Happy Chinese New Year!

I am a few days late.  The New Year was on February 18th.  I celebrated with a Starbucks coffee, but most of my Chinese friends and associates spent New Year's Eve stuffing themselves with delicious food with their families.  According to this Wikipedia article, people traveling during the Spring Festival period (which accompanies the New Year) account for the largest single migration on the planet every year.  According to the article (which does not make it fact), 2 billion train passengers were recorded during this time in 2006.  That's more than the population of China.  Veracity aside, China's trains can be a fun, cultural experience, but I wouldn't want anything to do with them during this period.

The festivities in China last about a week or so, and it's a major holiday during which most businesses, factories, etc., shut down.  February is always a hectic month for getting projects done there.  The weeks leading up to the New Year celebrations involve factories going crazy trying to push through as much as they can before the respite.  When the celebrations begin to subside and people start returning to work, there is another week or so during which everyone is playing catch-up.   Folks in Hong Kong return to work earlier.  But if you're communicating with an office in HK, chances are you're working with a factory on the mainland and  you're just not going to get much done.  Planning your projects around this time is key.  It's also a good time to try and take on a 15-course dinner in one sitting.  Both are a worthy challenge in my book.

Disney Dinosaur Meet Tiger Woods

I was thumbing through my pictures of product samples from China today and I came across this picture of me at a driving range in Changzhou, China (sorry for the fuzzy quality).  The driving range was a part of a nine-hole golf course next to what was a very nice hotel for Changzhou.  The hotel happened to be located directly next to a dinosaur-themed amusement park.  If you look above me in the background, you can see the large, star-trekkish, space tower jutting into the sky.  What the picture doesn't convey, is the myriad of sing-along and theme tunes (which made me routinely think of Goofy when teeing off) that echoed out over the entire golf course. 

I've always felt this picture spoke volumes about something, perhaps many things, but I could never  put into words what it was.  For those that don't play golf in the US, courses are usually meant to be quiet, serene places where respect is shown by silence when someone is going to swing.  Noise pollution is not something one seeks out on the golf course.  But in Changzhou, this doesn't seem to be too important.  In fact, save a major airport, I can't imagine two more incongruous things next to each other.  There was miles of vacant land around, but these two attractions were placed directly adjacent to each other.  Whatever the reason, be it poor urban planning, cultural differences, or just an attempt to draw as many customers as possible, it is just downright different.  Better?  Worse?  I don't know.  As an American, it just isn't something I am accustomed to. 

Many people talk about cultural differences, differences in business styles, communication styles, etc.  But it never seems to sink in as much until you spend a little time somewhere.  It subtly begins to sink in deeper when you start to interact with people on a daily basis and are trying to accomplish something.  And it smacks you in the face when you come across something like this--when you see something that makes not a shred of sense from your own perspective.  But it makes perfect sense to the people you are doing business with.  The magnitude of the difference in perspective between you and your new business partners can be just like a large, space-launch tower above your head playing Goofy tunes.  You might want to ignore it, but it's going to be playing in the background throughout your experience.  Sooner or later, you're going to have to pay attention.   

Due Diligence and Visiting a Factory Overseas

The trading portals out there, Alibaba and others, have led to a vast surge in small businesses and individuals contacting overseas suppliers to procure goods.  Go ahead and search "injection molding China" on Alibaba and you get 800+ results. It's remarkable how the world shrinks through websites like this.  But unfortunately, they also have a tendency to give the false impression that the rest of the product sourcing process is as simple as contacting someone online.  How easy?!  I email someone that says they have a factory that can make what I want.  I tell them what I want.  They ask for money.  I send my money over.  And...

ChinaLawBlog, which routinely posts useful cautionary tales about why his clients have to come his firm for help, recently wrote a post on the importance of due diligence.  One of his clients lost a year and a large sum of money to an overseas trader that posed as a manufacturer, did not even have an export license, and had little inventory. 

