Archive for the ‘News’ Category

Merry Christmas and Best Wishes for 2008

By on December 24, 2007 | Category: News | Comments Off on Merry Christmas and Best Wishes for 2008

By now, you likely have many products that have gone through design, engineering, prototyping, manufacturing, packaging, shipping, distribution, marketing, and retail, resting under your tree or being exchanged over the holidays. 

For those involved in any part of the product commercialization process, it’s  interesting to consider all of the people, places, and things that came together to culminate in that wrapped box with a bow.  Ok, when I look at my HP calculator sitting on the table next to me, it’s not as if I’m getting teary-eyed and sentimental over it.  But, in today’s world, I can only imagine all the pieces and parts that came from different countries to make a simple consumer electronic product like this.

I imagine, if you’re reading this blog, you are involved in one, a few, or all of the phases of product commercialization which I mentioned above.  I  sincerely appreciate your readership and interest.  I hope to post more entries and write more insightful and entertaining content in 2008.  Global Sourcing Specialists has quite a bit going on these days, so I will certainly have the stories, thoughts, and rants to get out to you.  Happy Holidays to all of my readers and here is to a new year in which your product finds its way into a box with a bow exchanged by millions of people at this time next year. 

September 22, 2007–Inventors Alliance Presentation: Manufacturing in China

By on September 20, 2007 | Category: News | Comments Off on September 22, 2007–Inventors Alliance Presentation: Manufacturing in China

I will be joining the Inventors Alliance this Saturday (9/22/2007) at 10:00am, in Silicon Valley, to lead a workshop on manufacturing in China.  For those in the Bay Area, feel free to join us as there should be plenty of good dialogue regarding insights and challenges in manufacturing in China.  I’ll be covering topics on the process, players, tips, myths, risks, must-do’s, must-not-do’s (yes, I just made these terms up), and more.  You can attend in person or order the video.  The details are below and hope to see you there:

Event Details (Registration – Price – Location – Date – Time)

REGISTRATION: These are the ways to experience this event.

1)**Attend In Person**
at 120 Independence Dr, Menlo Park, CA 94025
35 minutes South of San Francisco, CA. 25 minutes north of San Jose, CA

2)**Order The Video**
For those of you not living in the San Franciso, Bay Area or just short
on time and not able to attend in person, you can order the video online.

We will send you the download link three business days after the event.
Download the video and watch it whenever you want on your computer.

Attend in person + get the video for only $5 more.

Attend in person of buy video
$15 Members
$25 Non-Members
$60 Membership

LOCATION: Tech Shop 120 Independence Dr, Menlo Park, CA 94025,+94025&sll=37.0625,-95.677068&sspn=39.456673,92.548828&ie=UTF8&om=1&ll=37.485313,-122.179341&spn=0.011714,0.028667&z=16&iwloc=addr

Saturday, September 22nd

Check In & Networking:
9:15 – 9:45am

9:45 – 10:00am

10:00am – 12:15pm

Small Business Administration Seminar: Basics of Manufacturing Your Product Overseas – Next Week!

By on September 4, 2007 | Category: News | Comments Off on Small Business Administration Seminar: Basics of Manufacturing Your Product Overseas – Next Week!

The Small Business Administration has asked me to lead a seminar next week at their San Francisco offices on the subject of "The Basics of Manufacturing Your Product Overseas".   It should be a lot of fun because I’ve outlawed the use of bullet points in our company presentations AND we should have ample time for Q&A.  Hope to see you there.

The Basics of Manufacturing Your Product Overseas


6:00 PM – 8:30 PM

Competing in the Global Economy today requires
access to global manufacturing resources to produce and sell your
product on the market.   Learn the basics of manufacturing overseas,
the steps and decisions involved, the players, and critical insights
into making your operations a success.  Find out how to obtain accurate
production quotes from qualified vendors, manage the communication
process, protect your intellectual property, and assure high-quality
product. If you are a business with products on the market, currently
developing products or a product line, or an entrepreneur starting with
a product idea, this seminar will prepare you for the next step.

The Small Business Administration offers a
variety of classes for business owners in our Entrepreneur Center,
located at 455 Market St., 6th Floor in downtown San Francisco.

