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20
Dec
2010
Poorly Made in China E-mail
Reviews - Books
Written by David A. Dayton
Like a couple other of my favorite books on China, River Town and Mr. China specifically, I’m admitting to you now that the reason that I like this book so much is that this is my life in print. This is what I’ve done for the past 7 years in China—solved other people’s problems, dealt with very “cleaver” Chinese factories and played go-between with suppliers and buyers who are not just from different countries but actually from completely different planets.

Poorly Made in China
tells the stories behind the products. Unlike Made in China, it’s not an agenda-driven call to political action, but rather a travelogue of successes, missteps, misunderstandings, adventures in manufacturing and scores of “I can’t believe what just happened” moments. If you think that “oh, China’s not so bad anymore” then you need to read this book. It’s a Mr. China for this decade—a direct look into the experiences of a China Hand deeply involved in manufacturing in Southern China right now. Despite the gleaming steel and glass buildings of Shenzhen and Guangzhou, Paul clearly shows that China is not a first world country.

It’s the uglier under-side of China where all the manufacturing and (double) dealing really happens; and that’s were Paul Midler writes from.

Many books about China are written for the MNC class of China buyers—big companies that have entire purchasing departments. Very few are for or about the rest of us—those entrepreneurs that come to China and work with or for smaller companies (that may or may not sell into the big box MNC’s eventually). This is the boots-on-the-ground advice and perspective that everyone that is coming to China should read at least once.

Here’s the review from the Economist.

The book is a quick read if only because it’s so captivating and entertaining. But there are lessons that I’ve underlined and will come back for in the future. Here are a couple of my favorites:

Chapters 8-11. If you’re going to read this book like a Chinese (sit on the bookstore floor on Sunday afternoon for a couple of hours) then these are the chapters that you just can’t ignore.

“China’s saving culture was so strong that it was at times detrimental to business interests.”

“Typically, the importer negotiated prices in advance of any order. Then, throughout the production process, (the supplier) would look to find savings where it could. If the supplier managed to cut a corner and it worked out, it pocketed the savings. If it did not work out, the supplier then tried to use the fiasco as a chance to raise the prices in some way.”

“Importers were not inclined to pursue legal action when problems arose in a ongoing manufacturing relationship. An importer was not going to place an entire business on hold just to settle the matter of a few containers. Manufacturing problems tended to be small relative to the size of the overall business, and factory owner actually took this into account when they considered whether or not to manipulate quality levels.”

“The importer should have been rewarded for uncovering quality problems, but it was almost never the case. Factories did not see an attention to quality as something that would improve the business prospects, but merely as a barrier to increase profitability. Working to achieve higher levels of quality did not make me a friend of the factory, but a pariah.”

Speaking of faulty product discussions with a supplier, Midler says: “While we were both looking at the same problem, she was simply choosing not to see it. More than that, it seemed, she was hoping that I would share her view. Most her disappointment, it seemed, was reserved for me, because I would not entertain her own versions of reality.”

“Creating the outward appearance of the thing was often just enough to get the order initiated. Once funds were transferred to China, the manufacturer could then work on the part about getting the product right.”

“By now, it was clear to me that such inspections were pointless anyway. Whatever could go wrong with a manufacturing process was going to be seen on a walk-through. If there was something that would raise a serious alarm…the factory owner could easily make sure that it was hidden for a few short hours while the inspectors were in the plant.”

“Factories manipulated quality on a large number of variables, taking small nibbles out of each’ if they were caught in one area, they still had the advantage of others. It seemed at first a little unusual to me. By running so many schemes at once, (the supplier) seemed to be increasing his chances of getting caught doing something dishonest. In an environment where everyone is expected to do the right thing, the smallest indiscretion is a sign of moral failing, but China was a low-trust environment. Local players operated on the presumption that everyone was engaging in some level of game playing, that others would expect a level of misappropriate activity. By spreading the shenanigans around, an operator could make related wrongdoing appear less damaging. No auditor could ever be do diligent as to catch every maneuver, which mean that profit lost on one shortcut could still leave other sources of margin.”

“Factory owners were aggressive more than anything else, and perhaps even a little bit cruel. This one factory owner had encouraged his prospective customer to board a plane in the United States and fly all the way to China. Once the investment in time and money had been made, the factory took advantage.”

“Why didn’t Chinese manufacturers take the (customer is king) approach with their own customers, and why were they eternally focused on short-term gambits? Chinese business leaders were continually preaching how they valued relationships, and yet it was more often foreigners who understood what it really meant.”  My take: Why don’t Chinese think about “long-term” relationships? They do, but foreign clients are rightly not whom they think they will have these “long-term” relationships with. They don’t know you from Adam, they don’t know if you’ll place one order let alone the volume and the re-orders that most buyers talk about. And there are so many clients beating down the doors in China that suppliers really don’t need to care.

“Reverse Frequent Flyer” programs—the more you work with a factory the more punitive the relationship becomes.

Mark Elvin’s“Advantage of Backwardness” says that “farmers were so good at finding small ways to increase efficiency through tinkering and that success with short fixes dulled the impetus to build machines that could replace human labor.  What is surprising is how little has changed, even as the country has moved from agriculture to a focus in export manufacturing. Factory owners were just as focused on life at the margin. While they worried less about natural disasters, they behaved as though they were struggling to just get through the season.  What had kept the nation from creating its own industrial revolution was more than likely this enduring cultural trait—an endemic myopia—and knowing that they suffered from it was what led common fold to welcome the larger and more direct role that government played in their lives.

“China itself was involved in a similar contradictory pattern; while the nation wanted to become a major global player, there was still too much to be gained by insisting that they were just barely getting by. They wanted to be feared and respected, but at the same time they saw the advantage in being pitied.” Thank you. I’ve been saying this for years—China is schizophrenic.

Probably my only complaints about the book was the lack of 3rd party involvement in the stories and a lack of citations.  At times, Paul sounds like he was the only man on the planet and dismisses the real and valuable help of 3PQ and other professional services out of hand.  Surely, with as much education as he reminds us he’s had, he would have known that others had both done this before and been successful at it to boot!  Not sure why many in China assume that it’s “me against the world” and there are no other solutions.

While the stories are fantastic, the lack of any other sources or citations leaves you wondering where the stories and personal opinions end and where the facts and research begin.  Certainly theories, quotes and statistics that are discussed in detail (economic numbers, population numbers, development theories) should have been cited.  To me one of the values of books is that  they lead you to more books.  This one just ends. Great stories, great lessons, well written.  Highly recommended.


David A. Dayton is the CEO of Silk Road International (SRI), an U.S.-owned and managed international procurement agency based in China. Click here to visit SRI's Website.

Our valuable Editor David A. Dayton has been with us since Monday, 02 November 2009.

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