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Why I love the circus

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One of my favorite things to do is take my family to the circus. I like them all, but my favorite is Cole Brothers under the big top, the way a circus should be.

I love circuses because you can’t fake it. Everything is live, and it all depends on the elegant combination of individual skill and teamwork.

PassageMaker has grown in a decade from one guy (Mike Bellamy) working in his living room after his day job with one customer (me), into a company with over 150 employees and a global sales force. We serve clients in nearly every conceivable market segment; we participate in supply chains ranging from global OEMs to the next hit on DRTV; and even in this recession, we continue to grow. Our facility in Buji includes a highly sophisticated medical assembly center that specializes in sterile manufacturing, assembly, inspection and packaging of certified medical products used around the world (“clean room” doesn’t really sum it up).

There are a million trading companies in China, all who claim to be the right partner for your business. But there are things you can’t fake. When you work on the high-wire without a net, you’d better be for real. Our track record proves we are, so sit back and enjoy the performance.

Why go it alone?

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Random thoughts at the end of a great week, one where long-delayed projects resumed, new customers signed on, and some HUGE potential clients visited our facilities in Shenzhen and Buji:

  1. While I don’t think for a minute the recession is over, I am amazed at the resilience of the entrepreneurs we meet in this business. Creative, driven people with amazing ideas. Coming from the soul-draining purgatory of automotive, the best part of being PassageMaker’s global sales chief is the opportunity to work with such people in so many markets.
  2. Even though a significant percentage of our clients are inventors and start-ups, some of these new prospects have been working in China for 15+ years. They see PassageMaker’s bricks-and-mortar; our skill navigating the Chinese VAT system; our proven ability to manage supply chains for everything from medical products to toys; our commitment to “Trust & Transparency“; as game-changers that can simplify their lives, reduce costs and generally provide piece of mind. While PassageMaker doesn’t claim to eliminate all the difficulties of doing business in China, we could not have grown as we have if we could not deliver on our promises.
  3. At the close of this amazing week, I heard the story of a local businessman who just returned from his first trip to China. He doesn’t speak the language, but felt obligated to go to try to convey his expectations to the suppliers. He was basically told by his hosts not to expect too much, this was China after all and quality problems happen. While in a sense this is wise counsel, what a sad statement. I would advise anyone who loves to explore and travel to visit China, but not for that reason! PassageMaker and our friends at www.SourcingServiceCenter.com are in business to help insure quality and keep our clients at home with their families. You can bet I will be contacting this gentleman first thing Monday morning to offer our services!

Great weekend to all!

The “Wiffle-Ball Life”

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Author P.J. O’Rourke once called America’s obsession with safety the quest for the “wiffle-ball life”. I remember when I was a child, backyard contact football was played without pads or helmets, and NO ONE would have ever been caught dead with a bicycle helmet on. My school gym class included “war ball”, a particularly violent and Darwinian variant of dodge ball. The kids in my neighborhood even played a game where you tried to throw a football to stick in the front spokes of the opponent’s bicycle as he rode by. Follow the physics on that one. I am pretty sure I as the parent would be jailed today if my kids were caught doing anything similar. While that game was admittedly really, really, really stoopid in hindsight, they are still fond memories, and frankly such experiences toughen you up.

Today I spotted this collection of silly federal safety recalls, there’s a new set of regulations that might be interpreted to penalize individuals who sell recalled goods at yard sales. God forbid anyone use a car seat where an accessory pillow partially cover a warning label. It’s a wonder any of us survived to adulthood.

Now what does this have to do with China sourcing? Well, look at the products. I’m betting at least 5 of the 7 were ‘Made in China’. Based on that assumption, and then examining the silliness of some of these recalls, is the Chinese reputation for defective or dangerous products deserved?

Sadly, like most stereotypes there is plenty of truth in this one. Chinese factories do cut corners with dangerous and tragic results. But part of that stereotype is overblown and frankly unfair. Buyers with poor designs, who don’t take the time to complete their material specifications or set up proper Quality Assurance protocols, to say nothing of bone-headed government bureaucracies, should shoulder at least as much blame as the Chinese, if not more.

