>The company name on the wall was different.</li>
</ul>
<p>Oh, and also… The prices he was quoted in the afternoon were 25% lower than in the morning!</p>
<p><a href="http://www.qualityinspection.org/wp-content/uploads/2011/10/afternoon-factory.jpg"><img title="afternoon-factory" src="http://www.qualityinspection.org/wp-content/uploads/2011/10/afternoon-factory.jpg" alt="Factory lobby in the afternoon" width="502" height="431" /></a></p>
<p>Could he have spotted it before the visits? No. The company names were different, and one address referred to the area while the other gave a street address.</p></blockquote>
<p>Read the whole thing.  I have thankfully not had anything so dramatic happen to me, but this is an example of why it pays to do your homework and have an agent on the ground. If this kind of thing happens to experienced buyers, what makes you think you can avoid such situations buying online from the USA?</p>
<p>&nbsp;</p>
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		<title>Father of the shipping container dies</title>
		<link>http://www.psschina.com/2011/09/father-of-the-shipping-container-dies/</link>
		<comments>http://www.psschina.com/2011/09/father-of-the-shipping-container-dies/#comments</comments>
		<pubDate>Mon, 26 Sep 2011 21:17:32 +0000</pubDate>
		<dc:creator>whit</dc:creator>
				<category><![CDATA[Whit's China Business Blog]]></category>
		<category><![CDATA[china shipping]]></category>
		<category><![CDATA[China Sourcing]]></category>
		<category><![CDATA[China supply chain management]]></category>
		<category><![CDATA[Keith Tantlinger]]></category>

		<guid isPermaLink="false">http://psschina.com/?p=4569</guid>
		<description><![CDATA[When I began this blog two years ago, my first post was about the passing of Norman Borlaug, the Father of the Green Revolution.  Mr. &#8230; <a href="http://www.psschina.com/2011/09/father-of-the-shipping-container-dies/">Continue reading <span class="meta-nav">&#8594;</span></a>]]></description>
			<content:encoded><![CDATA[<p>When I began this blog two years ago, my first post was about the passing of <a href="http://psschina.com/2009/09/china-development-pioneer-dies/">Norman Borlaug, the Father of the Green Revolution</a>.  Mr. Borlaug&#8217;s research created varieties of wheat, maize and rice that helped feed literally hundreds of millions of the world&#8217;s poorest people, including the pre-reform People&#8217;s Republic of China.</p>
<p>Mr. Borlaug&#8217;s inventions produced a great deal of good for the world &#8211; fewer starving children strikes me as quite good &#8211; but his detractors argued that cheap plentiful food was a bad thing.  Too much food would lead to too many people, and Gaia must be saved.  Their compassion only extended to mankind in the abstract.  I guess some people are never happy.</p>
<p>Now today a coworker sends me a fascinating article on the passing of Keith Tantlinger, the inventor of the modern shipping container.  While Malcom McLean usually gets most of the credit for moving the world to containerization, Mr. Tantlinger was the man who actually designed the containers themselves.  If there is one item that made &#8220;Made in China&#8221; possible, the shipping container is it.</p>
<p>Here is his <a href="http://www.telegraph.co.uk/news/obituaries/finance-obituaries/8766380/Keith-Tantlinger.html">obituary</a> and here&#8217;s the <a href="http://www.channelregister.co.uk/2011/09/19/keith_tatlinger_shipping_container_inventor_dies/">blog post</a> sent by my coworker.</p>
<p>I don&#8217;t know if Mr. Tantlinger knew he was creating technology that would truly change the world, enabling the export led growth that allowed so much of Asia to crawl out of miserable poverty in such a short period of time. That change allows me and millions of other consumers around the developed world to enjoy inexpensive imported products that would be priced out of the market if they were Made in America.  Indeed, many of these products would never have been brought to market, as the initial investment in tooling would have been prohibitively expensive.  Anyone up for a $2500 iPhone?</p>
<p>I know what the pessimist side will say, international trade has cost American jobs.  I can probably find a thousand economists on either side of this argument, but my first hand impression having done business in emerging markets like Mexico, Eastern Europe and China is this &#8211; economic growth is a good thing and not a zero sum game.  The Czech Republic right after the fall of communism desperately needed economic growth to recover from the damage done by the previous regime.  Should we have refused to trade with the Czechs? What would have happened had there been no blossoming of the export sector?  I can&#8217;t think of any alternate scenario with a happy ending.</p>
<p>I could write for days on why American industry is or is not competitive or why you should or should not source in China.  I will agree that there is always a cost to every transaction (there is a benefit too), and sometimes that cost is measured in manufacturing jobs lost to foreign competition.  I will agree that &#8220;free trade&#8221; with China is a stacked deck.  But billions of people are benefiting from global trade and the USA has seen its ship rise right along with everyone else.  None of this would have happened without containerized freight.</p>
<p>So thank you Mr. Tantlinger, may you rest in peace.  Those of us in the China supply chain management game wouldn&#8217;t be here without you.</p>
<p>&nbsp;</p>
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		<title>Despair is a sin</title>
		<link>http://www.psschina.com/2011/09/despair-is-a-sin/</link>
		<comments>http://www.psschina.com/2011/09/despair-is-a-sin/#comments</comments>
		<pubDate>Fri, 23 Sep 2011 01:05:43 +0000</pubDate>
		<dc:creator>whit</dc:creator>
				<category><![CDATA[Whit's China Business Blog]]></category>
