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Day 14

Day 14 hong kong border fence

Day 14 – Tuesday – Some interesting China article links to kick things off:

I had some customer calls this morning and got to the office later than planned. It was a beautiful day, clear and warm and actually worked up a sweat walking to work. Mike is very frugal (like a good entrepreneur should be) and he sited PassageMaker and the corporate apartment on purpose. Liantang, our “town” in the Luohu district, is not upscale at all, and most Western companies are based in tonier districts like Futian and Shekou. Liantang is very Chinese, we are the only foreigners and there is no Starbucks or other Western shops. We do have a KFC and a McD’s, but both these brands are so well established in China they are almost like local offerings now. KFC especially has a very different menu than in the States, tailored to the local market. When Mike was researching our new home a few years ago, he chose this area because he could buy a house across the street from the office. Also we are an important tenant for the landlord, so we can control the HVAC. In many of the high rise office towers, the landlord controls the thermostat. And rents are also much lower in Liantang.

Day 14 hong kong border fence

In order to get to work, you have to cross a foot bridge over the main highway. Chinese steps are instructive.

Day 14 chinese stairs

For breakfast I went to a vendor around the corner selling a type of flatbread. The size of a large pizza but wafer thin, it is fluffy and crispy at the same time. I has green onions cooked into it and is coated with sesame seeds. A real taste delight. I bought half a pizza, cut up into bite-sized pieces and shared with the office. All for 4 RMB = $0.60.

Day 14 flatbeard

It was a busy day in the office. We had customers visiting from France in the morning and USA in the afternoon. Late afternoon, my friend from Taiwan stopped by for a meeting to learn more about PassageMaker. We gave her the run down on all the companies – PassageMaker, QTP Bag & Case, and China Quality Focus – and their services – Sourcing Feasibility Studies, Vendor Coordination, Assembly-Inspection-Packaging, China Sourcing Office, our Medical Assembly Center with Clean Room and Sterile Packaging, Logistics, VAT Rebate Processing, Simple Factory Audits, on-site Quality Inspections, Market Feasibility Studies, Factory Formation, and our Endorsed Service Provider network. She has USA friends and clients contacting her to help source in China and she wants to introduce them to us. I am confident we will find a good way to work together. Only one dish of note today at lunch, the variation on my favorite shrimp skewer dish, this time without the chiles and salt baked, to give them an intense somewhat smokey flavor.

Day 14 salt baked shrimp skewers

I head out a bit earlier than normal to join her for dinner. It is not uncommon for folks at PassageMaker to work until 8 or 9 PM, so I felt a little bad leaving at 5:30 PM. My friend is in the mood for Japanese, so we head to Coco Park, a big mall and surrounding shopping area in Futian. Our driver heads off and we are mired in a few minutes time in rush hour traffic. Liantang is on the east end of Shenzhen, almost to Yantian, the most eastern district of Shenzhen and the location of the port. Shenzhen was the first Special Economic Zone set up by Deng Xiao Ping when China decided to open to the West. 30 years ago it was a farming and fishing village that just happened to abut British Hong Kong. Today it is a sprawling city of around 12 million people. From Shekou and Baoan in the west to Yantian in the east, even in good traffic at highway speeds it can take an hour or more end to end. The original Luohu district is crammed right up on the border and it is obvious that the city planners years ago had no idea what was to come. The highway in Liantang running to the port that I’ve posted in the past, was built because this area was almost a suburb. In central Luohu, the highways take crazy S curves weaving in and out of skyscrapers, and in some areas are reduced to two or even one lane. This is the polar opposite of the planned asphalt and concrete expanses of Pudong in Shanghai. Thus the trip to Coco Park takes around 45 minutes.

Coco Park is across the street from the new McCawley’s we visited the other night, and is a big beautiful mall. Lots of stone and neon and every major Western brand represented. In contrast to some of the malls in China, I actually saw people buying, not just looking. In we go to a Japanese restaurant, which if you take the bad blood between the two nations seriously, should be deserted. Instead we have to wait 25 minutes for a table the size of a matchbook, crammed between a large party of Hong Kongers and a couple on a date. This lao wai barely draws a second glance, except when I take a picture of the food. My friend tells them I am a food critic, which I guess is accurate.

We start the meal with raw beef tongue sliced paper thin. We initially opt to cook it ourselves on a portable butane burner, but after nearly giving ourselves 3rd degree burns (the cast iron cooking plate doesn’t exactly fit the burner and keeps sliding around), we send it away for them to cook.

Day 14 beef tongue

Day 14 japanese fried chicken and the cooked beef tongue

Beef tongue is a bit more unctuous than other cuts, despite having not much visible fat, and is quite good. I am not sure I would be able to tell the difference if I was not told though. I remember that in his book Undaunted Courage, Steven Ambrose reported that Lewis only ate the tongue and the fat of the buffalo they killed. Now I understand.