So, what’s the lesson here? When sourcing in China, the buyer has to assume responsibility for making sure the products meet the applicable regulations of the importing nation. PassageMaker’s system has been built around this philosophy. Through our network of Endorsed Service Providers, we can assist clients at nearly every stage of a product’s life cycle, including recommending engineers to make sure the design database is complete. We help our clients identify capable vendors with a Sourcing Feasibility Study and then help them write their Product Quality Manual, which details all the dimensions, specs, and regulations a product must meet. PassageMaker can perform many tests at our Assembly Center in Buji, but what we lack can be done at preferred rates by our friends at STR. What quality control services or factory audits PassageMaker cannot provide can be performed ably by China Quality Focus.

In short, the buyer has to be proactive about specifying the requirements and then must verify that they are met. Assuming the vendor will know all the applicable regs and trusting that everything will be A-OK is naivete bordering on negligence.

Yummy chicken feet, tires, and the global economy

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The NYT article, “Chewy Chicken Feet May Quash a Trade War”, leads me to mull over the potential trade dispute over tires and chickens:

“China is threatening to cut off imports of American chicken, but poultry experts have at least one reason to suspect it may be an empty threat: Many Chinese consumers would miss the scrumptious chicken feet they get from this country.

“We have these jumbo, juicy paws the Chinese really love,” said Paul W. Aho, a poultry economist and consultant, “so I don’t think they are going to cut us off.”

Chicken exports were thrust to the forefront of American-Chinese trade tensions on Sunday when China took steps to retaliate for President Obama’s decision to levy tariffs on Chinese tires. The Chinese announced that they were considering import taxes on automotive products and chicken meat, a development that some trade experts feared could escalate.

American executives expressed concern about losing what recently has become the largest export market for their chickens, one that is expanding rapidly as the Chinese population grows more prosperous. But the executives also expressed relief that, so far, Chinese importers have told them to keep the feet and wings coming.”

Most people look to China as a source for low-cost goods, but I don’t think many USA or EU clients are looking to buy tires without a name brand to assure them of the quality of this most important piece of safety equipment (my wife runs Michelins for instance). But while Chinese products have a reputation for poor or inconsistent quality (after all this is why PassageMaker assists clients with inspections and it is the ONLY business for our friends at China Quality Focus), foreign products often enjoy a privileged place in the Chinese marketplace. Especially foreign agricultural products, and it is far harder to copy a Georgia pecan, Scotch whisky, Spanish wine, etc. PassageMaker’s can help help foreign sellers research the Chinese market and establish distribution partners, much like a Sourcing Feasibility Study in reverse.

Let’s hope this increasing integration of the USA and PRC economies encourages expeditious and rational resolutions to such trade fights.

Let’s have a trade war! Or, what to do when you tire of chicken…

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So we now have a brewing trade row over Chinese tires and American chickens:

“China announced dumping and subsidy probes of chicken and auto products from the U.S., two days after President Barack Obama imposed tariffs on tires from the Asian nation.

Chinese industries complain that they’re being hurt by ‘unfair trade practices,’ the nation’s Ministry of Commerce said on its Web site yesterday. The dumping investigation relates to poultry alone, a spokesman said in Beijing today. The ministry didn’t specify the value of imports of the products.”

This is something of a daring move on the part of the American administration, given that China is the largest buyer of USA debt, and thus underwrites Washington’s spending. And the Chinese are none too comfortable occupying this space these days. Ditto for the rest of the USA’s creditors. I am sure there are plenty of valid arguments on both sides of the issue (Chinese tires don’t exactly have a sterling reputation), but the timing is curious. The Obama administration has based its agenda on deficit spending and has to know that the PRC government is mighty uncomfortable providing the financing. A more conciliatory American posture would be expected.

That said, sourcing in China will continue – it has to, with the so many USA firms no longer in business – and if you need to source in China, you need a partner who can help you navigate the waters and protect you from shoddy product. PassageMaker acts as a “Black Box” to protect your Intellect Property and a “Quality Gate” to make sure you get the product you ordered.

