Pen Type-A: a cautionary tale of manufacturing in China
gist.github.comI guess some people here live in github but I really don't recommend it for publishing text documents this way.
Sure I can read it by scrolling back and forth or downloading it and opening it in something that will format it nicely and perhaps I missed the "make readable" button. But serious it is 2012, there are dozens of ways to publish things on the web that format them automatically for the browser to people can "just read" them.
</rant>
A copy to make it easier to read:
Project Update #27: The Storm
For backers only, Posted by cw&t
Hi backers!
First, for those of you still waiting for your pen(s), we're still on schedule. The schedule was posted a few updates ago (update #22). The 3 remaining batches are shipped from our manufacturer in China on
July 7th (480 pens)
July 23rd (480)
August 7th (494)
In the last couple months, we fought hard to speed up production. We advanced more money and were promised ship dates by our manufacturer and none were met. In their eyes, delays were caused by us because we were so picky about the details, but the truth is we weren't asking for anything out of the ordinary. All we asked for was for them to follow the specifications in our drawings they agreed to on day one. They weren't able to meet the specifications, so they blamed production delays on little changes made during production to help make the pen more manufacturable.
To try to move things forward faster, we proposed to place a new order with our manufacturer in exchange for ramping up production. Instead, they countered our offer and demanded we sign an exclusive 4 year contract, place a new order immediately and pay an additional engineering fee, or they would stop production of the current order.
We weren't interested in a 4 year exclusive contract with a manufacturer that hadn't proved itself, so we didn't sign. On top of that, they took our olive branch (the proposal to place a new order), sharpened it into a shank and started stabbing us with it (metaphorically, of course, with lawyers).
They stopped shipping us pens. We lost some sleep. Lawyers got involved. There was yelling over email, in person, and on phone calls. After many weeks, we arrived at a compromise. We lost a lot of time, some money, and our faith in Chinese manufacturing, but we're still moving forward. They won't be ramping up, but they are completing this order and making pens (that we are super excited about!) without changing the shipping schedule.
We're not placing any future orders with them or any manufacturer in China ever again. It's an unfortunate conclusion, we can't even begin to tell you how pissed off we are with them. It's the first and hopefully last time we'll yell in a business relationship. It's not how we like to do things.
This all happened at the beginning of May. We have been aching to share this, but we had to wait until the storm settled. We were mislead, and in turn, we mislead you. We thought we would finish fulfilling all 5.5k pens in a timely manner. Many of you are understandably frustrated and upset that a project you backed is taking a year to complete. We are too, and we sincerely apologize. We've made poor business decisions and we only have ourselves to blame.
We learned our lesson. We're now setting up to manufacture our next order of pens in Vermont, USA. We won't be able to sell the pen for $50, but we're happy to be out of China. Vermont lacks the charm of smoggy skies and broken english, but when Vermont says they can do it, they mean it.
lots of love,
cw&t
PS. your drawings from us are coming soon! (2 of them are at the bottom) we have about 110 so far and many more to go.
PPS We get butterflies every time we see your drawings. Keep them coming! http://pentype-a.tumblr.com/submit
Check out some of the latest drawings (and some great pen hacks!) http://pentype-a.tumblr.com/
The problems might have been due to your (mis)communication with your Chinese partner, I wouldn't rush into accusing the entire Chinese manufacturing sector for your problems. In fact, an accusation like this proves you have problems of perception and prejudice on your side which might have contributed to it.
Its always "due to translation problems". That's usually the next step after the "yelling" part. The yelling part is to make the customer give in a little more. After that, blame all the yelling on misunderstandings due to language problems, so both sides save their face, and go back to negotiate.
How's this for broken english: due diligence.
Now you can take your naive, tarbrush, self-adoring brand of racism, sandblast it, polish it and and stick it up your ass.
(Thanks for reposting, ars!)
I suspect you haven't heard the earlier installments of this story in which they were absolutely lied to about physical and volume capabilities. They found someone in china they could trust who led them to this manufacturer who appears capable of doing the job, but uninterested in matching their high quality requirements which they were quite aware of up front.
