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Reading the (Western) Media on China

UPDATE, 01/03/10: Apple Admits Child labour was Used to Build iPods and iPhones in Chinese Factories.

This is at best an (educated) guess but at worse a lie–Apple did not admit this.  From the article:

The exact location of the factories has not been identified. Apple has factories which supply parts in Taiwan, Singapore, Thailand, the U.S., the Czech Republic, Malaysia and the Philippines, but most of its products are assembled in China.

Why does this article lead with China? Why not the US?  Or Taiwan or Thailand?  Not sexy enough?  Not “threatening enough?  Just another example of media bias that I talk about below.

Now we may find out that later on that this is all true.  Wouldn’t surprise me.  And since most of their products are made in China, odds are it is true.  But we don’t know for sure yet–so how can you lead with that?!  Yes, the article points out specifically that in CHINA there were cases of underpayment and chemical poisonings.  But we do NOT know if China used underage workers at this point.  Of course ‘using kids’ sounds really evil, and we need a new villain so that’s the lead in.

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Everyone that writes has a direction, agenda or angle that they are writing to prove.  My goal for this blog,for example, is threefold.  In 2004 when I started it, the goal was to share with family, friends and clients the work that I do over here.  Since then I’ve added more content directed towards people who ask questions, clients who have similar situations to other clients, and a general interest in recording what I experience in China on behalf of my clientele.  Of course, the third reason now is more exposure for my business.

I’m fine with blogs being average—Lord knows that that’s an accurate description of my witting skills.  The professional media though, should be held to a higher standard.  But from my perspective, on China they barely meet much of any standard at all.

When I’m in the office I always download articles to read later when I offline at a factory or traveling.  Here are a few articles that I read in the last month and stitched together as my commentary on Western Media covering China.  A couple of things before I get to the articles.

First, I think that the next Century is going to be characterized by an ever increasing Chinese presence in the world.  Get used to China being involved in just about everything.  It’s just too big not too.

Second, I think that the most important and currently one of the least well-managed international relationship on the planet is China and the US.  If they overtly tried too, could more people have done more stupid things over the course of the last 3 US presidents to damage this relationship?  Highly unlikely.  And just because the Americans are stupid doesn’t mean that the Chinese are not blameless in all this either.

Third, I do NOT think that China is taking over the planet nor do I think that the 21st century is going to exclusively be the Chinese Century.  I’m constantly frustrated by media that claim that China is the next superpower/super villain.  They are big, they are growing, the change here is amazing.  But despite all that and the disaster that is the current US economy, China is still multiple decades of double digit growth behind the US—and their growth will slow down and their population will get smaller too.  Also, they do not have the ability to project power like the US does (but they are indeed getting regionally much much stronger).

Finally, I’m amazed at how many people in the US are “scared” of China for one reason or another.  Job loss, communism, human rights, pollution, censorship, holding our debt, etc. all add up to seem like a huge menacing red scare in the East—especially if you have no other source of information about China (which most people do not).  China is very very different, but it shouldn’t be scary.

First the good, then the bad, then the ugly.

Article #1.  Uncle Sam vs. The Dragon, Daniel W. Drezner.

This is a great piece that puts the relationship in perspective.  It rings the right warning bells for the US without being alarmist or exaggerating.  China is an incredible adventure, a poor country, an amazing story, a difficult nut to crack.  Everything that is politically difficult to manage has a counter part in business—it’s not like there are two completely different cultures that never meet at work in Chinese cities.  Remember, at least 30% of the Chinese economy is SOE’s and the bureaucracy in China is filled with engineers, technocrats and officials that are driven by monetary goals.

Article #2 The China Fix, James McGregor

James McGregor knows China.

1. The local people.

The pressures on Chinese President Hu Jintao and Premier Wen Jiabao are overwhelming. They are white-knuckling their way through their final two years in office, focusing on 8% or higher growth and crushing any dissent that could derail it. The Chinese people are generally pretty happy, but the Party leadership is terrified of their outsized expectations. People under age 40, the progeny of the one-child policy, didn’t live through Maoist poverty and upheaval. They are pampered, impatient and demanding. They consider exponential growth as a basic benchmark of life, and access to information to be a civil right. China’s rich are powerful opponents of further reform and opening. They made money the local way and are determined to block foreign competition so this can continue.