Day 14 japanese potato omelet with bonito shavings not good

Day 14 japanese lamb chops pretty hard to mess up lamb

Day 14 japanese salad

Day 14 japanese fried tofu with bonito shavings

We rounded out the meal with some sashimi, which everyone has seen so I didn’t bother with photos. My friend is into dessert, so we had ice cream and cheesecake, neither of which were anything special. The highlight for me was the Suntory beer, which I hadn’t had since my last trip to Japan nearly 12 years ago. Suntory is an brand rarely exported (I’ve never seen it in the USA, even in major cities) and it is a good basic lager. Just the thing for the food.

Conversation over dinner gets philosophical. She and I have known each other a long time through a string of career and life changes. She’s met my family and I’ve spoken to her significant other on the phone a number of times, though we’ve never met. She and I may not talk for a year, but whenever we do, the conversation picks up just where it left off like no time had passed. She looks great, hasn’t aged a bit. It has been 5 years since we’ve actually seen each other. It felt like last week. OK, so it WAS last week at the Italian restaurant, but you get my meaning.

Life is nothing but a string of anecdotes, with book learning thrown in for filler. You never really know anything but what you see with you own eyes, smell with your own nose, etc. When Mike asked me to write this blog, it was to boost our search engine results. I immediately realized I couldn’t do it if every post was a string of key words. It had to be about life. It really should be called “Whit’s tiny slice of Shenzhen, Hong Kong, a couple places in Dongguan and Guangzhou, a few trips to Shanghai and Beijing, Singapore from 15 years ago, Taiwan from 12 years ago Business Blog”. I know more about China than most people, but as our rep in Brazil, Andrea Martins, who lived in China for 25 years once told me, “If you go to China for a week, you can write a book. If you go for a year, you can write an article. If you live there for 25 years, you have nothing to say.”

A professor of mine once introduced me to an audience at a speaking engagement as one of the happiest people he knows. I don’t know if that is the truth, but I AM happy. Not because I don’t have anything to be sad about, but because it doesn’t do any good to fret and worry. I have a beautiful wife and a wonderful family, I love to meet people and make new friends. I love what I do, because I essentially made my own path (with lots of help from everyone in my life, including The Man upstairs). Some years ago, I made a silent promise to myself to “live a life less ordinary”. So far, I think I’ve succeeded.

When I am at home I am happy and content. I love Salem, VA and the USA. I love my family and friends. It is a beautiful small town, safe and pleasant. Do I miss China when I am at home? Of course.

When I am in China I am likewise happy and content. I cannot say I love China, so much as I am fascinated by it. Every day is a new experience. Buying a loaf of bread or a carton of milk is an adventure. Do I miss my home when I am in China? Of course. I miss my family terribly.

But there is work to do and money to make. You put it out of your mind. Absence really DOES make the heart grow fonder. I know when I see my family in 3 weeks, it will be a wonderful homecoming.

 

Days 6-13 – Shanghai Hooters, Mao’s Revenge, and rotten cell phone companies

1 view from the apartment 1

Day 6 – Woke to steady rain after a fitful sleep. The Chinese believe in sleeping on hard beds, as it is supposed to be good for you. And when I say hard, I mean sheet of plywood hard. And how having your hips so sore you can barely get out of the bed in morning after tossing and turning all night is supposed to be good for you beats me. We will be upgrading the mattress shortly.

View from the apartment window.

1 view from the apartment 1

2 view from the apartment 2

And though it feels cold here because of the damp, it is about 62 F. Salem, VA was in single digits in comparison. The company apartment is decorated with Chinese art (Mike has good taste). We even have a life sized terracotta warrior.

6 this guy startles me everytime

4 love the screws

5 ill have one of these in va soon

Our apartment complex

11 the fountain

he walk to the office takes maybe 5-6 minutes. The rain was coming pretty hard and the wind overwhelmed the umbrella. One thing you notice about side streets like ours is how poorly they are sloped to drain the water. Makes for enormous puddles.

Stopped at my snack shop for dumplings and a tea egg. I make tea eggs at home, and they are just that – eggs boiled in tea, dark soy sauce and spiced with star anise. The flavor is very subtle – it is 90% a regular hard boiled egg, but the last 10% makes all the difference.

12 tea egg for breakfast

Worked the morning in the office, and then had lunch at the restaurant around the corner. It has a few dishes that are wonderful, but is certainly not fine dining. The highlights:

Day 6 lunch best use for broccoli

Day 6 best use for squid

Back to work until late in afternoon, then I head to Futian district to take an old friend from Taiwan to dinner at an Italian restaurant. We were the only ones there, so service was exceptional, as was the food, as was the wine, AS WAS THE PRICE. Dinner for two cost 7 times as much as dinner on the street the night before! Luckily she is bringing some of her USA friends to PassageMaker, it was a legit business dinner, but man it is easy to get spoiled by the cheap food over here. I figured we all know what Italian food looks like, so I’ll spare you photos of gnocchi and tiramisu.

Day 7 – A clear day, rain has stopped. It’s knocked the smog out of the air, so a bright blue morning.

