Silk Road International Blog

China and the NBA, two of my favorite things, are both in the news a lot more than usual this month.

First, I’m really not understanding the logic of the purchase of part of the Cleveland Cavilers by a Chinese group.

One of the reasons that the Chinese investment was thought to be a good idea, or at least the Chinese investment fuel the speculation, was that a Yao trade to Cleveland was in the works. But now that’s forever dead with the sad news that Yao may be gone from pro ball for good.

Of course the addition of Shaq does a lot for the marketability of the Cav’s over the next 11 months.

I’ve seen Yao play at least 5-6 times and he really is a freak of nature—someone that large, playing that much and moving that well. Really amazing. None of the other Chinese ballers can fill his public or professional shoes. I hope, for his own sake, that he can make some sort of comeback. But if he doesn’t more people than just him, the Rockets and the Chinese National team will be hurting.

But back to the purchase at hand, the purchase seems to be a Face move more than a wise investment. (Unless it’s LA, Chicago or Boston, is buying an NBA team ever a good investment?) Here are a couple of reasons why I think they shouldn’t have bought Cleveland.

1. Cleveland is a city of long-term sports losers. No offense, Cleveland. Imagine the Chicago Cubs and the Detroit Lions in the same city. Ok, it’s not that bad, but you get the point. The most famous Cleveland sports moment? The Shot! Yup, the Cav’s losing to MJ. How many Chinese investors know about this history? But they should—that’s what they are buying into. It’s like the question that Bill Simmons always asks: “Why would you own a basketball team if you’re not going to try to win?!”
2. Maybe it’s still speculation at this point, but who believes that LBJ is going to be in Cleveland for more than another year? Anyone outside of Cleveland? So once he’s gone…what are you buying? How well do you think a Zydrunas Ilgauskas jersey is going to sell in China?
3. While LBJ wants to be a global icon, right now he is not even the most popular NBA star in China. He has lower jersey sales and is lower on the most-recognizable-NBA-player lists than Kobe, Yao, and D-Wade (and even MJ is still more recognizable an in more ads). LBJ, like Yao is a freak of nature that Chinese ballers don’t really identify with—they just can’t ever get that big. They all like Koby, AI, DWade. So why not buy into some marketing opportunities with Yao or Kobe instead? Heck, the Lakers have Sun on their team already—how is some marketing deals with the Lakers not a better investment? And Kobe and the NBA in China are just getting bigger.
4. Buying the Cav’s doesn’t give you direct and/or unlimited access to LBJ, which I assume is the main goal, anyway—especially if he’s not part of the team any more. Why not have LBJ speak for one of your products instead of buying a team (he’s going to leave)? He’s then yours for the length of your contract, rather than his Cav’s contract.
5. Even if LBJ does stay for a few more years, why would an investor want to be a part of the Cav’s organization long term? Did they make money before LBJ? They are not one of the most popular or recognizable teams in US or world sports with or without LBJ. Can they sustain their current level of popularity when he leaves? (No way.) This seams like a quick fix, a short-term flash in the pan, lots of face, but not a very smart long-term investment.
6. I do think that foreign (Chinese) investors in the NBA is a good idea. Like foreign investors buying Euro football teams (Taksin, Man City). But shouldn’t they want to be involved with an NBA team in a city with a large Chinese population or with exceptional popularity in China, or with a history of long-term success and/or name recognition? Why the Cav’s? How much potential is really there?

(Go ahead, my one reader from Cleveland, now it’s your turn. Fire back.)

Then again, maybe just the very fact that there may be more Cavs games on TV in China will affect the future in unknown ways that are bigger than the next 5 year’s of NBA Championships. For example, my 4 year-old son said to me last week that he is “black like Kobe. Not white like you.” I told him he was more yellow (he’s ½ Chinese), like Yao Ming, but he was insistent—“No, I’m black like Kobe.” OK.

This next part has nothing to do with the NBA, but it does relate to foreign business. Yea, I’m reaching.

Anyway, I’ve also been watching a bit more of the beautiful game lately (bummer about the US collapse vs Brazil, no?). Last month while watching a soccer game (RLS beating LA Galaxy) with some friends, a buddy of mine started to list off the reasons that business in Asia is like a soccer game. It was funny, so I took notes (and embellished!).

Now, you’ll have to excuse both of us—while we have both done business here in Asia for more than 10 years, neither of us have every played soccer. But, never afraid about talking about something that I don’t know much about, here is our list of why Soccer is like international business.