2. The foreigners

The foreign business community in China has deep respect and affection for the Chinese people and their hard-earned success. But more than a few foreign business leaders are asking themselves if they have been bamboozled by the system. Multinationals have been solid citizens in China, handing over heaps of capital, technology, training, source code, best practices and proprietary products to joint-venture partners they were forced into bed with. They have funded schools, orphanages, disaster reconstruction, overseas scholarships and all manner of poverty-alleviation programs. But now that the China market matters more to them, it appears that China couldn’t care less. Increasingly difficult China-market access is the immediate worry. But many are looking ahead and losing sleep over expectations that their onetime partners are morphing into predators — and that their own technology and know-how will be coming back at them globally in the form of cut-price products from subsidized state-owned behemoths.

3. On the ground situation.

At the same time, I have also seldom seen the Chinese government and business community more unsettled and uncertain. Theirs is an arrogance borne of insecurity. The global financial chaos and China’s rocketing global status threw off the meticulous national development schedules carefully crafted by the risk-averse and surprise-allergic engineers who run the Party.

4. The sad players in the int’l game.

So both Chinese and non-Chinese have legitimate challenges and understandable phobias.  …with the U.S. as the key negotiator for the West. It won’t be easy. China and the U.S. are past masters at blaming their domestic policy failings on outsiders. Finger-pointing politicians and chest-beating nationalists in the two nations will make rational discussion nearly impossible.

Yet it is time for leaders on both sides of the Pacific to lift their heads above overwhelming domestic concerns and fix China’s deteriorating relationship with foreign business and the developed world before things get out of control. One thing’s certain: they won’t find the answers through Google.

But I think that his conclusion is a bit off.  He said:

“Google is just a proxy in this intensifying dispute. It’s really about rebalancing the economic and political dynamic between China and the developed world…”

I disagree—it is that big of a deal.

Google is a global company but this isn’t a proxy for an international power struggle, It’s an argument that happens over and over every day in China—it just happens that Google gets a bit more press then most.  It’s the oft repeated story of a foreign company that has finally had enough of abusive policies in China.

If you think that this is about the US/Chinese balance of power, then I suggest that you talk with the French dairy products company, Dannon.

The world balance of power isn’t shifting as much as fear mongers in the US and the party in power in China would like everyone to believe.  With the US economy in tatters and China holding so much of the debt, China has decided that they can safely stretch their muscles a bit and the US won’t do much about it right now.  But is this really what the future of global politics is trending towards for the next decade?  How many decades has the decline of the US and the rise of China (or Japan before that) been predicted?  Would China be as cavalier if the US was not involved in two wars right now?  Or if Obama (less international experience than Ms. I-can-see-Russia-from-my-house) wasn’t president?  None of these situations are permanent—neither is China’s run of incredible (and exaggerated) growth.

People who watch China, myself included, often confuse news about China with news of global priority.   Google, if it does leave China changes what?  If they stay and force some sort of compromise, who else can match their level of influence?  Wal-Mart?  Microsoft?  Anyone else?  No one else will benefit from their ultimate decision (continued in article #3….).

Article #3.  The Chinese Internet Century, Adam Segal

The reality in China is that very few people within China care.  Most foreigners outside of China don’t care either.  This news affect a few hundred thousand of us who are obsessed with China and think, that everyone else should be too.

The fact is that the majority of Chinese simply don’t care, giving the government even less incentive to change its ways. Technologically savvy Chinese “netizens” — if that term even has meaning in a place like China — find ways to fan qiang (scale the “Great Firewall”), but most users, like their counterparts elsewhere, are more interested in entertainment gossip, pirated MP3s, and updates from their friends than missives from Falun Gong or the latest report from Human Rights Watch. U.S. State Department spending on proxy servers or technologies that hide users’ identities temporarily allow some Chinese greater access to information online, but won’t substantially change the underlying dynamics.

While the hacking of the accounts of individual human rights activists has garnered the most public attention, the primary objective of the cyberattack on Google was probably intellectual property theft. The Chinese leadership has a strategic view of technology development, and the cybertheft of corporate secrets is married to an industrial policy designed to promote “indigenous innovation” (zhizhu chuangxin). Through local content requirements, tax benefits, government procurement, and the development of competing technology standards for 3G mobile phones, Wi-Fi, and other products, China consistently seeks to free itself from dependence on foreign technology, particularly from the United States and Japan. In a few cases, China has backed down in the face of concerted pressure from more technologically advanced trading partners, but old policies were quietly replaced with new ones designed to forcibly transfer technology to Chinese firms. Cyberespionage is this industrial policy taken to its logical extreme, subsidies in the form of intellectual property theft.

