NOVEL SOLUTIONS Poorly Made Is a Rich Read Shannon Wetzel, Senior Editor I


was hesitant to pick up Poorly Made in China, by Paul Midler, because I thought by the title that it would be a heavily


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slanted book. But the subject matter was so intriguing, I went ahead with the read. While the author does point out several fl aws in Chinese manufacturing, he does it with the affection of someone who wants to see China prosper. He says Chinese business owners fi nd ways to become profi table, even if those ways don’t jive with how America does business. Some lessons of caution should be learned, but also lessons of competition. In the U.S., a company buys a product for $1 to sell


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it for $2. A Chinese manufacturer produces a part for $1 and then sells it for a $1, and Midler, who worked as a go-between for American and European companies with Chinese factories, explains how it makes money in these too-good-too-be-true scenarios. First, Chinese manufacturers will produce the fi rst series


of products strictly to sample but then start cutting corners on quality to reduce its manufacturing costs, according to Midler. Second, the manufacturers use their experience with American companies to prove to other prospective customers they are a reli- able supplier. This second wave of customers will be quoted higher prices than the initial customers. Third, Chinese suppliers know it is diffi cult to set up importer-supplier relation- ships with other factories and use that leverage to in- crease prices with their fi rst customers. The customers are in a tight spot and need their product quickly, so they will deal with the price increases rather than suffer through four to six months of fi nding another factory and establishing that relationship. What Midler never fully explains is why Ameri-


MODERN CASTING / March 2010


can companies continue to source product from Chinese manufacturers, even after profi t margins are erased. This could be because Midler—whose livelihood was reliant on connecting foreign customers with Chi- nese suppliers—is just as puzzled by it as the reader. Switching suppliers would take months. Their customers want their product in weeks. But, why not switch manu- facturing back to the U.S. or


Europe or wherever it was previously? Midler worked with dozens of American and European companies and hundreds of factories in China. From his ac- count in Poorly Made in China, customer and manufacturers were involved in a game in which quality and pricing issues were a constant battle, most often lost by the customer. Yet, he doesn’t mention a single example of an American customer returning production jobs to a manufacturer in the U.S. Further, prospective customers faced with obvious signs that entering a contract with a particular factory would be a bad decision still go through with the deal. As one of Midler’s clients said, “Look, these guys want


Metalcaster’s Translation King Chemical had


the deal to happen. There’s nothing I can do about it. I’ve got the CEO of my company talking to everyone about how China is the future, and there are all these other guys in the offi ce who are counting on this deal.” Midler goes on to explain: “The deal stank; they all knew that there was a problem, and yet they wanted to move forward anyway.” Through his experience,


turned the business into a game. The terms of each deal were negotiated at the start of the project, and then the factory went on a hunt, looking for savings. The fi rst price a Chinese manufacturer quotes is only meant to get its foot in the door, even when it means no money is made on the part. After a relationship is established, the manufacturers often fi nd ways to make a profi t through the degradation of the product.


Midler is in a unique posi- tion to explain the tactics some Chinese businesses will use to first win a customer and then make money off the customer. This knowledge is valuable either if you are consider- ing sourcing products to a Chinese factory or if you fi nd you are losing custom- ers to China.


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