		<category><![CDATA[China Sourcing]]></category>
		<category><![CDATA[China supply chain management]]></category>
		<category><![CDATA[china vendor coordination]]></category>
		<category><![CDATA[Contract Assembly]]></category>

		<guid isPermaLink="false">http://psschina.com/?p=4574</guid>
		<description><![CDATA[I don&#8217;t fit in well in my home town in America anymore. Oh, I was born and raised here, have friends here, go to the &#8230; <a href="http://www.psschina.com/2011/09/despair-is-a-sin/">Continue reading <span class="meta-nav">&#8594;</span></a>]]></description>
			<content:encoded><![CDATA[<p>I don&#8217;t fit in well in my home town in America anymore. Oh, I was born and raised here, have friends here, go to the church where I was baptized, confirmed and married, but having been an expat, spending a couple months a year in China, having a workday that spans the globe, and making a living &#8220;taking American jobs overseas&#8221;, suffice it to say conversations are often awkward.</p>
<p>My view on China sourcing can be summed up thus:</p>
<ol>
<li>I might change things in the rulebook if it were up to me, but it&#8217;s not.  The games is played by rules written by others, and until someone makes a change, the world is a global market and one man or one company cannot change the system by refusing to play.  When I came back from my first experience living in Asia in 1994, I told everyone in our company that the &#8220;great sucking sound&#8221; from Mexico was not what we were really hearing.  It was the tidal wave headed across the Pacific from China.  I knew that our company was not going to stop that wave and we could either drown on the beach trying, or get a board and learn how to surf. PassageMaker&#8217;s services can be described many ways &#8211; China supply chain management, vendor coordination, China sourcing, China contract assembly, blah blah blah blah blah &#8211; but we are really surfing instructors for hire.  It&#8217;s my job to keep you from drowning, not change the world.</li>
<li>China moving from a desperately poor nation to a more prosperous one is a good thing.  I would rather 1.3 billion Chinese people feed themselves than starve waiting for foreign aid.  That doesn&#8217;t mean I&#8217;m in love with the government or that I think Chinese people are perfect or better than Americans.  America&#8217;s problems are mostly our fault and entirely up to us to fix.  The solutions are there, and most business owners I know, regardless of political affiliation, will prescribe the same solution &#8211; get the government out of the way and let me get to work.  Nothing is accomplished by blaming others or giving up hope.  To quote <a href="http://jerrypournelle.com/chaosmanor/?p=2069">Jerry Pournelle</a>:</li>
</ol>
<blockquote>
<p style="padding-left: 30px;">Despair is a sin.</p>
<p style="padding-left: 60px;">At the end of World War II, much of Germany was in ruins. Large parts of its infrastructure was attacked or bombed by the Allied Forces. The city of Dresden was completely destroyed. The population of Cologne had dropped from 750,000 to 32,000. The housing stock was reduced by 20%. Food production was half the level it was before the start of the war; industrial output was down by a third. Many of its men between the ages of 18 and 35, the demographic which could do the heavy lifting to literally rebuild the country, had been either killed or crippled.<br />
During the war, Hitler had instituted food rations, limiting its civilian population to eat no more than 2,000 calories per day. After the war, the Allies continued this food rationing policy and limited the population to eat between 1,000-1,500 calories. Price controls on other goods and services led to shortages and a massive black market. Germany’s currency, the reichsmark, had become completely worthless, requiring its populace to resort to bartering for goods and services.<br />
In short, Germany was a ruined state facing an incredibly bleak future. The country was occupied by four nations, and soon it would be divided into halves. The Eastern half became a socialist state, part of the Iron Curtain that was heavily influenced by Soviet policy. The Western half became a democracy. And caught in the middle was the former capital of Berlin, which was divided in two, eventually separated by what became known as the Berlin Wall.<br />
But by 1989, when the Berlin Wall fell and Germany was once again reunited, it was the envy of most of the world. Germany had the third-biggest economy in the world, trailing only Japan and the United States in <a href="http://www.investopedia.com/terms/g/gdp.asp">GDP</a>.</p>
<p style="padding-left: 60px;">Read more: <a href="http://www.investopedia.com/articles/economics/09/german-economic-miracle.asp#ixzz1YRwTIuT4">http://www.investopedia.com/articles/economics/09/german-economic-miracle.asp#ixzz1YRwTIuT4</a></p>
<p style="padding-left: 30px;">There is a way out of this Depression. Our lands do not lie in ruins. Our fields are not cratered from bombs and filled with mines. Many of our idle factories still exist. Wonderful machine tools and laboratory instruments are sold at scrap value on eBay and at public auction. There is lots of unused productivity in this land, and we know the formula for prosperity. It is liberty. That has always been the secret of American exceptionalism. We had founders whose goal was to insure the blessings of liberty for themselves and their posterity.</p>
<p style="padding-left: 30px;">Freedom is not free. Free men are not equal. Equal men are not free. We have always known this. We know it still.</p>
</blockquote>
<p>China sourcing is a tool businesses can employ to help make themselves more competitive.  That doesn&#8217;t mean you should source in China. And that doesn&#8217;t mean it is the only way to compete.  Blaming others solves nothing.  Time to get to work.</p>
