What is going to amuse our bouches now? (bumbaugh) Tue 21 Jul 09 09:35
We're pleased to welcome Paul Midler, the author of "Poorly Made in China," a recently published book that highlights issues related to China manufacturing. Paul graduated from college in 1992 with a concentration in Chinese history and language, and he holds an MBA from Wharton. He has lived in East Asia for over ten of the past fifteen years, mostly by playing go- between for American companies in the region. In the course of his manufacturing career, he has assisted companies of all sizes in a diverse range of industries, working directly with hundreds of manufacturers in China. Midler's book has received praise from many corners and has been called a "must-read" for anyone doing business in China today. Leading the discussion is Cynthia Barnes. Cynthia is a long-time WELL member whose work has appeared in National Geographic, Humanities, Voyaging and Salon. Her Slate series, 'Timbuktu for the Timid' was listed as "notable" in Best American Travel Writing 2006. A graduate of the University of Missouri- Columbia, she recently (and somewhat reluctantly) relocated from Bangkok, Thailand to Boulder, Colorado. Her online home is www.cynthiabarnes.com. In true Boulder fashion, she is currently typing with one hand, having broken the other while cycling. She begs your indulgence. Sorry about your injury, Cynthia, but great to have the both of you here. Welcome!
cyndigo (cynthiabarnes) Tue 21 Jul 09 13:00
thanks, bruce! paul, i wonder if we could start by telling us a bit about how you came to be a liaison, and when you realized there was a book to be written...
paulmidler (paulmidler-1) Tue 21 Jul 09 13:15
Here we go... Much of my manufacturing career in China was about "right place, right time." American importers were coming to China in big numbers, and they needed help. I spoke Chinese, and I had an interest in learning more about export manufacturing. I graduated from business school at a time when manufacturing orders were shifting to China. One of my motivations was placing myself in the epicenter of this very interesting and historic happening. It may have been true that I'd always wanted to write a book, but for years I wrote nothing at all. I just went about my business, trying to do my best as a go-between for American companies in China. After a while, I realized that I was giving the same advice over and again. And I was telling the same stories. I began to jot down some of what I thought was important, and then the floodgates opened wide. I had a lot to say, apparently, and after writing for some time, I thought that there might be enough for a book. The thing evolved until we got the narrative that we're talking about here -- "Poorly Made in China"
cyndigo (cynthiabarnes) Tue 21 Jul 09 14:43
in the book, it seems as if the continual degrading of quality is built into the whole operation -- that if the factories delivered the original quality at their original price, there;s no way they can make a profit. do you think it's planned from the get-go?
Gail Williams (gail) Wed 22 Jul 09 13:19
That's a staggering observation and question! A quick aside: If you are not a member of The WELL, you may ask a question by emailing inkwell @ well.com -- please include "China" in the subject line. (I would normaly say include the whole title, but for some reason a note about "Poorly made in China" triggered a spam-filter for me! Small wonder.) Folks reading this conversation from outside The WELL's passworded areas may bookmark it as: http://tinyurl.com/358offsite If you are reading without being logged-in and you do have a password here, you can post to this discussion here: http://tinyurl.com/358loggedin Back to the book...
descend into a fractal hell of meta-truthiness (jmcarlin) Wed 22 Jul 09 13:22
I just read the great reviews on amazon.com to get a sense about the book. I've started distrusting anything and everything made in China. It's gotten to the point that I assume that anything with a "made in China" label might poison or injure me or burn my house down. I've spent quite a bit of time looking for products made elsewhere whenever possible. I'm wondering if you think that the situation is improving even marginally? And, as a follow up, what can we do given the current system where all manufacturers are rushing to hand business to China with the biggest concern cost and where the government goes along with it because the lobbyists flood Washington with money.