Let’s have a trade war! Or, what to do when you tire of chicken…

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So we now have a brewing trade row over Chinese tires and American chickens:

“China announced dumping and subsidy probes of chicken and auto products from the U.S., two days after President Barack Obama imposed tariffs on tires from the Asian nation.

Chinese industries complain that they’re being hurt by ‘unfair trade practices,’ the nation’s Ministry of Commerce said on its Web site yesterday. The dumping investigation relates to poultry alone, a spokesman said in Beijing today. The ministry didn’t specify the value of imports of the products.”

This is something of a daring move on the part of the American administration, given that China is the largest buyer of USA debt, and thus underwrites Washington’s spending. And the Chinese are none too comfortable occupying this space these days. Ditto for the rest of the USA’s creditors. I am sure there are plenty of valid arguments on both sides of the issue (Chinese tires don’t exactly have a sterling reputation), but the timing is curious. The Obama administration has based its agenda on deficit spending and has to know that the PRC government is mighty uncomfortable providing the financing. A more conciliatory American posture would be expected.

That said, sourcing in China will continue – it has to, with the so many USA firms no longer in business – and if you need to source in China, you need a partner who can help you navigate the waters and protect you from shoddy product. PassageMaker acts as a “Black Box” to protect your Intellect Property and a “Quality Gate” to make sure you get the product you ordered.

Ghost Fleet = Great Time to Source in China!

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From the Mail Online, “Revealed: the Ghost Fleet of the Recession”. This is the most stunning evidence yet that things will not be back to normal any time soon. 12% of the world’s cargo fleet sits idle?! One-in-eight ships tied at anchor out in the middle of the ocean!? And the shipyards continue to produce more…

“A couple of years ago these ships would be steaming back and forth. Now 12 per cent are doing nothing.

You may wish to know this because, if ever you had an irrational desire to charter one, now would be the time. This time last year, an Aframax tanker capable of carrying 80,000 tons of cargo would cost £31,000 a day ($50,000). Now it is about £3,400 ($5,500).”

“Aframaxes are oil bearers. But the slump is industry-wide. The cost of sending a 40ft steel container of merchandise from China to the UK has fallen from £850 plus fuel charges last year to £180 this year. The cost of chartering an entire bulk freighter suitable for carrying raw materials has plunged even further, from close to £185,000 ($300,000) last summer to an incredible £6,100 ($10,000) earlier this year.”

I have been very skeptical of those saying the worst is past. I certainly don’t see it my USA businesses, both in manufacturing. I see a slight uptick coming as some businesses replace inventories, but nothing like a return to the boom years in the near future.

However, for those wishing to do business in China, this is a time of opportunity. Freight is at all-time lows. Chinese factories have massive over-capacity. If you can secure financing and know you market well enough to move the goods, now is a great time to buy. Through PassageMaker’s Endorsed Service Provider network, we can introduce you to resources that can help make your project a success. By conducting a Sourcing Feasibility Study, we can shop a number of vendors and establish a true ‘China price’.

Even in a terrible recession, people make money if they play their cards right.

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!

Father of the Green Revolution dies

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Norman Borlaug – the man who enabled the growth of the globalized world more than any other – has died.

“Borlaug was the Father of the Green Revolution, the dramatic improvement in agricultural productivity that swept the globe in the 1960s. For spearheading this achievement, he was awarded the Nobel Peace Prize in 1970.”

Whether you think the Green Revolution was a good thing or not, it is impossible to make the case that the world could have developed as rapidly as it has in the last 40 years without a revolution in agriculture. China would still be spending 50% of its time (as many in India and Africa still do) just trying to meet its daily caloric needs, were it not for the new strains of rice and wheat Borlaug pioneered. The result is a China that has risen from gruesome poverty and overcome crippling political orthodoxy in less than 30 years to become the 4th largest economy in the world. However, such rapid growth creates a system that is anything but systemic. China for all its success is barely-controlled chaos. This is where PassageMaker’s core services – Sourcing Feasibility Studies, Vendor Coordination, Assembly-Inspection-Packaging and Factory Formation – allow our customers to find safe harbor in the storm.

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!