Monday, July 4, 2011

Why are Chinese Manufacturers are so Short-Sighted?

One thing about Chinese manufacturers that is universally true: they always focus on how best to maximize the one current job you've sent them. They would find all kinds of ways to cut corners, either by reducing the quality of material or less labor, etc. They would never look down the road where a solid working relationship will in turn bring in additional jobs.

This is why most of their customers are usually one-time customers. They spend the great majority of their sales and marketing efforts trying to get new customers. Client-retention rate is very low for them; the concept might even be foreign to many.

And because they have to compete with thousands of other similar Chinese manufacturers to get new customers, most of them will likely employ the same tactic: promise the world, get the order first. Once the order is secured, they'll then try to see how they can maximize their margins. By this I mean the good old Book of Shanghaijacked Tricks will be fully utilized. After they collect, they'll move on to the next victim.

I'm sure this is a growing process for them. After all, despite being the second largest economy in the world, China is still a "developing country." As many native Chinese will tell you: "Our hardware is state-of-the-art, but our software has yet to catch-up." In this instance, "hardware" means the infrastructure. China has all kinds of modern high-rise buildings, high-speed rail, highways, etc... But the "software," or the people itself, is still very under-educated if not unethical. In this sense, I think it'll take China another decade or two to bring its citizenry up to par with the standards we are used to in the "developed" world.

From a different perspective, I can't really blame them... Why...? Easy. We buyers do not have the loyalty that we usually extend like when we buy from domestic vendors. We encourage high performance by sending repeat business. But when we go overseas, everything is out the window. We shop around on every single job, whoever provides the lowest price wins. To us, all Chinese factories are the same, so why not save ourselves some money? This type of behavior had perpetuated how these Chinese factories behave. They now reciprocate our lack-of-loyalty by only focusing on one single job. Whatever down the road has a less than 50% chance of happening, so why even bother.

So, why do we do this? Why can't we extend the olive branch to these Chinese factories and show some loyalty? I guess the fact that having broken our own psychological barrier to buy direct from oversea sources might have something to do with it. Since we've agreed to assume all the risks, why not try to save as much as possible? Right?

While on the surface, this type of reasoning is not wholly faulty. But we must understand the same old adage of "you get what you pay for" rings true in U.S. as it is in China, or India, Vietnam, anywhere in the world. The fact that we are willing to assume more risk does not negate this universal rule of law. So, next time when we go shopping for a new Chinese factory, let's ask ourselves on how much risk is reasonable, and how do we make compromises on pricing so we can get better quality in return, on both the product and level of service.

Blacklist: Shenzhen Yonghongshun Bags Co. Ltd.

Blacklist: Shenzhen Yonghongshun Bags Co. Ltd. (深圳市永宏顺袋业有限公司)

Address: Block 1 Dahenglong Industrial Park,Dabuxiang Road,Guanlan, Bao'an District,Shenzhen

This is a bag manufacturer. Although they claim to specialize in export work to the U.S. and Europe, they are ways away from being an expert. In short, they are just another typical Chinese manufacturer.

Our experience with the company is so typical. They are exactly like the countless other Chinese factories who are so short-sighted. Most Chinese companies would only look at one single job and never look ahead about the possible long-term relationship that may result from a job well-done. To them, it's always how to cut corners so they can maximize their profits on this current job.

This factory promises one price at the start of the job. As the job progressed, the factory would find all kinds of excuses to increase the originally agreed prices. You are literally at their mercy as your schedule, quality, and the physical products are being held hostage. So you give in to their demands as long as the increases are not too significant. And they know it, too! They would not come to you with a huge cost increase, unless they really screwed up. They know you, as a buyer, would eventually agree to many small increments.

So the overall cost is one thing, the schedule is put back and back until we were almost at the situation where the order is almost cancelled by our U.S. buyer.

At last, they screw everything up by not packing your job correctly. We were told by the factory that the job will take one single container, but it ended up to be more than that. We are now stock with the additional ocean freight that we have eat ourselves.

Worst part is, with this type of service, we have no idea if the quality of the bags will be consistent and accepted by our buyers here in the States.

Of the many bag manufacturers that we bought from, this one has to rank the lowest. Stay away if you can.