Day 7 morning

Day 7 street-scenes

Off early to our Assembly Center in Buji. I’m working on continuous improvement initiatives there as part of our new ISO 9000:2008 certification, something we achieved just last month. My background is in manufacturing, and since we are gearing up for what we think will be a very strong 2010, Mike asked me to come over and assist with introducing the alphabet soup of kaizen related initiatives – 5S, JIT, OJT, etc. Meet and greet the staff, which is dominated by women at the manager level. Only one man on the senior staff. You are seeing more of this in China, but my impression is PassageMaker is ahead of the curve here. On to lunch, which is fabulous as usual.

Day 7 an even better use for squid1

Day 7 best use for duck

Day 7 i love these little fish

Day 7 man they do vegetables well

Day 7 you have to get used to your food staring at you

On the way out, we passed the fish tanks that hold the seafood fresh and alive until it’s time to cook it. Everything in China is prepared fresh.

Day 7 if id known they had had geoduck

Day 7 duck fish

Later that afternoon we headed back to the office to pick up Julien Roger of China Quality Focus, our sister company. Mike, Julien and I flew to Shanghai for the Global Sources trade show, a trip that wasn’t scheduled for me when I came over, but I’m glad I went. The show went well and I’ve never really been to downtown Shanghai before, just the industrial area around the old Hongqiao airport. We flew into the new Pudong airport and I am convinced the planning went something like this – “To demonstrate the greatness of the People’s Republic of China, we will build the longest airport in the world!”. We landed late at the last gate and walked for 10 minutes in a straight line down the terminal until we got to the baggage claim area. This is a seriously long building. And thoughtfully they included no people movers like the trams at the Detroit airport. Considering the late hour and the lack of other arrivals, you’d think they could’ve found a found a gate closer to the exit.

Heading to the hotel, Ibis, a chain of affordable hotels owned by Novotel, a French company, what struck me about Pudong at night were the vast highways. Six to eight lane interstate grade roads as compared to the cramped streets typical of most Chinese cities. Pudong was farmland just a few years ago, and it definitely has a planned feel.

Although they fed us on the plane (a 2 hour flight with meal service – haven’t seen that in the States in decades), Mike and I were still hungry, so we found an American bar, Malone’s across the street and had a very good hamburger while listening to a GREAT Filipino cover band. Every bar and hotel in China has a Filipino band, all playing English cover tunes, even when the clientele is Chinese. And nearly all of them suck. This was an astounding exception. They were tight and the covers were quite good, including good hard rock and heavy metal. The singer had some serious pipes.

Back at the hotel, I noticed the bathroom is a pre-fabricated assembly. Smart idea for a chain. It was one of the nicer bathrooms I’ve had in China.

Day 7 pre fabed bathroom

 

Day 8 – After the best night’s sleep so far, up early to get to the show and set up the booth. On the way to the convention center, I saw this:

Day 8 just bizarre

They switched us at the last minute to give us a corner booth, which meant we had to cut up the posters to make them fit. I think the booth looked pretty good, considering.

Day 8 our booth

I’ve been to a fair number of trade shows over the years. Heavy truck shows are dull unless you really like trucks and truckers, car shows are fun, and motorcycle rallies are a blast. But in every case before, I was selling a product. If the guy’s got a Road King we have something for him, but not if he has a Dyna. We’re on this model of Peterbilt, but not that one. But now that I’ve done it, nothing beats selling a service. EVERYONE doing business in China needs Quality Inspections, Product Testing, Sourcing Feasibility Studies, Vendor Coordination, Intellectual Property Protection, Logistics and Assembly Inspection & Packaging. The industry doesn’t matter, they all needed at least one of our services. This was a gift and clothing fair, but it is the same at every show. It’s like we are selling beer at a NASCAR race. We got business cards from USA, France, Australia, Saudi Arabia, Venezuela, Israel, Nigeria, Iran, South Africa, New Zealand, etc.

Mike is a featured speaker at every Global Sources trade show (including Dubai, Hong Kong, Mumbai and South Africa this year), and he gave a two-part presentation spread over the first two days of the show. He did a great job and it was extremely well received by the standing room only audience. Rather than a canned sales pitch, he tells it like it is, barely mentioning PassageMaker or China Quality Focus. The soft sell works and many attendees stopped by the booth afterward to tell us so. They figure anyone with enough confidence to NOT shove his company down their throats must have it going on. And they are quite right. We do.

Day 8 mike is featured speaker

Day 8 mike giving his presentation

Julien Roger is also a tremendous salesman and very knowledgeable. I learned a great deal from watching his methods. Selling China Quality Focus’s services is easier, as Quality Inspections are very straightforward compared to PassageMaker’s services, but the combined message of the two companies meshes very well. We often have the same customers.

The convention center is still under construction and gigantic. As with the airport, the point seems to be making you walk as far as possible to get anywhere. Despite the impressive size, they apparently forgot about effective HVAC. It is unseasonably cold and I packed for south China. Day 1 of the show had no heat at all, which made it a real grind. Day 2 was a little warmer, but still uncomfortable. By Day 3 they’d gotten it going to the point it was now actually hot inside. HVAC needs some work for sure.

