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Trade Show Season 2009 is different

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In years past, the China trade shows were dominated by American buyers. What we’ve seen at the trade shows in April 2009 and so far this October is an increase of attendees from the developing world. It is not for nothing that PassageMaker opened our first two satellite sales offices outside of the USA in Mexico and Brazil.

This article from the NYT provides a good overview of the current situation. Key paragraphs:

As throngs of prospective buyers swarmed the exhibitions, equal to five times the floor space of the Empire State Building, Chinese exporters were upbeat. By keeping China’s currency, the renminbi, tightly yoked to the weak and weakening dollar, Beijing had made Chinese exports increasingly competitive around the world.

“We are very confident,” said Liu En Tian, the marketing manager of the Huasheng Jiangquan Group, a manufacturer of ceramic tiles in Linyi City. “Already the buyers who are coming this morning are more than last year.”

Like those of many Chinese manufacturers, his company’s exports fell by nearly half last winter because of the global economic slowdown, but they are now down only 20 percent from their peak more than a year ago because of a surge in sales to South America and the Middle East. “The economy will get better very soon” around the world, Mr. Liu said. [ed. – emphasis added]

While Washington seems hell-bent on borrowing / printing / spending money in reckless abandon, almost as though they want to destroy the dollar and the rest of the USA economy (much to the horror of American businessmen like me), other markets around the world are recovering quite well. It seems that many nations know that Keynesian economics is bunk without having to try it out each and every generation.

I’ve avoided commenting on the decline of the dollar, mainly because it feels like commenting on a slow motion video of a train full of children hitting a bus load of nuns, but as a global company PassageMaker is working daily to position ourselves to take advantage of the global rebound. We have sales representatives in Mexico, Brazil and Europe and are interviewing for sub-Saharan Africa, India and Australia. Like it or not, China is a global player and PassageMaker is well positioned to help our clients succeed in China. Please contact us an let us know how we can be of assistance.

How to make a BLT

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Years ago I saw a cookbook in Taiwan, written in Chinese, that taught our intrepid Taiwanese housewives how to make such standard American fare as the BLT (that’s Bacon, Lettuce and Tomato sandwiches for the non-Americans) and the PB&J (Peanut Butter & Jelly sandwiches). It had never occurred to me that anyone in Taiwan would (A) require instructions for such basic American fare or (B) want to cook it. I can’t really remember why I didn’t buy it – probably my student budget – but I regret that decision often.

Regular readers of this blog know I study food. Cuisine is the most basic cultural art form. Every culture, no matter how primitive, develops its own distinct cuisine. You learn a lot about someone by trying their food.

Asking an American how to make a BLT provokes a guffaw, but I’ve had exactly the same experience in reverse when I ask Chinese folks how to make the core dishes in their cuisine. BLT is every bit as literal as my favorite Chinese dish, 拍黄瓜, “banged up cucumbers”, which describes how you use the flat of the knife to lightly crush the cucumbers*.

Cultural assumptions greatly complicate international business. Foreign expectations of how things are in China are nearly always wrong. PassageMaker has studied the culture in China for more than an decade and our company exists to help our clients be successful in China.

We developed the Sourcing Feasibility Study to identify a wide range of capable vendors. Our Vendor Coordination services can be customized to support almost any task the client requires. Our Assembly Center was started to bring the critical Assembly-Inspection-Packaging functions in-house where they could be managed exactly to the client’s requirements, as documented in the Product Quality Manual.

While exploring foreign cultures – especially through cuisine – is one of the great adventures in life, it is a bad idea to try to learn the business culture of a foreign country on the fly. When your money is on the line, you need an experienced guide like PassageMaker.