If 1.3 billion Chinese don’t care, and except for sinophiles no one in the West even takes notice, then how is this a new global showdown of earth-shattering importance?  It’s not.  (I wrote this last month—heard anything lately about Google in China?  Nope. Me neither.)

Article #4 With suspicious statistics, China obscures economy, David M. Dickson.

I’ve mentioned accounting with Chinese characteristics a number of times.  Without exaggerating I can tell you that any numbers you read out of China are faked to some degree or another—Enron style faking.  There is no standard, no regulation and no reason not too.

For example, when you buy anything in China you’re supposed to get a tax receipt from the vendor.  But every store/restaurant/service provider I’ve ever shopped at will offer you a 5-7% discount if you don’t take the receipt—so they don’t have to report the sale and pay the tax (that’s why all the tax receipts are part of a lottery to entice consumers to force vendors to hand over the receipts).  Similar, but much larger discount deals are offered for production runs of product, imported components, export duties, etc.

I have a couple of friends that do finance work for a MNC’s with offices here in China—they tell the same stories—accounting in China is a complete mess.   Sure the accountants themselves are well trained and can crunch numbers as competently as anyone else.  But finding “real” numbers to crunch is the problem.  And anyone who has ever dealt with SOE’s, 30% or more of China’s economy, knows that accounting is political at best and sometimes nonexistent.  Mike Bellamy of Passagemaker tells of buying components for below cost because the SOE just needed to keep people working (and they purposefully made defects to have product to fix too!).

Article #5. China mulls setting up military base in Pakistan, Saibal Dasgupta.

Since this is from India about a Chinese threat to India, I’m not sure how accurate the reading of the “signals” really is.  But with the stance that China has taken in the last 5 years as they move up in influence in the world and with all the investment into Pakistan, I don’t discount it either.

Like I’ve said before, as they themselves see it, it’s not really in China’s best interests to be a “good neighbor.”  It’s in their best interests to quell unrest at home, promote domestic economic growth at almost all costs and not overtly aggravate their neighbors.

China’s foreign policy can be, I think described best as plausible deniability.  Publicly send SOE’s in instead of direct govt action, don’t support anything that is even slightly partisan in the UN, talk about growth, equality and “fair” play the “victim” and/or “still developing country” cards ad nauseam, and then quietly do what ever they want.

The down side of this new base being true, is of course, that this will eliminate at least ½ of all the content of China’s international speeches (“we are not interested in influencing other countries’ domestic affairs”).  How will they be able to complain about the expansionist US military now that they too are building overseas bases?

Warning.  These last two articles I totally hated. Read very very carefully—American Edition

Article #6.   China scientists lead world in research growth, Clive Cookson

What’s wrong with this picture? (Graph is from the article linked above)

Did you find the “mistake” or did you just read over it the first time like I did?  The US is fourth behind China, Brazil and India, right?  Wrong—the US has almost 40% more articles published annually than all of the BRIC countries combined.

Sure, the title (China scientists lead world in research growth) is accurate but it’s either designed to be completely misleading or is very poorly explained.  This is like saying “Hangnails are the most painful injury.” (Of course this is only for people with no other injuries whatsoever).

What you don’t get from reading the article, only looking at the (awful) graph is that even with a 64-fold increase, and even with more students, China’s total is still actually less than 1/3 of what the US produces annually.  Less than one third!  China probably has more college students than the US has people!  Don’t buy the argument that China is taking over the globe just yet.

And of that huge increase—at least 9% is co-authored by US scholars.  And the study only counts US scholars and doesn’t count all the co-authors from other countries.  Remember, you should read 90% of statistics with a large grain of salt.

To the details, anyone that’s worked in academia in China knows that the idea of “mixed quality” is a major understatement.  Two personal anecdotal examples.

First, to graduate from college in Shenzhen, my wife had to write an English thesis—10 pages of original research and analysis.  Any topic.  Her thesis adviser told her to copy text from the internet on a page that isn’t very popular and that way he “wouldn’t have to read it” since he would know that it was already “correct.”