paulmidler (paulmidler-1) Wed 22 Jul 09 14:01
Before I begin, a quick thanks to Cynthia for participating -- and with the use of only one hand! Hope you're feeling better soon... Let me start off with Cynthia's comment... Back in 2007, I wrote an article in which I raised an alarm. I countered the generally accepted notion that "things were going to be all right" in China, and that "quality was going to improve." Based on what I had seen in manufacturing, things were actually getting worse. I called it QUALITY FADE, and while the article was passed around and led to a few interviews, the media returned to its state of denial. And then, of course, we had so many more quality failures in 2008 and 2009. For a quick look at that article, here is the link... http://www.forbes.com/2007/07/26/china-manufacturing-quality-ent-manage-cx_kw_ 0726whartonchina.html In the book, I made an attempt to show how wonderful things could appear at the beginning of these contract manufacturing relationships. At the start of one project where we were manufacturing soap and shampoo for the US market, the American importer that I worked with asked me: "How can they make this stuff so cheap?" He knew the price of all the components that went into making a bottle of shampoo, and it seemed that there was next to no profit for the manufacturer. I don't want to ruin the entire book for prospective readers, but in the end we learn that there are many reasons why a manufacturer would agree to make merchandise for next to nothing. One reason is that "switching costs" in manufacturing are high. It was important to many manufacturers to catch the order first. Later, once the importer was relaxed and the orders were assured, the factory could raise prices bit by bit, and then quality could be cheapened. Some have suggested that quality fade is nothing new, that it is mere corner cutting. I have challenged this notion in a number of ways, one of which is by tying the habit in China with a cultural inclination towards counterfeiting. Chinese manufacturers over time were learning tricks of the trade. They were taking a product that looked like it was "A level" and were actually delivering "B level" goods. Chinese suppliers have proven brazen in their attempt to manipulate quality so as to circumvent third-part laboratory testing. The most egregious case of quality fade involves melamine-tainted milk. Farmers and milk collection centers began thinning out milk with water. The milk companies caught on and began testing for protein levels. So, then the farmers and collection centers began adding melamine, a toxic industrial byproduct that shows up in laboratory tests as a protein. They put in less and less milk, and more and more melamine, until babies began dying. It's really a sad, sad case. Some of those who have read "Poorly Made in China" are parents, and those with children are worried the most about products that are made in China. I have had readers tell me, for example, that they have cleared their kitchens and toy chests of anything that is made in China. My sister who is about to have a baby sent me a frantic email asking me whether I thought it was best to avoid cribs that are made in China. This was two months ago, and since that time there has been another major recall of baby cribs that are made in China. Jmcarlin's question is a good one. Is the situation improving? Well, let me put it to you this way: China has a major quality problem, one that is endemic and that has cultural roots. China's response to the problem is to say "there is no problem." What do you think? Will the problem go away on its own? My own take is that denial a kind of guarantee that we will see further problems. The question is whether US politicians are going to respond to the problem, or if we will continue to close our eyes. HINT: Someone should ask me if consumers can have an impact by refusing to purchase products that are made in China.
paulmidler (paulmidler-1) Wed 22 Jul 09 14:14
For WELL readers, wanted to post a link to an excerpt, along with links to recent book reviews... EXCERPT: http://www.tcbreview.com/what-do-you-make-here.php BOOK REVIEWS: The Economist: http://www.economist.com/books/displaystory.cfm?story_id=13642306 Asia Times: http://www.atimes.com/atimes/China/KG18Ad02.html Epoch Times: http://www.theepochtimes.com/n2/content/view/18877/ John Derbyshire: http://article.nationalreview.com/print/?q=ODA5MTM2NmEzM2JkYWZhN2RiZmFkOWIwNGY zZDhhZTU= The Star (Malaysia): http://thestar.com.my/lifestyle/story.asp?file=/2009/7/11/lifebookshelf/426419 6&sec=lifebookshelf In Arabic: http://www.aleqt.com/2009/07/21/article_254675.html In Norwegian: http://www.idg.no/computerworld/article137579.ece
pardon my amygdala (murffy) Wed 22 Jul 09 14:38
Ooh, I just thought of a question. Can consumers have an impact by refusing to purchase products that are made in China?
Mark McDonough (mcdee) Wed 22 Jul 09 14:44
Damn, I was just going to ask that one! So I'll have to drop back to a more philosophical one: What do you think the Chinese will end up with after all is said and done? I have a friend who's convinced that the Chinese will climb up the value-added ladder just as the Japanese did and be a very dominant economic power for generations. I have my doubts, partly because I've read just enough Chinese history to have some vague sense of the many internal tensions and difficulties they confront.
descend into a fractal hell of meta-truthiness (jmcarlin) Wed 22 Jul 09 16:01
I sort of asked that question in my earlier post, albeit with some cynicism and pessimism. Sometimes I feel like the odd lemming out who asks about the path ahead and is told: everyone is going over the cliff because that's what people want.