* – Pai Huang Gua – “Banged Up Cucumbers”

4 small pickling cucumbers, washed and chilled – make sure to use fresh, crisp cucumbers

6 cloves garlic, finely chopped

1/4 tsp pickling salt

3 tbsps black vinegar (available at Asian markets, substitute white vinegar if unavailable)

2 tbsps sesame oil (3 tbsps if no hot sesame oil)

1 tbsps hot sesame oil (optional – available at Asian markets)

1tsp hot sauce, preferably Chili Garlic sauce or Sambal Oelek (optional – available at Asian markets)

Wrap cucumbers in plastic wrap and using fist, cutting board, rolling pin, flat of a cleaver, etc., smack the the cucumbers until they split. Unwrap and coarsely chop into large chunks. Salt the cucumbers and garlic in a bowl, drizzle liquid ingredients one at a time in order over the cucumbers and gently mix with a spoon. Do NOT cover and shake or otherwise try to completely blend liquid ingredients. You do not want to create an emulsion, but rather a layered sauce. Serve immediately as a cold appetizer.

Brett Favre = It’s Awesome Time

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Short post tonight.

I am a Packers stockholder. I love the Packers and I hate the way the divorce with Brett Favre went down two years ago.

Tonight, in his 19th season in the NFL, he put the smackdown on his old team. One week from his 40th birthday, he showed the whole world how it’s done.

Brett Favre on a football field = Awesome Time. Aaron Rodgers and the Packers played one hell of a game, and but for a bogus “interference” call in the 1st half that cost them a touchdown, it would have been a game. But at the end of it all, there is nothing to say but that Favre schooled them.

I hope that 9 years from now, Mike Bellamy and I can look back on our career and say we were even half as good.

At this point, I’m supposed to give you a bunch of links on how PassageMaker can help you with your project. Tonight, I won’t. You can find them on the website if you want. Instead, let me just say congratulations to Brett Favre. He’s beaten all 32 teams in the NFL, something no one in the entire history of the NFL has done.

A legend walking the earth deserves nothing less than my complete respect.

BRETT FAVRE IS THE MAN.

It is a huge misconception that creativity is confined to “the arts”

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My mother, who passed away 24 years ago today, was a professional artist. Her grave marker says “Artist-Wife-Mother”, and I do not think that is a false order.

I wanted to emulate her when I was younger and even took private lessons from her student, Ann Glover. There was a brief period in my late teens when I would say I was on my way to being a decent artist or illustrator.

Then I lost interest in creative pursuits like “art”. It was not until years later that I realized that creativity is not restricted to the “arts”.

PassageMaker serves a wide variety of companies, many of which were founded by entrepreneurs and inventors, and many of which participate in Fortune 500 supply chains. What I find constant among these clients is the brilliance and originality – the artistry – they bring to their designs and products. Creativity is not limited to the “arts”.

PassageMaker created our network of Endorsed Service Providers and formulated our service offerings – Sourcing Feasibility Studies, Vendor Coordination and Assembly-Inspection-Packaging – to support those companies bringing innovative products to market while protecting their Intellectual Property from the piracy that sadly is all too common in China.

I hope that if you are reading this, you will see clear to entrust your creative product concept to us and let us help you make it a reality.

No, it’s a want to issue

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Cogitating on the 60th anniversary of the PRC, one cannot fail to consider the current state of the USA, and as a microcosm, our domestic automotive industry.

Yesterday, it was announced the deal with Penske to buy Saturn fell through, and so dies another GM marque. In this case, I have a personal interest, as I drive a Saturn. I bought it on one gruesomely hot day years ago. I remember the day quite clearly, as at the time I was traveling quite a bit and had rented a series of then-current Detroit iron to evaluate the offerings. I had settled on a Dodge product (yes…I know), and due to the repairs required to keep my very old Ford running, we could delay no longer. So with pregnant wife and little girl in tow, we went car shopping.

Before you cut in to to ask why Mr. China, Mr. All-Things-Asian here has a problem with foreign brands, just don’t. It’s complicated and irrational bordering on schizophrenic. Just stick with the story.

And before you interrupt again and ask why Mr. Captain-of-Industry drives a Saturn, here’s why – cars, like horses, are for riding. For basic transportation. When one dies, you get another one. If you need to a car to show the world how cool you are, you’re not. If I show off anything in this world, it’s my wife.

But I digress.