Second, when I was teaching at a college in Sichuan (’95) I was asked to review the theses of a number of grad students (20+) that were hoping to go on to foreign schools or better domestic universities for post graduate work.  There wasn’t one of them that had done any original work.  Not one.  They had copied and pasted paragraph after paragraph with minimal original transitional sentences linking them all together—this was obvious to detect since the first and last sentence of every paragraph were the only ones with any grammar problems.  When I brought this up to the Dean of the English department, he looked at me with a shocked expression and said something like: “Well, of course.  Their English isn’t good enough to do all that work on their own.  Besides they don’t have time with all their other class work.”  Mixed quality indeed.

This article gives no context or analysis: The article claims that “if [China] continues on its trajectory it will be the largest producer of scientific knowledge by 2020.”  That’s a HUGE “if.”  The “logical” extension of the article that that China is on its way to dominating the world’s research centers.  But this can’t be true for multiple reasons which are never discussed.  First, They will not have this much growth opportunity in the future (remember, they were at ground 0 in 1980).  Second, they will not average 10% GDP growth for the next 30 years, not even this year (or last year).  Third, they can’t continue to push this many students into grad school.  Impossible because of physical limitations now and the fact that the one child policy will limit the number of available students soon too.

The thing about most journalists who didn’t study China and are just writing about them now is that it’s like other than some fuzzy memory about the summer of ’89 they’ve only just heard of China for the first time with the Olympics last year.  “Wow, did you know China has 1.3+ billion people?!”  My question to the author of this article and others is this: Shouldn’t China be producing the most grad students and research in the world anyway?  They have the most colleges the most students, the most grad students, the most engineers, etc., etc., etc.  But they don’t have the most peer review or original research so they won’t pass the US in research or innovation until they can solve this structural problem.

If you don’t know much about China you may be asking: “Yea, but 64-fold increase is awesome, why the amazing growth?”  Good question.  I’m glad you asked since the “Science Editor” for the FT didn’t (and should be asking and answering this question in the article).  Here’s some historical context.  The story measures growth from ’81 to ’08.  Prior to ’81 what was happening in China academically?  Absolutely NOTHING!  You could probably count the number of peer-reviewed papers from Chinese scholars from ’66 to ’81 on one hand—really, no joke.  All schools were closed until ’76 because of the cultural revolution.  ’81 is just about the first time in a decade in when China could actually have students that finished some college and were now graduate students and doing “peer-reviewed” papers at all.

Because of how the info is present, there are a couple of complete lies within the article.

1. “China far outperformed every other nation, with a 64-fold increase in peer-reviewed scientific papers since 1981, with particular strength in chemistry and materials science.”  It should read “China far outperformed every other nation IN THE INDEX.”

2. ““China is out on its own, far ahead of the pack,” said James Wilsdon, science policy director at the Royal Society in London.”  it should read: “China is out on its own, far ahead of the OTHER BRIC COUNTRIES.”  Sure this is a quote, but isn’t there some responsibility to clarify statements that are misleading or out of context?

Many other parts are just totally misleading:

While the US is measured in the graph it is NOT included in the research itself.   But that fact is NEVER mentioned in the article.  Of course readers are going to assume, from the visual presentation, that the US in included in the research and in the totals talked about in the article—why wouldn’t they?  Since the US is purposefully included in the graph why didn’t the editor purposefully note that the US is not included in the research?

So, what’s the point of this?  Major mistake?  I would hope not.  So then what’s the agenda behind a horrible article and misleading graph like this?  I don’t know what else it could be other than the promotion of China as a threat.  Odd, since the FT is usually pretty even handed, I think.

Now don’t get me wrong.  I’m trilled that academia is gaining ground again in China.  My first job in China was teaching English at a college in Chongqing in ’95.  I think that more education is one of the very best things that could happen to China.

What I hate is the media distorting news for some unspecified agenda.  This is just the most recent example of crap-reporting about China.  As China grows and exerts more and more influence in the world you’ll see more and more reporting like this.  Especially if the US economy continues to stagnate and China continues to grow—many in the US need a villain to blame.  (It couldn’t be our own fault that our economy is paralyzed with debt.  Nah.).

And I love the FT.  I read it and link to it all the time.  But this article should never have been published like this.

Article #7.   Global Weirding is Here, Thomas L. Friedman

I love my wife and my inlaws (honest), but my love for them hasn’t led me to believe that everything China does is glorious and wonderful.  If anything it’s taught me that I don’t know nearly as much about China as I thought I did.  Unfortunately, I can’t say the same for Thomas Friedman.  Love of China has certainly blinded him to a number of realities over here.