1. Fields are different. No Hoosiers measuring tape here. Fields are different sizes, just like the figurative playing fields in business are different. Home field advantage means so much more in soccer and international business than it does in any other US sport.
2. No clear set time—only the ref knows how much stoppage time will be added to the game. Maybe you think you’ve won, only to be told that there’s 3 more minutes—that’s what business in rule-by-law countries is like. Just because you’ve got the most points when time runs out doesn’t mean that the game is over.
3. Fouls are arbitrary. Again, if you’re working anywhere that does not have a very strict and efficient legal system you’re bound to get nailed with arbitrary yellow and red cards.
4. Low chance for a “score.” Lots of fishermen but very little catch. I’m convinced that soccer in the US is not popular for this very reason—there are so many other sports with more scoring opportunities that it’s just not as much bang for the buck.
5. Your can run out of bounds and not get penalized. As someone who loves basketball, this always kills me. The guy with the ball can be out of the field of play and as long as they ball isn’t, it’s OK. How many times in business can you “go outside the lines” and still be allowed to “stay in the game?” The answer? Only in Asia!! I’m equally offended that people with connections can literally go around the game and take home the prize without ever really being on the field.
6. Everyone speaks a different language. Soccer is the world sport, and as such teams are built with players from all other the world. Not even English and Spanish are the lingua franca for teams, refs or FIFA.
7. Everyone has a different style of play and business. In south America it’s all about the long pass and the header into the goal. The Euro leagues are much more about surgical strikes. Asia is about speed (and no defense),
8. Your best players can be bought, traded. What’s the difference between headhunters and scouts? Only the name on the door.
9. High work input, low return. There aren’t very many businesses like the NBA where 50% of your touches turn into points. Most of the time business is a lot of work for a single point—much more like soccer.
10. If you score enough points early the game is won before the game is over. Timing is everything. Being the first one to market can be better than being the best production offering. Maybe you don’t field the best team, but if you score enough points early, it doesn’t matter.
11. All the action is NOT in the score. Best moves do not always result in score in soccer, nor in business. Some of the prettiest plays are the set up and ball movements rather than the goals themselves.

Any other reasons?

Finally, best quote about American soccer: “Never mind startin’ wars, emitting greenhouse gases, wearing fanny packs abroad. If we ever win a global tournament in a sport we barely care about — and can’t even bother to call by its correct name — the rest of the world is going to be seriously annoyed.”

Tags: China, Culture // Add Comment »

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.

Tags: Book Reviews, Business, China, Culture // 5 Comments »

I did an interview with NPR last week about the shift in status of American buyers in China.  We’re seeing that Chinese suppliers are doing much more due diligence prior to accepting orders and have much less trust in foreign buyers since, in the last 18 months, they’ve been left holding the bag more often than not.  I’ve shared a couple of stories about this type of thing before.

Here’s the NPR link.

Tags: Business, China // Add Comment »

When I was teaching at a university in Chongqing in ‘95 I had a student say something to me that I will never forget, “at least, well, I haven’t forgotten it yet.” She told me that when she was young she had the bad habit of telling the truth.  After getting both herself and her family in trouble a number of times her father sternly taught her this lesson, “Never tell the truth to anyone but your parents.”

This was one of my first major lessons about how different China really is.  There is no “moral code” no “generally accepted morality.”  Not even an overly trite “Confucian values” system in place here, really.  I believe that one of the lasting legacies of the current government will be that they amoralized an entire country.   I’m not talking about the vilification of organized religion I’m talking about the creation of a system that punishes honesty.

Anyway, back to the story at hand.

China has, in their typical reactionary fashion, decided to be incredibly strict on H1N1 because the want to show the world that they learned a lesson from their lying and covering of up the SARS epidemic a few years ago.  Well, I got caught in the new H1N1 net as I returned from a business trip to the US.

Here’s my story and the lessons I (re)learned.

I’m out.  Finally.  After 24 hours in lock down, I just got up and told them I was leaving and then just walked out of the hospital.  They screamed, tried to stop me and called security (little skinny guy with no socks that wanted no part of a pissed off foreigner that out weighed him by 100 lbs.) but finally said–”ok, but you have to take the is paper with you.”  When they said that, I almost lost it.  “You mean if I had tried to leave last night you would have let me?”  They said no, but when it came right down to it, they admitted they really couldn’t keep me there if I had tried to leave.

Here’s the time-line of events for the last 36 hours.

Day 1, 6:30 AM HK. There were two people on our flight (CX873) taken off the plan in HK and taken to the hospital.  They were a couple rows away from me.  Don’t’ know what they had, only that there was a “suspicion of infectious disease” announcement on the PA and we were held for about an hour before we were let off.  I filled out forms and then deplaned.  No problems, no delays, temperature scanned at least twice in HK and no issues.