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		<title>The importance of parallels</title>
		<link>http://www.psschina.com/2011/09/the-importance-of-parallels/</link>
		<comments>http://www.psschina.com/2011/09/the-importance-of-parallels/#comments</comments>
		<pubDate>Wed, 21 Sep 2011 21:39:30 +0000</pubDate>
		<dc:creator>whit</dc:creator>
				<category><![CDATA[Whit's China Business Blog]]></category>
		<category><![CDATA[china assembly]]></category>
		<category><![CDATA[China Sourcing]]></category>
		<category><![CDATA[china vendor coordination]]></category>
		<category><![CDATA[Dan Harris]]></category>
		<category><![CDATA[Renaud Anjoran]]></category>

		<guid isPermaLink="false">http://psschina.com/?p=4584</guid>
		<description><![CDATA[[Sorry if you receive an incomplete version of this post - hit the wrong button.  WCK] Since I suck at blogging on a regular basis, &#8230; <a href="http://www.psschina.com/2011/09/the-importance-of-parallels/">Continue reading <span class="meta-nav">&#8594;</span></a>]]></description>
			<content:encoded><![CDATA[<p><em>[Sorry if you receive an incomplete version of this post - hit the wrong button.  WCK]</em></p>
<p>Since I suck at blogging on a regular basis, you should really read Dan Smith at <a href="http://www.chinalawblog.com/">China Law Blog</a> and Renaud Anjoran at<a href="http://www.qualityinspection.org/"> Quality Inspection Tips</a>.  It&#8217;s not that I don&#8217;t see two dozen things each day I want to blog about &#8211; I have hundreds of articles archived that I fully intend to blog on someday, probably after each is three years out of date &#8211; but I just run out of time each day.</p>
<p>Well today Dan had something that really struck a chord with me.  In his post, &#8220;<a href="http://www.chinalawblog.com/2011/09/moving_on_out_to_chinas_west_side.html">Moving On Out To China&#8217;s West Side. Why Things Go Slowly.</a>&#8220;, he writes:</p>
<blockquote><p>&#8230;we were hit with a flurry of companies looking to move out from places like Suzhou and Shenzhen and Dongguan to places like Yantai, Jinxue and Datong. Two of these have already begun the process. Note though that I intentionally used the ambiguous term &#8220;move out from&#8221; as opposed to &#8220;leave&#8221; because in none of the cases is the company going to shut down any operations. At least not yet. Their plans are to open ancillary facilities elsewhere, see how those go, and then, based on that, decide what to do with their existing facility or facilities.</p></blockquote>
<p>This is priceless advice.  In years past it was not uncommon for me to have clients shut down existing domestic supply chains before the Chinese supply chain was properly up-and-running; in some ridiculous cases, before the Chinese suppliers were even really identified.</p>
<p>DO NOT DO THIS.</p>
<p>If you are ever thinking of establishing a new supply chain, regardless of where it is, get it established and running in parallel with your current system.  And then run it in parallel for a couple of years, slowly changing the ratio so that the majority of your product comes from the lower cost source.  Then once all the bugs are worked out and you are absolutely convinced you are ready to shut down the old in favor of the new, run them in parallel for another year just to be safe.</p>
<p>PassageMaker can help you manage your Chinese suppliers, but I will advise you NOT to give me 100% of your demand right away if you have existing suppliers or your own production lines. Keep your existing system as back up and average your costs down.  My goal is that you be successful and making me immediately responsible for your whole world is not a good decision for anyone.</p>
<p>But that&#8217;s just my rant for the day.  Your thoughts, please.</p>
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		<title>Poka yoke, or Why a solid design database matters</title>
		<link>http://www.psschina.com/2011/08/poka-yoke-or-why-a-solid-design-database-matters/</link>
		<comments>http://www.psschina.com/2011/08/poka-yoke-or-why-a-solid-design-database-matters/#comments</comments>
		<pubDate>Thu, 04 Aug 2011 21:07:32 +0000</pubDate>
		<dc:creator>whit</dc:creator>
				<category><![CDATA[Whit's China Business Blog]]></category>
		<category><![CDATA[china assembly]]></category>
		<category><![CDATA[china inspection]]></category>
		<category><![CDATA[china logistics]]></category>
		<category><![CDATA[china packaging]]></category>
		<category><![CDATA[china quality control]]></category>
		<category><![CDATA[China Sourcing]]></category>
		<category><![CDATA[China VAT system]]></category>
		<category><![CDATA[Contract Engineering Services]]></category>
		<category><![CDATA[design engineering]]></category>
		<category><![CDATA[Endorsed Service Providers]]></category>
		<category><![CDATA[VentureTech]]></category>

		<guid isPermaLink="false">http://psschina.com/?p=4499</guid>
		<description><![CDATA[So we have had a very hot summer thus far here in southwest Virginia.  Not that it was any cooler or less humid when I &#8230; <a href="http://www.psschina.com/2011/08/poka-yoke-or-why-a-solid-design-database-matters/">Continue reading <span class="meta-nav">&#8594;</span></a>]]></description>
			<content:encoded><![CDATA[<p>So we have had a very hot summer thus far here in southwest Virginia.  Not that it was any cooler or less humid when I was in Shenzhen for six weeks in late spring, but given that I am renovating an old home without central air while living in it, I am allowed to comment on the weather.</p>
<p>The old A/C units that came with the house were not up to the task, so rather than broil while we rip up half the house to install central air, off we go to the appliance store to buy some new window units.  We bought several of the same model, and while I have never thought about an A/C unit needing a remote control, this model had remotes.</p>
