When Mike Bellamy started PassageMaker, it was a typical trading company. Mike had a relationship with a particular set of factories, and sold their services to customers (like me) at a mark-up, taking ownership of the parts and assuming warranty risk. It worked well for a while, but soon enough, despite all our efforts, things began to falter because if you don’t fully own the factory, you can’t fully control the quality, delivery dates, pricing and services. It only proved to both of us that there was a better way. It was Mike who had the epiphany on the better way.
That better way became The PassageMaker Model of Trust & Transparency. Being honest became the core product. De-coupling the services from the vendors was the eureka moment. The services are inspection and final assembly. The vendors provide the bill of material. In this new method, the inspection and final assembly center is 100% owned by PassageMaker so the customer and PassageMaker are no longer at the mercy of the suppliers to get the quality right at ship it on time.
Plenty of folks have offered snickering criticism over the years. We don’t charge enough. We should be marking up the product’s BOM with a margin hidden to the client, rather than just invoicing for our services. We should finance our customers. We can’t possibly be serious.
Well, to all our critics, we tried the traditional trading model a few times back in the day and lost our shirt, socks and underwear because the Chinese suppliers let us down, not because of something we did or did not do. We’ve watched our friends do the same thing over and over in their trading companies. They all failed because they left it up to the factories to hold the price, ship on time and manage the quality. If you don’t believe me, put five years of trading in China under your belt and then let’s talk. Running a trading company means assuming astounding risk with minuscule net margins, and because you don’t own the means of production, you are totally at the mercy of your suppliers. It is a great business model in theory; wretched in practice.
There was no textbook for The PassageMaker Model, because no one had gotten around to writing it, because no one had ever even thought of it. Mike is now (quite literally) working on the textbook , but our Sourcing Feasibility Studies, Vendor Coordination and Assembly-Inspection-Packaging services are our philosophy in practice. They are the controlled evolution of an idea.
There are lessons in life you have to learn by doing. Mike and I have the scars to prove we went through the fire, but the critical point is what we did with that learning experience. Anybody can learn from their own mistakes, by a wise person learns from the mistakes of others. We didn’t just learn; we innovated. And now we leverage this knowledge to the benefit of our customers. PassageMaker is unlike any company you will encounter in China, because simply we are unlike any other company in China.
I hope you will give us a chance to show you how different we are.