Sunday, July 3, 2011

The Blacklist

Here are a list of Chinese printers that I have personal and negative experiences with:

Beijing Shiyi Printing Co. Ltd.
- Quality: Numerous quality issues. Almost 80% of the 10+ jobs sent have some sort of quality problems.
- Pricing: Low to medium. However, this company makes many mistakes in cost calculation. If they found their mistakes before printing or before delivery, they will not print/ship your job until you pay them more. They will not return your deposit either if you want to cancel. In either case, your originally agreed delivery schedule will be screwed. This company has the classic "Shanghaijacked" behavior.

Shanghai Litian Packing Colorful Printing Co. Ltd.
- Quality: Many quality issues. Almost 70% of the 50+ jobs sent have some sort of quality problems. The problems were usually due to political infighting inside the company. It is unfortunate that the customers have to become their political sacrifices.
- Pricing: Medium. Not the best price in town. If you send them mulitple jobs, they will also try to play games with the selling price of each different job so that it'll look better for them internally. This means that you'll end-up paying more [than originally agreed pricing] on certain jobs. If you are running multiple jobs with them, it'll get confusing after a while. And usually, they win out as customers always seem to be paying more on certain jobs in order to fill the short-falls on other jobs. In any event, you are not going to get your jobs or deposit back unless you follow through with the rules of the game as they have laid down.
- Delivery: Lousy. The political infighting affects more than just quality. 95% of the jobs sent were late for one reason or another; however, all were related to their internal politics. Some jobs ran as late as two months!

Shanghai iPrinting Co., Ltd. (Shanghai Tuyu Printing Co. Ltd.)
- Quality: Good. As long as nothing happens with the quality of the job, you are okay. But once something should happen, you are on your own. When quality of the job becomes a problem because of a manufacturing issue, buyers are on their own to fix the problem. The general manager had visited me and proclaimed that they are the most responsible printer in the entire China. The very next day, one of the job printed by them had issues with pages falling out due to bad binding. The general manager not only refused to do anything about the problem, he also started to ignore our calls for solutions. In short, we had to dig into our own pocket to get the job reprinted by another factory. Needless to say, we neither received a discount/refund or an apology for the said problem. Of the five jobs sent, two had similar problems.
- Pricing: Medium to high. Not the best priced printer in China.
- Delivery: Acceptable.

Shanghai Picture in Picture Package Printing Co. Ltd.
- Quality: Bad. This factory has the will to change paper and other material once you send the jobs in. This creates a dangerous situation where, if you are reselling the job, you'll be offering an inferior product to the end-buyer than what's originally contracted. Worse part is that the factory pockets all the savings from switching material/paper, you don't get a penny. All you get is a bad reputation as you'll be left hanging to face your own customers. There are also numerous issues with various other quality problems. The overall quality control in this factory is very low. There are political infighting between the press department and postpress. Each department will actually use customer's jobs to set the other up; ultimately, customers are the ones who lose out due to very bad and inconsistent product quality.
- Pricing: Low to Medium.
- Delivery: Slow.

Shanghai Daya Advertising and Printing Co. Ltd.
- Quality. Bad. Another factory that practices "bait-and-switch." They love to switch out material/paper whenever possible. Sometimes, they will even print a small portion of the job using the specified stock while print the bulk with something a lot cheaper. End result is that buyers get nice good paper for the advanced copies, but once the ocean shipment lands... Surprise! And not a pleasant one.
- Pricing: Medium. Not the best price nor the highest.
- Delivery: Less than satisfactory. Since this factory has very limited postpress capability, they outsource most of their binding. However, their lack of management makes their jobs always late on delivery.

Is it just China?

Although I've focused my blog primarily on overseas printing in China, the same unfortunate phenomenon is rampant in many other developing countries such as India, Indonesia, and Vietnam.

Buyers beware.

I'm using the term Shanghaijacked because most of my overseas printing ventures are in China. I've also dealt with printers from other developing countries with similar results.

Lastly, not all printers in China behave badly. However, there is a very high percentage of the population that engages in this kind of unethical business practice. The likelihood of an unsuspecting print buyer running into one is definitely more than 50%.

