The last two weeks have been full to the brim with visitors from central China, Hong Kong and Germany (yes really, here in Salem, VA), sales calls, and computer crashes (my God, does Microsoft suck – Apple, I’m comin’ baby).

I have some great food and travel blogging drafted, but it is 3:15 AM, and I’ve been going since 7:00 AM yesterday, so you get some random dreck, DJ-style, like the great Instapundit (and yes that’s me hoping for some linky love).  I’ve been saving these up for a while, but they are still current and topical.

• Reuters – Google phases out Microsoft Windows use: report – GOOD; Vista is a war crime and the entire Office 2007 suite should have resulted in public hangings in Redmond.  How do you screw up Excel with stoopid menus?  I swear they could mess up a calculator.
• Financial Times – Rival tablets ready to bite into iPad lead – and they’re not even talking about the knock-offs you can buy on the streets of Shenzhen.
• The Anchoress – Witnessing the heart as it cracks – UPDATED – this is now quite dated by all the other bad things that happened in the Gulf of Mexico.  I only post it here to make the point whether you like Obama or not, having a President in the White House who the entire world (especially our Chinese creditors) see as an incompetent fool is not a good thing.
• New York Times – Virus Ravages Cassava Plants in Africa – This is quite sad, as Africa has enough problems.  I will be interested to see if the new colonial masters, the Chinese, come to the rescue with either aid or a scientific solution.  Somehow I doubt either scenario, but I sure hope I am wrong.
• AutoblogGreen – Study: Mass adoption of EVs in China will lead to tremendously higher emissions – It took me several minutes to stop laughing after I read this.  That Law of Unintended Consequences really is a bitch.  I love it when the local tree-huggers tell me about all the green technologies in use in China.  I wish I had a clear photo of the street lamps on a showpiece stretch of highway from Liantang to Buji.  The bulbs are fluorescent and the lamps have solar collectors and windmills!  They should be totally awesomely green, right?!  Except there is no consistent wind, the smog blocks out the sun and the bulbs are all broken.  Other than that, they are on the right track.
• The Telegraph (UK) – Chinese hiding three million babies a year – I know far more young people in China with siblings than the One Child Policy would suggest.  Anyway, as Mike is famous for saying, “there are 1.3 billion people in China – people be ****ing.”  Speaking of which…
• The Sun (UK) – Saying Sorry to China with Sex – Well, I for one applaud the young lady for trying to heal such old and deep wounds.  I mean, what have YOU done today to atone for the atrocities in Nanjing?  On a similar note…
• Good**** – China’s looming woman shortage: 5 possible consequences – this blog post is safe, but please note the site itself is NOT SAFE FOR WORK as the blog title suggests.  Despite the location of this post, the point is very valid – such an imbalance (India is said to have a similar problem) is a  huge flash-point as Beijing tries to control China’s rapid ascent.
• Walter Russell Mead – Marx Awakes as China Rises – an erudite end to this post.  If you don’t read Mr. Mead regularly, you should.

Actually, I have to end with some key words to boost our SEO, since that’s the original reason for this blog in the first place.  So here goes:

Contract Manufacturing, Contract Packaging, Contract Assembly – rah, rah, rah, sis boom bah!  Please feel free to contact me about our contract capabilities!

4:00 AM – good night, Irene.

• MSNBC – Clinton says world must respond to N. Korea
• Financial Times – US warns over Beijing’s ‘assertiveness’
• DER SPIEGEL  – Interview with Economist Nouriel Roubini: ‘We Will Have Even More Crises in the Future’ (hat tip Matt)
• Real Clear Politics – Depression 2010? (whether you agree with him or not, this future is not clear or bright – there is much excitement yet to come I fear)
• Reuters – Factbox: Sources of tension between China and the U.S.
• Reuters – China and U.S. look to close world’s biggest trade gap
• Reuters (again) – Clinton avoids China disputes, hands out teddy bears (avoid confrontation and carry a teddy bear – not exactly what the Teddy for whom the bear is named advised, but then he never had to deal with being in debt to your competitors)
• CNBC – US Plays Down European Crisis but China Worried (as they should be)
• USA TODAY – Private pay shrinks to historic lows as gov’t payouts rise (that’ll work)
• Reuters (yet again) – How Greek debt crisis could save America (God, I hope so)

Maybe get to some travel blogging tomorrow.  Or not.  You’ll have to check back to see.

Too many American industries rely on illegal labor to remain cost competitive, thus the constant drama on the border issue.

