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Bad China Days

Sometimes, living in China sucks.  We’re not supposed to say that, but it’s true.  Our friends, family, and colleagues see the glamorous side of the life that we lead, the travel to exotic places, the sights where we take the obligatory photos, our posts about the food and the constant rain of new experiences.  We should love it, at least that is the feeling we get from the relatively constant guilt trip that people in our lives send our way.

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Expat with ID Card

Becoming a China Expat

Making the jump from China traveler to China expat is still a common occurrence, despite the reported decline in the traditional expat packages in Tier-1 cities like Shanghai, Beijing, and Hong Kong.  Living and working an a foreign country is a complicated process, within both the new country as well as your home country.  Expats in China are subject to a dizzying array of considerations.

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US-CN Security

Keeping your Intellectual Property Secure in China

China gets a bad reputation for their treatment of intellectual property. The reality is that all multinational firms should pay attention to protecting their intellectual property both at home and abroad. While the lessons in this post are written with China in mind, we believe they are applicable anywhere.

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Design for (Chinese) Manufacturing

“How many plies do you want”

Plywood1Not the question I was expecting from a plywood supplier; I mean, I understand that plywood is made of plies, but normally most manufacturers would have a catalog of standard product consisting of 1.2 x 2.4 meter panels (or four-by-eight in the states) in various thicknesses, glues, and coatings.

Buying a product that would in most countries be a commodity is just another way in which China is different, as I was in the process of finding out at the first plywood supplier that I visited.  Whereas in most countries I might have asked for “12mm untreated plywood”, in China I found myself specifying the number of plies, the type of wood, the brand of glue, and the method of finishing before I had seen anything that resembled a sheet of plywood.

China manufacturing offers a world of possibility that is unmatched, still, anywhere else in the world. In China, almost everything is built to order, which means that there are near endless opportunities to tweak the product before it is made.  In order to leverage this amazing capability that China brings to the table, it is critical to change your mentality about how you design and build your products.

I know our clients reach the aha moment, when, typically during one of their trips with us to China, they tell me that they finally understand why we ask so many questions when they ask for a production quote from China.

In most countries, suppliers in a given product category generally have a catalog of products that they sell.  A lighting supplier is generally going to have, for example, a selection of LED light strips.  They may have a few different configurations, colors, and lengths but that’s about it.  A request to order one hundred of those strips, but just a few millimeters shorter would likely be declined or perhaps even illicit laughter.  In China, however, those types of requests are not only acceptable, they’re expected by just about every supplier.  It’s rare for us to ever make the same thing twice, not just in terms of our finished goods, but even down to the sub-assembly and component level.  Trust me when I say, not only is this the best way to manufacture products, it is the source of much of our competitive advantage.

So how do we go about making products in this unique environment? Whereas in other countries I would start by grabbing catalogs from electronics and hardware companies, in China the methods are quite different.  Despite these differences, there are tactics that help us leverage this unique manufacturing environment to produce great products. Lets explore the (highly simplified) steps that we use in our product development.

Step 1: Find Similar Products (or factories using similar manufacturing methods)

The first step in making your product is to find a manufacturer that is making something either in the same product category or at least using similar production methods to what you believe you need to make your product.  The first method here, finding suppliers in the same product category, is the easiest, so we will start there.

There are lots of sites that you can use to find suppliers, but I have to be honest, for finding suppliers, and factories especially, Alibaba is by far my go-to.  One of the things that I reinforce in my sourcing trainings is that the key to success in Alibaba is just knowing how to search correctly.  A few pointers:

Make sure you’ve found a factory not a broker

We wrote about this earlier in our article on vetting suppliers, Are You For Real  ( Pay particular attention to any firm that has the words “trading” in their name; unrelated businesses words should also be a red flag, e.g. your clothing supplier should not be called “Guangdong Greetings and Colorful Card Printing Limited”)
In the introduction to this category I mentioned that you might want to ignore product category and find a supplier using similar production methods. To illustrate this point, I’ll use an example from our business. We had an opportunity to make a small corrugate display which, at the top, had an illuminated sign, like a miniature version of the signs you might see on a storefront or on the inside of a shopping center.  Our team initially started their search by looking for suppliers of illuminated signs, which was a logical first step.  We quickly found, however, that the cost of a real sign was significantly more than our ten-dollar-per-unit budget.  After scratching our heads for a while about how we were going to be able to supply an illuminated, vacuum formed sign for less than ten dollars, we finally hit on the right people to help us: halloween mask manufacturers. Who else would understand both vacuum formed plastic and distortion printing and has a product with a sub-one-dollar manufactured cost? It seems so obvious in hindsight, and it is a lesson that we have learned a number of times over: the “right” manufacturer for your project can often be in what seems, at first, to be an unrelated business.