Gail Williams (gail) Wed 22 Jul 09 16:35
By the way, did you see this very strange news story about a suicide of a young man working on iPhones in China, and the outrage the story is supposedly causing within China? Lots of details, which may be apocryphal, in the blogs, but a lot of caution in giving just the bare bones of the tale in mainstream media, like this account: http://online.wsj.com/article/SB124827762524772555.html
David Albert (aslan) Wed 22 Jul 09 18:36
After reading the whole book, I had several questions: 1. Asked above. 2. It seemed generally as if you were suggesting that the real brunt of the problem was borne by the importers rather than the retailers or consumers, since retailers would typically not accept bad product and wouldn't pay upfront, while importers had to pay before delivery. Is that what you intended to convey, or is it just that you work most closely with importers and thus are most familiar with their specific problems. 3. Were all the stories in your book exactly true as to fact, or did you need to amalgamate various stories and/or change details (other than just names, which you mentioned needing to change in the book) in order to protect the privacy of your clients? 4. You gave one story (I think it was only one) in which an importer figured out a trick to help somewhat in their bargaining power with a Chinese factory, but all your other stories suggested that ALL the power lay with the factory -- it really felt as if there was VERY LITTLE that importers could do, even savvy ones, to make things better. Was that true then, and is it still true now? 5. How dated were these stories and how much has changed since the stories in your book? Some of them go back quite a ways so I wasn't sure by the end how much may have changed from start to finish.
cyndigo (cynthiabarnes) Wed 22 Jul 09 19:14
all great questions! paul, thanks so much for posting your reviews.
paulmidler (paulmidler-1) Wed 22 Jul 09 21:21
Thanks, Murffy. Here we go: "Can consumers have an impact by refusing to purchase products that are made in China?" This is what media pundits like to use as an argument in defense of China. If consumers don't like what's being produced in China, why don't they simply pick up products that are made somewhere else? The suggestion is unfair to American consumers, who don't really have much of a choice. For many product categories, there is simply no choice but to purchase a product that is made in China. I like to use the analogy of a car radio. You may want to listen to Brahms or Elvis, but changing the channels may not get you where you want to be. The reality is that the distribution channel is controlled by someone else. Sure, you are free to change the channels, but you're only going to have the chance to listen to whatever is playing on the radio at that moment. American consuming habits are effectively controlled by those importers who bring goods into the country. Importers control the distribution channels. Their role is critical, and it is one reason I chose to write this book. For those who have not yet got hold of a copy, I focus heavily on the role of US importers in China.
paulmidler (paulmidler-1) Wed 22 Jul 09 21:39
Gail - I did see the story about the iphone worker who is said to have committed suicide, and it was sad. Of course, something you won't find in China is a TV show called "CSI: Shenzhen." These folks are not famous for their forensic investigations, and so we won't get any autopsy that details, for example, bruising that may not be related to the fall itself. For those who have not followed the case, there was talk of the worker having been beaten by security officials as a part of their "investigation." Some analogy here could be made with a suicide in the Mattel case from 2007... http://www.telegraph.co.uk/finance/markets/2814037/Chinese-boss-of-toy-firm-in volved-in-Mattel-recall-commits-suicide.html
paulmidler (paulmidler-1) Wed 22 Jul 09 22:07
Aslan - I'm going to address your #3 and #5 and leave the rest for tomorrow. Great questions, by the way... "3. Were all the stories in your book exactly true as to fact, or did you need to amalgamate various stories and/or change details (other than just names, which you mentioned needing to change in the book) in order to protect the privacy of your clients?" The book is true to facts, and especially true to dialogue. There were a couple instances where I took liberties with the time line, though I did nothing that might have distorted reality. An author typically has a certain amount of license, but I didn't give myself much at all. A book must read well, yes, but this one maintains absolute fidelity to events that occurred. Evidence of this may have come in the form of notes I've received from others who have worked in the same manufacturing settings. These individuals have written to say that my book perfectly reflects their own experiences in China. "5. How dated were these stories and how much has changed since the stories in your book? Some of them go back quite a ways so I wasn't sure by the end how much may have changed from start to finish." The book reflects the manufacturing world in South China in the first decade of the 21st century. A book is not a newspaper, and I did not intend for it to be read and then tossed aside. Certain cultural elements that I got down on the page are going to have staying power, because culture doesn't change too quickly. Having said that, anyone who attempts to write a book on China is a fool -- because a book is meant to be permanent, yet China is characterized by rapid and broad change. I am personally curious to see how the book will read in ten years. In the end, I don't see the book as a primer on doing business in China (though I am glad that businesspersons are finding tips in the book). More important, the book highlights the extent to which culture affects business. Some details may become outdated, but the point about culture is everlasting.