Now, I’ve lived in Singapore, Taiwan, and spent considerable time in South China. I grew up working summers in Virginia factories without A/C. I cut my teeth as a manager in a South Carolina metal stamping plant that (surprise) got hot in the summer time. I can handle the heat, but the parking lot of that Dodge dealership reminded me of the scene from Lawrence of Arabia where they have to cross a stretch of desert called “The Anvil of the Sun”. My daughter, not yet 3 if I remember, just wilted. I thought my wife was going to have heat stroke. The BEST part – the part that still informs my concept of customer service to this day – was that I could see the entire sales staff in the air conditioned office, drinking sodas and looking out the window at us – the only customers in the place – in-between telling jokes to one another and calling their girlfriends on the company phones.

After 10 minutes of cooking my family and waiting for someone to bestir themselves to come sell me a car, i.e., do their jobs, I loaded the family into the wife’s Oldsmobile (yes…I know) and drove 300 yards down the road to the Saturn dealership. One (1) hour, several bottles of cold water and snacks to reconstitute the toddler in the A/C, later and I had a Saturn. Yes..I know. It’s not a great car, but it is fast enough, gets decent mileage and is (apparently) invisible to radar. 100k+ miles later, and it is still going strong. In that time, the dealership has always been friendly and professional. I will sincerely mourn seeing these hardworking and decent people lose their jobs. They have done nothing wrong other than sell and service a decent people-mover at a fair price.

And the Dodge dealership? It got its franchise revoked by the Obama administration. Now when you drive by its empty lot, you are greeted with huge banners saying “YES, WE’RE STILL HERE! PARTS DEPARTMENT STILL OPEN!”. I won’t comment on the political or economic wisdom of that move by the government but as far as it applies to this particular dealership?

good.

All this was put into sharp focus by this brilliant piece by the Autoextremist.com about Cadillac’s attempts to return to the top of the heap. As the article points out, Cadillac’s recent product offerings are excellent, but after so many years mediocrity interspersed with chunks of mind-blowing awfulness, the recent successes only get you back in the game. You have to maintain this level and build on it for at least a decade or more before you have a chance of getting back on top. And the author, Peter M. De Lorenzo, fears as I do that Cadillac won’t. Here are the key paragraphs:

Because it will take an all-consuming passion of total commitment – a relentlesswant to, if you will – on the part of the entire organization, something that currently only appears sporadically and only in some quarters of the division.

It will take a clear understanding of who they are and a clear vision as to where they want to go (an idea that perhaps sounds a bit too simplistic, that is until you’ve been inside some of these organizations and realize how difficult it is to get everyone on the same page and pulling in the same direction).

It will take a focused consistency in their design and engineering regimens and particularly in their product execution. What does that mean? If Cadillac is to be Cadillac again, the people toiling in it need to understand that the division’s recent resurrection to respectability is only that, respectability. It’s not a ticket to “the club” yet. Yes, the CTS-V is an incredibly outstanding machine, but it shouldn’t be the culmination of where Cadillac wants to be, because it’s just the beginning. Every single new Cadillac must bristle with the kind of creativity and executional excellence that’s evident in the CTS-V if the division is to attain real greatness.

If Cadillac wants to get back – all the way back – to the reputation it once enjoyed and thrived upon then it has to put its stake in the ground and understand that the raison d’etre that once propelled it to greatness, that brand image that was seared in the consciousness of consumers for decades has to not only be renewed, it must be embellished and enhanced for this new age.

Laughable? Not from where I sit. This isn’t a technology issue or a talent issue, because Cadillac has everything it needs to succeed as a luxury-performance automaker.

No, it’s a want to issue.

China was once the top of the heap. 1000 years ago, anyone visiting this planet would have taken one look at the Middle Kingdom and decided that was the place to be. And then they stumbled, became complacent and fell far behind. Now they are charging back. And there is no question in my mind that they have the want to part of the equation figured out. Frankly, sadly, I’m not so sure about America anymore.

