Continue reading »]]> Full disclosure: I was contacted by the author and sent two copies of this book.

Despite a slightly misleading title, this book is definitely appropriate for anyone whose business involves China in any way. Selling To China is about dealing with people and understanding their motivations and the way things work.

Stanley Chao starts by making a distinction between two types of people in China; those that he calls the Mao Generation, and the newer more Western generation. The Mao Generation are those that are older and have had a lifetime of experiences completely different from Western civilization that have influenced everything about how they act and do business. The newer generation is educated in Western business practices and their mindset makes sense to Western business types. Because their psychology and motivations are similar, and because they often speak English and don’t put so much emphasis on cultural heritage and are more interested in forming long lasting positive business relationships than making a quick buck, and because this generation is still young and only slowly integrating into the factory and corporate leadership, Stanley Chao doesn’t put so much emphasis on this group for the remainder of the book. Instead, he focuses on dealing with the people who do own the factories and do have influence; currently the Mao Generation.

A consultant, Stanley has seen his fair share of horror stories, and he shares many. As a businessman who has been to China for manufacturing, I can identify with and confirm some of them. The book addresses many of the topics that are of concern for a lot of businesses looking to have stuff done in China, and highlights some of the common mistakes and possible problems that occur when two distinctly different cultures try to communicate and do business with each other.

If you have already decided to go to China this book will help, but it will not tell you why you should or what factors should help you make the decision. After hearing many of the horror stories and challenges that make pursuing China challenging, this book left me more informed and aware, but certainly didn’t remove the nervous pit in my stomach that you will probably have all the time. This book might be a manual for a zebra in the African Savannah; there are lots of things that will eat you but as long as you know about them you can keep your eye out and react when you see the signs.

If you are traveling to China either to outsource manufacturing, source parts, or even try to tap into the billion potential customers, then this book has valuable information that is easily worth the cost of the book and the time for this quick read.

Continue reading »]]> I recently read a short book called Don’t Just Roll The Dice, available as a free pdf. The book is about different pricing models and how they work, why they work, the psychology of the different schemes, and how to choose the right model and prices for your business. The book primarily focused on software, but as a lot of hardware often now has a software connected component, it is still somewhat applicable. For example, the book talked about selling the Playstation and xBox as a loss leader but making up that revenue in increased game sales.

At around 70 pages, it’s a quick read; good if you have an hour to kill. The biggest lesson from the book is that you shouldn’t be afraid to just pick a price that you think makes sense and then experiment with it to maximize profit.

In the hardware world, things are in a lot of ways more complex than what the book described. There are so many extra costs that need to be considered that aren’t part of the physical product being manufactured. Things like shipping, tariffs, tax, support, returns, defective parts, assembly, licensing and certifications. Plus there are months of delays between making an order with the factory and getting the finished product delivered. There are people at every step who siphon off a chunk of the profit. There is a lot more risk that is outside your control. As a general rule, hardware pricing takes the cost of the goods sold and multiplies it by 3 or 4. That means every product you buy probably was produced for 1/3 to 1/4 of the price you paid, which is kind of amazing when you look at all the technology packed into a TV or computer. But all that markup is necessary because moving physical things around is expensive.

Continue reading »]]> It’s been suggested to me that I should avoid injection molded plastics wherever possible, and try to go with thermoformed plastic. Generally I research and validate advice before following it, so I started researching when thermoforming should be used over injection molding.

For the newbies, injection molding is when you build a metal tool that is hollow where you want the plastic to be. You put the tool in a large press that holds the two halves of the tool together. The other part of the press has a hopper with a bunch of small plastic bits. Those plastic bits get fed through a heater and then pumped at high pressure into the mold. A few seconds later, the plastic cools inside the mold, the press separated the halves, and the part is popped out of the mold. This is great for smaller parts.

Thermoforming is when you take a plastic sheet, put it in a square frame to hold it, put it near a flat heating element until the plastic reaches a certain temperature, at which point it will sag in the middle. Then you drop it onto a prepared mold. The mold will have lots of little holes drilled into it, and those holes all lead to a vacuum. The vacuum is turned on and the melty plastic is sucked up against the mold. It spends some time cooling, and then can be popped off the mold. It requires another step of cutting the extra plastic off. This method is good for enclosures or large pieces, and it’s a fraction of the cost.

But there are a LOT of considerations, including what material to make the mold out of, what specific method to use for thermoforming (there are lots of fancy variations), and even what kind of heater to use to melt the plastic, and how to move it from the heater to the mold.

But for learning everything there is to know about the process, the materials, the tools, and the molds, this free resource was a fantastic and entertaining read (where entertaining means marginally better than reading a book on accounting methods). It’s available as a PDF here:

http://www.spartech.com/plastics/vfmanual.pdf

Continue reading »]]>  Where East Eats West is a terrifying guide on just some of the ways you will get screwed in China. The entire book leaves a continuous stream of “oh crap oh crap oh crap” repeating in my head and making me wonder why I’m not on the next plane out of this crazy place.

Only two things kept me going while reading this. First, this book is more for people who are setting up a business IN China, not doing business WITH China. It’s a huge difference, though there are still a lot of things to learn from the book, and hearing about some of them set me ill at ease with being remote while trusting a Chinese company to do my work with any kind of quality.

Second, this book is a whole three years old. That means it was written four years ago, and based on experiences from the last 20 years. Things change quickly in China; maybe in the last few years amazing things have happened with quality and the mindset of the Chinese. It’s unlikely that China has adopted Western ethics and corporate culture, so I shouldn’t discount the book on age alone. It’s still highly relevant. The second reason is just naive hope.

It was a quick read, and informative. But as I’m sitting in China right now, considering manufacturing my product here and worrying about all the horror stories I’ve heard, reading more of them in this book was certainly not something that made me feel any more comfortable about where I am.

Continue reading »]]> One of the recommendations from a presenter was the book “Poorly Made In China”. The book was written from the perspective of an agent who deals with importers who are trying to have their products manufactured in China. Usually he is brought in when there is a communication problem and things are failing. In each of the chapters he writes about something that went wrong. Sadly (for them), many of his stories follow the same company.

There are many lessons to glean from this book, which at ~250 pages was an investment of half a day with potential returns of many times that.

Some of the lessons, shortened and made generic:

• Listen to the people you pay for advice who have expertise in the field you need. In a few of the chapters people were bull-headed and ignored what was staring them in the face, or passed over expertise that was offered because of past experiences.
• There are many cultural differences that make working with manufacturers in China difficult, and they are not the stupid things like offering gifts. There are some ways of thought that are completely non-western and thus may seem illogical but aren’t. They often don’t understand the product they are making or why it is designed or functions the way it does, and thus don’t understand how minor modifications to it can be critically consequential.
• Without constant supervision, manufacturers will do everything they can to make or save money. This includes selling ghost product, replacing parts with cheaper parts, skipping quality control, ignoring safety, and many negotiation tactics that are designed to the benefit of the manufacturer and not the importer. They could destroy tens of thousands of dollars worth of product by saving a few dollars on a cheaper part, and they won’t tell you they changed the part.

The book is pessimistic, largely because the author is often brought in when things fail. It’s a roadmap of landmines to avoid and tricks.