8:00 AM, China. Crossed the border into China and they pulled out of line for a fever.  They took my temp 10x after HK and before the hospital.  All the same 37.1-2 degrees.  Even their own paperwork that they gave me says that 37.5 is the problem point.  “What’s wrong with 37.1?”  No answer.

Apparently I was right and 37.1 is not a problem, at least not enough of an issue to satisfy the supervisor in Customs.  So the nurse lied about my temp when a supervisor came in.  I busted her for it; they didn’t know that I spoke Chinese and didn’t like the fact that I was calling them out in public.  The fact that they were exaggerating my temp and filling out the forms wrong was apparently not an issue for them and they didn’t think it should be for me either.  Why did they do this?  I have no idea.  But the excuse I was told was that “the thermometer was not very accurate so .1 degree off was really the same.”  Of course my response was that 37.1 then should be the same as 37 and I should be allowed to go.  Right?!  If it really is the same, after all.  That didn’t go over well.  Logic rarely does.

So I sat in customs—directly across from the desk for people to fill out forms—for two hours.  About 5-6 other people in the same situation.  No masks, 5 feet from hundreds of other people going through customs.  Like I said, logic is not a commodity.

Finally they move us to a “semi-quarantine” room.  Some people with masks, some without.  Sometimes the doors were shut, sometimes not.  Sometimes we were asked to wear masks, other times, not.  One HK guy was angry and just got up and walked out—they brought him back about 15 minutes later; he was hoofing it back to HK and was picked up on the bridge.  What a joke.

Once they fill out all of the paper work and stamp our passports there are 5 of us that sit locked in an ambulance for 30 min with no AC and no open windows in 33 degree heat (with suspected fevers!).  Then we were transported across town to a hospital.

11:30 AM Driven to a complete dump of a hospital.  Roaches in the cabinets, spider’s webs on the walls, sink drains onto the floor, no paper towels or hot water, stains on the walls, rock hard bed, no AC, used soap and no towels in the shower.  They try to take my temp with a thermometer that’s just sitting on the table—no case, no sterilization, no alcohol or iodine.  They want me to put it in my mouth.  I tell them no way!  They agree to the armpit–I clean it with a wet wipe from my bag first.  Then they want to take my blood and bring in unpackaged needles and iodine to do so.  I refuse this too.  Really, I’m convinced that hospitals in China make you more, not less sick.

Staff in the hospital all have bio-hazard suits on.  I’m isolated in a private room in an isolation wing of the hospital.  But I can go out on the balcony and talk with the “unsuited” guard and lean over the rail and talk with people downstairs or in the other “quarantine” rooms too.  Should I laugh or cry?

6:00PM They ask me what I want to eat for dinner.  I joke that I’d like some pizza and a Coke.  They giggle uncomfortably.  Pregnant pause while I look at them expectantly.  Finally, I say Chinese food is fine, just no bones, please.  They bring bones anyway. (Honestly, I can’t make up stuff like this.)

I really hate that—if you know you’re not able to fulfill the request, why ask the question?!  This happens all the time in factories.  Managers ask what we want, knowing full well they can’t do it, but it’s like they’ve been taught in “Dealing with foreigners 101” that they must ask a series of questions regardless of if they can actually do anything.  To any Chinese factory salespeople reading this: UNDER PROMISE AND OVER DELIVER not the other way around!!!

At sometime around 6PM the CDC employees go home for the night.  Am I told that I won’t be getting my results tonight?  No.  Am I told anything?  No, of course not.  I call the nurse every hour on the hour and the answer is “we still don’t know, but we should know soon.”  Bullshit.  At midnight I call my wife and tell her I’m not coming home and I try to sleep.

Day 2 7:00 AM Temp has not been over 37 for over 20 hours now, no new tests, no results, nothing—why the hell am I still here?! When I ask them to tell me what’s going on, the staff (still in bio-hazard suits and using two breathing masks and clear face-guards) tell me: “Don’t worry. There are a lot of people in the same situation.”  Who the hell cares how many other people are in the same situation?!?!  I want to be told what my test results are!  I need to know if I can go to work, if I can talk with my family.  No answers.  I am told that the CDC people come back to work at 8 AM–ahhhh…Now I know why I was kept over night.  Their shift ended.

9 AM. They tell me that even though I’m in a private room, in an isolation wing with staff that are completely bio-suited I am still required to wear a mask!  Who, pray tell, am I going to infect (with my 37 degree fever)?!  “It’s for your own safety,”  I’m told.  “If you were really concerned about my health you’d let me out of this dirty hospital!”  More uncomfortable giggles.