You're wrong. I've been hearing about this unfolding trainwreck for at least six months. All this talk about trust and lies is exactly what you always hear from people who are out of their depth. Fine. No problem with that. It's the 'China's shit, America's ace' rubbish that's unnecessary and unfair.
I'll provide a counterpoint that doesn't involve America at all. When I lived in Beijing, I had a French friend of mine that lived in Shanghai and was responsible for all the sourcing of clothing for a high end French fashion label that had decided to move production to China. These are just two of many stories he told me:
(1) He signed a contract with a manufacturer. During the signing of the contract, the company intentially sealed the contract with a red stamp that looked official, but was not that companies legal red stamp. They did this so that if anything happened they would have an out if there were a dispute. A dispute eventually arose and my friend found out the hard way to always have those stamps double-checked to make sure they are legit and represent the business with whom they were doing business. Had my friend been literate in Chinese, he probably would have caught this, but the Chinese manufacturer intentionally exploited his illiteracy in Chinese to produce a contract that could not be enforced.
(2) On more than one occasion he would be called by a manufacturer to be informed that the clothes had been produced and were ready to be shipped and that all he had to do was deposit the rest of the money and they would ship the clothes. After once discovering that the manufacturer had not even begun production, but was lying to him to cover a cash flow problem he made it a point of always flying out to the manufacture's plant the very next morning to personally inspect the entire shipment before depositing money in the account. After he started doing this, he repeatedly came across many manufacturers that were caught completely unprepared by his unannounced trip and when he arrived he discovered that no work had been done. This tactic to solve cash flow issues is apparently a semi-common occurrence.
Ask any foreign national that has ever worked (not just lived as a student) and you'll come across many many stories like the two above. I have my own stories from the times I taught public speaking to Phds in China.
TBH, I personally don't attribute it to race or nationality. It's just that many businesses in China have yet to move beyond a "caveat emptor" approach to business to a trust based system. A "pareto optimality" mindset prevails there. So many businesses transactions are negotiated on the Chinese side as "A dollar they get in this is a dollar lost for me" while the foreigners (depending on the country they are from, of course) are negotiating with the intention of long term continued business and that the long-term relationship will be far more profitable for both sides than trying to maximize short term returns. If there is any miscommunication, it's not because of language, but because the Chinese business is looking at it as a short term deal and the foreign side is looking at it as a long term relationship.
Just to be fair, most markets at one point in their development have been "caveat emptor markets". Europe and the US included. At some point a market eventually gets past that mindset once trust becomes a competitive advantage. In China, trust isn't yet seen as a competitive advantage because there are still many naive foreigners coming to China to manufacture things without knowing any better. Once the supply of naive business men going to China to manufacture stuff dries up, I reckon you'll see more competition based on trust.
Exactly. Every Apple, Samsung and HTC product is produced in China. It's not hard to get things done right there, as long as you cover your bases.
Does the fact that large companies successfully manufacture in China by investing literally billions of dollars and no doubt having many full-time staff to smooth the process really show that "it's not hard"?
Reading through this, my sympathies are definitely with the manufacturer.
Click the "raw" link and it's a readable wrapping text-only mode.
That too was my approach, but I'm sorry to report it didn't wrap for me.
Not in Firefox.
There's a plug-in that does word wrap. It's something called "Word Wrap within <PRE>."
Why should I have to mess with something like that? This is an authoring issue, not a reading one.
Like someone else said, a company's attention to detail shows up pretty much everywhere.
Changed the filename to make it markdown, added a few list bullet points if it helps.. https://gist.github.com/3016221
Same here.
I don't mean to be snarky, but if this guy can't even post readable text on a website, it makes me question how valuable his advice can be.
This is a repost of a backers-only email from Kickstarter. It wasn't meant to be published as a gist.
he's reposting an e-mail he got. It's not his advice.
This should be a cautionary tale about contracting out manufacturing (which in today's world, nearly means "trying to make anything physical"). Nothing is particular to China, although time differences and language barriers surely didn't help the matter. I say that having dealt with trying manufacturers myself.