So, no matter which developing country you may have in mind when buying overseas printing, be mentally aware that there is always many risks involved in international trading, especially with a partner in a developing country. Despite the facade put up by China during the 2008 Olympics, the 2010 World Expo, and many other financial news headlines, China remains a very "developing" country. And one of the strongest reason for that is because the population has no concept of law and order, not to mention basic morality and ethics. As the country progress as a whole, it will get better. But by then, print buyers have long moved to other developing countries because the costs in China has risen in proportion to its living standards.

Hijacked!!!

The most common practice, or malpractice, of many Chinese printers is to take your print jobs in at a very low price. When the files are in, deposit sent, and delivery date confirmed, the Chinese printer will come back and tell you that he had miscalculated the price and need more money from you.

If you don't pay up, the job will get stuck in purgatory and be on-hold indefinitely.

If you don't have a hard deadline, you can try to negotiate all you want. But since most print jobs usually have a specific date that it needed to be used, this deadline usually becomes one of the leverages used by these despicable Chinese printers to get you to pony up the ransom.

And, of course, there is the deposit that you have already paid. Good luck on getting that back if you don't pay more into the coffer.

Don't think that you can take legal actions. International business suit can take forever, and the Chinese government doesn't look too fondly on any business suit brought by a foreigner.

Suing them in domestic Chinese court is even less likely. Even if are a domestic Chinese company, this process not only takes a long time (there goes your delivery date), once your foreign identity is made public, the likelihood of you winning the case gets slimmer by the minute. The Chinese courts will definitely favor their own sons. And by happenstance that you should win the case, you'll never be able to collect. There is nobody to enforce the judgment. Nobody except local hoodlums and thugs that may vie for the right to help you to collect. Good luck working with them!

There have been cases where the same printer actually pulled off a double-hijack in one single job. Once they know you are willing to pay, it just adds to the likelihood that they'll come back and do it again. It's almost like dealing with the terrorists - no negotiations. But if you don't negotiate, you'll never see another penny from the deposit that you've already paid.

The most likely time that the Chinese printer will pull this stunt is right after he tells you he has started the job. In actuality, he has no intention of starting the job, he's just misleading you into believing that he has already incurred hard costs and is drawing the short stick - both of you are in it together. More often than not, he will not start the job until you pay up. He's likely to bide his time so that when the schedule progress beyond the point of no return, you'll have no option but to pay up.

If the Chinese printer comes up with the request for ransom too early in the game, you can always choose to walk away. The most you'll lose is your deposit. So the trick is to pay as little as possible on deposit although that may not be acceptable to most Chinese printers. But if you can't forfeit your deposit (most of us can't), then you are on the hook to play his game.

Despite the fact that you and the Chinese printer may be working on strictly numbers, he knows perfectly well that his Ace lies with the delivery date. The longer you take to ponder over your options, or lack thereof, the later the delivery date will be postponed. So, to salvage your all-important delivery date, you will likely to make the decision to pay more fast and quickly.

Let's face it, once you cross that international border, this type of risk is inherent. While I'm sure it is not limited to China alone, my personal experience with Chinese printers have told me that over a good 80% of them will do this. And unfortunately, there are many more tricks in their bags than just hijacking your job for ransom. It almost feel like there might be a school somewhere in China that teaches all these printers on how to win and milk foreign contracts.

And yes, these Chinese printers are very short-sighted. They are conditioned to look at one job at a time and not look too far into the future of what a mutually beneficial business relationship may bring. They are taught, by their own personal experiences dealing with the local population, that if they don't become the antagonist, someone else will eventually do it to them.

If you should have a chance to visit Shanghai, you'll be dazzled with all the modern high-rises and the endless construction for more. You'll be mislead into believing that you are in a civilized country like any other western countries. You'll see the courts, the police, and every other institution and infrastructure that you were accustomed to back home. You'll feel safe, personally and business-wise. But the truth is very far from it. Despite the facade, most Chinese people are still struggling to make a living. While the younger generation may be college-educated, their college education does not mean a thing when it comes to different strokes on making money. You are a fair game to them. This is in complete contradiction to a society where the culture places so much emphasis on being honorable and ethical. I guess this is why Confucius is a saint here.

Most buyers like to shop around for the cheapest price, the more you shop, the more likely you'll run into one of these Chinese printers who makes hijacking your job their daily practice. So, the safest way to buy overseas printing is to send millions of dollars into one single Chinese printer. That is, if you have that much job going on. Otherwise, your best bet will be to contact a U.S. based company that specializes in buying from China.