In his latest diatribe on the how our planet is, through America’s faults, getting more “weird” than it otherwise would be without us evil (Western) humans, he ends with this gem:

“China, of course, understands that [renewable energy is “going to be the next great global industry”], which is why it is investing heavily in clean-tech, efficiency and high-speed rail. It sees the future trends and is betting on them. Indeed, I suspect China is quietly laughing at us right now.”

I agree that China is laughing at us, but it’s over our debt, not our energy sector.  Besides, four desperately needed high-speed train lines (and no other evidence) doesn’t really show that China “gets” anything but logistics (and maybe capitalism too).

A few example of China not getting it.

How about the fact that they are the #1 builder of dirty coal plants on the planet?  China builds more new coal power plants every year than the total number of coal plants in operation the US.

How about the over building of every major commercial city center causing massive warming in more metro-areas than in any other country?

What about the fact that they now have more autos than any other country?  (So it’s evil for the US to have so many, but for China it’s a sign of progress?)

Or that fact that air pollution from China is so bad that they have 16 of the top 20 dirtiest cities on the planet or that air pollution from China can be measured in the US?  Do they really get it?

SIDE NOTE: It kills me that the environmentalists defense of climategate is 1. It’ climate change, not global warming so the cold is part of it too (So global cooling in the 70′s was what?).  2. It’s overall climate not local weather that is the issue (so what about localized studies that “proved” #1?).  3. “Yes, we lied, but it’s better to be safe than sorry, right?”  Safe from what?  You lied!  You made up the threat!  Friedman’s spin on this is: We fudged a bit but it’s going to be the next big thing—so let’s make as much money from it as we can!  Isn’t that the problem in the first place?!  Capitalism is destroying the planet, isn’t it?  So how is more capitalism (from the resource desperate Communist Chinese, no less) going to save the planet?  What a joke.

The reality is that China is investing into “clean tech, efficiency and high speed-rail” for at least five major reasons completely ignored by Friedman.

1. One billion plus people.  The logistics of China are such that much of what is done elsewhere is just not logistically possible here.  High speed trains are cheaper than airfare and so service more people for less per person.  This is a simple case of Friedman trying to fit a logistical problem into a complex liberal theory to prove a completely unrelated point.  Just follow the money and the power: If normal people don’t have access to cheap transportation, they protest against those that are in power.

2. Defensive realities.  China is wholly dependent on foreign oil.  More so than the US—because they have few natural resources, a larger % of their population dependent on out-of date transportation, heating oil and ever increasing social pressures to back up political rhetoric with actual physical improvements (like more cars).   But, unlike the US who can project military power, China cannot.  One of the major military fears of the Chinese (and the reason for renewed presence in Pakistan—ports, roads, pipelines and prioritized attempts at a military presence in East Asia) is the very real fear that in a conflict they will be cut off from the oil that they import.  Oil which is necessary to run both the country and the military.  China isn’t laughing at the US for not going green, they are scared to death that if push came to shove that due to the power of the US military they couldn’t get enough of the oil that they too are addicted to.

The reality of “green” energy is that it is, for all intents and purposes, it doesn’t exist yet—not feasible green energy, anyway.  And not enough to replace oil.  Not now, not this next decade, not in the foreseeable future.  China’s not betting wisely on future trends, they are in panic mode when it comes to energy.

3. China is fast becoming a garbage dump.  Literally.   I love some of the things about living here, but it’s dirty and it’s not getting better.  Air pollution, toxic spills, low levels of environmental rule enforcement, increasing numbers of automobiles, more coal plants, more flights, a rapidly increasing standard of living for 500 million Chinese, the governments goal of urbanizing 80% of the population—all of these things contribute to a increasingly dirty country.  China is going green out of necessity.  Again, follow the power and money—when things get too dirty, normal people protest. And in many cities in China it’s already “too bad.”  You can’t have people complain when your national slogan is “harmonious society.”

4. Inefficiency.  Despite the fact that everything is made here, it’s not made well here—meaning, China wastes more of the energy (imported oil) needed to produce one unit of product than almost any other industrialized country.  China is going to get poor (and old) before the majority of their population get rich—and that’s the real motivation for any and all changes.