They also have very little in the way of food. The restaurants inside looked just plain bad, serving cold rolls and sandwiches wrapped in plastic like a vending machine. However, there was a McDonald’s right across from our hall, W2. It turned out to be the world’s smallest McD’s, about the size of a broom closet, with one little girl selling horrible looking “chicken sandwiches” out of coolers. I put that in quotes, because they were actually pork. Menu says chicken, she will say in English it is chicken, the box says chicken, but she insisted in Chinese that they were pork. We passed and were directed to the other McD’s at W5.

W5 is an international airport runway away from where we were. In 30 F weather, I was not interested in the walk, but there was nothing else, so walk we did. Entering W5 was a shock as it was still under construction, freezing cold and reeked of paint fumes. The McD’s was even colder than the rest of the building. It was a huge McD’s, brand new and manned by an army of eager young staffers in winter parkas. McDonald’s can’t heat their own place. It was also completely deserted. We were it for customers stoopid enough to walk that far in the cold for genuine simulated food. Our “food” in hand we sat down to eat our rapidly cooling cheeseburgers (with cucumbers instead of pickles) in 25 F comfort, huffing paint. Then the staff helpfully turned on the Backstreet Boys at headache inducing volumes to entertain us, because what lao wai doesn’t love the Backstreet Boys? We’d shout over the music to tell them to turn it down please. And they would, just a little. As it was the only food around, we ate there all three days of the convention. Our experience was exactly the same each time, including the yelling over the music to turn it down. Note to China: the progress over the last 30 years has been astounding, but build convention centers with decent places to eat and heaters.

Day 8 holy crap this place is big

Day 8 holy crap this place is big 3

Day 8 holy crap this place is big 2

Day 8 this is the smallest mcds in the world

Day 8 why put the real mcdonalds as far away as possible

Day 8 w5 under construction

Day 8 way to plan fellas

The interior of the McD’s was just as bizarre.

Day 8 mcds posters wtf

Day 8 mcds posters wtf 2

Day 8 mcds posters wtf 3

Day 8 rarest sign in china

With the first day of thee show successfully behind us, we head out into a bitterly cold Shanghai sunset.

Day 8 shanghai sunset

For dinner, we are off to meet friends at Shanghai Hooters. Yes, really. This turns out to be loads of fun. Mike, Julien and I meet up with one of our sales reps, Dan Welygan, who worked in our Shenzhen office for about 4 years. Also in our quintet is a classmate from the University of South Carolina now living in China. Many, many wings and beer later, I have a new found appreciation for Hooters. It was a bold decision to open this restaurant, as typical Chinese girls lack the requisite body type required of a Hooters waitress. And they have to be attractive and be able to speak English. A pretty small labor pool. Our waitress was very good, spoke solid English and really new how to work a room. A very bright young lady, she has a future in sales for sure.

Day 8 our waitress elva

Day 8 hard to find hooters in chinaDay 8 hard to find hooters in china

Day 9 – Second day of the show went as well as the first. Part two of Mike’s seminar was very well received and many of the attendees have stopped by the booth, several 2-3 times. After the show, we meet our web developer, a French graphic designer living in Shanghai, at a trendy coffee shop for sandwiches. This place was in a glittering new mall, still decorated for Christmas. My cameras does a poor job in low light, so my apologies for the quality of the photos.

Day 9 christmas decorations

Day 9 first of two ferraris in 2 minutes

Day 9 yep thats a christmas tree

Day 9 this is what irony looks like

So far no Chinese food in Shanghai. After the meeting, off to meet another USC classmate at The Boxing Cat Brewery, the nicest brewpub I’ve ever been to. As I was once in this business, that is quite a statement. It was in a 100+ year old home in the old part of Shanghai, beautifully refurbished. The brewpub was 3 stories, with a bar on the 1st and 3rd floors. It felt exactly like a British pub, with beer selection and menu to match. Since we had already eaten we did not order anything, which now that I know the chef was trained at Le Cordon Bleu in Paris, I heartily regret. I have a feeling it will not be my last trip. My, how far this country has come in just a few short years. However, even The Boxing Cat has moments that confound.

Day 9 were the heck do you want me to put it

Day 10 – Last day of show, and the pollution is pretty bad today. Traffic is light, and some exhibitors start packing up almost from the opening bell. We stayed until nearly the scheduled end at 5:30 PM, though we give up when they start dismantling the booth around us at about 5:10 PM. Global Sources has been good to us and we thought it the honorable thing to do to stick it out to the end, though honestly the show really ended around noon. Off to Pudong airport (which is even more gigantic from the outside and has the coolest road system connecting it I’ve ever seen) to catch our flight to Shenzhen. Our first Chinese meal of the trip is some very good Cantonese cuisine at the airport.

