Book Review: Poorly Made in China

Poorly Made in China: An Insider's Account of the Tactics Behind China's Production Game

I just finished Poorly Made in China and wanted to highlight some of my key takeaways in the book. The book recently made The Economist's Book of the year list (Book review - The Economist). Paul Midler has lived in China for over 15 years and worked as an outsourcing consultant for small-to-mid-sized companies on a range of products. He wrote the book because he was shocked at what he saw. The book was written as a response to the string of 2007 Chinese quality scandals (yes, it even it's own Wikipedia page; and 2008, and then there's Chinese Drywall). It took him a year and a half to finish, so it sort of had a quiet launch, until The Economist picked up on it.

The book is not an overview of the 2007 quality scandals. He references them only briefly. Some interesting notes: the infamous Mattel lead paint toys case involved a Chinese factory owner who had worked for Fisher Price for 15 years and had an estimated net worth of ~900 million USD. It was a symptom of what Midler refers to as "Quality Fade."

Here's an article he wrote in 2007 (that also served as the seed for the book) about quality fade: Dealing With China's 'Quality Fade' - Forbes.com

Some of the other takeaways:
* The reason China does so well initially attracting business is: #1 very, very low crime rate (at least for Westerners), #2 low initial price point (although subject to rises over time), #3 zero regulation (want to discharge wastes from a galvanizing operation directly into the sewer? No problem!), #4 ease of access (a business traveler can get a cheap ticket over there, then stay in very inexpensive hotels, and come back to the US for less than he budgeted; comparable trips to Mexico or Dominican Republic are extremely costly due to security constraints).
* Chinese factories deliver low prices because they'll sell at-cost to US markets, then sell knockoffs of the same products to Latin America, Mid-East, etc. for double/triple the price they're selling it to the US (generally "borrowing" the intellectual property/design/etc. in the process).
* Chinese factories are described as 'almost mid-evil' level of technology. The average factory is a series of long tables, with lines of stools (generally without backs, made from scrap wood) with massive amounts of human labor substituting for what machines would do in the West. I've been to a few US factories and it's amazing the level of technology you'll see; so long as it lowers the marginal cost and there's enough volume, you'll see lines of the most expensive computer-controlled CNC machines. The only machinery in Chinese factories is generally worn-out, obsolete equipment from the West.
* China is not THE lowest cost producer. Vietnam generally beats them out on labor costs.
* There's a bias out there that "Made in America" is too expensive, while "Made in China" guarantees you're getting a good deal (at least on price). Say you want to buy bolts. A Chinese factory quotes you 68 cents/ea.. You think you're getting a good deal. If you go to a US factory and they quote you 68 cents and "Made in America", people think they can get it cheaper elsewhere. A US manufacturer, thanks to automation, mechanization, and superior methods, might actually be the less expensive manufacturer, while a Chinese manufacturer may only meet that price point while sacrificing something (namely, quality).
* A lot of the business-people in China, especially among the lower-to-mid-size companies are incredibly naive. Those are the best stories in the book. A Chinese factory was making 'private-label' beauty products for an un-named CVS/Walgreens/etc. and the 'CVS' buyer kept complaining they were getting 'screwed out of pH'. The pH was on the lower end tolerance range (~6 in a ~6-7.5 range). Meanwhile, the factory was doing all sorts of other substitutions behind their back that they weren't even checking. Upon being challenged, the 'CVS' buyer didn't even know what pH was, much less have the idea to test for bacterial contamination of the lots of body wash, shampoo, etc. that were coming into their store by the shipload. Because they didn't know how to make anything, they had no idea how a manufacturer could screw them over. The Chinese product had a "not tested on animals" label, primarily because there was no testing done whatsoever!

One of the things I enjoyed about the book is it's a business book, but there's very little 'business' in it; it's mostly about relationships and Chinese culture. That's also this reviewer's take. Some of the cultural nuances were remarkably like America, in a way.

Also worth a look: Paul Midler's Blog. Especially the older entries.

Also of note: Dumping China for America - CNN Money

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On a personal note: one of the reasons I've become interested in this book is I've gotten into valve procurement in a big way. The valve business is very, very competitive and a valve you bought 10-15 years ago that used to made in the USA with a good reputation for quality is now either 'assembled in the USA' (with Chinese-made parts) or wholly-made in China due to commercial pressure. I was at a meeting when we went through valves and name after name was "made in China" (partly or completely), I asked 'is there anyone who isn't?', the older engineer looks over at me and says, "yeah, Company Z. Their valves are made in India" Me: "Um..."

Now, we try do as much as possible to test the valves and to screen out the worst offenders, but the whole process has left me with some uneasy feelings. The valve salesman won't be around when the project starts up. I will and the operators will work next to these valves for years to come.

Note that Paul Midler ends his book with a GUARANTEE of further Chinese quality scandals.

NOTE- Some edits for spelling and clarity.

UPDATE- I've been spreading the word:

Chinese Democracy

Made in China

OK/Go - Needing/Getting

A few parades down, many more to go...

Imminent Ned: Mardi Gras is coming, a photo by dubtea on Flickr.

NOPD Officer posts anonymous letter to citizens

Original text here.

WWL TV story here.

Dear Citizens of New Orleans,

We, the men and women of the New Orleans Police Department, would like to express our concern to you about our current state of affairs. Most of our officers entered their career in Law Enforcement because of a desire to help and to protect citizens in need. We are experiencing difficulty in doing this at this time.


The basic police service is to provide officers at the platoon level (uniformed officers) to answer your calls for service and to patrol your neighborhoods. Under the last several Superintendents, this has not been a priority. Emphasis has been placed on pro-active units which don’t respond to citizens’ calls for service and rather than patrol your neighborhoods, their focus is on obtaining ‘stats’ (arrests and other “activity” to generate statistical evidence of work), so the leadership can have numbers to justify their actions.