In product sourcing, due diligence goes beyond a credit and reference check.  If you're going to depend on an overseas vendor to create your product, a product that is to represent your company and drive sales, you've got to know they can do the job right.  Visiting the factory or having someone you trust on the ground there to visit the factory is necessary.  Not only can you assure yourself that the deal isn't a scam, you can perform key inspections to verify that the factory has the capabilities in place to serve you as well as meet the owner and managers face to face to establish the relationship.  It's an investment in time and money that pales in comparison to trying to seek legal recourse, if you even have the opportunity.  This goes for most countries, not just those from which you hear the most warnings about.  If you are going to be placing production orders in a size that will be significant to your company, visiting your partner's factory shouldn't be left out of the due diligence process.  It's also a chance to travel, see another way of life, and try some incredible food (if you're adventurous).   Whatever your impetus, someone needs to perform this step for your business.

Tune in to Our Basics of Offshore Sourcing and Manufacturing Webinar, Feb 27th

I will be doing a webinar with Young Inventors International on February 27th, from 8pm-9pm EST as part of Entrepreneurship Week USA.  I will cover the ins-and-outs of developing, sourcing, and manufacturing your products overseas and will answer questions from participants.  Feel free to join in and learn about the process, players, and tips on what to watch out for when developing your product and finding a suitable overseas manufacturer.  With these kinds of presentations, I do my best to offer real insight and valuable information to help you in this process, rather than just talking about the obvious and plugging our company.  My goal is to help you walk away more knowledgeable about what you need to do and how you need to do it. 

You can register for the event by going to this link at the Young Inventors Website.  Look forward to talking with you!

Six Reasons Why Prototyping Pays

Prototyping in your product development process pays.  I can't stress the importance of prototyping your product.  If you are a first-time inventor, you should try and create a prototype yourself.  If off-the-shelf products and components are available--rock 'n' roll, you could be in business cheaply and in no time.  If you are going to work with a manufacturer and it's cost effective, having them create a prototype of your product can be very helpful in assuring that you get 10,000 units of what you paid for in a production order.

The Wikipedia Entry on Prototyping:

Prototyping is the process of quickly putting together a working model (a prototype) in order to test various aspects of a design, illustrate ideas or features and gather early user feedback. Prototyping is often treated as an integral part of the system design, where each prototype is influenced by the performance of previous designs, in this way problems or deficiencies in design can be corrected. When the prototype is sufficiently refined and meets the functionality, robustness, manufacturability and other design goals, the product is ready for production. 

Here's our take on what you can get out of creating prototypes of your product:

1)  Marketing Research:  Having something to place in your customers' hands allows them to physically interact with the product and opens a whole new realm of observation and insight possibilities into assessing and answering their needs better.

2)  Design and Engineering Spec Verification:  Having an overseas manufacturer create and send you a prototype based on their understanding of the product allows you to quickly assess whether they really understand the product.  You would be amazed at what can come back from a manufacturer after you think everything has been clearly explained.

3)  Quality Control:  A prototype from a manufacturer is going to give you an idea of the kind of quality of work that they do.  Typically, prototypes are not up to the quality level that your actual product will be.  They often are made from different materials, might be hand-poured, and might not perform all of the functions of the actual product.  That is ok.  What you want to see is how much effort the manufacturer puts into it in the first place--the attention to detail.

4)  Packaging:  You can photograph a good 'looks-like' prototype to use in your packaging, website, or other promotional materials.

5)  Communication:  Submitting an existing prototype to a manufacturer allows you to convey to them an enormous wealth of information.  They can hold the product in their hands, feel the finish, understand the working parts and requirements, sniff the glue, see the colors, etc.  This will help you circumvent the language barrier as they will be able to see for themselves.  This is extremely helpful.

6)  Attracting Investors and/or Selling Your Product:  If you are looking for investors for your company or product, or if you plan on using sales reps, or contracting with distributors or retailers, a prototype is an excellent way to sell your product.  It shows them that the design is almost or completely finished, allows them to better understand the value of your product, and indicates a seriousness about taking the product to market.

For one step in the product development process (which may be repeated many times), that's a lot of value in many important areas of your business.   

Labor and Health: Is the Factory Half Exposed or Covered?

