China, gold, and the civilization shift

Fascinating article in the Telegraph about China’s gold buying binge.

I am reminded of this from the Onion.

Hope everyone is enjoying the holiday weekend – back to regular posts on Monday.

Click here to see Oct 2009 interview at Hong Kong trade show

PassageMaker founder Mike Bellamy speaks to an interviewer at a Global Sources trade show in Hong Kong.

And now, the link to Mike’s interview…

Subscribers to this blog probably got an update last night that should have included a link to Mike Bellamy’s interview during the recent Global Sources trade show in Hong Kong. Sorry for the omission, but please take the time to watch.

And send in your vote on whether Mike should shave his beard! What’s up with that?!

Happy Thanksgiving to all!

China State Construction nets $100m US subway deal; or a tale of three links

Three headlines today

  1. The largest Chinese construction firm wins a bid to work on the NYC subway system.
  2. ‘Real’ unemployment rate hits 17.5%.
  3. And it’s only 34.5% among young black men.

I’m sure that will go over well. It’s all about the timing.

The recession is nowhere close to over, yet PassageMaker continues to get new clients, and our efforts to expand outside of North America are paying off as clients in new markets like Australia, Brazil, Israel, Spain, etc., sign up with PassageMaker, China Quality Focus, QTP Bag & Case (our bag manufacturing company) and SafePassage (selling into China).

I am thrilled to see entrepreneurs with such faith in the market and their own products. Thank God for small favors.

Odd & Ends…it’s Monday

I’ve been down with a cold, so no entries the last few days, and don’t really feel like one now, but here goes.

From Jake Tapper of ABC, “Did the Chinese Government Crack Down on an Obama Interview?“. I love the line, “It is all bizarre, and self-contradictory, and very China.”

From Dan Welygan, our salesman based in Seattle, a link to The Black China Hand, a very good blog. Read especially the two entries (17 & 18 Nov 09) on fake Chinese companies. Sadly common.

And who knew SNL was funny again? This bit is as hard as I’ve laughed at anything they’ve done in years, and the saddest part is how true it is. Caution, to some sensitive souls NSFW.

And just because it is also funny (and sad) as a Packers fan, read this (originally from 2006 during the Muhammad cartoon mess, but still appropriate and still a scream). Hat tip to Brian Garvin.

NOT GOOD

Wow. This is a powerful visual representation of the USA unemployment from January 2007 to September 2009. What’s even scarier is the official rate is severely understated.

The USA is not out the woods by any stretch, and our leaders seem to have no clue how an economy functions. Thank goodness we’ve been expanding our sales footprint outside of the USA, but the recession is far from over.

China Inspections

Short post tonight, early morning tomorrow. Dan Welygan sent me a link to this interesting blog focused on China quality control. While it’s not by our friends at China Quality Focus, it is full of good information that CQF can help you implement.

More pearls of wisdom tomorrow…

Blue Cactus Wisdom; or why the “Slow Food Movement” rocks.

The Blue Cactus Cafe in Columbia, SC is the most unique place I’ve eaten. It appears a very plain diner, but inside wonders are kept. The menu is half Tex-Mex and half Korean. Dad’s American and Mom’s from Korea and the food is all home made every day, including the Korean hot bean paste and kimchee. If you’ve never had Korean food, you simply don’t know what you’re missing.

But what sets the Blue Cactus apart from other good Korean restaurants is their dedication to “slow food”. They will not be rushed. Good food takes time. The kitchen is small, as is the whole restaurant, and if you’re in a hurry, they suggest you go elsewhere. Lunch takes at least an hour, and complaining will get you nothing positive. As the Daughter once said to me, when she thought I was complaining (I wasn’t, I swear), “don’t mess with the people who can put their fingers in your food”.

While this may turn some folks off, they are the distinct minority. Business is always brisk, and the walls are covered with postcards from around the world, sent by dedicated fans. Whenever I am in the area I stop by for take out, and I live in Salem, VA. That’s 4 hours 15 minutes worth of take out. I have three identical coolers, all bought from the same Kmart in Columbia on three separate trips over the course of two years that just happen to perfectly hold four orders of my wife’s favorite dish, Bee Bim Bop. It is that good.