The China nearly every Westerner sees is the coastal veneer.  The majority of China still dwells in the poor, mostly agrarian interior.  Their source of cheap labor in internal.

And as this article in Slate by Brett Edkins points out, in a sense, many of those Chinese migrant workers are “illegal” anyway.  Key paragraphs:

The United States could begin by conceding one of China’s principal arguments: Human rights are not just about individual liberty, but also economic opportunity. The Chinese “economic miracle,” which lifted 500 million people out of poverty in just one generation, is itself an unprecedented human rights achievement. Yet it gave rise to other pressing human rights concerns, including an issue that threatens to destabilize China’s Communist regime—growing discrimination against the roughly 200 million Chinese citizens who left their rural homes to find jobs in China’s booming cities.

In many ways, these rural migrants resemble undocumented immigrants in the United States. In China, they provide indispensible labor for vast urban construction projects and work in menial jobs as guards, waiters, cooks, or barbers. They are often mistreated by employers, generally live in poor conditions, and receive few social benefits and limited protection from the police. And their children are regularly denied public education.

Chinese newspapers, “Netizens,” and even Communist officials are calling for reforms. Their main target is China’s 50-year-old household registration, or hukou, system. Began as part of China’s state-run economy, the hukou system labels individuals as “rural” or “urban,” indicating their proper place of residence and binding laborers to the land. Today, rural residents are permitted to travel to the cities, but they can still be fined or forcibly returned home if they are caught working or living outside their designated hukou. Obtaining a temporary urban-residency permit from the police is beyond the means of most migrants, requiring a fee and employment documentation. Permanently changing one’s hukou by attending university or joining the military or the Communist Party is similarly out of reach.

Life for a city dweller with a rural hukou is difficult. Their hukou denies them urban welfare and access to public housing. It also excludes them from publicly funded health-insurance schemes. Since fewer than 3 percent can afford health insurance, most avoid medical care altogether. City judges often impose harsher sentences on rural migrants, and employers frequently withhold wages, knowing undocumented workers cannot complain to police without risking exposure.

I will admit I not a fan of the author’s wording, “undocumented migrants”.  If you illegally cross a national border anywhere else in the world (including Mexico), you’ve broken the law.  Only in the modern American journalist and politician world does that deserve an obscurant euphemism.

However, the point of the article is that despite the rapid advances, parts of the Chinese state are stuck in the Maoist past.  One good thing about dealing with PassageMaker, you know our employees are treated well and legal.  As a foreign owned firm, the government would come down on us like a ton of bricks were it otherwise.

Regardless, I am happy to see people in China, including members of the Communist Party, start to address the problem.

The importance of contracts and compartmentalizing your supply chain cannot be overstated.  You have invested too much to build the business.  Don’t give it away because you are too lazy or too cheap to do the work to protect that investment.

Money ‘graph:

The other day, a really savvy client of ours stopped by the office. This company has been doing business in China for a long long time and it has non-disclosure/non compete/non circumvention agreements with all of its Chinese suppliers and US Buyers I mentioned the above conversation (no names or other identifiers, of course) and we talked about the benefits of the contracts his company has both in China and in the U.S. He then reminded me that this was also one of the reasons his company had set up its own trading companies in China. This company gets its product from about a dozen different Chinese factories, but the records in both China and the United States all point to the U.S. company’s own trading company as the exporter. This company has never had a problem with its customers going around it.

PassageMaker can help you secure your China supply chain.  Our “Black Box” Assembly Center is a far less expensive option than setting up your own trading company.  If you still want your own presence in China, we can help you with our Factory Formation service.  Give us a call, and when you need a lawyer in China, you could do far worse than Mr. Harris.

I’ll step up and admit I didn’t.

What’s worse, now that Import Genius is out there, finding your competition’s suppliers is as easy as using a search engine.  Anything imported into the USA is a matter of public record, including the exporter (i.e., your supplier), the type of goods and your receiving address.

Import Genius is an amazing program and I will be using it for sure, but it also highlights another advantage PassageMaker‘s “Black Box” offers our clients.  When you hire us to perform our Assembly-Inspection-Packaging service, that is really a catch-all term for any sort of contract assembly, product inspection, contract packaging, kitting, order fulfillment, pull-pack-ship, freight consolidation, private labeling or branding, etc.  We do everything from kit mobile phone accessories to assemble vacuum cleaners.