We have continuously expressed our concerns and needs to our leaders, but they continue to ignore our pleas, responding with ‘political’ answers that don’t directly answer our concerns, or we are told that our needs are “not an option”. This neglect of our needs has caused many of us to become frustrated, disgruntled, and to question our career choice as well as question our continued loyalty to the department.


Our manpower and resources are spread thin in order to concentrate on pro-active policing and more recently, to satisfy the requirements of our Data Driven programs (DDACT), rather than on the basic police service. There is a need for all of these policing tactics, but with the number of officers leaving the department, we should be in a state of emergency. Since Katrina, our resources should have been directed to the Basic Police Service, staffing the platoons with adequate manpower, vehicles and supervision, This has not been done.
Our leadership has become strictly data driven, spending time, manpower, and money on computer programs that are just a more modern version of basic police tools that we have already, creating new command positions, re-adjusting district borders and sectors when we already have zones, creating additional redundant administrative duties for Field Supervisors, and creating new or additional administrative positions, while ignoring, and taking resources away from the basic police service that we really need. Money needs to be directed to basic resources; broken computers, printers, copiers, cars, etc., rather than on the implementation of costly new programs and positions. The overdue promotions of the rank and file officers should be considered before new positions are funded. Our current rank structure should be re-organized so that more supervisors are providing the bottom line service of protecting the Citizens rather than administrative and data driven tasks.


Many of the modern versions of policing that are being put in place could be effective if we had the resources available. But when problems are encountered in the implementation of these programs, our leaders take punitive action against the rank and file; excessive monitoring of sick leave, texting when calls are holding too long, punitive transfers when proactive stats are not at a level that they believe is acceptable, which is illegal, micro-managing every minute of a platoon officers time, instead of fixing the root problem of inadequate staffing and resources for the platoons.


Some of the changes implemented are detrimental to Policing the community:
Arrests: Not arresting persons who have arrest warrants on file; if we can’t afford to house them, then the Sheriff and the Court system should address their release, not the police, If a judge found cause to issue an order to arrest a subject, the police should be obligated to affect that arrest and remove that person from the community.


Issuing summons; This should be left to the discretion of the Officer and his supervisors in the field. Issuing a summons for criminal activity usually does not discourage further criminal activity. This goes against the ‘Broken Windows’ theory of handling minor incidents before they become major incidents. The shoplifter graduates to armed robbery, the trespasser graduates to theft or burglary, those disturbing the peace return to retaliate with violence. First we issue a summons for the initial criminal act and the perpetrator is released into the community where he committed the act. Then, when he doesn’t go to court, a warrant is issued. By Issuing still ANOTHER summons for missing court, the Offender remains in the community where he is committing these criminal acts. Where is the incentive for him to stop criminal behavior? Is this community policing? Fugitives from other jurisdictions are located by Officers, a report is written and then they are released. If they are wanted for committing crimes in another community why should we allow them to remain in our community? If they commit another crime after they are ‘caught and released’ who is at fault? The Criminal? The Officer who released him? Or, the Command staff that initiated the ‘catch and release policy’? Does it matter to his next victim?


Of the estimated manpower of 1300 Officers, the platoons who provide the basic police service, the uniformed officers in your neighborhood who answer your calls, are about 300 to 400. These men and women, with some exceptions, are forced to work in one Officer units. This is dangerous for the Officers as well as for the Citizens who depend on us. We should have a higher percentage of our Officers on the platoons with a mix of one Officer and two Officer units, as well as field Supervisors who are actually in the field instead of tied up with administrative chores. If we can assign 700 Officers to work special events, why can’t we assign 700 Officers to patrol neighborhoods and respond to Citizens calls on a regular basis?
For special events, the platoon Officers are sent to work the event while Task Force Officers and others, who don’t normally do platoon work, are left to man the platoons. This is ineffective. District Task Force units should be dismantled, with the Officers, vehicles and Task Force Supervisors being re-assigned to the platoons. Then when officers are sent to work special events, the ones left in the district will be familiar with platoon work and be more effective. How about combining the Crime Abatement Team and other special units with the Special Operations Division and utilize them as a city wide task force? District Task Force units can be manned when there is enough new Officers hired.


Many of the concerns of the rank and file Officers of N.O.P.D. have been documented in the Department of Justice report that highlights many of the problems of the N.O.P.D.. We are frustrated that when we expressed these concerns to our leadership, they had been ignored until the Department of Justice came to point them out. If only our Leadership had listened to the rank and file earlier, we may not have needed Federal intervention. We need a regular outlet to communicate with the Citizens, one where we can express concerns to you without the fear of retaliation from Command Staff.


We feel the need to reach out to you, the Citizens because we have no voice within our Department. Some have suggested a Strike or ‘Blue Flu’ protest, but we are here to serve You, the Citizens, and we realize these options would not be beneficial to you. Some have suggested a protest on our off time at City Hall or Police Headquarters, but we fear punitive action from our administration. Although we have no Labor Union, we are grateful that we have a Police Association that is willing to speak for the Officers. But the Administration has no obligation to respond to our concerns. But they are obligated to respond to YOU.
We understand that we all have to work together with the community to solve our crime problems. We can’t do it alone. We know that the concerns of the Men and Women of the N.O.P.D. are not the only issues to be considered, but since our Leadership is not responding to repeated pleas to resolve these issues, even under a threat of possible punitive retaliation, we feel that you, the Citizens of New Orleans, have a right to know our concerns and their effect on our ability to serve you. Maybe you can have influence on our leadership. Despite these conditions we, your Police Officers, are concerned for your safety and continue our service to you.