Make sure the factory is in China

Alibaba has great filters under the “advanced” tab but honestly I usually just add the word “China” to my search terms.  Further to this same tactic, I sometimes try to find factories in close proximity to one another (it makes intra-country logistics easier), so I just add either city (e.g. – Xiamen) or state (e.g. – Jiangsu, Zhejiang, etc) to the search terms. Especially if you are making a trip to China, you’ll want to try to group your factory visits together into geographic areas.

Do some basic research

Unlike factories elsewhere, factories in China are accustomed to customers questioning their existence. Some Alibaba listings will include copies of their China business license, other times a link to the factory website will give more details.  Over time, before you even contact the factory you’ll learn to have a good sense for filtering the real from the vaporware.  As is the case everywhere, many times you’ll find that the firm with the best website has the least impressive factory. 

Step 2: Establish Contact

Once you have a short list of suppliers to contact, you’ll want to reach out to discuss your needs or get some quotations to set a benchmark for pricing.  I’ve personally had a lot more luck making my first contact using the built in messaging system in Alibaba, as compared to email or phone calls. There’s a downloadable app or you can chat right inside of most browsers, plus Alibaba has a great mobile app that allows you to easily chat with suppliers.  This is especially beneficial since China has a significant time difference with the US and Europe and I often find myself chatting with suppliers after standard business hours.

Calling China is relatively easy, although it is worth calling your phone company first to make sure your calling plan includes a reasonable rate to China; for about $5 per month my AT&T wireless account includes a super-cheap rate to China.

Lastly, be sure to download and signup for a Wechat account.  Chinese chat app Weixin (or “Wechat” in the US App Store) is absolutely dominating the market for communication in China; you would be hard pressed find a Chinese person that does not have this app on their phone.  As a result of the popularity of WeChat, the need to have a local Chinese number has been greatly reduced. You can use Wechat to chat, as well as make audio and video calls.  (I gave some hints about this in a related article). Wechat is super easy to use, and is available in just about every language.  Wechat contacts are exchanged using QR codes.  A good tutorial is here.

Step 3: Start with what they know

Crazy as this may sound, when you work with Chinese suppliers for a while, you find that oftentimes they share a common sense of disbelief that they can produce a particular item. For example, if you were to approach a television manufacturer to enquire whether or not they could make a special digital signage product for you, the answer would likely be an outright “no”.  However, if you were to start with a pre-existing product, you could most likely work with the supplier to evolve that product into the product that you need. Lets explore this fictional example for a moment.

Lets say that we want to make digital signage screen.  Our first contacts are likely to be television assemblers, firms that make housings, buy LCD screens, and either make their own driver board hardware or (more likely) have it made for them.  Their answer to “do you make digital signage screens” is likely to be “no”.  Remember though, that this “no” is not because they can’t but rather because they haven’t made one before.  So what you need to do is to coach the factory into understanding that they can do it.  You have to start gradually.

To continue this fictional example, you might ask some questions intended to lead the supplier down the right path.  Start with asking for a brochure of their existing products; you’ll probably find photos of televisions that look a lot like ones you’ve seen in the store back home.  From here, make changes a little at a time.

“Can you make this TV (circle one in the brochure) but change the driver board, as long as I meet the MOQ?”

“Sure, what are the changes?”

“Just take out all of the inputs except one HDMI connector and add a media player”

“Yes, we can do that”

“And can you make the TV auto-power on, and make the media player auto-start?”

“That seems possible”

…And just like that you’ve changed from a TV to a digital sign.

Of course, I’m oversimplifying, but the reality does seem to always follow the path from knowns to unknowns. With a constant, gentle pressure, we move from products they know to the product that we need.

Step 4: Define your product well

Ok, so you’ve found a supplier, made contact, and in just a little bit of dialog, they’re well on their way to creating the product that you need. Success!

One really important detail to keep in mind is that this factory may have not ever made anything like what they are building for you.  This lack of contextual product knowledge can hurt us.  For example, a maker of digital signage solutions will know that keeping a video monitor on 24/7 will generate a lot more heat compared to the duty cycle of your typical consumer television that is on for a few hours a day.  Our TV supplier that we have just coached into making their first digital signage product does not have the luxury of this experience, and as such it falls on you to set out a product definition with enough testable parameters to ensure the success of your product.

I wrote about this a while ago in Why making quality product is so hard.  The bottom line is that whereas in many other countries we would expect our factory to know everything about what they are building and how it will be used, in China you are expected to deliver a very detailed level of both functional specifications and test procedures.  Flexibility in manufacturing can be very powerful in helping us to deliver customized products in record time, but with this power comes the responsibility to define and test to an extremely granular level.