To register for classes, go to:

TieCon Event: What is the Right Channel to Take Consumer Products to Market

By on August 21, 2007 | Category: News | Comments Off on TieCon Event: What is the Right Channel to Take Consumer Products to Market

TiE, The Global Network of Entrepreneurs, organization will be hosting an event in the Bay Area this evening on the topic of What is the Right Channel to Take Consumer Products to Market?.
For those able to attend, it should be a valuable roundtable discussion
with several executives from leading national retailers, including
BestBuy, and Walmart.  I will be attending this evening and for those
of you who aren’t in the area or cannot attend, I will blog on the main
points and highlights of the event in the next few days.  Should be
interesting.  You can click on this link to register or view the event details below:

Time and Place:

Tuesday, August 21, 6pm-9pm

TiE Conference Center, Suite Number 108

2903 Bunker Hill Lane

Santa Clara, CA 95054

Online registration closes at Noon, or you can register at the event.  Member fees USD 20.00 online; Non-member USD 50.00 online; Member USD 30.00 onsite; Non-member USD 60.00 onsite.

Topics of Discussion:

TiE Consumer Technologies SIG is pleased to announce its next event, focused on "What is the right channel to take consumer products to market?
Understand how your target customer (consumer) will learn about the
product, and how will they want to buy it? impulse or considered
purchase? how long is that consumer sales cycle?

you are in the business of Consumer products, and would like to know
how to choose the right channel for your company this panel cannot be

Some of the questions this group will discuss:

– What are the choices for taking new product to market?
– Common mistakes to avoid? what are some of the most spectacular mistakes you’ve seen?
– Direct mail campaign with phone support?
– What about infomercials? shopping channels like HSN? how to work with this channel and not waste money in that channel?

How do I compare the effectiveness of the various channels? how to
measure? quantitative vs qualitative components. (where do the
impressions go? what’s the typical response rate, conversion rates,
click-through rates & typical sell-through rates? return rates?
– What is a hard goods retailer looking for? What should I be
prepared to pay for? what should I be ready to support? returns? what
are typical terms? how long will a retailer try a new product category?
how much inventory is required?
– How to balance channels: what is
multi-channel retailing? should I pursue a multi-channel strategy? when
is it right for me – why should I care? (because you have limited
marketing funds – prioritize and spend funds wisely) – use the right
channel for the right audience
– How to think about direct marketing
– such as BestBuy’s direct mail program? is this something startups
should think seriously about?
– Does direct mail still work? if so, when should it be considered?
– Q&A

From Chinese to Japanese Quality: China Has a Model, But Will it Follow Suit?

By on August 3, 2007 | Category: News | Comments Off on From Chinese to Japanese Quality: China Has a Model, But Will it Follow Suit?

There has been no shortage of blog posts and news stories on the quality issues in Chinese manufacturing in the last few weeks.  The most recent story is Mattel’s recall of 1.5 million (967,000 in the US) toy products, which was announced last week.

Mattel has done the right thing and while some may believe their brand
has been tarnished in the short term, I believe their acknowledgement of their accountability for what has happened and the actions they’re
taking will only help reinforce their brand in the long term.  What
perspective on this recent event involving Mattel will be more sticky
in consumers’ minds?  The fact that they produced and sold poor quality
product from China?  Or, the fact that they assumed responsibility for
their oversight and took action to correct it?  In the long run, my guess is the latter.   

But, like most news stories, the more the press covers it and people hear about it, the more likely people will become ambivalent to the issue.  But for those of us involved with manufacturing in China, Asia, or anywhere for that matter, the subject will continue to be just as important.  So where do we go from here?  Where does China go from here?  What have countries in China’s situation done in the past in this situation? 

It will not come as a surprise to many that China is not the only country to experience quality woes.  But it may be surprising to learn that Japan was once in China’s place.  Japan, a country widely associated with companies that consistently produce high-quality products, once held China’s title of "low-cost/low-quality" producer.  Yup.  Post World War II Japan’s "Made in Japan" label was a symbol of low quality product.  Interestingly enough, a few Americans, such as Edwards Demming, whose ideas on statistical quality control processes were turned down by US automakers, were embraced by Japan and helped lay a foundation for Japan’s culture of quality.  Realizing quality as a path to growth and market share, Japan took quality very seriously and took several steps to infuse their business culture with the attitude and tools to build quality into their companies and production lines.  And you see it when you walk a Japanese production line in a Chinese factory.  They are consistently impressive and it speaks very well of a factory if they are supplying a Japanese company with product.  Today, while every country has the occasional issue with quality, Japan is widely considered a world leader. 