10 AM. I’m basically in a Chinese jail.  I don’t know how long I’ll be here, what the problem is, or what, if anything they are doing about it.  People are trying to stick unsterile things into my body cavities and I have no recourse—I can’t even all a lawyer.  I have to admit, though, the staff here is very polite and quite friendly.   I just wish that they were as well educated as they are congenial.  This place is a pigsty!  If I am sick it’s because of the hospital, I’m convinced.

Got a list of swine flu symptoms from a friend (via my 3G phone—Thank God for technology).  Went through the list with the staff and showed them that I don’t have any symptoms.  They still want me to wear the mask in my empty room.  They’re not impressed with my doctor impression or my ability to do internet research in jail either.

10:30 AM Finally, I’ve had enough.  I shower, get dressed and walk out.  They scream, try to stop me, call security (little skinny guy with no socks that wanted no part of a pissed off foreigner that out weighed him by 100 lbs.) but finally said, “ok, you can go but you have to take the is paper with you.”  And then they let me go.

I had to pay for my own taxi to get back home.

I’m not so much angry as I’m just in shock at the collective idiocy of this event from beginning to end.  I’m not excluding myself from the list of idiots either.

Turns out I did four things wrong.

First, I usually don’t let police (border agents) know that I speak Chinese.  If there is a problem, I only speak English and if they start off in English then I only speak Thai, just to get out of things faster.  (Speaking Thai usually works like a charm, by the way.)  If they can’t communicate they often just give up and let me through.  But, when I caught the nurse lying about my temperature to a supervisor, I called them both out in Chinese–that was the mistake.  From there on out everything was in Chinese and I was treated just like everyone else that spoke Chinese.

Second mistake was that I just put my head down and followed orders at the hospital.  In China if you do what you are told you get lost in the crowd.  When I finally opened up and told them I was leaving I got the attention that I wanted and something was done immediately about my case.  Prior to that, though, because I was willing to wait, I waited.  I’m sure that if I hadn’t thrown a fit I’d still be there.  I’m also sure that if I’d thrown a fit last night I could have left last night too.

Third, I told the truth.  Why was I kept in the hospital in the first place?  Because I told the truth and offered them as much info as I could about where I had just arrived from–just trying to be helpful and honest.  Turns out that the other guy from my flight that was in lock down with me didn’t tell them anything and was released last night.  I was held so they could confirm with HK that the people on my flight were not an issue.  Since they needed 24 hours to confirm that, I was held for 24 too.  If I’d just not told them anything about my recent trip to the US I would have been home in my own bed last night.

Fourth, I assumed that since I was put in the hospital by people in uniforms I was required to stay there.  Big mistake.  I could have left, they admitted that they couldn’t keep me, if I had really tried to leave.  Image is as much a reality as law–if you look the part, you can more or less do what you want.  Why do you think that China has such a uniform fetish?!  People look the part, but very very few of them actually have the authority to make any decisions.  In business or in the hospital or at the border, who says yes or no isn’t as important as who has the authority to enforce the yes or no.  And the enforcer is rarely in a uniform and never on the floor dealing with riffraff.

Lessons learned:

1.If you have even the tiniest cold, drink cold/fever medicine before you arrive so you can get in.  If you are sick in any way at all and coming from the US you’re not getting in—the people implementing the policies on the border are scared for their jobs if they screw up, racist, ignorant of modern health procedures, using outdated equipment and defensive since they were caught lying last time (SARS).

2. Don’t share any evidence that you were on a flight from the US recently (i.e. open passport to blank page).  Don’t lie, just don’t offer any info about travel out of HK/China.  This specifically worked for people in the same ambulance I was in that were also on my same flight.  I was stupid and actually filled in the form with the information requested.  Other people didn’t and were let out 12-15 hours before me.

3. Don’t speak any Chinese and don’t try to understand their English either.  If they can’t talk to you, they’ll get frustrated and either let you go or send you to quarantine (where you’re headed anyway).  This works well if you can understand what’s going on.  If you can’t speak Chinese in the first place you’ll be used to this and so it’ll be no big deal.  But as soon as they know you can speak, it’s all Chinese from there on out and you’ll be treated just as badly as they treat everyone else that speaks Chinese.  Trust me, you don’t want to be in that group.

4. If you do speak Chinese, listen to all conversations and double check all documents that are about you or that you are asked to sign.  Refuse to sign anything you can’t read and/or don’t agree with 100%.

5. Don’t offer up ANY additional information that isn’t specifically and directly asked for.  Answer yes/no and give as little info as possible.