Day 10 shanghai pollution

Day 10 always a bad sign when the gates are in triple digits

 

Day 10 cantonese food chinese airport food is much better than usa

Day 10 cantonese food chinese airport food is much better than usa 3

Day 10 cantonese food chinese airport food is much better than usa 2

Day 11 – Worked all day to get caught up from the show. Verizon’s data service here stinks, a pale comparison to my old AT&T service (of course, that is reversed in the USA, which is why I switched). Many emails did not come through to my blackberry. I also discovered that Verizon is charging me $2/minute to RECEIVE CALLS. This was one of the specific questions I asked before adding the “China plan” for this trip. I have already written about how woefully trained their salespeople are, and this takes the cake. Since the trip began, I have been receiving calls from clients, family and friends – including a call a 3 AM from a client who had missed I was not in USA. My team in the USA is having words with Verizon about this, but let’s just say, it was a cute phone bill. China Mobile by comparison, charges nothing to receive an international call. Heck, their rates to MAKE an international call are less than Verizon. So, if you want to get in touch with me, send me an email and I’ll give you my China Mobile number.

I join Mike and Adam Supernant for dinner at a local place in Liantang.

Day 11 chinese donuts I like the fried ones steamed ones not so much

Day 11 gross

Day 11 very common to have fire at the table

Day 11 quite tasty tofu and pork

After dinner I was invited to join some of our Chinese co-workers at a nightclub. I was flattered to be invited and went along. After several hours, I had my first run in on this trip with the dreaded Mao’s Revenge. I am trying to tell it like it is for those of you who don’t travel overseas, and if this strikes you as TMI, it isn’t. You need to know what you are in for.

While western style “sitters” are becoming more common, squatters still dominate. In a sense this is good, as sitters are not as sanitary ( I mean, everyone else is sitting there too). But when you’re in an emergency situation and you are not used to squatters, this can get dicey fast. My advice for survival in these situations:

  1. Wear sensible shoes with good rubber shoes – I prefer Blundstones.
  2. Wear jeans. Avoid khakis – not the color issue but the way the pockets are cut. I always keep everything – wallet, keys, passport, phones – in the front pockets of my jeans.
  3. This is a very uncommon position for a Westerner. I have pretty strong calves and thighs, and have learned how to balance, but if you never done it before, try it and hold the position for 2-3 mins. It takes some getting used to and you don’t want to find out the hard way you can’t do it. Luckily the squatting position is more conducive to the situation at hand, and so things tend to go quickly.
  4. Carrying a small packet of tissues is a good idea. Toilet paper in a public restroom anywhere in the world is never a given. Handkerchiefs and socks (single use of course) will do in a crisis.
  5. Carry a bottle of prescription Lomotil or the generic. I always do and there is no OTC medicine that comes close. It WILL stop the drama.

My evening cut short, off to sleep. Day 12 is Sunday, market day in Liantang, and Mike and I head to Mian Dian Wang, or “Noodle Snack King”, my favorite fast food chain in the world. 14 line cooks actually making the food by hand. Total cost of the meal is about 60 RMB, or less than $9.

Mian dian wang

Day 12 mian dian wang

Day 12 mian dian wang 2

Day 12 mian dian wang 3

Day 12 mian dian wang 4

That evening, Mike threw a dinner party at his home. It was great to see old friends and an even better meal. Simply the best food I’ve ever eaten in China. Mike’s wife and the maid did all the cooking.

Day 12 two women in this kitchen in about 2 hours..

Day 12 two women in this kitchen in about 2 hours.. 2

Day 12 made this

Day 13 – Monday – Last night there was a little too much “medicinal wine”. Whenever you hear that phrase, run screaming in the other direction. After such an amazing meal, we needed something basic to calm the acid seas, so off to Subway (yes, really). A steak and cheese later and all is right with the world. With some lingering Mao’s, I head to the apartment to work from home. It was a glorious day, 70 F and clear blue skies with a light breeze.

Day 13 our apartment complex

Later Mike asked me over to finish up the leftover ingredients from the dinner party – there was no left over dishes, just raw materials. This is the modest result.

Day 13 a light meal

Two customer visits tomorrow and time at the factory.

All for now…

 

4 PM on a Friday

I come from the automotive world. People who don’t understand the automotive industry can’t fathom how completely different it is from every other industry out there.

The worst hour of the week in the automotive industry is 4:00 PM to 5:00 PM on a Friday. It is that nightmarish 60 minutes when Murphy’s Law takes shape and capers about like a mad, evil leprechaun bent on wrecking your weekend.

Why you ask, did I dread this hour? Why dread an hour that for every other person in every other industry is a clock watching semi-holiday where little to nothing gets done?

Because if something catastrophic is going to happen, it will happen at 4:00 PM on a Friday, never 8:00 AM on a Tuesday. The crisis always starts when there is no time to react, no time to rationally analyze the situation, no time to do anything but panic.

More times than I can count, the call would come in that there was a problem at one of our customers’ plants, and if we didn’t get parts to the line by 8:00 AM Saturday, they would go “line-down”, meaning the end of the world. The assembly line is shut down and the charge backs start at $100,000 per hour.

And when I got there, it was rarely our fault. Sometimes it wasn’t even our part that was to blame. I can remember one such trip to an assembly plant where we discovered that the problem had to do with a mating wire harness supplied by someone else. Our part functioned perfectly, but it was my wife and kids who got the short end of the deal when Daddy had to drop everything to drive several hours to work with the night shift QC tech to fix the (non-existent) problem.