<p>After I got them installed, we noticed a tiny little design flaw in the remote.  See if you can spot it.</p>
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<p><a href="http://psschina.com/wp-content/uploads/Whoops2.jpg"><img class="alignleft size-large wp-image-4516" title="Whoops" src="http://psschina.com/wp-content/uploads/Whoops2-717x1024.jpg" alt="" width="430" height="614" /></a></p>
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<p>Were I a dedicated blogger, I would take one of these apart to show you the interior, but now that I have the wonder of a remote control for my A/C, I am not going to risk breaking one of these just for you.  I prefer to luxuriate in my new found comfort like a stereotypical lazy American, thank you very much.</p>
<p>Were I to take the remote apart, you would see that the buttons are molded as one piece.  Molding the buttons as a solid piece is the standard way of doing it, but by creating a part that was symmetrical (likely just a plain rectangle), the designer created a failure mode &#8211; the assembler could put the parts together backwards.  What the designer should have done was analyze what could go wrong with the design &#8211; could it be assembled backwards? &#8211; and keyed one end so the the part was not symmetrical.  Perhaps there is an internal feature that one end of the button strip could have been molded to mate with.  Many companies I&#8217;ve worked with use the formal Failure Modes Effects Analysis (FMEA) process, and it is a great tool if you have the discipline to use it.  The Japanese refer to this practice as<em>&#8220;poka yoke</em>&#8221; (mistake proofing), but often still translated as &#8220;idiot proofing&#8221;.  I&#8217;m not a fan of that translation, because who&#8217;s the idiot &#8211; the guy would made the momentary mistake of putting it in backwards or the designer who created a flawed product?</p>
<p><a href="http://psschina.com">PassageMaker</a> often gets classified as a China sourcing company.  While we do <a href="http://psschina.com/about/virtual-tour/services-and-pricing/sourcing-feasibility-study/">source products</a> in China, that is only the smallest part of what we do.  We are primarily a <a href="http://psschina.com/2011/07/virtual-tour/">contract assembly company</a> (with that label encompassing <a href="http://psschina.com/about/virtual-tour/services-and-pricing/vendor-coordination/">vendor coordination</a>, inspection, the actual <a href="http://psschina.com/about/virtual-tour/services-and-pricing/assembly-inspection-packaging/">assembly</a>, packaging, <a href="http://psschina.com/about/virtual-tour/auxiliary-services/logistics/">logistics</a>, <a href="http://psschina.com/about/virtual-tour/auxiliary-services/value-added-tax-planning/">VAT rebates</a>, etc.).  And I can tell you that we see MANY severely flawed design databases, drawings that appear to have been made by someone who gave no thought to how to put the thing together.</p>
<p>If you are going to spend the money to have something made in China, a dollar&#8217;s worth of <em>poke yoke</em> is worth hundred times that in money saved doing inspections, warranty claims and just the general embarrassment of sending a functional part out into the world that is nonetheless defective.</p>
<p>In our Endorsed Service Provider network, we recommend two design engineering firms.  <a href="http://ce-services.com/">Contract Engineering Services</a> is based in Virginia, USA, and <a href="http://www.venturetech.info/">VentureTech</a> is Dutch-owned, based in Shenzhen.  Both do a fine job for our clients and even if you do your own engineering, I strongly urge you to learn from the lesson above and try an mistake proof your design.  It might feel good to blame the Chinese assembly line worker, but who really made the mistake?</p>
<p>Your thoughts?</p>
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		<title>From &#8216;just-in-time&#8217; to &#8216;just-in-case?&#8217;</title>
		<link>http://www.psschina.com/2011/04/from-just-in-time-to-just-in-case/</link>
		<comments>http://www.psschina.com/2011/04/from-just-in-time-to-just-in-case/#comments</comments>
		<pubDate>Wed, 13 Apr 2011 04:25:50 +0000</pubDate>
		<dc:creator>whit</dc:creator>
				<category><![CDATA[Whit's China Business Blog]]></category>
		<category><![CDATA[China business]]></category>
		<category><![CDATA[china logistics]]></category>
		<category><![CDATA[china medical assembly]]></category>
		<category><![CDATA[china shipping]]></category>
		<category><![CDATA[China Sourcing]]></category>
		<category><![CDATA[China supply chain management]]></category>
		<category><![CDATA[Glenn Reynolds]]></category>
		<category><![CDATA[Instapundit]]></category>

		<guid isPermaLink="false">http://psschina.com/?p=4267</guid>
		<description><![CDATA[Glenn Reynolds, aka Instapundit, wrote a great op-ed piece in the Washington Examiner recently, on the impact the Japanese earthquake and tsunami are having on &#8230; <a href="http://www.psschina.com/2011/04/from-just-in-time-to-just-in-case/">Continue reading <span class="meta-nav">&#8594;</span></a>]]></description>
			<content:encoded><![CDATA[<p>Glenn Reynolds, aka <a href="http://pajamasmedia.com/instapundit/">Instapundit</a>, wrote a great op-ed piece in the <a href="http://www.sfexaminer.com/opinion/op-eds/2011/04/just-time-just-case">Washington Examiner recently</a>, on the impact the Japanese earthquake and tsunami are having on supply chains around the globe.</p>
<p>Quoting the Professor in full:</p>
<blockquote><p>Japan&#8217;s earthquake/tsunami has occupied the news and also spurred a lot of thought. Among other things, it has underscored the fragile and interconnected nature of modern society, and caused some to question the wisdom of &#8220;just-in-time&#8221; manufacturing approaches in today&#8217;s unsettled world.Instead, it is suggested, we might want to focus on &#8220;just in case&#8221; approaches designed to be more resilient under stress.</p>