When it comes to contracting out work, the first time is always going to suck. This whole industry has figured exactly who needs to provide what, and what every word they use means, and you'll always miss something. Ideally, you have somebody who's done it before coaching you through the process (well worth hiring a consultant do that and save you some stress).
Less ideally, ask the people you are interfacing with a lot of questions. Clarifications about what a word means. Or how they count days. Every step of the way, ask them "what do you need from me? how can I speed this up and make it easier for you? what's the next step and when does it happen? did we miss anything?" Ask if they can send you example of the documents that they need, so that you know the format and type of content they want.
Yes, it's a lot of leg work. It's worth it when the manufacturing goes right, though. And it gets easier every time.
> well worth hiring a consultant do that and save you some stress
Isn't finding a reliable consultant who has gone through the hoops as difficult as sourcing manufacturing itself?
Finding a reliable expert on manufacture, if you are getting something manufactured, isn't a separate problem. It is one of the first tasks to accomplish in sourcing manufacture. The detail involved in something like just getting two simple injection moulded parts made that need to fit together snugly is huge, if you don't want to just bin several batches.
I had a (shockingly) similar experience with Chinese manufacturers five years ago. My experience cost me a company, my shirt, and a whole lot of lost sleep. Consequently, I too decided that I will never, ever do business with another factory in China. Not sure that is fair (as manufacturing problems happen everywhere), but it is what it is...
Frankly, my story is useless - it is one entrepreneur's story of woe in a sea full of them. However, when you take stories like mine, Pen Type-A's, and the legions of others that have had problems in China, something more macro starts to emerge.
I'm beginning to detect a strong country of origin bias against China - many people are refusing to contract work out to that country. If this trend strengthens, it will affect demand for Chinese manufacturing. As demand drops, the Chinese economy will be starved of the western currency that has fueled its unbelievable growth.
I'm not crying wolf, rather I'm just seeing some ugly clouds growing over the horizon...granted, getting screwed by a Chinese factory is nothing new, but....??
Eh, I don't see this happening because China still has the big manufacturers, and they keep the big clients happy. Most of those manufacturers probably are good at building to spec, but would not entertain a small project like pen type a.
That's what China is all about: mass (with a capital M) manufacturing. In pen type a's case, the up front costs and haggling are a major trouble but for an order serveral orders of magnitude larger, the up front costs are a mere rounding error.
Great points - thanks for your perspective! I think I got a little caught up in the cult of me....:)
Not to detract from your point though, I do agree (and I'm fairly certain there are numbers somewhere to back this up) that the super-custom small batch manufacturing industry is alive and kicking in the US and other non-fareast countries because of exactly what you describe.
> the Chinese economy will be starved of the western currency that has fueled its unbelievable growth
Don't be so sure about that. China itself is currently the main growth driver for consumer goods, even for companies like Apple.
Great point!
Thing is, the Chinese demand is met through RMB - the RMB has a whole ton of problems. My concern is that items like potash and oil (which the Chinese are hungry for) will become too expensive to keep the growth moving.
However, I haven't thought about your perspective, so I'm likely wrong. Thanks a lot for your feedback - it gives me something new to think about!!
Sadly these guys wrote an identical blog post a year ago about how their previous manufacturer was unprofessional. The new one was supposed to be top notch, since they met him in person and toured the factory before signing.
http://www.kickstarter.com/projects/cwandt/pen-type-a-a-mini...
The description and photos of the etching and milling "factories" are, for me, the sort of thing that makes funding Kickstarter projects worthwhile:
... As we got into the car to head to the other factories, the factory owner conveniently disappeared and we were whisked off with his assistant and a machinist. It was unclear where we were going. After a long drive, the car stopped and we were told to get out. There was no factory.