Aside from the advantages we provide to help you control your costs, ensure your quality and protect your intellectual property, we also act as a “firewall” to protect your real supply chain.  When a competitor searches for you on Import Genius now, they’ll get the name of your Chinese supplier.  Think about that for a moment.  You invested thousands upon thousands of dollars to establish that relationship, to tool your product and get the production going.  If you are like a typical “mature” PassageMaker client, before you hired us, you were paying for at least a half-dozen trips to China a year.  With business class seats, rooms at the Shangri-La, private cars, etc., that’s $20k per trip.

How confident are you that your supplier wouldn’t sell a knock-off of your product to a competitor?

If they search when you are working with PassageMaker, all they will see is our address as the exporter.  So in addition to saving you on travel expenses, we protect the investment you made in your suppliers.  Our motto is “Trust & Transparency”, and you can trust us to protect that supply chain.  We wouldn’t stay in business 5 minutes if that weren’t true.  In the PassageMaker system, you will always know who your suppliers are, who has your tooling, who has your designs, who has your money and who has your products.  The transparency part only applies to you!

I take full responsibility, as I am the only one who proofreads my blog posts.  I have dyslexia, so I always try and proofread everything 2-3 times before I send it or publish it.  After all, I get enough hounding from the clan in China, to say nothing of the Zen Dragon from down under, that I don’t need to make it any easier for them.

That said, my error sets me up for a good blog post today.  This experience underscores what I was saying in the original post – your business documents are far, far more important in China than in your home market.

Make a mistake or an error of omission on a purchase order, and you may very well be hosed.  Do the same on a Product Quality Manual (PQM), and I can guarantee trouble.

Some time ago, such an error of omission rose up and bit one of our customers rather badly.  We had followed the PQM as approved, but we had not been checking a particular dimension.  It had never been in the PQM, whether we didn’t include it when we drafted the document or whether the customer left it off the original drawing was lost in the mists of time, but the error had persisted undetected by all for nearly 4 years.  It was never a problem as long as the vendor providing that component did their job right, but we are all human and that finally didn’t happen.

Our team inspected the product to the PQM.  The error was so subtle, you would never notice it with the naked eye.  The client assumed all was well and shipped the product, which immediately were rejected in the field.  Long story short, everyone was unhappy and we all lost, but there was no warranty claim to be made against PassageMaker.  We’d followed the approved PQM.

Our policy is we will do what you tell us in the PQM, no more, no less.  It has to be this way, as the biggest problems in China are the admirable Chinese tendency to want to help too much or worse, to improvise when a problem arises.

I had a friend who was buying pillow cases in China.  All the samples came in exactly 1″ too big on every dimension.  Panicked, he called the factory and they told him they so appreciated the order (for several hundred thousand units), that they wanted to reward him by providing extra material at no cost!  After he got his heart pumping again, he contacted our friends at China Quality Focus who went on-site and got things back on track quickly.

Doing business in China is Murphy’s Law on steroids, acid and a truckload of uncut Colombian all at once.  Muse’s 1st Law is “Never Assume Anything“.  Make sure if you want it to happen (or not to) that you put it in writing.

I meant it when I wrote that we LOVE getting 17 pages of corrections back from the client.  It is far better than a cursory review and signature.

We have four (4) internal layers of proofreading for a PQM before it is sent to the client for approval.

1. The PQM is drafted by a Quality Technician, with input from the entire team, including the client.
2. It is then reviewed by the Production Engineer.
3. It is then reviewed by the Project Manager.
4. It is then reviewed by a member of senior management (most often by me).

Only then is it sent to the customer.

This is a time consuming process.  But the alternative is terrible to contemplate.  Anything worth doing is worth doing right the first time.

So make sure you proofread before you sign on the line that is dotted.

This put me in mind of the importance of making sure all your business documents say what you intend them to, ESPECIALLY when doing business in a foreign language.  One of the services PassageMaker offers our clients is help drafting the language on their purchase orders.  Many of our clients come to us after having a bad experience or two in China, and it is amazing how vague some of their purchase orders are.

The Chinese legal system is rapidly improving and a properly written purchase order is a binding contract that can be the difference between getting raked over the coals and being the one doing the raking.

I see similar issues with design databases.  Drawings are often given to us with no material specifications, no finish specs, etc.  I had a drawing once from an client that specified “aluminum”.  When I asked his engineer what type, he responded that he didn’t think it mattered.  This for a part to be subjected to high heat and load stress – you’re darned tootin’ it matters.