I thought of this 4:00 PM phenomenon today, but in a good way. The last few weeks have been crammed with new clients contacting PassageMaker wanting to launch new projects, some of which have been on hold for a year or more. All want to get things going before the end of the year, as though the difference between now and January is critical.

Hopefully this is a sign of the recovery to come.

Headline – “China burns U.S. consumers again”

Here’s an interesting editorial from the Idaho Mountain Express (4 Nov 09), sent to me by Julien Roger of China Quality Focus, which is short enough to quote in full.

In their headlong rush for global respectability as a hybrid Communist-free market power, mainland Chinese masters of the world’s largest population omitted a vital function required of great industrial countries: manufacturing quality control.

U.S. consumers have been burned repeatedly by inferior, even deadly, Chinese products—lead-painted toys, toxic pet food and sickening seafood products.

It’s happened again. Chinese-made drywall used in construction is being investigated as the source of illness among U.S. homeowners. The drywall literally stinks and may cost homeowners plenty to replace.

Hundreds of thousands of mom-and-pop industries have appeared in the midst of China’s relaxed, free-enterprise attitudes. However, they’re mostly unregulated and have virtually no quality control.

U.S. companies that have swooned over less expensive goods have been importing these substandard products.

And during accelerated trade with China and the expansion of wars in Iraq and Afghanistan, the U.S. government cut the budgets of two important watchdogs, the Food and Drug Administration and the Consumer Products Safety Commission. In one FDA program, only 1 percent of imported products were tested for quality and safety.

Two urgent actions are required.

First, Washington should beef up product health and safety inspections on all imports, but especially those from China.

Second, Congress should remove incentives for U.S. companies to rely on overseas vendors for products, while creating incentives to revive robust domestic manufacturing that restores jobs and strengthens the U.S. economy.

I shall refrain from addressing the tone of the piece, but to address the substantive points:

  • Yes, there are quality problems in China, as there have been in any developing industrial base throughout history. It is foolish to deny it, just as it is foolish to deny that there is defective cable supporting the Brooklyn Bridge. As was beautifully recounted in David McCullough’s The Great Bridge, the cable manufacturing company owned by the principle engineer, Washington Roebling, was eliminated from the project because of politically motivated charges of corruption part of the way through stringing the the suspension cables. Despite the fact the fact that the competitor was behind the accusations and was known to be a purveyor of shoddy goods, the bridge was finished with his cable, which Roebling later found to be as brittle as straw. Thus over 100 years later, New York commuters are still relying on Roebling’s good cable to carry the load of the charlatan’s defective cable. Quality problems are endemic to the human condition. Just examine the quality of the legislation oozing out of Washington 200+ years after the ratification of the Constitution. At least there is reasonable hope that China will get better, not worse as their industrial base matures.
  • Yes, defective products have made it to the USA, and some are truly and legitimately defective. But others are not, simply rejected by the hyper-sensitive inspection criteria made up by the inventors of the Wiffle Ball Life. Of the truly defective ones, some are defective due to the mendacity of individuals, but some are also defective because of poor vendor management and poor quality control regimes on the part of the customers. At PassageMaker and China Quality Focus see this everyday, clients whose drawings specify no materials, who require no international standards to be met, and who often don’t even include critical dimensions on the drawings. They expect the Chinese factories to do ALL the heavy lifting while complaining constantly about price and lead-times.
  • “Hundreds of thousands of mom-and-pops” appear in a “free-enterprise” environment?Would that it were so here in the USA.
  • US manufacturers like me were driven to source in Mexico, in Eastern Europe, in Asia, by corporate buyers. It didn’t happen by accident. When you are explicitly told to outsource or lose the business, what do you expect?
  • Even if the author is correct about the budgets on the federal agencies (which I doubt, as nothing in Washington ever actually gets cut), I make a point of counting on the government for a little as possible in my life. The burden should rest on the producer and the importer, and in reality it already does.

As to the solutions offered:

  1. As stated above, I don’t count on the government for much, but we’ve got 17.5% effective unemployment and hundreds of billions of dollars borrowed from the Chinese sloshing around DC paying off one favored group after another. I imagine some could be applied to this worthy cause. Someone should get right on that. Maybe write an editorial about it.
  2. What incentives to outsource? I’ve been in American manufacturing all my life, and in my experience, our decision to start outsourcing over two decades ago was driven by market conditions and the direct orders of corporate buyers. We outsourced what made sense and retained our manufacturing capacity for those parts that were best made in the USA. For that “patriotic” decision I have never seen a representative from ANY government agency do anything but deliver a bill. I have nothing but utter contempt for the regulatory and tax authorities in this country, and anyone who thinks there is a single human being in Washington who knows how to “create” a manufacturing job is sadly mistaken.

The real solution to America’s manufacturing situation has to do with demographics, labor laws, regulations and taxes, and I’ve had enough of discussing it for a lifetime. Take it away, Jon Stewart (Not Safe For Work)!

However, there are simple and effective ways to ensure the quality of the products you source in China, and that is precisely what PassageMaker and China Quality Focus exist to help clients do. It is on the buyer’s shoulders to specify the criteria for the product, and it is the buyer who is responsible for establishing a quality control regime to make sure the criteria are met. Contact us and we’ll be happy to show you how it’s done.

