Sunday, July 19, 2009

Poorly Made in China

I've been reading a very interesting book: Poorly Made in China, by Paul Midler. It reads almost like a novel, but sadly, it isn't. It's about the difficult relationship between importers--mostly Americans--and manufacturers in China, with all the ways that the Chinese manufacturers manipulate and control the relationship, not to mention the quality of products. Midler talks about "quality fade", a deliberate and incremental degradation of quality and manufacturing standards in order for the Chinese side to cut costs and increase their profits, as well as counterfeiting--making extra production runs to sell proprietary products in a gray market. The Mattel and milk scandals are only two more well known examples---Midler's cases and his research imply that the practices are widespread.

Midler is a fluent Chinese speaker with a Wharton MBA who has acted as a consultant to various importers, ranging from a personal care products importer to a diamond merchant. Like his clients, he often finds himself victim of the manufacturers' practices---at one point, insisting on a refilling of bottles of body wash that had been shorted the requisite 850 millileters, he found himself having to walk back to his hotel because the factory owner, "Sister", was angry with him for insisting on the re-do and wouldn't provide a ride. The importer, known only as "Bernie", constantly finds himself at a disadvantage as "Sister", who speaks very little English except "price go up!" manipulates both his temper and the business. "Sister" is also constantly engaging in "quality fade", with both the packaging and the formulas. At one point, some shampoo turns to jelly and she wants to ship it anyway, and in another, she gradually reduces the thickness of plastic containers to the point that they start to have leakage problems in shipping. Near the end, Bernie comes up with his own "gotcha" moment, but you have the sense that ultimately, Sister--despite little business training and no English--is going to cut him out of the middle one day and go direct to his customers. In fact, one of the main messages of this book is the way in which the importers are totally beholden to the manufacturers. Even when Bernie tries to go around Sister and find another supplier, she finds out about it almost immediately since the suppliers in this business all know each other and do not let foreigners play divide and conquer.

Midler himself, despite being a long time resident and Mandarin speaker, does not ever really seem to help his clients beat the Chinese manufacturers at their own games--he is taken advantage of almost as often as his clients. Even Bernie's "gotcha" moment is something that Bernie himself seems to have thought up. Or perhaps Midler is too clever to take the credit, since he wants to continue to be a bridge with Chinese companies? Hard to say. LIke him, though, I find myself thinking twice everytime I pick up a consumable product made here. You just don't know if "Sister" might be the factory owner....

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