paulmidler (paulmidler-1) Wed 22 Jul 09 22:17
Aslan - On question #4... "4. You gave one story (I think it was only one) in which an importer figured out a trick to help somewhat in their bargaining power with a Chinese factory, but all your other stories suggested that ALL the power lay with the factory -- it really felt as if there was VERY LITTLE that importers could do, even savvy ones, to make things better. Was that true then, and is it still true now?" One of the things that "Poorly Made in China" does is set the record straight on the balance of power in these manufacturing relationships. Chinese manufacturers have a lot of leverage than the average consumer understands. In an environment where the law cannot be used to get people to behave properly, actors will look to situational leverage. I've tried to show a number of areas where manufacturers hold better cards than their customers. The imbalance was, I suggested, part of the cause behind product quality failures.
Linda Castellani (castle) Wed 22 Jul 09 23:27
Hi Paul. I really enjoyed the book, although I was aghast at what I read. I, too, now want to avoid buying things that are made in China. Have you ever wanted to be more than the middleman between the importer and the manufacturer and figure out a way to do more than just warn importers (in vain, it appears)? Is there any way at all that the manufacturers could acquire a conscience? In the case of the manufacturer who commited suicide, do you think he did that more because of loss of face or because of the financial impact to his business? What kind of things have you heard other manufacturers say about it?
cyndigo (cynthiabarnes) Wed 22 Jul 09 23:35
the changes will be interesting! i've been meaning to read "a year without Made in China" to see how the author managed. do you think the endless recalls and safety horror stories will have an impact on either the process or the distribution system?
paulmidler (paulmidler-1) Thu 23 Jul 09 06:30
Hi Linda. On your first question, yes, there were times that I wanted to do something else. I did enjoy the challenges that presented themselves in my role as a go-between. After a certain number of years, though, I felt it would be more interesting to tell the story than to go on living it. On the cases of apparent suicide, it is difficult to determine motive. It is *especially* difficult since in neither case was a suicide note ever found. It is not a reporter's job to speculate, but a good crime scene investigator would explore the possibility of murder. It may be interesting to note that the majority of suicides in China occur in rural communities, and that China is the only country where women commit suicide in greater numbers than men. Having worked with many brazen suppliers in China, I can tell you that their first response to getting caught in production shenanigans is not to commit harakiri. The two cases mentioned -- Mattel and iPhone -- involve a lot of dollars and China's international reputation. There was another very public case, involving China's global reputation -- a senior food safety official "fell" from a building amid a related scandal. The government called it an accident, not a suicide. http://www.reuters.com/article/latestCrisis/idUSPEK70797
paulmidler (paulmidler-1) Thu 23 Jul 09 06:44
Hi Cynthia - "A Year Without China" was about a family experiment. The author attempted to live a year without products that were made in China. The moral of the story was, of course, that it's really, really difficult to do. It would be nice to say that "it's our responsibility," but consumers can't do much. First, in many product categories, most of what you see in the stores comes from China and there is no alternative. Second, people are economic creatures. You can't ask them to go out of their way to buy more expensive things. On this point, let me digress for a moment. There are folks in the media who will insist that China has been great for us, because it has allowed average Americans to save a few dollars per year. These same pundits, reporting on the quality problem, will then turn around and say "well, if you don't like it, why not buy something that's more expensive." The third problem is that consumers don't always get to find out where a product is manufactured. I'll give you a perfect example... In the world of soap and shampoo, manufacturers do not always have to indicate the country of origin. I was just last week in a supermarket and was checking labels. Vi-Jon manufacturers soap for Topco, which sells a generic brand into the supermarkets. Their products that are manufactured in Canada will say "Made in Canada" somewhere, but then there are bottles that do not offer country of origin *anywhere*. I would bet that those bottles came from China, or some other market where the distributor hopes to keep the information hidden. You have bottles of soap and shampoo in this country that say "Distributed by X, an American company." These products give *no* indication of the country of origin. It is not the consumer's job to police the supermarket shelves, or to direct foreign economic policy It is the job of the US government. There is a lack of leadership here, as evidenced by quality failures. It is, by the way, the government's job to ensure that consumers have enough product information. Why companies in health and beauty care are allowed to skip country of origin information is beyond me, but if this happens in one product category it goes on in others.