How to use supplier audits to ensure effective China sourcing

Here’s a great interview with Mike Bellamy, founder of PassageMaker, discussing the importance of supplier audits and how PassageMaker and our friends at China Quality Focus can make them effective.

Governmental incompetence and the illusion of the opposite…

I’ve been watching the live-action version of Atlas Shrugged unfold in the USA in the form of The Great Recession with a profound sadness and morbid curiosity.

What is most striking is the sheer incompetence of the governments involved. California, once the beacon of American economic might is looking especially bad these days.

Here’s a fascinating article on Los Angeles’ epic bungling of what should have been the very cut-and-dry matter of medical marijuana distribution. Please trust me, it’s worth the time to read this long article – it is an excellent what-not-to-do guide to public administration. How in the hell do you screw up giving away dope?

And I remember reading this piece back in the summer, which started me wondering what happened to our formerly Golden State. Ouch.

This next article from San Francisco is probably Not Safe For Work (content, no pictures). I agree with the editorial writer in that it is jaw-dropping that a member of the Board of Supervisors is even considering such a measure.

Anyone want to start a business or relocate in California now?

Now the EPA has declared CO2 (that is the breath you exhaled just now while reading this) as a “pollutant” on par with NOx or SOx or particulate pollution. Such incredible power grabs – coinciding even more incredibly with Climategate and 17.5% true unemployment – have led American businesses to husband their resources for fear of what one Reuters columnist rightly calls “The Uncertainty Tax”.

Add to that uncertainty a unpopular push to “fix health care”, and it is no wonder that American businesses are sitting on their hands.

And as the coup de grace, Congressional leaders are now talking about placing a “global tax” on stock market transactions to fuel new spending. No word about paying off deficits or debts.Brilliant idea, Nancy.

The bolder American business leaders – like John Allison of BB&T and David Farr of Emerson Electric – are speaking out against the current governmental trends in the USA. Farr goes so far as to make the point plainly:

“Washington is doing everything in their manpower, capability, to destroy U.S. manufacturing,” Farr said today in Chicago at a Baird Industrial Outlook conference. “Cap and trade, medical reform, labor rules.”

Emerson, the maker of electrical equipment and InSinkErator garbage disposals with $20.9 billion in sales for the year ended September, will keep expanding in emerging markets, which represented 32 percent of revenue in 2009. About 36 percent of manufacturing is now in “best-cost countries” up from 21 percent in 2003, according to slides accompanying his speech.

Companies will create jobs in India and China, “places where people want the products and where the governments welcome you to actually do something,” Farr said.

I am not saying China is perfect. It’s not by any stretch. I remember when they repaved our road in Shenzhen 3 or 4 times in a row, for no apparent reason. But despite such silliness, the Chinese government writ large is certainly projecting an image of competence, even if it turns out to only be an illusion somewhere down the road. As they say, perception equals reality.

Writing this blog as someone who has investments in American manufacturing companies and in a China-based company serving clients worldwide, it should be obvious which market I find more predictable and worthy of further time, effort and money.

What a sad comment on the current state of affairs that is.

American competitiveness = American creativity

Yesterday I was in a perfectly justified foul mood at the rampant economic stupidity being foisted upon America by our semi-permanent governing class, but while I am disgusted with many elements of American society, I still have great faith in this country.

I am a minor stockholder in a local manufacturing company that celebrated 95 years in business last month. My family’s involvement goes back almost 50 years, which is quite a statement of longevity in itself, but 95 years is just extraordinary. Even more impressive is the growth and dynamism of this very old company in the last decade. Under the vigorous leadership of the “younger generation”, it has more than doubled in size while maintaining stellar profitability and taking on NO debt. Simply astounding to watch.

This company has been an international player in its core market for decades. They’ve been selling overseas for longer than I’ve been alive. While maintaining their core manufacturing in the USA, they were outsourcing before it was cool. The management has guided the company along this journey by focusing on product innovation, customer service, maintaining profitability and keeping debt to a minimum.

There’s been plenty of bad press about the USA recently – our relative decline in competitiveness, our gruesome debt burden, the decline of the dollar, rumors of a new global currency – and one could be forgiven for thinking the best was behind us and that it was now a Chinese (or Indian or Brazilian or pick your country) world. Perhaps I am guilty for spreading this sentiment.

While we aren’t going back to 1950 ever again, the USA will remain a major, if not the dominant player for some time to come. While atrocious government policies have wounded us, in a democracy those can be undone. Despite our demographic challenges, we are still the 3rd largest population on the planet, and by far the wealthiest of the major economies. All of our major competitors, including China and India have huge challenges of their own.

From where I sit, what will define the future is creativity, and in that the USA has an astounding advantage. I meet a great many people from all over the world, but the numbers of inventors from the USA dwarfs what we see from other markets. The downside is that no one would be crazy enough to start a manufacturing company in Salem, VA today as they did 95 years ago. Taxes, regulations, cost of materials and labor make it prohibitively expensive, not to mention a gigantic pain. The corporate buyers demand a world price, which drives manufacturing to China.