We were on a dark, narrow road where every storefront was some variation of a live/work machine shop. Each one different. Each one specialized. A whole town of them, crammed side by side on narrow streets lit only by the glow of naked fluorescent bulbs. Think Bladerunner meets pre-industrial metal shops. The energy was palpable. Clean? No. Could we find it on a map? No. Could we have ever imagined that a factory work is outsourced to places like this? Definitely not. And even though we had never seen anything like it before, we could recognize it straight away. Every shop was run by highly skilled, passionate, self-taught makers. A lot like the shops many of our friends back home run. They are their own bosses. They live for and are proud of their work. This was nothing like the factory where we spent the past few days. It was invigorating.
The man that machines the screw parts is awesome and his setup is incredible. He has six CNC swiss screw machines in a storefront garage, in the back room is his office, a small kitchenette, a toilet (which you flush by pouring a bucket of water into it) and a small room off the back where he and his wife sleep. ...
(I received my Pen Type-A a month or two ago, by the way. It's well made and is a pleasure to use.)
Hooray for unregulated and dangerous working conditions!
Mine works well only if I use it regularly. After a few days of non-use it dries up - even when kept closed. It might be because I haven't yet swapped out the original ink barrel though.
Have you had similar issues?
Yep, even with it closed the tip dries and I have to wet it a bit / scratch a bunch to get it flowing. Not sure there's a fix that is reliable.
The other risk I've seen in Chinese manufacturing is duplication of your design. Some vendors will manufacture a larger run and then place the float on the black market. This is particularly true for smaller orders.
I know of at least one niche electronics manufacturer - they have the parts made in China, but they load the firmware back in Australia. They've gone to great lengths to make the device useless without the firmware. It's a bit of a pain shipping-wise, but gives them some security.
How do they qualify the devices coming out of China without running firmware on the manufacturing line?
I just asked - they supply a testing firmware that does the qualification. So on ship (from China) the device will start, but only to POST level.
For those wondering what they're talking about, it's this:
And the Kickstarter is here:
http://www.kickstarter.com/projects/cwandt/pen-type-a-a-mini...
Outsourcing works when you want to exploit economies of scale. This project appears to be an attempt to create a high cost novelty product at a very small scale. They probably would have been better off hiring the services of a local machine shop, cranking out a few dozen gross of these things, and marketing them carefully. Even better if they set-up shop and did themselves-- if we're only talking about a few thousand units.
Waiting for a bad experience with an American company so that they can swear off all United States based manufacturing and move everything to friendly Mexico.
In this case, it's reasonable. There are many reasons to avoid China, very few of which are intrinsic to China. Manufacturing in the US means your manufacturer is in the same time zone and speaks the same languages. You both have the same understanding of contract law and a court system that you are both familiar with. Traveling to the factory takes less time.
Honestly, I'm not sure why their made-in-china pens cost $50 each. It's a five cent block of aluminium that's been hit with a laser. That probably costs $1 to make in China and $20 in the US (worst case). Selling it for $50 still leaves plenty of money for the designers.
Anyway, their decision is reasonable. Hiring people in your own country is easier than hiring people half the world away. If two Chinese guys wanted to make a similar pen, I'm sure they'd be successful in China.
It's two blocks of steel, which have been milled, then turned, then one of them is laser-etched (and possibly painted), and they are finally both finished. Oh, and there's the screw-in part at the top. And it's being done in a relatively small run, which factories hate. The tooling cost is spread across 5.5K pens, not 5M or more. And Kickstarter takes 5%, Amazon something like that as well.
Then you have to ship to yourself. And then re-package and ship out to your customers. And be ready to deal with people complaining about them. And some will get lost in the mail (not your fault, but if you want to be awesome, you treat it as if it is). And you have to pay yourself. And the person un-boxing and re-boxing the pens. And you worked on it before there was a Kickstarter for it, so you should probably pay yourself for that time.
And maybe, maybe, you want some money left over so that you can afford to front the cash for your next run, instead of always counting on Kickstarter projects. It's not always easy.
Back in the day, several of us wondered why they seemed so bound and determined to do it in China: http://news.ycombinator.com/item?id=3037108
I always thought cw was a native Chinese speaker.