5. Money.  If Freidman is right about anything it’s that there will certainly be (artificially created) demand for “green” energy in the future—socialist governments across the planet will see to that.  And where there is money and opportunity, you will find Chinese entrepreneurs.  They may be late to the capitalist table, but they are fast learner and they know how to make money!

Friedman is biased and agenda-driven and has painted himself into a corner with past positions on (now discredited) anthropogenic global warming and the omniscience of Chinese group-think.

Article #8.  China extends position as worlds’ leading food producer, Reuters.

The comments say it all—I’m not the only one tired of the media looking for someone to blame.

Under-promise, Over-deliver, Part II, Vietnam

So I’m sitting in a factory office outside of HCM city as the factory General Manager is talking with another client.   The inevitable discussion about product quality and how the production doesn’t match the samples comes up and the conversation starts to get heated.  The client is arguing that because of the samples he expects better quality than what is currently being produced.  The factory is saying that his expectations are unreasonable—“production quality is never 100%.  Nobody can do perfect.”

The client, of course, is pointing out that the samples are much better looking than production and the sample from the factory is the standard he agreed to before he paid.  The factory boss turns to me for support in his argument and says: “Mr. Dayton has been doing QC in Asia for many years, he knows that we can’t get it perfect, right?”

Now, this was the first time that we’d ever worked with this specific factory otherwise this manager would have known that this was a bad move on his part.  I complete agree with the client—but, since I’m next in line (to be screwed?) I’m a little bit more diplomatic.   But only a little. “Yes, there are often differences in production and samples. BUT since you have both a sample and a contract, I believe that you should be able to get exactly what you contracted for since the factory already told you they could do it.”

The manager who started out smiling was not pleased with my final answer.  But, I was there to have the exact same conversation with him about our products.  I wasn’t going to lie to this other guy (who was obviously lost as to what to do next) just to be nice to a factory that I was already displeased with.  I’m all for being nice, but I’m not much on compromise when it comes to my clients’ money.

The other client ended up getting more than what he was currently getting, but not as much as he wanted or thought he had contracted for.  He got (almost) what he expected because of three things he did–he had a contract (and brought it with him);  he and the factory both signed multiple sets of samples (and he brought them with him); AND HE SHOWED UP AT THE FACTORY.  Not doing anyone of these three things means he never gets what he wants.

I got a cheap bowl of Pho and a very silent ride back to my hotel.  But I also got what I wanted/contracted for and stayed though two more days of production to guarantee it.  I’ll take the crappy lunches, pay for my own taxies and endure the silent treatment if that’s the price of getting what I’ve ordered.  It’s not what I want nor is it fun/comfortable.  But it’s certainly worth it.

On day two of my visit the manager, obviously still bugged, asked me why I didn’t help him out a bit more with the other client.  I told them that I thought the client was right and that I’ve worked with too many factories that make golden samples to have any empathy for “differences” in production vs sample quality.

He then told me that he has this same argument with just about every foreign client that comes to the factory (but not the local ones or the ones that don’t come to the factory, hmmm….)  And then he launched into the same oratory that he used the day before with the other client.  I listened politely, waited until he was finished and then, again, disagreed 100%.

Side Note: Listening to disarm. I have found that if you listen to, without interrupting, most people, but Asians in particular, and allow them to finish their arguments completely they are just blown away if, in the end, you don’t agree with them.  It’s like they think that if they can just finish the sentence uninterrupted they win.  I think that they expect you to interrupt each and every time you disagree and if you don’t interrupt, then you certainly must agree with all of what they’ve just said.  When I first figured this out, I admit, I tried it a few times just for shock value.  Now, I’ve seen it so many times over so many years that I realize that it’s more than just individual quirks.  Yes, I’m stereotyping (“I’m like my mother, I stereotype. It’s faster.“).  But I’m not saying Asians are dumb/bad/ignorant/purple/whatever.  Relax.  I’m just pointing out that expectations in communications are different and it’s to your advantage if you know those differences.  Remember, if you can name the game, you don’t have to play it.

I told him that Westerners feel lied to if they get production pieces that are noticeable different (lower quality) then the samples they used for contract standards.  Let’s be honest, in the West it’s bait and switch.  I said that doing business like this is the best way to ruin relationships quickly. I tried to share with him the idea that he’s got to under-promise and over deliver, and right now he’s doing the opposite.  Foreigners want the sample to be the basic standard—something that checks off all the boxes but in no way should be better than production.  It’s the standard, not the exception.

