The Chief Asia Inspector Blog

Total Recall

The list of recalled made-in-Asia products keeps getting longer and longer…

It seems no one is safe anymore: to name only a few , your kids may damage their brain or become comatose when playing with their favorite toys, you can ingest poisonous chemicals while brushing your teeth should you observe basic hygiene rules, or die after eating your daily portion should you be a pet...

You might also learn that your kids’ clothes were actually manufactured by Indian children, some as young as 10.

For more of these pleasant stories, you can consult the US Consumer Product Safety Commission here  (for all products) or here (for toys only), the US Food and Drug Administration here, or the EU recalls list here...

Should we put all the blame on Asian suppliers and stop doing business with them ?

I don't think so; these stories are only a strong reminder that international trade is risky - and that you can not pressure for lower prices on one hand, and not watch out for the quality on the other hand. Finding the balance is what makes it difficult - but this is also where importers can bring value to their clients !

Don't mess up with Quality in China...

These past weeks have seen a number of stories unveiled about quality issues on China productions, mainly on the food & drugs industries - and recently in the Toys industry.
There are stories about this bun maker using cardboards found on the streets in his products, the counterfeit drinking water sold in Beijing, or the infamous use of antifreeze chemicals inside toothpaste...
Finally, these last days, Dora the Explorer returned home, with Mattel announcing a recall for 1.5 million toys made in China (containing excessive lead levels).

The matter is getting very concerning for the Chinese government. The execution of the the ex-Food & Drugs Administration chief Zheng Xiaoyu, after being convicted for bribery charges (he took about 6,5 million RMB to let defective drugs get SFDA approval, ultimately causing the death of at least a dozen patients) will certainly not be enough to restore the reputation of the "made in China".

Figures given by the Herald Tribune sound scary : 23,000 cases uncovered of fake or low-quality food between December & May, only 81% of the food tested in a nationwide survey up to safety standards (improving from 78% the year before),

Chinese government was prompt to react, with the implementation of guarantee seals from the Quarantine administration on all food exported items in next September, the tightening of drugs approval procedures, or the implementation of a daily reporting system on food safety.

The risk that these stories hamper the long expected restoration of the Chinese leadership with the coming Beijing Olympics in August 2008, while the world will be watching closely, is high.

I can't help but insist on the importance of the Quality Inspections on-site, as much for every importer buying from China, as for the manufacters themselves who are willing to establish their reputation and improve.

Direct from the Hong Kong fair !

Completing my previous posts on Canton fair, here is a word from the Hong Kong Electronic & Components fair, where AsiaInspection is exhibiting this year for the first time (after having exhibited at other HK fairs the previous years).

The fair is organized by Globalsources, the leading online platform "connecting global buyers and suppliers", who by the way happens to have the same graphical chart than AI (red, black & grey)!

It takes place at AsiaWorld Expo, a new exhibition center opened in 2006 in Hong Kong, built conveniently near the International Airport and offering an additional 70,000 sqm space for exhibitions to relieve the "old" HK Convention Center located on the Hong Kong island.

After more than 10 years visiting these Asian fairs I am still dazzled by the atmosphere you feel there, and how these events make you sense, in a very tangible way, the 10% economic growth of China !

Invest in Shenzhen !

As I keep an eye on real estate prices in Shenzhen, I thought I would share my views on it - especially when you realize how good the investment can be !

See below an ad I received recently :

-Location : Fu Ming Metro Station
-Building Construction date : 2003
-25th floor / 32
-Flat area : 93 sq.meter
-3 bedrooms, 2 bathrooms,
-Towards south, HongKong direction: "Rice Shop" - good Fengshui
-Estimated total price - RMB1,350,000.
-Located in a  florishing area (shops and businesses)
-Estimated Rental price: around RMB 4000

Besides the fact that such a property would probably be worth more than RMB 6-7 M in Paris (not mentioning London), I really believe investment opportunities are great in Shenzhen now, and my advice (free of charge !) is to buy around 1,300 Euros / Sqm, with a 70% mortgage financement plan at a 6% variable rate...

Vulture Culture

If you’re still wondering “is cultural knowledge important for foreigners doing business in China?”, then take a look at this survey of international executive recruiters grading different parts of the world on their merits for expatriate assignments. (Hat tip: China Economic Review Editors’ Blog). Two things struck me: 1 – China is the only country highlighted as being both popular with expatriates and difficult for them to succeed in. And 2 – over half of the respondents cited a lack of “cultural fit” as the most common reason why expatriates fail.

Go figure. China’s fast, exciting and growing at a miraculous rate. Where others say challenge, I say opportunity!

Nap for your health

This is what the inside of our neighbor's Shenzhen office looks like at 1:15 pm on a weekday!
I've said before that the Chinese art of napping (Wu Xiu) is less likely to happen these days, but I actually think it is a good habit. We should change the nursery rhyme to: "a nap a day keeps stress and pressure at bay".
How about loosening that tie and rolling down those blinds after eating your steak sandwich today? Bring back the siesta via the East!