Betsy Schwartz (betsys) Thu 23 Jul 09 10:35
It's so very difficult to avoid products made in China, and it is exponentially more difficult if you cannot afford to pay specialty prices, and don't have a taste for hand-whittled wooden toys. If you shop online, many retailers simply identify products as "imported" - they may be getting the same product from multiple sources. And there are some things that seem to be made nowhere else - like computer printers, to name one I tried recently example. There are some sites that list things made in America, but it seems to be almost impossible to keep this sort of list updated. My biggest worry, personally, is food. A great many harmless-sounding food ingredients are manufactured in China. Citric acid, for example. China produces at least half of the citric acid used in food, and that stuff is in *everything*, and who knows what sort of acidic white powder is actually being shipped? China also produces huge amounts of the world' sodium citrate, potassium citrate and calcium citrate. Xanthan gum, food coloring , vitamins. Lactic acid, sodium bicarbonate, dicalcium phosphate. All those little things at the bottom of the ingredients lists are increasingly made in China. After the melamine scare I don't have much faith.
cyndigo (cynthiabarnes) Thu 23 Jul 09 11:15
another argument for eating locally! since reading paul's book i've began studying labels on toiletries ... you're right about gov't oversight but until (if ever) they step in, we must do what we can.
Michael C. Berch (mcb) Thu 23 Jul 09 11:57
Hello, Paul - I guess I'll be the devil's advocate. While I've experienced some of the poorly-made in China goods as others, there are also many examples of very well-made goods, like the laptop computer that I'm typing this on, and my new iPhone (which is exquisite). I've seen the same thing with cameras, DVD players, and televisions. So clearly, there are a number of Chinese manufacturers that are able to maintain high standards of quality and importers who are able to enforce those standards. Also, some of my other reading indicates that Chinese manufacturers are constantly frightened of having their export deals terminated for either high costs or poor quality -- a specific example was direct importer Walmart, which plays Chinese vendors against each other to drive down costs and keep quality high. I have a cousin in Southern California who imports sandals from China, and given the huge number of factories who are able to supply low-tech, fungible goods, he does not hesitate to switch suppliers. One crappy shipment, and someone else gets the business next time. I guess I don't quite understand your argument that manufacturers have market power over customers.
paulmidler (paulmidler-1) Thu 23 Jul 09 13:49
Hello Michael - Excellent point, and I'm glad you brought it up. Yes, it is true. Not all of the products that are made in China are poorly made. Is this a comfort, though? Not really. In the book, I mentioned on a trip taken back to the United States that a crime wave had been sweeping the city of Philadelphia. In the course of a year, 400 had been murdered, and most of these by handguns. In the city's defense someone might have pointed out that there are millions of people in the city, and that while 400 were murdered, many of the city's citizens weren't! At one point during the quality crisis, Chinese government officials made the claim that 99% of their goods were trouble-free. How do you like those odds? If I told you that the chances of getting into a car accident were 1 out of 100, would you be as willing to get behind the wheel? What if the odds were the same for getting food poisoning in a restaurant? In our daily lives, long story short, we need a lower failure rate. You do not need to have been personally shot at to know that there is a gun problem in your city. By the same token, you do not need to have been personally affected by shoddy products in order to recognize that a problem exists. Will pick up more from your post in my next one...
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