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The Shanghai show has begun

The latest Global Sources Trade Fair is underway in Shanghai. Sadly, I could not make this one, but the PassageMaker / China Quality Focus booth is there, staffed by personnel speaking English, Mandarin, Spanish, French, Portuguese, and Russian.

Stop by booth # 3A55 and meet our team and make the time to participate in Mike Bellamy’s conference on sourcing in China!

This is just cool…

Here’s a fun article about how they printed the Iron Man suit. This was posted on the “Additive Manufacturing (AM) – Rapid Prototyping (RP), Tooling and Manufacturing” group on LinkedIn. Normally, I’m so tired by reading the group name I never get much farther than that, but thankfully today I persevered.

I’ve been fascinated by this technology since I first saw it maybe ten years ago. We’ve used it many times to prototype our own products, and our Endorsed Service Provider, QuickParts is a great resource for our clients.

Hope everyone has a great Memorial Day weekend!

China’s Mexico is inside China

300x250 run backup

This analogy has a number of problems with it (like most analogies), but I got the point the first time I heard Mike Bellamy make it.

Too many American industries rely on illegal labor to remain cost competitive, thus the constant drama on the border issue.

The China nearly every Westerner sees is the coastal veneer. The majority of China still dwells in the poor, mostly agrarian interior. Their source of cheap labor in internal.

And as this article in Slate by Brett Edkins points out, in a sense, many of those Chinese migrant workers are “illegal” anyway. Key paragraphs:

The United States could begin by conceding one of China’s principal arguments: Human rights are not just about individual liberty, but also economic opportunity. The Chinese “economic miracle,” which lifted 500 million people out of poverty in just one generation, is itself an unprecedented human rights achievement. Yet it gave rise to other pressing human rights concerns, including an issue that threatens to destabilize China’s Communist regime—growing discrimination against the roughly 200 million Chinese citizens who left their rural homes to find jobs in China’s booming cities.

In many ways, these rural migrants resemble undocumented immigrants in the United States. In China, they provide indispensable labor for vast urban construction projects and work in menial jobs as guards, waiters, cooks, or barbers. They are often mistreated by employers, generally live in poor conditions, and receive few social benefits and limited protection from the police. And their children are regularly denied public education.

Chinese newspapers, “Netizens,” and even Communist officials are calling for reforms. Their main target is China’s 50-year-old household registration, or hukou, system. Began as part of China’s state-run economy, the hukou system labels individuals as “rural” or “urban,” indicating their proper place of residence and binding laborers to the land. Today, rural residents are permitted to travel to the cities, but they can still be fined or forcibly returned home if they are caught working or living outside their designated hukou. Obtaining a temporary urban-residency permit from the police is beyond the means of most migrants, requiring a fee and employment documentation. Permanently changing one’s hukou by attending university or joining the military or the Communist Party is similarly out of reach.

Life for a city dweller with a rural hukou is difficult. Their hukou denies them urban welfare and access to public housing. It also excludes them from publicly funded health-insurance schemes. Since fewer than 3 percent can afford health insurance, most avoid medical care altogether. City judges often impose harsher sentences on rural migrants, and employers frequently withhold wages, knowing undocumented workers cannot complain to police without risking exposure.

I will admit I not a fan of the author’s wording, “undocumented migrants”. If you illegally cross a national border anywhere else in the world (including Mexico), you’ve broken the law. Only in the modern American journalist and politician world does that deserve an obscurant euphemism.

However, the point of the article is that despite the rapid advances, parts of the Chinese state are stuck in the Maoist past. One good thing about dealing with PassageMaker, you know our employees are treated well and legal. As a foreign owned firm, the government would come down on us like a ton of bricks were it otherwise.

Regardless, I am happy to see people in China, including members of the Communist Party, start to address the problem.

Some miscellaneous articles

Feeling lazy today. Sometimes the juices ain’t flowing. In no particular order:

Maybe get to some travel blogging tomorrow. Or not. You’ll have to check back to see.

More comments on “Sheer Import Genius” and a great post from Renaud

Renaud Anjoran is a fine fellow who runs an excellent blog about quality control in China. I’ve linked to him in the past, and he’s returned the favor.

He commented on my recent post, “Sheer Import Genius“. This led me to read two excellent posts on the the good and bad trading companies in China.

His points are spot on. One of the reasons PassageMaker formulated the Sourcing Feasibility Study (SFS) was to identify and eliminate piss-ant trading companies that don’t add value.

Li & Fung is a tremendous company, and we have sought to emulate them in many ways. PassageMaker focuses on SMEs – Small to Medium Enterprises, not Li & Fung’s market. Many of our customers are Tier 1 suppliers to Fortune 500 companies, but they themselves fall into the SME category. In my mind, this is a fine market to serve.

PassageMaker is not a middleman. We are not a traditional trading company. We add tangible value with our SFS, Vendor Coordination, Assembly-Inspection-Packaging and Factory Formation services. Most importantly, the entire process will be transparent. We don’t exist by keeping our clients in the dark.