As I’ve said before, China is back, and saying so isn’t anti-American or pro-Chinese. Mike and I saw this coming more than 15 years ago and planned accordingly. We realized then, as I cautioned students at my alma mater last month, there are easily 3 billion people on this planet who want your job. The world is an intensely competitive place. If you want to succeed you have to get the want to part down.

PassageMaker has grown in 10 years from one guy with one customer to a company of 150 people with customers around the world. Mike and I and the rest of the PassageMaker team have the bricks-and-mortar and the technical capabilities, either in-house or through our Endorsed Service Providers to make your project a success if China sourcing is required. But most importantly, for us, want to is not an issue.

The 60th anniversary of the PRC

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I still have my Deng Xiao Ping commemorative pocket watch celebrating the 50th anniversary. I remember I bought it in Beijing the day my lovely wife and I found out she was going to have our first child. A blessing she used later that evening to get out of a drinking contest she’d accidentally started by saying “gan bei“, literally “dry glass” or bottoms up, to one of our friends without understanding the full reciprocal connotations of the toast. The ensuing row over violated etiquette, amped up by her joyous announcement, meant that the celebratory burden fell on me. Fell rather hard as I remember. Nothing like being lost in Beijing at 3 AM, hammered on tequila and baijiu in the dead of winter. Again, guys, appreciate you leaving me like that. No hard feelings, really. 10 years later and I’ve almost moved on. Thankfully, my wizened little guardian angel in the Mao hat helped me flag a cab – the coal smoke was so bad, visibility was maybe 100 ft, not ideal cab-flagging conditions – and so my daughter has her daddy around today to tell her to stay in school and avoid such ludicrous situations.

There will be many, many, many, many articles written about this historic event. The transformation of the People’s Republic over the last 30 years has been particularly extraordinary; indeed it is unprecedented in human history. 30 years ago the GDP of the PRC ranked it as one of the poorest countries in the world. In the last 30 years, the PRC has industrialized and urbanized with astonishing speed. Roughly the population of South America moved from the countryside into brand new cities all over the country. Shenzhen, our corporate hometown, has grown from a fishing village to a city of 14 million souls.

I am not a panda-hugger, nor am I am dragon-slayer. People are people the world over. I became fascinated with Asia in general and China in particular nearly 20 years ago, because such change and dynamism is…fascinating. How could you not be amazed by so many people rousing themselves after centuries of enforced slumber?

Napoleon wrote, “when China wakes up the world will tremble”. I have certainly seen and felt the earth move during my lifetime, and was lucky enough to guess early on which way the ground was shifting. Mike Bellamy and I went to Asia at the same time; he to Japan, I went to Singapore. But from those separate vantage points we both saw the same thing and acted on that new-found knowledge.

China is here to stay. It is not anti-American or pro-Chinese to say so. PassageMaker’s goal is to help foreign companies successfully do business in China. Let us show you how we can make your project a success.

A ship is safe in a harbor, but a harbor is not what a ship is for

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The title of this post is one of my favorite sayings. As an entrepreneur, it reminds me to keep trying, even when it is hard; especially when it is hard.

These days the world economy is a tempestuous sea, but PassageMaker is growing and thriving. A “passagemaker” is a small motor boat capable of crossing the open ocean; I think Mike Bellamy chose an appropriate name for the company.

Even in this time of chaos, new clients contact us daily. Even though budgets are tight and the margin for error is far smaller than just a year ago, those entrepreneurial passagemakers know that if they ride out the storm they will be in a much better position to prosper when the storm ends. And they won’t be smashed to bits tied up to the docks.

Harbors are over-rated. There is no such thing as a safe job anymore. The closest thing to a job for life is the value you create for yourself as an entrepreneur.

Why do so many people source in China? Because tooling prices are 10%-25% of USA. Because component prices are 25%-50% of USA. Those are great enticements, but a Chinese supply chain takes far more time and effort to establish than an American one. In this economy, budgets are tighter and risks are higher, and you can’t afford the learning curve to figure out China on your own. Now more than ever entrepreneurs need a real PassageMaker to help them navigate the storm successfully. Contact us and let us show you how our Sourcing Feasibility Study, Vendor Coordination and Assembly-Inspection-Packaging services help our clients achieve success in China.