Step 5: Breathe

I’ve introduced a lot of people to China and Chinese manufacturing, and anyone that has met me knows the passion that I for the products we build and the methods we use to bring those products to life.  But I know that this environment and it’s stark differences from the West can be jarring.

Just as our factories need to be introduced slowly to new things to build and new manufacturing methods, so do newcomers to China need to be introduced slowly to this new environment and it’s unique requirements.  It can be overwhelming if we try to take it all in at once.

But just relax, take things slow.  If you take the time to truly learn the ways and means to develop product in China, I guarantee that you’ll realize a huge competitive advantage.


Travel Light and Carry On (Literally)

I picked up my briefcase (or is it an attache? I’ve never sure where that line is drawn) the other day and I was so surprised at how light it felt that I was convinced I had left my computer or power supply somewhere at the supplier I was visiting. After a few panicked seconds of looking over all of the contents and realized everything was where it should be, I was struck by the thought that over the past twenty years of business traveling, I’ve really refined the items that I take with me on trips.  I figured I would post a bit about the things I bring (and leave behind).

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Are You For Real? Vetting Suppliers on Alibaba

It wasn’t until their IPO last year that Alibaba really started to become a household name in the US, but for those of us working in China, Alibaba has been a key component of our toolbox for much, much longer.  As one of the oldest and largest directories of products and manufacturers, Alibaba is my go-to search tool when I need to find a specialty supplier in China. Like any tool, the more you know about how to search, the more effective your searches will be.

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Your First Trip to China

It still shocks and amazes me when I meet people that source product from China, sometimes for many years, yet they have never actually traveled to China or visited their suppliers. It’s really not as daunting as it seems; yes there is some paperwork involved and the flight can be long-ish, but as always, there is no substitute for being on the ground to meet suppliers and manage production. I always tell my team to listen to that little voice that tells you that you should get on a plane and go check-in with a supplier.  With cheap round trip tickets available from many US cities, and reasonably priced, decent hotels available in most cities in China, these trips are cheap insurance for your production.

As always, the earlier you catch issues the cheaper it is to rectify them.

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Work Hard and Carry On

Last year I was invited to speak to a group of business students at a university outside of Shanghai.  After a brief presentation about the work that I do in China, the class took turns asking me questions about business and entrepreneurship in general.

One of the students approached the microphone and asked “you’ve done a lot and accomplished a lot, what advice would you have for someone that also aspires to accomplish great things?”

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Anything is possible but nothing is easy

Impossible is Nothing!

Back when I was the General Manager for our Asia operations at Lynx Innovation (I’ve since returned to the USA and now spend only half of my time in China), I challenged our executive team to come up with a mission statement.  I told them to talk amongst themselves for a week and come back with what they thought was a statement that reflected our values as a company.  At our next meeting I asked them what they came up with, and they proudly proclaimed “Impossible is Nothing!” It was a proud moment for me, reinforcing our success in attracting a team that embodied the right cultural orientation. You’ve heard me say it before but truly nothing is more important than choosing employees that embody the culture of your organization; almost anything else can be taught.

It was this mission statement that lead to the slogan I’ve attached to our China business years later.  When discussing China, especially with newcomers, I often explain that in China, anything is possible but nothing is easy.

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Manufacturing: Fine Dining or Fast Food?

A continuation and refinement of the ideas presented in last week’s spellbinding, food-based perspective on outsourced manufacturing. What I want to talk about today is the different perspectives that exist between fast-food and fine-dining restaurants and how these perspectives inform our techniques in managing a global manufacturing footprint. And hamburgers; I always seem to work those into my story.

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Lets Make a Sandwich

I recently heard an example used to explain the complexities of outsourced manufacturing that has resonated members of our team that spend a great deal of their time in China.

We sometimes take for granted that our years of experience in this industry give us insight in the right and wrong ways to undertake so many of the tasks related to the manufacture of our products (or as we often say, we always know which end is up).  Our outsourcing partners, on the other hand, lack the advantage of this contextual knowledge, and we pay the price in issues as small as upside-down stickers and as large as whole mis-manufactured runs of product.

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The Same-Supplier cycle

Having been involved in Chinese and Asian sourcing and manufacturing for more than ten years, I have a lot of experiences to share, and I’ve never been shy about meeting up with fellow professionals to swap stories over some food or drinks (hopefully both).  A while ago I met up with a fellow Thunderbird alumni to discuss challenges he was experiencing in his Shanghai representative office.

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Why making quality product is so hard!

Recently I’ve been sharing an article that I wrote for Quora some time ago, about the challenges of sourcing and manufacturing in China, especially for a start-up firm or those not buying items by the millions.  The original question was, “Why are Chinese products of such low quality? If apple can make the iPhone in China, why do we still struggle?”

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