Of course, he told me the same thing that every other factory tells me when we have the “golden sample” argument.  Factories in Asia all face so much competition that they make perfect samples to get orders all the while knowing that production will never be that good.  They just want to get the deposit and start the order assuming that they can work out the discrepancies in quality later; which they often can (or they can hide it if they know you’re not coming to do QC).

My take away was this: the factory isn’t stupid.  They would rather get deposits and have this quality argument over and over than take a chance at losing orders with “almost” perfect samples and never argue–money is more important peace.  And I can’t argue with this logic; when a good percentage of the clients either don’t do QC, don’t call them on the changes or don’t even show up at all, factories have really lost nothing by making golden samples. In fact they’re making money!

One more reason to always do QC.

Even if it’s not your fault…

On of the things that I’ve learned, the hard way, about doing business in China is that as a (foreign) buyer when there are problems, even if they’re not my fault, I’m going to be asked to pay for them.

For me, this is the single most exasperating thing about working in China (and Vietnam and Thailand and Taiwan and India too).   Bad quality we can monitor and keep to a minimum.  Ditto late deliveries.  Changes in the prices and terms after we sign contracts really sucks, but the changes usually are not killing deals.  But mistakes, even (or especially?) factory-acknowledged errors that cost time and money (and my face) are the thing that always makes me mad.

“Nothing can be done perfectly” I’m always told (after we’ve approved the sample, paid the deposit and committed to the client).  What does that even mean?!  OK, so about 99% perfect?  No?  96%?  Who, if it’s not me (the guy holding the bag), gets to choose what is and is not perfect?  Which part of “yes, we can do that” does not cover the current imperfection?

Now, I’m not unreasonable, I understand that mistakes happen.  Anyone that reads this blog knows about my (poor) typing skills—everyone has something they don’t do well.  That’s just part of life.  Typo’s are my fault and I’ll refund your subscription if they are too much for you to deal with.  I want that same offer from my factories.  Or at least an offer to pay for the fixes!

Only once or twice has that ever happened though.  So, more often than not, we have to find ways to solve the problems or go crazy being angry all the time.

Usually when we find problems, we’re also told something like, “It’s just really hard to do what you want” or “We’ve never done this before” or “What you’re asking for is impossible.”  I’ve found that one of the best ways to resolve production issues is to ask these questions back to whomever is telling you no: “Is it impossible or just difficult?”  And: “Is it impossible or have you just never done it before?”  Impossible means you need to find a new factory.  “Difficult or “never before” simply means we need to try something new.  Most production issues are NOT impossible to resolve.  But because China is so task specific (a product of both hierarchy and a focus on labor) people are usually tied to very a very limited number of repetitive duties.  They are paid to NOT make any changes or deviate from SOP so they do not solve problems.

For example, this week we had a hat manufacture that had (handmade) perfect samples but was now having issues getting some layering correct in mass production.  They even went so far as to tell my QC that what we were asking for was “impossible.”

I went to the factory, they were politely embarrassed but agreed to build a hat with me. We walked through every one of the production steps with one of the hats, from cutting materials to final ironing and packaging.

Now I’m not a seamstress (seamster?) so I had lots of stupid questions about why they were doing it the way they were.  They had answers for most of the questions and a couple times they were honest and just said “that’s just how we’ve always done it.”  After we produced the same (wrong) result together (“See?  This is just what we can do!”) I asked them to switch up a couple of the steps in the process and see what would happen.  They wouldn’t do it.  I finally told them I’d pay for whatever happens—the wasted sample, the material, extra bills.  Just switch up the steps, please.  They did, amidst a bunch of grumblings and comments like, “It just isn’t done this way” and “I don’t think that our machines will be able to do this” and “You’re not a professional” and “We’ve been making hats for 15 years and never done this before.”

What do you know?  It worked!  They were as surprised as I was and we solved the problem at no extra cost to me (which was the whole point).  This wasn’t me solving the problem as much as it was just being in the factory and taking responsibility for trying out potential solutions, one of which happened to work out.

I was talking with my friend, and 25-year China vet, Bernie, about why this lack of “just try it” attitude exists.  He mentioned that it may have something to do with that fact that there is no one who is responsible for the mistakes it may cause or the fact that it’s really no one’s specific responsibility to try new things either.  So no one does.  It also opens the door to future “adjustments” and “changes” and gives the client the expectation that they are welcome to come in and change process and try other things out in the future.