The end of the dollar and the rise of the Chinese consumer

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When Mike Bellamy and I chose the China track at the University of South Carolina in 1997, it was still an avante garde career move. Both of us had been to Asia and knew China was going to play a key role in the 21st century. Neither of us thought we’d be reading articles like this only 9 years after graduating:

From the Telegraph (UK), “The dollar is dead – long live the renminbi”

I try to stay away from politics in this blog, but regardless of your party affiliation, you can’t honestly avoid the conclusion that Washington (and London) have spent too much money in the last decade. This profligacy was matched by most individual Americans, as the country went on a credit-fueled bender. I remember feeling the odd man out for not having a $400k mortgage. But while individual Americans seem to have learned their lessons, and are now saving and investing at record rates, the US government has not learned and continues to issue debt at an astounding clip – $7 trillion in debt in 2009 alone.

This is not about politics, but simple math. The USA cannot afford to spend this money, and the political class is failing the polity by not acting responsibly to control this accumulation of debt.

To date, the producing nations – Germany, Japan and most importantly, China – have underwritten our debt to keep the USA consuming to fuel their export-driven growth strategies. But reality is going to force a brutal readjustment and a change in behavior for both the producing and the consumer nations:

A seminal shift in behaviour is being forced on the deficit nations [i.e., USA, UK, Spain – ed.] where, despite massive fiscal, monetary and financial system support, there is a continuing scarcity of credit and a growing propensity to save. Neither of these two constraints on demand will reverse any time soon.

This, in turn, is forcing change on surplus countries, whether they like it or not. Export-orientated nations [i.e., China, Japan, Germany – ed.] can no longer rely on once profligate neighbours to buy their goods. Against all instinct, they are having to stimulate their own domestic demand.

The most startling results are evident in China, where retail sales grew an astonishing 15.4 per cent in August. Fiscal action has succeeded in boosting consumption in Germany, too, despite mistrust of what one German politician has dubbed “crass Keynesianism”. [emphasis added – ed.]

So what does this mean for PassageMaker and those wishing to do business in China? From the sourcing point of view, there will likely be inflation in the renminbi, but I expect that to be outpaced by dollar inflation. No matter how you slice it, China is here to stay as a manufacturing center. And the Chinese are in much better position to enforce sound monetary policy with so much cash on hand. In this inflationary environment, PassageMaker’s services – Sourcing Feasibility Studies, Vendor Coordination and Assembly-Inspection-Packaging – are more valuable than ever. Think of them as an insurance policy or a hedge; you simply cannot afford the risk of a China learning curve any longer.

Though there will be increased wages for Chinese workers, especially in coastal zones, the reservoir of inexpensive labor is too vast to be exhausted for decades. China will retain the edge on cost of labor. And with the US government beholden to the Chinese, don’t expect any protectionist measures to last long. I do not expect a broad resurgence of US manufacturing.

BUT…for producers of unique products, especially agricultural products, like wine or coffee, this could be a grand time to start selling to China. As the Chinese middle class begins to consume to fill the gap, there is a huge opportunity for foreign firms to provide those goods. PassageMakercan help with just this, helping clients identify, establish and manage sales and distribution networks in China.

The future is as clear as mud, but I know we are all in for an interesting ride. In these times especially, you need to work with a company with solid experience in China. I hope you will consider PassageMaker and SafePassage as your business partners in an increasingly uncertain world.

The importance of food (and drink); or learning to love Pig Brain Soup

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Business books aplenty have been written on the importance of guanxi or relationships in China. And most of them are boring, so I won’t add to the pile.

From my personal experiences over the last 15 years in Asia, as a round-eye you build relationships by eating anything put in front of you and drinking too much. And bringing Purchase Orders.