We have also received drawings specifying titanium fasteners.  After wasting time looking for these very hard to find fasteners, the project engineer in the USA tells us that he just cut and pasted the fastener drawing and forgot to change the material spec.  Two seconds of his time would have saved two days of our team’s time.

This kind of BS is why we have Endorsed Service Providers.  Choosing with the cheapest guy is very rarely the best deal.

Another area where we frankly NEED our clients to proofread is our Product Quality Manual (PQM), the core of our Assembly-Inspection-Packaging service.  As Mike Bellamy says, “we are generalists; we depend on the client to be the expert”.  We take the lead on drafting the PQM, and submit it to the client for approval, but once they sign off on it, that is what we are going to do, no more, no less.  It becomes our warranty and if the client forgets to tell us something, once they approve the document, that is now the official record.  We’ll happily amend the PQM for the next order, but if it wasn’t written down, not my fault.

Our system incorporates four (4) levels of approval before it is sent to the client for final approval.  From the speed at which some clients approve the document, I know they barely looked at it.  I would rather have a 17 page response as we got from one client than a signature 20 minutes later.

Doing things right takes time, but nowhere near as much time as doing things over.  If your project is valuable enough to bring to market, you have time for some proof reading.

PS – I have dyslexia, and have proof-read this damn post five times looking for typos.  I bet you all find at least one in spite of that effort.

And by this weekend, I mean most all of it, Friday, Saturday, Sunday and Monday morning.  Friday and Saturday were hot and humid, but Sunday was the gauntlet.  Day started early, hot and humid and ended in a cold rain at 1:00 AM Monday morning.  I had some work to do and did not get to sleep until 2:30 AM, back up at 6:00 AM to help them finish before the deadline of 9:15 AM (which we made by 5 minutes).

Why am I telling you about this, a blog ostensibly about China Business and my impressions thereof?  Two reasons:

1. I am a slightly overweight and out of shape 39 years old.  I like to drink more beer than I should and my Room 101 is a gym.  I have never been a good athlete, I have a bad back, so bad I had to wear a brace 24/7 for several years as a teenager.  And though today I am sore all over, my legs and my back feel far better than I’d expected.  I credit my TrekDesk.  I’ve mentioned TrekDesk before (here and here) and I walk several miles a day at an aggressive 8 degrees of incline at 2.2 mph, which will get your heart pumping.  I had not realized how well it had conditioned my legs and forced me to improve my posture.  Walking while you work really does rock.  I mention this because as I have blogged before, the TrekDesk is one of the best examples of our complete system of services – engineering by our Endorsed Service Provider, Contract Engineering Services; then Sourcing Feasibility Study, next Vendor Coordination and now Assembly-Inspection-Packaging at our Assembly Center according to the customer approved Product Quality Manual.
2. The USA’s trade deficit with China is almost universally viewed as a bad thing.  But the low-cost goods China provides to the USA consumer is a reminder that any transaction has benefits for both sides.  As I moved my friends’ copious amount of stuff, I was struck by how much of the contents of their home (and indeed, any American home) are now Made in China.  When I was growing up, I do not remember having that many clothes.  That is not to say I went about in rags; quite the opposite, my Father was successful and I had a wonderful childhood.  I just don’t remember having anywhere near the sheer volume of clothing my friends’ children had.  Today I have five (5) pairs of shoes.  I actually make a game of trying to minimize the amount of stuff I drag around with me – Exhibit A being the extended trips to China with one (1) carry-on bag.  Looking around my own house, each of my children has at least twice as many pairs of shoes as I do.  All are Made in China.  The prices paid for those are astoundingly low, even to me who has an idea of what they cost ExW.  While I am rightly concerned about foreign competition as an American manufacturer, it would be dishonest and foolish to say that there was no benefit to the American consumer from our trade with China.

All for today, much catch-up to do having lost the weekend.  It continues to rain soup, new opportunities daily.  Will try to squeeze in more blogging tomorrow.

This project has now transitioned to Pramod KC‘s team for production.  Pramod’s team manages the vendors (we call it Vendor Coordination / Export & Logistics) and coordinates to make sure our Assembly Center gets all components and performs Assembly-Inspection-Packaging to the customer approved Product Quality Manual.  When all is complete, our Logistics Department arranges the shipment, often shipping directly to the client’s distributors and retailers, often in customer-specific packaging, including point of sale displays and barcoding.  In short, this is not only a great product, but it is a great example of how the PassageMaker system works start to finish.