<p>Japan&#8217;s earthquake was in some ways a triumph of preparedness: Thanks to strict building codes, not a single building in Tokyo collapsed. But the earthquake, and the tsunami it produced, have had impacts that go well beyond the immediate.</p>
<p>In particular, the damage is exposing the extent to which modern supply-chain management has produced a system that is so lean it lacks the reserve capacity needed to cope with disasters.</p>
<p>In manufacturing, plants have been idled around the world because Japanese factories &#8212; or often, a single Japanese factory &#8212; serve as the sole source for a vital component. With the factories sidelined by damage or power outages, the components are unavailable, and production has to stop.</p>
<p>Ford Motor Company idled a plant in Belgium for five days over parts shortages; Toyota warned plants in the United States to be prepared to close for the same reason. A U.S. plant making car seats had to close because of a shortage of premium vinyl made only in Japan. Ford has suspended orders for some models in red and black because the paints come from a single factory in Japan, now closed. Tales like these abound.</p>
<p>Even the New York subway system is affected by the parts shortage: As National Public Radio&#8217;s &#8220;Marketplace&#8221; reported: &#8220;Steel from the north of Japan can&#8217;t get to Suzuki. Suzuki can&#8217;t make the parts for Hitachi. And Hitachi can&#8217;t send the parts to New York. The global supply chain breaks down with the removal of just one link.&#8221;</p>
<p>As Edward Tenner noted in the Atlantic: &#8220;The tsunami has exposed a weakness in global logistics long recognized in principle but disregarded in practice. Lean manufacturing plus heavy reliance on a single plant equals vulnerability to disruption.&#8221;</p>
<p>With managers under pressure to keep costs down, there has been a tendency to cut special deals with single suppliers, and to keep stocks of parts as low as possible. So long as everything goes smoothly, this saves money: Single suppliers give you the best price, and low inventories keep you from tying up working capital.</p>
<p>The problem is that we seem to be in a period where things aren&#8217;t going as smoothly as they did for a while. And when things don&#8217;t go smoothly, the lean approach means that it doesn&#8217;t take much to bring things to a halt.</p>
<p>I mentioned this to a friend who&#8217;s got a custom-car business, and he said his experience with disruptions in getting supplies from vendors has caused him to move from a &#8220;just-in-time&#8221; system to what he calls a &#8220;just in case&#8221; system, where stockpiles are bigger and alternative suppliers are identified in advance. I think we&#8217;ll be seeing a lot more of this, post-Japan.</p>
<p>But the problem goes well beyond cars and subways. Lots of more important systems are similarly vulnerable. My wife takes a heart-rhythm drug called Tikosyn; if she misses a dose, she could die.</p>
<p>Walgreen&#8217;s doesn&#8217;t want to keep it in stock, so they order a bottle by air-freight when her prescription is about to expire. Normally, that&#8217;s fine &#8212; but if something happened to interrupt shipping, she&#8217;d be in trouble.</p>
<p>She keeps a backup supply, but what would Walgreen&#8217;s do for others in a similar predicament? A few days of shipping problems and many pharmacies would be out of important drugs.</p>
<p>Likewise, grocery stores now keep only a small supply of food on hand, depending on regular deliveries for restocking. When those deliveries are interrupted, shelves start to empty pretty fast. (And government emergency food stockpiles are nothing like they were in the Cold War era).</p>
<p>Power plants used to keep a 60-day supply of coal in stock. Now they typically keep only 30 days&#8217; worth. That saves utilities money but it means that there&#8217;s less margin if deliveries get interrupted. In the past, severe blizzards have left some utilities dangerously close to running out. Most cities have only a few days&#8217; worth of gasoline.</p>
<p>We&#8217;ve come off a period of several decades in which weather was better than average, and in which other forms of societal disruption were fairly minor. The 21st century looks likely to be less placid.</p>
<p>As we make all sorts of plans, at the governmental, the business, or the personal level, it will pay to think more about the likelihood that things won&#8217;t go smoothly, and about ways we can prepare now to deal with the inevitable problems ahead.</p>
<p>A new subdiscipline called &#8220;resilience engineering&#8221; looks at how systems can be made more resistant to failure, and better able to recover when they do fail. That kind of thinking, it seems to me, is relevant to all of us, not just engineers.</p>
<p>The ride seems to be getting bumpier. In all sorts of areas, we need more of a cushion.</p></blockquote>
<p>This advice is similar to advice I&#8217;ve been giving for years when it comes to China supply chains.  Simply put, &#8220;your order will be late; plan accordingly&#8221;.  When I was supplying parts to a large American motorcycle company, I knew that I had to buffer uncertainty with inventory.  They often couldn&#8217;t give reliable forecasts (or I should say, their forecasts didn&#8217;t always filter through the other supply chain members reliably), so I had to keep weeks or months worth of product on the floor to compensate.  And that was just the customer &#8211; the suppliers were a whole other ration of uncertainty.  This is the dirty little secret of the JIT revolution &#8211; the inventory levels are often still there, just held by someone other than the OEM.</p>