Thankfully, I like nearly everything I’ve eaten in China. I’d traveled extensively in the USA, Mexico, Europe and Africa before I ever set foot in Asia, but my first night in Singapore in 1994 changed my whole life. And the food was what really hooked me. Prawn mee soup, jumbo prawns cooked in a banana leaf and Tiger beer at 2 AM in Newton Circus. I’d never seen any of this food before, didn’t know it existed, never seen a Chinese spoon, never used chopsticks, yet it was all like mother’s milk. I learned to use chopsticks in about 30 seconds, and to this day I eat noodle soup for lunch at least 3-4 days a week. Tiger is still my favorite beer.

From this experience, I’ve become a more adventurous eater (and drinker) than you’d expect for someone raised in Salem, VA. That adventurousness has served me well in China. When you visit a supplier, it is de rigour that you be hosted for a lunch or dinner banquet. Chinese street food is generally light and nutritious (oh, how I miss the vegetable dishes at the little restaurant around the corner from our office), but the banquet dishes are lavish, heavy and designed to show off and feel you out. Oh, and get you blind drunk in the middle of the day. The Chinese eat darned near anything, especially the Cantonese, so get ready for offal, strange ingredients and powerful flavors and scary textures.

If you hold up under this onslaught of unfamiliar cuisine and frankly toxic baijiu, you pass the test and provide your hosts with some entertainment. If you wind up in the hospital from food or alcohol poisoning, it is even more entertaining for them. But if you flat refuse to partake for anything other than religious reasons, you establish yourself as a wet blanket not to be taken seriously.

So what to do if you just cannot summon the courage to drink snake wine or eat pig brain soup? Option 1 – stay home and let the PassageMaker team deal with the vendors. Option 2 – come to China but let us arrange your trip and we’ll make sure you are not exposed to the scarier fringes of Chinese cuisine.

PassageMaker wants to make sure you enjoy your experience dealing with China, even if you never visit. And I frankly want to keep my record for days on an IV and days hungover after a banquet (4 and 5 respectively) intact.

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P.S. – It’s really delicious. One of my favorite dishes. I’m serious.

China’s Fuzzy Math…Who do you trust?

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“China’s growth figures fail to add up” says the headline. And the sky is blue, you say?

“China’s gross domestic product figures are among the world’s most closely watched since they can move markets or boost hopes of an imminent recovery.

But the latest set of first-half numbers provided by provincial-level authorities are far higher than the central government’s national figure, raising fresh questions about the accuracy of statistics in the world’s most populous nation.”

China has made great strides (herculean is a better word) over the past three decades catching up to the rest of the world, but its statistical reporting, shall we say…lags. Just a bit. The USA’s is laughable at times as well, so I am not picking on the Chinese.

So what does one do when you can’t trust the official numbers from the Chinese provinces? The same thing you do when you are skeptical of numbers posted in other countries (did I mention the USA “unemployment rate”?). You go and have a look for yourself; you do your own research; you dig around for the truth. But what with the cost and indignities of international travel, how much better to have an “office” in China to do such looking and watching for you. That is precisely why PassageMaker developed the idea of the Sourcing Feasibility Study. If you could trust everything you read on a sourcing website, getting your products made in China would be a snap. But of course just as the “official” numbers are rarely accurate the first time out, you have about an equal chance of finding a fully qualified vendor on a typical sourcing website as you do finding true love on an internet dating site. And are you gullible enough to give your credit card number and banking information to that lovely lady you just met online? Think before answering…

Excellence is the consistent execution of a good plan. PassageMaker’s Sourcing Feasibility Study allows you to see a range of qualified vendors, not just somebody’s cousin’s stamping factory or their best friend from high school’s plastics shop. In this way, we help you establish the true “China price” from solid supply chain partners, without hidden mark-ups. By controlling which vendors see your design, we protect your IP, and by acting as a “Quality Gate” we make sure you only pay for good product.

Combining PassageMaker’s services with those of our friends at China Quality Focus (factory audits) and GloBIS (financial due diligence), and you can get a very clear picture of your Chinese supply chain.

Our motto is TRUST & TRANSPARENCY, so you know you can count on our figures!