I agree and would add that there is no incentive to try new things as that means new processes and potentially new and currently unknown problems and/or costs.   And if you get paid by the piece, why would you do anything but the same thing as fast as you possible can over and over—even if it’s wrong (as long as your step in the process is done correctly)?!  In fact, if you’re paid by the piece and you know something is wrong, it’s better for you to not say anything and then have twice as much work (income opportunity) to do later.

Side Note: Did you ever see those management clips where the guy in the US factory pushes “the button” and stops the whole line?  The boss comes down, they talk about the solution that this line worker thought up and all of a sudden the planets line up, world peace happens spontaneously and everyone is happy.  You know the one I’m talking about, right?  Well the Chinese have never see it.  In China the guy would be fired, the loses from a delay in the line would be taken out of his salary–his family would probably be billed too, he’d be locked out of his dorm so they could sell his stuff, and if he had the guts to tell a manager that they were doing it wrong (or there was a better way) he’d be laughed at, cursed at.  If foreigners were there at the time, they would be apologized to profusely and promises would be made that something like that would never happen again.

For whatever reason, it takes pressure from someone with influence (paying client), a manager (responsible party), a technician (the person running the machine) and then an agreement that the change can be repeated (without extra costs or time or money) in the production process to make even a simple change and have it last.

I’m serious about getting all these people involved.  If you don’t have a technician, you’re not getting the full machine capabilities—this person is really important and they don’t usually have any financial stake in the production process; they’re getting paid no matter what.  They will say things that the salesman or the manager won’t and they know production details that that admin folks do not.  Pay attention to these people, buy line workers or QC or engineers drinks gets and you’ll get access to privileged info and you’ll have a “friend” on the inside for future problems.

And no matter how many friends you have on the line, you’ll never be able to do anything without having a manager sign off on the process.  What I see more often than not is that this admin guy may also have to be at least the co-author of the solution too.  Not always a bad thing since he’s then invested in making it work too.

Knowing the process isn’t as important as knowing the final result/testing standards/quality spec’s and being here to make sure that you get what you want.  I can’t know everything about every product that we manufacture.  There are just too many variations.  And I can’t do anything without a ton of other people signing off on the processes, prices, standards, timelines and contracts.  So, as in all business, I trust a limited number of people in each part of the production process.  Each has specific value added that I can’t do without.

First, I trust the factory that they know what they are doing—even if I don’t agree with the way they are doing it.  Hopefully I’ve done enough homework that this trust isn’t misplaced.  But I’m also not arrogant enough that I don’t back up my own decision; we always have a second factory (or even third) that can do what we want if Option A fails.  This also means that I’ve verified a supplier’s previous products, clients and as much history as I can find; so it’s not a blind trust.

Let’s be very clear about the trust here.  I trust factories to know how to make product and buy supplies.  I do not trust them to value my business interests over their own.  So I also trust in very very detailed bi-lingual contracts and instructions and lots of on-site QC.

Further, I’ve learned that while there are specific steps and standards that can be translated from the West to China, there are many things that are done completely differently here but still achieve the same end result—which, again, is the goal.  Don’t confuse the importance of the process with the importance of ending up in the right place.  I know, sometimes you can’t skip steps.  Some times process IS the end result.  But many times, what we think is absolutely necessary isn’t even an option in China.

Second, my staff—an honest QC, a detail orient project manager and an aggressing negotiator are as good as gold in China.  If you have people that you can trust to look out for you first, you can get just about whatever you want in China (or anywhere).  It is worth just about any amount of money to have quality, committed staff.

Third, my clients—they are often banking their lives (second mortgages, loans, etc) on their products and they have a HUGE store of information/knowledge about what is and isn’t acceptable and usually a list of things that have already failed.  They almost always know more than I do about their own product/industry than I do—and they want to share and be involved.  People already in the industry are a gold mine of information, especially if they have a vested interest in your success.

Chinese factories have issues with letting others in or letting people know that there is a problem.  For some reason there is a deeply ingrained fear of mistakes being made public.  I’ve said over that if you want to solve the problems (or even know about them) you have to be here and you have to ask the right questions.  If you’re not here to ask, you won’t even know there is a problem until crappy (already paid for) product shows up in your warehouse.  But even if you are here, you’ve got to get to the root of the problem before you can solve it.