Do you wish you had never moved to China?
So you finally figured it out – you’re getting screwed!Moving operations to China sounded like such a great idea. The proposal delineated mammoth savings because of cheap labor. So where are they?As you’ve painfully discovered, there are all sorts of ancillary costs that just weren’t in the proposal. For instance, every time they miss a commitment, and you have to air-freight the product instead of shipping by sea, the freight bill skyrockets. It happens often.When you look at total costs, instead of just the purchase price, you’re no better off. All too often, you’re worse off.And, of course, you didn’t realize what it would be like doing business with people who are 13 hours ahead of you. At 8 a.m., it’s 9 p.m. that night in Beijing. At 5 p.m., it’s 6 a.m. the next day. So you never get to speak to them during normal business hours. Thank goodness for your cell phone, but aren’t you getting tired of those 1 a.m. calls that are so upsetting?Even worse, you can never seem to get a hold of them when you need to, and they always call back too late. At the end of the month/quarter, their other customers must have a much higher priority because you sure don’t. So you’ll get a call back around the 4th or the 5th joyfully sounding like there’s nothing wrong. What has this erratic performance done to your stock price? How are your customers taking it?As if that weren’t enough, you have been seeing knockoffs of your product. These are so close, you’d swear they’re being made in the same factory. In fact, you had to buy special tooling and machinery. It’s yours, but you can’t be sure your products are the only ones being produced on it.If they’re also making knockoffs on the side, they had no development expense, and they’re not paying any overhead — you’re paying all that. No wonder they can sell knockoffs below your cost — but, of course, you can’t prove a thing.Even though you’ve hired someone to represent your interests, and an inspector to make sure everything is OK before you pay to ship it over here, you can’t help but wonder if they’re more loyal to the factory than they are to you. You’ve been over there many times, but you just can’t be sure. Oh how you wish you were fluent in Mandarin.The proposal did mention you’d need a lot more inventory to fill the much longer pipeline. When you discover a problem here, one that should have been caught by your inspector, you’re never sure how far back in the pipeline it goes. And you had to pay for everything before it ever left the dock. Regardless of the condition, you own it. Are we having fun yet?Bringing it backYou just can’t take it anymore. You want to bring it back. Oh how you wish you had kept your factory going, at least with a skeleton crew. You still have the building because you couldn’t sell it. There is some equipment in there, but you’re not sure it’s still usable. And, of course, the people are gone.It’s going to be tough, but you can’t stay over there. Things aren’t getting better; they’re getting worse. Maybe you can find a stateside manufacturer to build product for you until you can get going again. Whatever you do, don’t let the overseas factory know you’re bringing it back until you actually do. If you think they’re uncooperative now, just wait until they realize they’re losing the business.The special tools and machinery may be yours, and you should try to get them back (to make it tougher for knockoff production), but don’t plan on using it here. The machinery will never meet our standards, and it will probably be severely damaged, like the tooling.So what have you learned?That it’s the producers who are in control, not the front office. Producers can shut you down whenever they want.And your technology? Well, you had to share it with them, so they could make your product. Now you can’t take it back. You have enabled a new competitor.Don’t you wish you could start all over again and review that proposal with what you know now?If you’re thinking of going to China, speak to someone who’s already there before you go.Ronald J. Bourque, a consultant and speaker from Windham who has had engagements throughout the United States, Europe and Asia, can be reached at 603-898-1871 or RonBourque@myfairpoint.net.