I’ve written before that I view my role at PassageMaker as having a moral component – helping to lift some the desperately poor people in China out of poverty, and helping companies around the globe grow and successfully bring their products to market in an intensely competitive world. If I didn’t believe this, I couldn’t do this job. It is very easy to blame the outsider for all your problems, but I the truth is always more complicated and usually involves looking in a mirror.

If the crowd in Washington want to keep this country in manufacturing, they won’t do it with protectionism. They can do it by getting out of the way – in the form of reformed labor laws, rational regulations, and lower taxes – but it is just so much easier to blame the Chinese instead.

Stomach of Iron, Liver of Steel (I wish)

As I look at the possibility of returning to Asia for an extended trip in the near future, I can honestly report a piquant combination of excitement and fear.

Excitement because it has been too long since my last trip, and I have missed China and Singapore.

Fear because I am not sure how much abuse I can take. I’ve mentioned the mixed pleasures of the Chinese business banquet before. You really can’t escape them forever.

I don’t drink coffee, can’t stand sodas and am no fan of hard liquor or wine. On the drink front, that pretty much leaves me with bottled water (suspect in China), hot tea (perfectly safe due to the “rolling dragon boil” required to brew it) and beer (bottled, carbonated and alcoholic = safe to drink).

For health and productivity reasons, when in the USA I tend to stick to decaffeinated iced tea and non-alcoholic beer. It’s a party a minute around here, but there are no such drink options in Asia.

Add to that the food sanitation and spices, and I’m pretty certain to be in for some “rapid weight loss programs”.

Don’t get me wrong, I am almost quaking with excitement at the prospect of seeing old friends and eating all my favorite dishes. Whenever I am in Asia I feel energized like you just don’t get in the USA. But I don’t stay in upscale hotels or dine exclusively at Western restaurants. Life is short and you’ve got to dive in to enjoy it, damn the consequences.

So heavily laden with Lomotil and Pepcid AC, off I head to my favorite part of the world. Now if someone would just tell my digestive tract.

The “Sweet & Sour” China experience

Andrea Martins, our sales representative in Brazil, lived in China for 25 years. She makes Mike and I look like amateurs when it comes to the crazy China stories.

She has my favorite term for dealing with China – “Sweet & Sour”, like the famous pork dish. During our regular calls, she will say such-and-such a potential client has had a “sour” China experience and wants our help to get to “sweet”. More food-borne analogies, I know, but this time it’s not my doing! And she sounds wonderful saying it in a Brazilian accent, so there.

Recently, a potential client decided to visit us in China without letting us know in advance. They dropped in to see us towards the end of their trip, thoroughly dispirited with their journey thus far – didn’t like the food, bad hotels, creepy new Chinese “friends” approaching them on the street, etc. They were desperate for someone to treat them right and handle their requirements in China with professionalism.

I have no idea why people assume that China is going to be easy. What, did you think you could learn Chinese on the plane ride over? There are thousands upon thousands upon thousands of words printed daily on the challenges China poses, and yet we regularly see otherwise savvy clients naively blundering about as though nothing bad is going to happen. After the inevitable does happen, we are happy to help get things moving again, but it is so much simpler to do it right the first time.

And now, because Sweet & Sour Pork is one of the very few dishes that appears on “Chinese” restaurant menus in America in something close to its original form, here’s a link to a pretty good recipe. Enjoy!

Climategate and pollution in China

I’ve written about the ghastly pollution in China before (here, here, here, here and here). With the recent bomb of “Climategate”, much of the core data supporting the theory of anthropogenic global warming (AGW) has been called into question. I am not going to get into a debate about AGW, or whether a trace gas like CO2 is something to worry about, but I am concerned that Climategate will take the the focus off the need to reduce pollution worldwide, especially in China and India.

The big immediate danger to humans in China is not a potential, theoretical increase of 1 degree Celcius, but rather toxic air, land and water. Vast amounts of coal and diesel are consumed everyday, all of it burned inefficiently in technologically primitive power plants or wretched Dong Feng trucks. No wonder so many Chinese people smoke (an estimated 70% of men); with that much soot, why the heck wouldn’t you smoke? If you don’t believe me, check out the photographs in this month’s National Geographic article on Xinjiang province (sorry for the link, but NG marks it hard to look at the pics if you don’t pay – freeze the video about 9 seconds in). I don’t know about you, but when the sky is the color of cat mess, CO2 is pretty far down on my list. And don’t get me started on the water pollution.

India has announced in advance of Copenhagen that they won’t be signing anything (heck, even Al Gore isn’t bothering to go). I am sure the Chinese will do the same. And there is no way the US Senate would ratify Copenhagen when they unanimously voted down Kyoto.

From my perspective, worrying about what might happen years from now and proposing fantastically expensive fixes to what may not be happening, detracts from practical efforts to mitigate what IS happening right now. I don’t need a climate model to tell me the Asian Brown Cloud is real – I can see it, smell it and taste it (*cough*).