PassageMaker often gets inquiries from clients wanting “rush” the development of their product. This is always a bad idea. There are some things you just shouldn’t rush. When you try to push a project along too fast, corners get cut and often the product is compromised. We are always conservative when estimating lead-times, because we believe firmly in under-promising and over-delivering.

These rush jobs also are part of the reason for China’s reputation for shoddy products. It takes 12-16 weeks to get an injection mold built in the USA. A typical tooling lead-time in China is 4-6 weeks. Part of that is technology, man-power, work hours, etc. But part of it is making tools that may not be perfect the first time, that will likely require some tweaking, and that may not run as many parts as the USA tools before needing serious maintenance or replacement. This doesn’t mean they are bad tools – given that they usually cost about 1/5 of the American cost, it’s a good trade, especially in a world where products rarely have long life-cycles. While the tool may need tweaking, the total development time is still usually less than USA for a fraction of the cost.

However, under duress I’ve seen a tool take as little as 2 weeks in China. While they are sometimes successful in making a good tool in that time frame, it is not something you can bet on, and it can often lead to disaster. Best to wait the 4-6 weeks.

In short, people often come to us with unreasonable expectations. And while it is tempting to always say what the client wants to hear, I have to remember my friends at The Blue Cactus and be up front – lunch is going to take an hour, but it is worth the wait.

The principle function of a design engineer…

My Father, who holds dozens of patents, is famous for this saying:

The principle function of a design engineer is to recognize a dead horse and bury it promptly.

We work with inventors and innovative small businesses from around the world, and nearly all of these folks have interesting product ideas. I love my job, as everyday is filled with creative people and their concepts. For all intents and purposes, it’s like being head of sales for a conglomerate that makes everything from medical devices to toys.

But a good idea is not the same as a design database. In order to proceed to tooling or manufacturing, you have to have a finished design, which is why PassageMaker has Endorsed Service Providers (ESP) for engineering. Many of our clients need assistance to bring their great ideas to life, and while we could say “come back when you’re ready”, we’d much rather direct them to a trusted ESP to keep the project alive.

Sadly, not all ideas are good ones, and that is another area where we can help, though the client may not want it. We’ve seen some real dogs and while I am happy to go forward if the client insists on paying, we don’t pull any punches either. Often seeing the costs involved to bring an idea to market, even with the savings inherent in China, is the best wake up call they ever get.

Is China headed toward collapse?

A friend sent me this interesting article by Eamon Javers in Politico.

Anyone who’s traveled in China knows there is substantial over-development. Gleaming new skyscrapers sit empty and the amount of factory over-capacity is staggering. Is the PRC a house of cards? In a sense, yes. The development over the last 30 years has been hugely successful, but the annual income for the vast majoirty of the people is still not high enough to turn them into consumers in the model of the West. The consumerism in the coastal mega-cities does not extend very far inland. It is true they still depend on exports to drive their economy.

The article focuses on the demand side of the equation. PassageMaker’s focus is on the supply side and the reality is that the manufacturing capability of China is here to stay. That over-capacity will serve to keep prices low and I don’t see how the “world prices” will be set anywhere else. I do not see India stepping up to take China’s place. With the dissolution of so much of the American manufacturing sector, to say nothing of regulations and taxes that make it unattractive to run a factory in the USA, where are you going to make products? I doubt the current administration in Washington will have a change of heart and encourage the opening of new coal mines, power plants, steel mills, etc.

Is China weaker than it appears? I would say yes, but that does not mean it is going to implode. We are all in for a rough ride the next few years, all of our own making, but China has cash and industrial capacity and I personally believe they can weather the storm. PassageMaker is hedging its bets by proceeding with plans to open another Assembly Center in Mexico, but there are no plans to exit China.

Even if the financial crisis leads to social unrest, the people of China have seen over the last 30 years what they can accomplish. While there are hundreds of millions of peasants in China, there are also now millions of managers, engineers, businessmen, entrepreneurs, etc., and they are not going to vanish. PassageMaker is planning for long-term growth and so far I think we’ve chosen wisely.