The labor practices of suppliers in other countries comes up from time to time in conversations with people about offshoring.  This topic usually opens a can of worms, but it's important to talk about.  It's a very sensitive subject--because it's one that touches people's values.  Our's included.  We take it seriously because we've got to sleep at night too.  Fortunately for us, good labor practices tend to run with those factories that make better partners in general.  But, many people who haven't spent time operating overseas might not see that it's a completely different ballgame than what we're dealing with here in the West.  No, that's not an easy way out, that's the truth. 

Western companies must play by western rules in a country and culture with different rules.  Their records might be less than satisfactory from a domestic perspective in some cases, but I tend to believe that many are making the effort to push things in the right direction--far past the standard that might exist were they not there.  I often find that those who want to extend US labor standards abroad into a compulsory, universal system have trouble coming to grips with the fact that what they're suggesting is the imposition of very western concepts on a culture and society that may not value the same things we do, labor standards included.  This idea wasn't pointed out to me by someone in some multinational corporation's purchasing or operations department, but by a Burmese professor during my graduate work in Asian Studies.   I can tell you that Chinese culture does not place the same value on these things the way we do.  But for all the flack that western companies get for being slack about enforcing these standards, they are making improvements from what might otherwise be taking place.

Not long ago, I toured a factory a few hours outside Shenzhen, China.  Considering the factories that I've been to, the facilities were clean and organized.  This factory manufactures all kinds of toys for the largest retailers in the U.S.  The owner employed approximately 10,000 people and we toured the multiple warehouses and buildings as he adeptly tore around the area in his Land Rover. 

Walking through the production lines, rows and rows of young men and women sat and spray coated various pieces of an action-figure whose character is particularly popular in the US.  They held the figure over their table and used a spray gun to coat the figure’s various limbs.  Approximately one half of the workers wore white surgeon’s masks, while the rest did not.  During lunch, the owner explained the trouble he was having keeping up with the labor and environmental demands of U.S. retailers.  His facilities were routinely inspected by 3rd parties for compliance with labor and health standards.  Undercover inspectors interviewed employees about the amount of work required of them.  And at one point, a major US customer decided that all of his employees should have access to and be able to wear the surgeons masks while working.  Begrudgingly, he purchased and offered the masks.  But, only about half or less of the employees had taken to them.  According to him, many of the employees simply did not like wearing the masks and didn’t see the point.

Without the directives in the first place, believe me, no one would be wearing these masks.  But under explicit directions from the US companies, they had succeeded in getting half of the workforce to wear masks.  Maybe health education is the next step.  The current situation might not be ideal, but coming from them: "a journey of 1,000 miles begins with one step". 

 

Inventoritis: The Surefire Way to Decrease Profits

I recently had a conversation with Tatsuya Nakagawa, author of the Product Life blog and CEO of Atomica Creative, a Vancouver based product marketing company, about the syndrome he likes to refer to as "Inventoritis".  He defines this as:

Inventoritis n. Any of a group of disorders usually characterized by withdrawal from reality, illogical patterns of thinking, paranoia, delusions and hallucinations accompanied in many cases by a portfolio containing granted patent applications and other forms of intellectual property including trade secrets. Inventoritis is associated with depressed or non-existent product sales and defects in marketing programs and is caused by excessive reliance on the assumed idea that one’s product or idea is an excellent one.

Taken from a product development and manufacturing perspective, I watch companies and inventors make their way through the trade-off process, in which they select their optimal combinations of features, costs, materials, and so forth for a product.  We've recently worked on a product requiring a rather simple component--as simple and as common as a button for a TV remote product or a shoulder strap for a carrying case.  With a common component like this, it's probably a good idea to see if one is already being produced out there that might fit with what you had in mind.  Avoid the need to spend thousands on tooling for a new component for your product!  Take that money and put it in marketing, or keep it as profit, or put it all on Black in the nearest casino.  Why design and build a new TV button? 

We sourced a nice alternative component, but the specs weren't quite a match (slightly wider than needed).  Rather than modify the designs for this (which would only have been an aesthetic modification), the client is still interested in tooling to maintain exactly what was envisioned.  This is where inventoritis and its evil cousin 'designeritis' smack into reality.  Multiply this approach a few times within one product development process and your looking at a surefire way to decrease your profits.

I say let it ride on Black...