Whether or not China will follow a similar path as Japan is unknown.   Generally speaking, countries in Asia have slowly moved up the value chain in terms of the benefits they provide.  Low development countries are generally entered into by companies looking for low-costs.  These companies are willing to go through, or find out that they will need to go through, a number of challenges to get an effective supply chain going in these countries.  Just read Gary Erickson’s tales of offshoring adventures from a few posts ago to get an idea.  In the 1950’s, this was Japan.  But as the value of Japan’s abilities grew, so did costs.  Thus, Western companies moved operations to Taiwan, South Korea, Hong Kong, and Singapore.  A few decades later, the same process occurred again, and China became the major low-cost destination that it is today, along with a few other Southeast Asian nations on a much smaller scale. 

Will China follow the same path as other Asian countries and move up the value chain?  They would certainly like to.  Manufacturing commodity products comes with razor thin margins and cutthroat pricing competitions.  There are two basic ways to get out of this business situation:  1) add to the value of the product you offer (ex. higher-quality products) or take on more valuable tasks for which customers will pay a premium (ex. R&D).  2) "Quality Fade".  A very popular article written by Paul Midler and published by KnowledgeWharton explains quality fade very well.  Quality fade is "the deliberate and secretive habit of widening profit margins through a reduction in the quality of materials".  Thus far, many Chinese companies have taken the path of least resistance and employed the "quality fade" approach.  Midler goes on to explain that one of the major reasons behind this is because many Chinese fear the window of opportunity to profit will close (via unpredictable, oppressive government actions), thus they focus on the short term.  Their fears are not unfounded. 

So far, China has responded to the outcry in the US over quality issues by citing the US’ own quality issues and holding that 99% of the products coming out of China do not have quality problems.  There may be some truth to this.  But the fact is, if China wants to continue moving towards higher premium products and services, they will have to seriously address their culture of quality.  This will take a great deal of time and effort.  Japan is a case in point.  The next few years will be very telling in terms of their initiatives in this area.  I don’t think it will be as easy or straightforward as the case of Japan.  And I think this is just one of the major underlying issues that China will need to face to continue its march onto the world stage.  In the meantime, Western companies now realize what is at stake and will need to act accordingly.   China is still a good place to manufacture product, and now companies know the risks.  Like Mattel, it’s time to start taking action.

Leading Sourcing and Manufacturing in China Event with Inventors Alliance

By on June 22, 2007 | Category: News | Comments Off on Leading Sourcing and Manufacturing in China Event with Inventors Alliance

I apologize for the late notice.  For anyone in the Sacramento or Bay Area of California, I will be giving a seminar with the Sacramento Chapter of the Inventors Alliance this Saturday on the Basics of Manufacturing in China.

During the seminar, I will be covering the issues related to small businesses and inventors manufacturing in China.  I will cover aspects of product design, product development, obtaining price quotes from manufacturers, sourcing, the manufacturing process, quality control, IP protection, and all through the use of many slides loaded with interesting pictures, images, and few bullet points.  I’ll also show some video of some factory facilities and processes from our recent trip to China. 

The event is from 2pm to 4pm in Sacramento, June 23rd (this Saturday).  The address is 925 3rd street, Sacramento, CA.  The event fee is $20 at the door.  The presentation will be worth your while.  I look forward to seeing those of you in the area and interested at the event. 

Business and Product Strategy – Part 3: A Portfolio of Product Iterations?

By on May 22, 2007 | Category: News | Comments Off on Business and Product Strategy – Part 3: A Portfolio of Product Iterations?

Seth Godin wrote a quick, poignant post on Starbucks recently:                        

Here’s today’s entrepreneurial trivia question:

Even after Starbucks had five stores and more than 20 employees, which item was unavailable for purchase at their stores:
Hot Coffee
Frappucino® blended beverage

Actually, it’s a trick question. The answer is ‘all of the above.’
It wasn’t until several years after the company was up and running that
they realized it would be a good idea to sell any beverages at all. All
they sold was beans (but you could get a free taste of coffee if you
asked nicely).

It might not be too late to fix your marketing/story/product mix.

It could be argued that one should always be fixing their marketing/story/product mix.  The fact is for many start-ups, small businesses, and inventors, it may not be possible to capitalize on a HitForge kind of strategy in which a portfolio of businesses (or products) are cooked up all at once and thrown against the wall to see which one sticks.  The issue is bandwith.  Early on, there is only so much bandwith to go around at a given point in time in terms of giving one product and business the time and resources necessary to see it through, let alone a portfolio.   

But a major problem that often plagues companies that don’t take the portfolio approach is that they throw everything into the exact opposite approach: they produce one static product based on company-centric development.  Companies often see the product development process as something that is centered upon themselves and happens only in the beginning stages of a product.  They focus on first customer ship, rather than getting the product right in the eyes of the customer and making sure a market exists that will pay for the product.  If the product is launched and does not reach certain milestones quickly, it is dropped as a failure and company resources are directed to the next company-centric product.