<p>If you actually both to read past the first chapter in any book on JIT, you will see that stability is a prerequisite for a JIT system &#8211; stability in demand and in supply.  The system can&#8217;t work in chaos.  Most Chinese supply chains are far too chaotic to be part of a JIT system (for Apple this is not the case, but chances are if you are reading this blog, the rule applies).</p>
<p>I could go into the math of how to calculate an inventory level based on your target fulfillment goal, but suffice it to say, you are wise to keep some stock on hand.  Much cheaper than airfreight.</p>
<p>As to single sourcing, some products don&#8217;t have the volume to have multiple sources, but whenever we have a client with substantial order quantities, I always recommend having at least two sources for each component.  I also encourage clients to develop domestic sources to support 20% of the normal production, and make sure they have capacity to handle increased orders if there are problems with the Chinese suppliers.</p>
<p>So, when you come to China, do NOT expect to run the supply chain the way the new text books say.  Go old school and put some fat in the system.  Just in case.</p>
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		<title>Election Night Predictions!</title>
		<link>http://www.psschina.com/2010/11/election-night-predictions/</link>
		<comments>http://www.psschina.com/2010/11/election-night-predictions/#comments</comments>
		<pubDate>Wed, 03 Nov 2010 04:29:24 +0000</pubDate>
		<dc:creator>whit</dc:creator>
				<category><![CDATA[Whit's China Business Blog]]></category>
		<category><![CDATA[China business]]></category>
		<category><![CDATA[China Sourcing]]></category>
		<category><![CDATA[Fishbone]]></category>
		<category><![CDATA[Morgan Griffith]]></category>
		<category><![CDATA[Rick Boucher]]></category>
		<category><![CDATA[The Reality of My Surroundings]]></category>
		<category><![CDATA[USA trade policy]]></category>
		<category><![CDATA[VA-9 House Race]]></category>

		<guid isPermaLink="false">http://psschina.com/?p=3905</guid>
		<description><![CDATA[In honor of my friend, Morgan Griffith, who just defeated 14-term incumbent Rick Boucher in the Virgina 9th Congressional District, let me make the following &#8230; <a href="http://www.psschina.com/2010/11/election-night-predictions/">Continue reading <span class="meta-nav">&#8594;</span></a>]]></description>
			<content:encoded><![CDATA[<p>In honor of my friend, <a href="http://morgangriffithforcongress.com/">Morgan Griffith</a>, who just defeated 14-term incumbent <a href="http://en.wikipedia.org/wiki/Rick_Boucher">Rick Boucher</a> in the Virgina 9th Congressional District, let me make the following brief prediction.</p>
<p>Morgan will be a good and responsible Congressman.  He will stay true to himself and not become enamored of life in Washington, DC.  We will all miss him when he is away and I know his wife, Hilary, is probably cheering and weeping at the same time as this means she will see even less of him once he takes office.  Congratulations Morgan and Hilary.  It could not have happened to two better and kinder people.</p>
<p>On the subject of whether the new Tea Party flavored Republican House will have a negligible impact on the America&#8217;s trade with China, I will make the following prediction:</p>
<p>Nothing will change.</p>
<p>Not because it shouldn&#8217;t, but because it can&#8217;t.  Not yet.  Not for a long while.</p>
<p>As long as the USA is borrowing money in shiploads from the Chinese, there will be little to no leverage.  As long as the USA continues to pursue policies that make the USA an unattractive place to start a business, there will be no hope of changing the rationale for doing business in China.</p>
<p>I approach this as someone who watched his Father start a metal stamping company in the USA during the 1980&#8242;s.  That company, still in business today, would never be started today.  The parts would be outsourced to China, because that&#8217;s what the math would tell you to do.</p>
<p>I write this with no special joy, despite how I earn my living.  It is simply a recognition of <a href="http://en.wikipedia.org/wiki/The_Reality_of_My_Surroundings">the reality of my surroundings</a>.</p>
<p>The USA will be gridlocked at the federal level until at least the 2012 elections.  Having a bulwark in the House to stop the anti-competitive agenda of the last two years will be a good thing, but the numbers are not there to start turning the ship.</p>
<p>If the USA wants to compete with China, tax policy will have to change.  Trade policy will have to change.  Health care, OSHA, EPA, Department of Education, on and on and on, will have to change.  And this won&#8217;t happen with a divided Washington.</p>
<p>Will the GOP House be better for <a href="http://psschina.com">PassageMaker&#8217;s</a> business?  I firmly believe it will.  Entrepreneurs and small-to-medium businesses are risk averse.  Now they can sleep a little easier that they will get to keep some of their earnings.  Gridlock is at least stable, and even a less than optimal stability is preferable to the roller coaster we&#8217;ve been on the last few years.  We&#8217;ve had a number of projects stall out because of clients who weren&#8217;t sure of the business climate.  I am betting this changes for the better.</p>
<p>So, Congratulations Morgan!  And on what other China business blog are you going to get a <a href="http://www.metacafe.com/watch/sy-18085700/fishbone_fight_the_youth_official_music_video/">Fishbone</a> reference on election night?  I know that they didn&#8217;t mean it when they wrote the song, but listen to the lyrics &#8211; is there a better Tea Party anthem?</p>
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		<title>Mike Rowe of &#8220;Dirty Jobs&#8221; talks about the nature of work</title>
		<link>http://www.psschina.com/2010/10/mike-rowe-of-dirty-jobs-talks-about-the-nature-of-work/</link>
		<comments>http://www.psschina.com/2010/10/mike-rowe-of-dirty-jobs-talks-about-the-nature-of-work/#comments</comments>