But enough about us, back to the article.  Key paragraphs:

You may think you have no choice about how much you sit. But this isn’t true. Suppose you sleep for eight hours each day, and exercise for one. That still leaves 15 hours of activities. Even if you exercise, most of the energy you burn will be burnt during these 15 hours, so weight gain is often the cumulative effect of a series of small decisions: Do you take the stairs or the elevator? Do you e-mail your colleague down the hall, or get up and go and see her? When you get home, do you potter about in the garden or sit in front of the television? Do you walk to the corner store, or drive?

Just to underscore the point that you do have a choice: a study of junior doctors doing the same job, the same week, on identical wards found that some individuals walked four times farther than others at work each day. (No one in the study was overweight; but the “long-distance” doctors were thinner than the “short-distance” doctors.)

…

But it looks as though there’s a more sinister aspect to sitting, too. Several strands of evidence suggest that there’s a “physiology of inactivity”: that when you spend long periods sitting, your body actually does things that are bad for you.

As an example, consider lipoprotein lipase. This is a molecule that plays a central role in how the body processes fats; it’s produced by many tissues, including muscles. Low levels of lipoprotein lipase are associated with a variety of health problems, including heart disease. Studies in rats show that leg muscles only produce this molecule when they are actively being flexed (for example, when the animal is standing up and ambling about). The implication is that when you sit, a crucial part of your metabolism slows down.

Nor is lipoprotein lipase the only molecule affected by muscular inactivity. Actively contracting muscles produce a whole suite of substances that have a beneficial effect on how the body uses and stores sugars and fats.

Which might explain the following result. Men who normally walk a lot (about 10,000 steps per day, as measured by a pedometer) were asked to cut back (to about 1,350 steps per day) for two weeks, by using elevators instead of stairs, driving to work instead of walking and so on. By the end of the two weeks, all of them had became worse at metabolizing sugars and fats. Their distribution of body fat had also altered — they had become fatter around the middle. Such changes are among the first steps on the road to diabetes.

…

Some people have advanced radical solutions to the sitting syndrome: replace your sit-down desk with a stand-up desk, and equip this with a slow treadmill so that you walk while you work. (Talk about pacing the office.)

Why yes, yes we have.  It feels to good to be a radical sometimes!

I have found that walking at 2.2 mph at 6 degrees of incline is just right to really get your heart rate going and still be able to type, write and talk on the phone.  So go order a TrekDesk, and if you need help bringing your product to market, give PassageMaker a call!

What I found most interesting was the “child” part – when I was 15 I would have slugged anyone who called me a child.  During the summer of my 15th year, I was working in our metal stamping plant where the highest temperature reached 103 F (40 C).  I had my first factory job when I was 14 turning wheels on a lathe.  My Father never read child-labor laws, and thank God for that.  It was an invaluable experience that I am sad to say I won’t be able to give to my son.

I can remember in 1998 visiting a factory for a major automotive supplier in Taiwan.  There were 14 year old boys working on the lines making seat belt assemblies.  I asked about it and found that they were students at the local technical school.  They worked half a shift on the line and spent the rest of the day in class studying engineering.  Today, 12 years later, they would be around 26 with degrees in mechanical engineering and over a decade of hands-on experience.  I imagine some of them are running plants in China now.

I’ve written about The Wiffle Ball Life before, a term coined by P.J. O’Rourke to denote the rather pathetic American obsession with safety, self-esteem, and never doing anything the slightest bit risky – especially if it might also be fun.

I understand that Apple is worried about its image, and I acknowledge that those eleven 15 year olds may not have wanted to be there.  But there is a big difference between a 15 year old farm kid fibbing about his age to get a good factory job to help support his family and using 6 year old slave labor in an illegal fireworks factory in Sichuan.  It would be nice if the amazingly flexible English language had a concise way of stating the difference.  I think “under-aged labor” is more reflective of the reality of the situation.

Should you need to verify that your suppliers are not using “under-aged labor”, our friends at China Quality Focus can perform a Corporate Social Audit for €376 + travel expenses, a small price to pay to avoid the kind of (undeserved) bad publicity Apple is experiencing.  PassageMaker can also help our clients, under the auspices of a Vendor Coordination contract, draft supplier agreements to reflect the social norms of their home country or industry.

A better solution would be to have PassageMaker perform the Assembly-Inspection-Packaging functions in our 100% US-owned and -operated Assembly Center.  We will warrant that we meet the necessary social compliance metrics.

Give us a call before you write the press release or talk to the New York Times.