How to be an angry customer

In a recent post, Seth Godin - one of the Western Gods of Marketing – gave a few tips on how to deal with an angry customer:
• talk quietly and slowly,
• ask the howler what you can do to make them less angry,
• repeat their request back to them in your own words,
• then decide if you can (and want to) give it to them then and there, or ask for a few moments to ask someone higher-up.

In China, behaving as sensibly as this comes naturally to frontline public staff. So let’s flip Godin’s point of view over on its back from “how to stop a customer being angry” to “if you’re the angry customer, how to get what you want”:

In China, the best solution is to shout loudly. Undignified perhaps, but it does the trick where rational and just reasoning might be ignored. Your customer services representative will give you anything they can to make you stop making so much noise, especially if you’re in public. This works as well when dealing with a reluctant, late-delivery factory as it does at an airport counter when your seat has been given to someone else.

And the Chinese will certainly never shout back at you...something you can’t say about my fellow French!

Beware of hard sell

Best practices China has a post up entitled: “If you Over-sell, you Under-perform”. It is excellent advice, aimed primarily at Chinese businesses, and is as true for manufacturing or shipping companies as it is for refrigerator salesmen. Such companies should not promise deadlines or quantities which are beyond their limits, obviously, as repeat business disappears under repeat bad-mouthing. But international companies take note: a small minority does still occasionally ignore this rule.
Again, the answer is to do due diligence before any such problems arise – don’t take people’s word on their manufacturing capacity or warehouse floor space, send a proxy or go and see for yourself. And if it isn’t easy for you to do it tactfully, I’d suggest you give potential contractors the BPC post to read!

Never bargain with a ghost

A recent Fortune magazine article highlights a big problem plaguing outsourcing – a problem known as the “ghost shift” or the “third shift”.
Companies licensed to produce a fixed quantity of goods – sports shoes or whatever – deliberately produce more (during this unauthorized “third” or “ghost” shift), then quietly sell the surplus illegally for their own profit. Dead easy really given that the proprietary information is originally handed over on a silver platter, as part of a legit deal… meaning that the “counterfeits” are that in name only, being made to virtually the same specs.
What’s the solution when you’re oceans away from your “trusted producer”? Nothing is 100% guaranteed, but some steps are rather effective:
#1  Conduct due diligence: before you sign any contact investigate your supply chain, your manufacturing companies and their supply chains thoroughly – interview as many other clients as possible.
#2  Maintain monitoring: Fortune mentions that shoe giant New Balance - badly burnt in the past - writes tough audit clauses into contracts, and enforces them. It even uses encrypted security tags to monitor how many shoes are being manufactured.
#3  As far as possible, minimize the incentives for the company to start selling your goods "off the back of a truck": treat them well both personally and financially, and emphasize the potential for your relationship to be long-term - so long as nothing jeopardizes it…
It's not foolproof, but might just make a wolf-in-sheep's-clothing think twice before getting his factory to run in the dead of night... Especially if he knows you're watching.

Au paradis des employés (qualifiés)

Regardons les choses en face : le marché chinois offre un énorme potentiel d’employés qualifiés. En moyenne, les jeunes diplômés de Shanghai, âgés d’une vingtaine d’années, restent moins de 18 mois en poste avant de dire zai jian à leur patron, et ce quel que soit l’emploi qu’ils occupent. Dans la mesure où le vivier de talents disponibles est bien moins important qu’il n’y paraît, la priorité absolue des entreprises devrait être de chercher à retenir les salariés de valeur.

De ce côté-là, AsiaInspection a été bien mieux lotie que la plupart des autres sociétés. En effet, certains de nos collaborateurs font partie du personnel depuis plus de cinq ans. Les dirigeants qui viennent à découvrir cet incroyable état de fait veulent bien sûr connaître nos secrets. Voici donc quelques trésors de sagesse à l’attention de la blogosphère :

• Comme partout ailleurs, il est important d’offrir des avantages tangibles : nos bureaux sont bien placés, nous payons bien et nous récompensons le mérite. A titre d’exemple, l'une de mes collaboratrices a rejoint notre équipe alors que nous lui proposions la moitié de ce qu’elle gagnait dans son précédent poste. En contrepartie, elle m’avait demandé de revoir son salaire au bout de six mois si j’étais satisfait de son travail. Elle a finalement vu son salaire tripler en moins de deux ans.
• Une autre méthode de gestion efficace pour tous : le respect mutuel et la mise en œuvre de canaux de communication ouverts. Les salariés ont besoin de savoir qu’ils peuvent aller se plaindre directement auprès de leur patron, si besoin.
• En Chine, où l’enseignement public est généralement inadapté, les salariés considèrent qu’apprendre constitue un investissement, une assurance sur l’avenir, voire une béquille ; ceux-là sont prêts à prendre un risque ou à accepter un salaire moindre en vue d’acquérir des compétences.

Sébastien Breteau