		<pubDate>Mon, 04 Oct 2010 16:42:15 +0000</pubDate>
		<dc:creator>whit</dc:creator>
				<category><![CDATA[Whit's China Business Blog]]></category>
		<category><![CDATA[American business environment]]></category>
		<category><![CDATA[china assembly]]></category>
		<category><![CDATA[China business]]></category>
		<category><![CDATA[china development]]></category>
		<category><![CDATA[China Sourcing]]></category>

		<guid isPermaLink="false">http://psschina.com/?p=3810</guid>
		<description><![CDATA[This video is actually over a year old, but the message resonates nonetheless.  I am a bit of a paradox &#8211; someone who is obsessed &#8230; <a href="http://www.psschina.com/2010/10/mike-rowe-of-dirty-jobs-talks-about-the-nature-of-work/">Continue reading <span class="meta-nav">&#8594;</span></a>]]></description>
			<content:encoded><![CDATA[<p><a href="http://www.ted.com/talks/mike_rowe_celebrates_dirty_jobs.html">This video</a> is actually over a year old, but the message resonates nonetheless.  I am a bit of a paradox &#8211; someone who is obsessed with Asia, who spends my days lethargically tapping away at my MacBook Pro (fantastic device), helping companies do business in China, often to outsource the &#8220;jobs Americans won&#8217;t do anymore&#8221;.  Yet I still have interests in two successful American manufacturing companies that make 90% of their product in the good old USA, and we are in the process of moving some of those products back to the America <em>from</em> China.  That&#8217;s what the math is telling us to do, and I know it is the right move.  I have an MBA, but some of my fondest career memories are of manual labor, working in a small brewery and various factories.  I hate going to the gym (as anyone who&#8217;s ever met me can easily attest), but I love yard work &#8211; pruning trees, weeding, splitting firewood, etc.</p>
<p><a href="http://www.washingtonexaminer.com/politics/blogs/yeas-and-nays/Rowe-touts-_Dirty-Jobs_-in-Washington-1045257-104023223.html">Rowe&#8217;s point delivered to Congress</a>, is worth quoting:</p>
<blockquote>
<div>
<div>
<p>Rowe  explained that &#8220;dirty&#8221; jobs, like those in manufacturing and farming,  used to mean success, but now look like settling. He wants that to  change.</p>
<p>&#8220;I don&#8217;t think the country is going to fall back in love with  manufacturing and I don&#8217;t think these policies are going to change,  until or unless we reignite a fundamental relationship with dirt, work,  and the business of making things, as opposed to the business of buying  them,&#8221; he said.</p>
<p>He said one of reasons this is occurring is because community  colleges and vocational education have taken the backseat to four-year  college degrees.</p>
<p>&#8220;It&#8217;s not happening because people hate community colleges, it&#8217;s not  happening because people hate the trades, it&#8217;s happening because we&#8217;re  promoting a very specific kind of education at the expense of the  others,&#8221; he said.</p>
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<p>I&#8217;ve written before about the <a href="http://pajamasmedia.com/instapundit/?s=higher+education+bubble">higher education bubble</a> (<a href="http://psschina.com/2010/03/eduscam/">here</a> and <a href="http://psschina.com/2010/04/eduscam-part-deux/">here</a>) and thoughts on <a href="http://psschina.com/2009/12/american-competitiveness-american-creativity/">American competitiveness</a> and the attitudes towards <a href="http://psschina.com/2010/03/child-labor/">work</a>, but Mr. Rowe does a better job of laying out where we&#8217;ve lost our way a bit.  Convincing people that the only path to wealth is $120,000+ in debt for a degree in liberal arts or the soft sciences seems further from the mark than ever.</p>
<p>China has built serious capabilities in the last 30 years, skills and knowledge that many parts of the developed world have allowed to atrophy.  Part of the attraction to doing business in China is price, but increasingly it is because the domestic industries have shrunken to the point that China is the only place you can get it made, whatever &#8220;it&#8221; is.  That is why <a href="http://psschina.com">PassageMaker</a> is there, so that if you are forced to do business with Chinese suppliers, you have an advocate that understands your concerns and requirements, and has your success as our primary objective.</p>
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		<title>The only thing better than having dinner with a beautiful woman&#8230;</title>
		<link>http://www.psschina.com/2010/09/the-only-thing-better-than-having-dinner-with-a-beautiful-woman/</link>
		<comments>http://www.psschina.com/2010/09/the-only-thing-better-than-having-dinner-with-a-beautiful-woman/#comments</comments>
		<pubDate>Sat, 18 Sep 2010 05:56:19 +0000</pubDate>
		<dc:creator>whit</dc:creator>
				<category><![CDATA[Whit's China Business Blog]]></category>
		<category><![CDATA[china development]]></category>
		<category><![CDATA[China food]]></category>
		<category><![CDATA[China Sourcing]]></category>
		<category><![CDATA[Post No Bills]]></category>
		<category><![CDATA[The Moore School of Business]]></category>
		<category><![CDATA[University of South Carolina]]></category>
		<category><![CDATA[venture capital]]></category>

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		<description><![CDATA[&#8230;is having dinner with two beautiful women.  Feel free to quote me. The last two weeks have included the opportunity to take part in a &#8230; <a href="http://www.psschina.com/2010/09/the-only-thing-better-than-having-dinner-with-a-beautiful-woman/">Continue reading <span class="meta-nav">&#8594;</span></a>]]></description>
			<content:encoded><![CDATA[<p>&#8230;is having dinner with <em>two</em> beautiful women.  Feel free to quote me.</p>