Let us know how we can be of assistance. If you are not 100% sure about every step of your supply chain, you need our help. Trust me, you do.

Great China Law Blog post related to “Sheer Import Genius”

A most excellent post on the importance of protecting your supply chain from Dan Harris of the (most excellent) China Law Blog. If you are not a subscriber, you should be. He is kind enough to link to my post yesterday, “Sheer Import Genius“.

The importance of contracts and compartmentalizing your supply chain cannot be overstated. You have invested too much to build the business. Don’t give it away because you are too lazy or too cheap to do the work to protect that investment.

Money ‘graph:

The other day, a really savvy client of ours stopped by the office. This company has been doing business in China for a long long time and it has non-disclosure/non compete/non circumvention agreements with all of its Chinese suppliers and US Buyers I mentioned the above conversation (no names or other identifiers, of course) and we talked about the benefits of the contracts his company has both in China and in the U.S. He then reminded me that this was also one of the reasons his company had set up its own trading companies in China. This company gets its product from about a dozen different Chinese factories, but the records in both China and the United States all point to the U.S. company’s own trading company as the exporter. This company has never had a problem with its customers going around it.

PassageMaker can help you secure your China supply chain. Our “Black Box” Assembly Center is a far less expensive option than setting up your own trading company. If you still want your own presence in China, we can help you with our Factory Formation service. Give us a call, and when you need a lawyer in China, you could do far worse than Mr. Harris.

Not (entirely) Safe For Work weekend post

ChinaSMACK is a window into the bizarre world of the Chinese internet. I regularly link to the oddities found therein. And while it is a window into a foreign world, it only provides snapshots that titillate and excite conversation on Chinese chat-rooms. Thus it is often the equivalent of watching helicopter footage of police car chases in LA. You might deduce something useful about life in LA from what you see and the insightful (*snort*) commentary of the reporters, but more likely it is just mindless entertainment.

This article appeared on ChinaSMACK today, Naked Chinese Girl Mentally Ill, Traumatized, or On Drugs?

The frontal images are pixelated, the rear images are not. I would argue that this is harmless, but you judge the culture of your office. WATCH AT YOUR OWN RISK.

I post it for the following reasons:

  1. The event takes place in Shenzhen. I swear this is Luohu district. The background looks so familiar, I bet this is near our old office.
  2. Notice the way she just walks through traffic and then hops the barrier fence – the one designed specifically to keep people from walking out into traffic. This is not a sign of mental illness. EVERYBODY does this in China.
  3. Notice the barely controlled chaos – the masses of people, the traffic, the noise. This is not because there is a pretty young woman running around naked. This is all day everyday in Shenzhen and every other place I’ve been in China. Most Americans cannot imagine the demographic density of Asia.
  4. Notice the unguarded construction site. While major digs with have walls built around them, it’s very common for smaller projects to be completely wide open, with people walking right through the middle, dodging around the construction workers.
  5. In my experience, the Chinese gawp at anything that outside the norm, including tall, fat white guys walking down the street. You should see some of the looks I get walking through Liantang.
  6. They are also charitable and helpful in my experience. Maybe it is because I am a lao wai, but I don’t think Kitty Genovese would have happened in China. There is a genuine effort to help her.
  7. The bare feet. The Chinese know that the streets in the major cities are beyond filthy. EVERYONE wears slippers around the house and would NEVER walk barefoot on the street. This is sure sign this is not a stunt. Even if she were a model paid to act crazy for some bizarre promotion, I am confident she would have retrieved her flip flops. That’s why the camera pans down to capture the image of the abandoned footwear.
  8. The omnipresent and yet soft police presence. Cops are everywhere in Chinese cities. Yet, I have never seen them bestir themselves for anything. I mean look at how the cop DOESN’T react when she climbs from the back seat of the cop car into the front seat. That would be impossible for a dozen reasons in an American police car – handcuffs, barriers, cops tasering you and then beating the crap out of you to name a few. I am almost convinced that as long as you don’t murder, rape, steal, sell drugs, or criticize the government, you can get away with anything. Jaywalking, reckless driving, spitting on the sidewalk, littering, public drunkenness, panhandling – those are all just fine. Indeed, it can be argued they are integral parts of Chinese culture.
  9. She’s naked. I mean, come on…

Have a great weekend!

Sheer Import Genius

So…did you know that your shipping information is in the public domain?

I’ll step up and admit I didn’t.

What’s worse, now that Import Genius is out there, finding your competition’s suppliers is as easy as using a search engine. Anything imported into the USA is a matter of public record, including the exporter (i.e., your supplier), the type of goods and your receiving address.

Import Genius is an amazing program and I will be using it for sure, but it also highlights another advantage PassageMaker‘s “Black Box” offers our clients. When you hire us to perform our Assembly-Inspection-Packaging service, that is really a catch-all term for any sort of contract assembly, product inspection, contract packaging, kitting, order fulfillment, pull-pack-ship, freight consolidation, private labelling or branding, etc. We do everything from kit mobile phone accessories to assemble vacuum cleaners.