But, one could think of one-off ideas as a linear portfolio of product and concept iterations that are continually being honed for success.  And they aren’t being honed by you or people in your company.  You are led through the honing process by empathic interaction with the intended users.   And you hone in on the winning product amidst the portfolio of iterations by continuing to test it and all sorts of variations of it, even when your product is experiencing marginal success.  You start with a solution to a need in the beginning, in the form of the first product iteration, and let your customers lead you through the many steps of realizing the solution in the best, most lucrative form possible. 

In Steven Gary Blank’s, The Four Steps to the Epiphany, the author lays out his theory that successful startups tend to implement a customer development process along with the product development process.  The idea being that the two must work in concert and prevent the all-too-common "fire, aim, ready" strategy, in which companies develop a product first and then put it on the market convinced that it will hit.  Blank notes that while the originators of the idea or product concept come up with the first iteration, the company must get beyond feature lists and focus groups, and go outside the building to validate whether there are customers and a market for it.  The cash-burn rate is kept low while going through this process and nothing is scaled up until a viable product finds a paying customer through a viable channel.  Most ultra-successful inventors and businesses that I have come across never stop this process.  There is not one chance in a product, but perhaps an evolution through 3, 5, or 10 possible iterations to fill a need successfully.  You have a portfolio of test results.

Is your product Starbucks just before they decided to try something different and sell beverages? 

Trade, economic interdependency, and Brad Pitt

By on March 1, 2007 | Category: News | Comments Off on Trade, economic interdependency, and Brad Pitt

Most have probably heard about the Dow’s large loss on Tuesday, precipitated by the Shanghai Stock Market plunge.  A recent NY Times article recaps much of the events and, mirroring Fed Reserve Chairman Ben Bernanke’s remarks about the economy to Congress a few days ago, believes the market correction will not stop moderate growth in the US economy.  “We’re seeing some blowing off of some froth in the equity markets and
that’s probably a good thing,” said Peter Morgan, regional economist at
HSBC in Hong Kong.  Well put.  But a lot more regular, everyday traders are going to pay attention now when they hear rumors or see signs of a potential cooling in China’s economy. 

We’re watching each other more and more closely.  In fact, an old friend who is a reporter for Xinhua, the Chinese national news agency, contacted me a month or so ago for a statement regarding the impacts a cooling in the US economy might have on US imports of Chinese goods.  It’s easy to focus on our own situation and forget how much of what we do impacts hundreds of millions of people’s livelihoods over there. When our housing market cools, we aren’t the only ones who feel it. 

Just another reminder that we’re all starring in our own "Babel" movie–but instead of a housekeeper, a Japanese girl, and some kids in a Middle Eastern country–Tuesday starred a Chinese business exec, a strung out New York stockbroker, and Brad Pitt still, whose headline about recently upsetting Angelina Jolie for sending a birthday card to Jennifer Aniston was bumped off the front pages because something more important happened.  Whether we’re investing in the stock market, manufacturing a product overseas, pumping gas, love Walmart’s Everyday Low Prices, just about anything these days, what happens in Shanghai might play a role.   

Beware the Scams and Dirty Tricks

By on January 30, 2007 | Category: News | Comments Off on Beware the Scams and Dirty Tricks

I always appreciate when other experienced practitioners offer up their wisdom and warnings about the risks of operating overseas.  ChinaLawBlog offers some input on Avoiding the China Buyer Scam.  I hear far too many sob stories from small businesses who threw away money, ideas, and time because they got scammed or chose a poor partner to do business with.

Check out a few warning signs by Dan Harris of ChinaLawBlog.  If these red flags come up when looking for a sourcing partner overseas, become more skeptical and keep investigating.

  • Company is just a few months old
  • Company is ready to spend several million dollars
  • Company has no trade references
  • Company is good on technical questions, but lacks market knowledge
  • Company is in an odd location
  • Company’s business scope does not match the current deal
  • Company has no website or has a suspicious one
  • Company has no online listings promoting its sales
  • When you Google the company, questions from other potential suppliers appear on BBs.