<p>The last two weeks have included the opportunity to take part in a number of events at <a href="http://psschina.com/about/board-of-directors/">Mike</a>&#8216;s and my alma mater, <a href="http://mooreschool.sc.edu/">The Moore School of Business</a> at the University of South Carolina.  USC excels in teaching <a href="http://grad-schools.usnews.rankingsandreviews.com/best-graduate-schools/top-business-schools/international-business">international business</a>, and we are currently hosting an excellent intern from the IMBA program in our Shenzhen office, so I freely admit I am shopping for next year&#8217;s intern(s).</p>
<p>Aside from the obvious ego boost of being asked to speak at your alma mater, it gives me enthusiasm for the future.  The class of 2013 has some real ringers, students I expect to read about in the business journals a decade hence (and a few who might make the police blotter for public intoxication between now and then, much to my gratification &#8211; Go Cocks).  To Aaron, Clinton, Frank and the young man with the extravagant hair who had the insane idea to eat a chili dog and then take hot sake shots at 4:00 AM, study hard.  You have quite a task to live up to trail blazed by Admiral Goodtimes, aka Mike Bellamy, and I circa 1997, but you are well on your way.  Make us proud.</p>
<p>These two weeks of travel also included meeting an amazing entrepreneur, Doreen Sullivan of <a href="http://postnobills.com/">Post No Bills</a>.  It is hard for me to briefly describe what they do (hell, it is hard for me to briefly describe what <em>I</em> do), but it is far above slapping logos on coffee mugs.  I expect we will be doing plenty of business together in the future.  A very dynamic woman with a very exciting company.</p>
<p>This week I was contacted by a student I&#8217;d met earlier in the year.  She wanted my input on a project for one of her classes.  We had a very enjoyable lunch, which put me in the mind to cogitate on three subjects much on my mind of late.</p>
<p>The first is the higher education bubble (much discussed by Glenn Reynolds, aka <a href="http://pajamasmedia.com/instapundit/">Instapundit</a>, if you care to follow along).  I&#8217;ve debated whether the bubble is real with the folks from my undergraduate alma mater, but there is no denying that the price of school has risen far faster than the rate of inflation.  I was <em>very</em> surprised to hear what this young lady was paying at a state school.</p>
<p>The second was the (sadly) trendy, politically correct nature of some of the classes she&#8217;s being required to take.  <em>Sustainability</em> in a business program?  Really?  Like every person able to read doesn&#8217;t already know &#8220;green&#8221; products are all the rage?  I know all the schools are doing it, but this strikes me as the B-school version of the &#8220;fill-in-the-ethnicity-studies&#8221; programs at the undergraduate level.  Let&#8217;s keep to the rigor of the old core, shall we?  I am not picking on USC, just pushing them to shuck the academic fads</p>
<p>The third was the advice this young lady had been given.  Most people were advising her to specialize, to focus on one subject, be it finance, marketing, etc.  I gave her the opposite advice.  I have always striven to be a generalist.  I shared with her (a badly butchered version of) one of my favorite quotes from Robert A. Heinlein.  Here it is in full:</p>
<blockquote><p>A human being should be able to change a diaper, plan an invasion,  butcher a hog, conn a ship, design a building, write a sonnet, balance  accounts, build a wall, set a bone, comfort the dying, take orders, give  orders, cooperate, act alone, solve equations, analyze a new problem,  pitch manure, program a computer, cook a tasty meal, fight efficiently,  die gallantly. Specialization is for insects.</p></blockquote>
<p><em>Specialization is for insects</em>.  What an amazing line.  If there is quote that sums up the need for an entrepreneur to have as broad a knowledge base as possible, that&#8217;s it.</p>
<p>Our lunch stretched into the afternoon, then into the evening.  My lunch companion is a very impressive young woman, Chinese but having spent half her life in the USA, her English is flawless, and there is obviously a great deal holding her ears apart.  We had a grand time discussing the vagaries of doing business in China, the diversity of the cuisine, the peculiarities of regional culture, etc.  Doreen of Post No Bills joined us around beer:30 and made an impromptu introduction to a struggling young entrepreneur with the<em> single most amazing product concept</em> I&#8217;ve experienced all year.  The next hour was spent discussing branding, funding, IP protection, etc.  We closed with a late dinner with the ladies (hence the title of this post), the final statement on the evening from our young student being, &#8220;I&#8217;ve learned more in the last nine hours than I have since I started school here!&#8221;.  Mission Accomplished.</p>
<p>That is how we roll at <a href="http://psschina.com">PassageMaker</a> and it is the reason I am so passionate about what I do.  At 1:00 PM on Thursday, I thought lunch would be over by 2:00 PM.  By 3:00 PM, I knew I&#8217;d found next year&#8217;s #1 intern candidate, and by 7:00 PM I had a new client with a product that will shake its industry to the core &#8211; an industry in which I have not one iota of experience, but the difference is I know <em>how</em> to learn and learn fast.  That is core of how PassageMaker operates &#8211; it has to be as our clients are so diverse &#8211; and I will credit USC with helping us hone that most critical of skills.  And by the 4:00 PM Friday, I had investors interested enough to schedule a meeting to meet the inventor with less than week&#8217;s notice.</p>
<p>Get an MBA to climb the corporate ladder?  Nah, not for me.  Specialization is for insects.</p>
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