Aside from the advantages we provide to help you control your costs, ensure your quality and protect your intellectual property, we also act as a “firewall” to protect your real supply chain. When a competitor searches for you on Import Genius now, they’ll get the name of your Chinese supplier. Think about that for a moment. You invested thousands upon thousands of dollars to establish that relationship, to tool your product and get the production going. If you are like a typical “mature” PassageMaker client, before you hired us, you were paying for at least a half-dozen trips to China a year. With business class seats, rooms at the Shangri-La, private cars, etc., that’s $20k per trip.

How confident are you that your supplier wouldn’t sell a knock-off of your product to a competitor?

If they search when you are working with PassageMaker, all they will see is our address as the exporter. So in addition to saving you on travel expenses, we protect the investment you made in your suppliers. Our motto is “Trust & Transparency”, and you can trust us to protect that supply chain. We wouldn’t stay in business 5 minutes if that weren’t true. In the PassageMaker system, you will always know who your suppliers are, who has your tooling, who has your designs, who has your money and who has your products. The transparency part only applies to you!

China’s other revolution

I remember hearing the term “monk hotels” when I lived in Taiwan. By that they meant that these hotels did not allow a foreign visitor to bring a “new wife” home with them for the night.

These hotels were already anachronisms in Taipei 12 years ago when I lived there, but China was far more conservative.

Now, it has changed dramatically, and China is as sexually liberated as any place on earth. I say this without any judgment on whether this is a good our bad thing, but it is true that China has opened to the world in more ways than just economics in the last 30 years.

This article from the AP, “Swingers’ case tests sexual limits in China”, highlights the dramatic changes.

The US engagement with China has always been predicated on the concept that through trade we would alter their society and thus diffuse any potential conflict.

Can you imagine a more Western defense than, “How can I disturb social order? What happens in my house is a private matter.”? Summed up in those two sentences are concepts of personal privacy and private property that would would have been incomprehensible 20 years ago.

How much China has changed since then…

Well, that’s just great…it’s spelled “proofread”

So I spend a week proofreading my post on proofreading only to be immediately informed by an observant reader (a former professor of mine from USC no less) that “proofread” is one word. Not “proof read”, as I wrote yesterday.

I take full responsibility, as I am the only one who proofreads my blog posts. I have dyslexia, so I always try and proofread everything 2-3 times before I send it or publish it. After all, I get enough hounding from the clan in China, to say nothing of the Zen Dragon from down under, that I don’t need to make it any easier for them.

That said, my error sets me up for a good blog post today. This experience underscores what I was saying in the original post – your business documents are far, far more important in China than in your home market.

Make a mistake or an error of omission on a purchase order, and you may very well be hosed. Do the same on a Product Quality Manual (PQM), and I can guarantee trouble.

Some time ago, such an error of omission rose up and bit one of our customers rather badly. We had followed the PQM as approved, but we had not been checking a particular dimension. It had never been in the PQM, whether we didn’t include it when we drafted the document or whether the customer left it off the original drawing was lost in the mists of time, but the error had persisted undetected by all for nearly 4 years. It was never a problem as long as the vendor providing that component did their job right, but we are all human and that finally didn’t happen.

Our team inspected the product to the PQM. The error was so subtle, you would never notice it with the naked eye. The client assumed all was well and shipped the product, which immediately were rejected in the field. Long story short, everyone was unhappy and we all lost, but there was no warranty claim to be made against PassageMaker. We’d followed the approved PQM.

Our policy is we will do what you tell us in the PQM, no more, no less. It has to be this way, as the biggest problems in China are the admirable Chinese tendency to want to help too much or worse, to improvise when a problem arises.

I had a friend who was buying pillow cases in China. All the samples came in exactly 1″ too big on every dimension. Panicked, he called the factory and they told him they so appreciated the order (for several hundred thousand units), that they wanted to reward him by providing extra material at no cost! After he got his heart pumping again, he contacted our friends at China Quality Focus who went on-site and got things back on track quickly.

Doing business in China is Murphy’s Law on steroids, acid and a truckload of uncut Colombian all at once. Muse’s 1st Law is “Never Assume Anything“. Make sure if you want it to happen (or not to) that you put it in writing.

I meant it when I wrote that we LOVE getting 17 pages of corrections back from the client. It is far better than a cursory review and signature.

We have four (4) internal layers of proofreading for a PQM before it is sent to the client for approval.

  1. The PQM is drafted by a Quality Technician, with input from the entire team, including the client.
  2. It is then reviewed by the Production Engineer.
  3. It is then reviewed by the Project Manager.
  4. It is then reviewed by a member of senior management (most often by me).

Only then is it sent to the customer.

This is a time consuming process. But the alternative is terrible to contemplate. Anything worth doing is worth doing right the first time.

So make sure you proofread before you sign on the line that is dotted.