In the US, you have more legal options. IIRC (and I'm not a lawyer), in China you are unlikely to be able to sue for more than what you paid. Chinese law can seem a lot more laisse faire compared to US law, unless they think you are in debt (and then you get imprisoned). Actually, it's not always laisse faire, it just looks that way because some things aren't enforced, and other things are - it's different, and your supplier knows the law better than you.
From reading http://www.chinalawblog.com/, it seems one solution is to include an arbitration clause. You can take them to arbitration in the US, using US law, and get the decision enforced by arbitration treaties. But you'd want legal advice for this - if you mess up, the you can end up in a no-man's land where the Chinese courts refuse to see you (because you've specified a foreign legal jurisdiction), and refuse to enforce a foreign ruling because it's not in their jurisdiction.
Also, you want some things in Chinese. If anything gets used in a Chinese court, it gets translated to Chinese. If the other party manages to influence the official translation (or the official translation is just wrong), it's not going to be fun trying to change the courts mind.
Whatever the case, working with a Chinese supplier requires a good OEM agreement, written with the advice of a lawyer who knows the ins and outs of Chinese OEM agreements. It's not easy, but it's better than your supplier seeing you as an easy mark.
China is also notorious for "creative interpretations" of contracts that just happen to favor the Chinese company.
What you describe is a quite normal business relationship with a Chinese company.
There is always the "unreasonable counter offer" once they know there is almost no way back for you. There is always yelling (but not insulting!), that's a normal part of the negotiation process.
It sounds to me like your "manufacturer" is already the distrubutor of whatever-pen-you-invented in Asia. Its not uncommon that they produce for their client and then produce another batch for themselves and sell it in China. Kinda like Zuckerberg did when he made Facebook while "working for" some other dudes. Standard practise in China.
Anyway, producing something inovative in China usually means having somebody there to check up in person and each step of the way. And spell out the contract very precisely down to the last screw. Never expect "reasonableness", it is always seen as an opportunity to make a few extra bucks. And a mainland Chinese company boss will discuss for a whole day to gain 10 Kuai extra.
Ymmv, that's only my personal experience after some years in China.
producing something inovative in China usually means having somebody there to check up in person and each step of the way
That sounds a lot like getting something innovative made anywhere in the world. If you are producing your first batch of any innovative product, make sure you hire a very very chilled out and friendly expert who can speak the same language as the manufacturer, and who can virtually camp next to the factory for the first three batches. If you don't do this, then you are either making something easy with large margins and don't care about wastage, or you just don't care.
Hmm. Sounds like something straight out of http://www.amazon.com/Poorly-Made-China-Insiders-Production/....
No. No. No.
Pen Type-A is a cautionary tale of overestimating your abilities, and of why Kickstarter is unlikely to have any sort of transformative impact.
Having read through the "updates" section of their Kickstarter page, it is clear to me that nobody on the team knows anything about manufacturing, least of all Chinese manufacturing. I am completely unsurprised by the fact that two amateurs end up making lots of amateurish mistakes.
This situation is no different from what happens when a non-technical manager tries to outsource a software development project. He doesn't know enough to spot good working practices or recognise when he's being fobbed off. He doesn't understand the myriad technical issues that could completely derail a project. He's a child in the big bad world, unaware of how little he knows, or how costly his naivety could be.
So what? They are starting and learning. Let them. Good thing, they actually seem to learn from mistakes, that's good.
Why more websites that put everything on a single line that forces me to have to scroll left forever? WTF?
Because gists are for publishing code. This is not the intended use case.
Good,
But this works fine only as long as some guy makes the same pens and starts selling for prices way lesser than you do.
This is the reason why China exists. Because there is 'Some guy' who always sells things for prices lesser than somebody else. And not manufacturing in China isn't an option for companies like Apple, Dell etc. For their volume, the cost advantage is simply too huge.
People dream up a product
Other people give them money
First people gives money to China and hope product materializes
Also, this is only a sob history. Nobody will learn anything from it. How did they find factories in China? How did they find one in the us?
If you read their posts you'll find all about that.