6. Remember, once you’re in the hospital, the staff are not the problem.  They really can’t do anything.  The CDC and the border guards are the people to yell at.  And yelling at the right people works.

7. The squeaky wheel gets the grease.  In China if you keep your head down and follow the rules you’ll get passed by.  Sometimes that’s what you want, but if you’re scared for your life (e.g. in a Chinese hospital, getting the once over at a border crossing) you don’t want to just stand there and take it.  I threw a fit and threatened to leave and that’s finally when I got attention.  The previously “busy” MD and CDC rep immediately showed up when I grabbed my bags and starting walking out of the isolation unit.

Tags: Uncategorized // 8 Comments »

Had a couple of really interesting discussions about working with Chinese factories today.  One was with a Purchasing Manager from the States that buys for his company in China.  He says that almost as difficult as dealing with all the unknowns and changes in China is convincing Americans that have not been to China in his company that China really is that irrational and difficult to deal with.

For example, the sales team was told that it takes two weeks to produce item XYZ.  But in reality over the past year every shipment is at least a week late, if not two.  This PM says it’s obviously taking 3 weeks to make the products.  So, logically, they need to extend their lead times accordingly.  But where’s the other week going then?  Domestic port transfers.  Closing dates are on Wednesday or Thursday for Yantian port in Shenzhen.  So if you don’t get product IN the port by noon on Wednesday you miss the boat and have to wait A WEEK for the next one.  And the boats don’t leave on Wednesday, that’s just the closing date.  So even if you make the closing date your stuff won’t leave China for another 4 more days.  There’s your second week.

But for some reason, sales people think 1) “Hey?! We can load and clear out a container in one day, why can’t they?!”  and 2) “Can’t we just tell them to do it faster?”  This is the secret to working in China.  Logical and logistical inefficiencies abound and make every transaction take longer (even if there are more workers and production is actually shorter than in the US).  You have to realize that banking, logistics, communications, physical confirmations of product and container loading can take you much longer than what you’re used to in the US.

Get your head around this reality and adjust your expectations accordingly or be very frustrated for the last two weeks of every order.  PM’s can help the process by placing orders on Fridays and start counting days on the following Monday.  You can also account for closing dates and shipping lead times; add in at least 4-5 days for every shipment or coordinate orders to finish and go to port on Monday or Tuesdays so you know you’ll catch the Sunday boat.  Understand that there are cultural issues on both sides that are hard for the other party to understand.  (For example, why can US companies only cut PO’s/checks one day a week?  This drives Chinese business people nuts.)

The second conversation was about attitudes and perceptions in China with the US economy is still weakening and China (according to official reports) still getting stronger and pulling out of the recession (first).  I’m still hearing that this is changing some of the ways that factories are looking at clients/buyers.  It’s not bad, actually it’s good.  But for those foreign buyers (especially US) that were used to being treated special, those days are coming to an end.  There are other fish (with money) in the pond now.  And there are enough stories about foreign companies stiffing Chinese factories that everyone here knows someone who was “unfairly” imposed upon because of the financial irresponsibility in the West.

Both this blog and China Law Blog have detailed how Chinese factories are more and more sophisticated in their research of potential foreign buyers and their participation in foreign markets.  This is all good, unless China was where you came to stroke your ego and feel appreciated.

You can also add to this the fact that factories are calling and telling us that if we have clients from the US they don’t even want them to visit right now because of the fear of H1N1 (pig flu).  They don’t want to take the chance that they’ll have to quarantine everyone for a week to ten days just because some guy from LA showed up with a cough.  Like Rodney says, no respect.

Other tidbits.

GM to make autos and ship them to the US.  Good, bad or ugly?

Good, for the domestic market here for sure.  Bad for Detroit—but what isn’t other than the Red Wings?  And ugly for quality.  Everyone’s heard of Beijing Jeep.  But it’s not just fake autos but parts out of China that are really scary.

80% of fake parts come from China. It’s so bad India (yes, India) is scared of being lumped in with China.  Most know that counterfeits are endemic to the China auto industry.  And that Professionals can’t tell the difference. What’s scary is that poor quality fakes in your car can kill you and the number of products sourced for autos in China is going to rise (especially if the entire car is built here!).

This is a good source for Black Market auto parts and other counterfeit news (news about counterfeits, not fake news).

Other Econ news.

You’ve heard of the bell curve, right?  Well, meet the “W” curve.  No it has nothing to do with George but everything to do with the end of this year.  Be afraid.

And finally, Missing China stimulus money is feared to be in individual bank accounts and stock portfolios.  50% of govt infrastructure programs are not completely funded either.  This is how you spell “slower-than-expected” second ½ of 2009 annual growth.

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