 A few examples of what can happen in overseas sourcing:

  • After months of product development, sourcing, production, and shipping, a small business owner received his first large shipment of product only to find that when the supplier ran out of the color red for a major piece in the middle of an order, they simply continued on in orange.  No…the order from their customer did not specify half the pieces in orange.  Tough break.
  • Many inventors who have tried to go direct through a trading website get a fair way down the pipe with a vendor.  They find a vendor who responds to them in English and tells them they can positively make their product.  The inventor puts down money for tooling.  But, when the tools are finished, all of sudden the minimum order quantity that was agreed upon early on is not sufficient, and the supplier says they will not continue unless the inventor puts up more money for a larger order.  Then, the angry inventor tries to regain their tooling from the manufacturer, and good luck on that.  Or, the supplier delays shipment until the buyer is in a crunch, and then increases the price when the pressure is on.

For those going it alone, be careful and please do your due diligence.


Engineers in China: Reality vs. Sensationalism

By on January 2, 2007 | Category: News | Comments Off on Engineers in China: Reality vs. Sensationalism

Despite my experiences overseas, I have fallen prey to China-mania
factoids on occasion.  I thought the media had moved on from the competition issues between Chinese and US engineers, but I still
hear questions and comments whenever China comes up in conversation and
continue to explain that

  1. the swelling stats of new Chinese engineers are misleading
  2. foreign companies operating in China
    are likely to have very different experiences depending on a number of
    factors, R&D included. 

China Law Blog wrote a post about an article published in the Wall Street Journal today, entitled "Innovation, China Style".  The author, Thomas Hout of Boston Consulting Group’s HK office, writes about the challenges China faces in trying to build an innovation economy based on world-class R&D.  It’s nice to see the mainstream media work to rein in a big, China-mania factoid that has been haunting policymakers, businesses, engineers, and your average American (maybe this last one is too optimistic) for the last few years.  It has been reported by both Chinese and US organizations that anywhere
from 250,000 to 600,000 engineers are graduating from China’s
universities per year.  This number compares to our graduation of
approximately 70,000 to 130,000 per year.  Business publications,
newspapers, and books have highlighted this six-digit number repeatedly for several years as evidence of China’s emerging capabilities
and imminent surge onto the world stage as a leading engineering and R&D resource.

As usual, there is more to the story behind the stats of new engineers in China.  A few observations:

  • the grand sum of 250,000+ graduates accounts for engineers of all kinds—civil, software, mechanical, electrical, and so on.  Many of them are civil and mechanical engineers who will spend a great deal of time in China’s interior and western regions building infrastructure. 
  • Although multinational corporations have been able to attract and retain the best in a one billion population—making for world-class talent, in my experience, the same cannot be assumed of the vast majority of Chinese firms.  From a ground level perspective, I’ve witnessed many Chinese firms hurting from an inability to find and keep good engineering talent.
  • I am not alone.  I recently listened to a panel of speakers at the Asia America Multi-Technology Association’s
    China Connect Conference, and listened to similar human resources woes
    of middle-sized US firms setting up shop and operating in China.

One particular example that comes to mind is my experience with a trade company in Shenzhen this year.  The company spent months advertising for new engineers with no results.  They had serious difficulties finding solid engineers, and had even more difficulty keeping them in the organization for an extended period of time.  The engineers we did work with were typically young and were often lured away by other companies offering more ‘lucrative’ opportunities.  Some projects proceeded smoothly.  With others, it seemed that progress was impossible without routine supervision.  We might spend three hours in one sitting, communicating the details of a project, after which we felt confident about the progress that should result.  Upon following up the next day, we’d find our project stood in line behind three others.  In the end, we found that it was very difficult to predict how quickly progress on a given project could be made, particularly if we weren’t there in person to prod people along.  Having this kind of transparency into a company’s HR situation is very helpful in situations like this, because we can always pull and go to another vendor if we know what we’re up against beforehand.  But it’s also very time intensive for the already-stretched smaller organization.

The simple fact is that even though hundreds of thousands of engineers are graduating every year, attracting and retaining solid engineering talent somehow continues to be a challenge for many US and Chinese firms in China.  This reality-check isn’t meant to dissuade you from enlisting the help of Chinese engineers, as the benefits of working with the right organizations that manage to keep a sufficient number of qualified engineers in their ranks are many.  Instead, this sobering dose of reality is meant to illuminate and pull back into focus some of the fear, protectionism, and irrational exuberance that big, hairy, six-digit numbers can evoke.  Smaller companies are advised to get a handle on the engineering department of their overseas partners.  And, if you’re an engineer in the U.S. and you’re worried, don’t be too alarmed by all the hype.  Do continue your education, job responsibilities, and growing sense of innovation.


Thanks to GSS for making our product a reality!

Julia Houck-Whitaker
President & Founder, Hem Gems LLC