April 2016 Reading Recommendations

The book recommendations this month are going to be a little sparser than usual simply because I haven’t had the amount of time I normally have to read, on account of battles I’m fighting the likes of which you can read about in the first book on the list below.

Poorly Made in China: An Insider’s Account of the China Production Game by Paul Midler is a must read book if you’ve ever harbored notions of importing goods from China. Or if you’ve ever gotten a bottle of your regular brand of shampoo (as I did a month ago) that just isn’t the same as usual. Or if you’ve purchased something from a mail order catalog with a price that seems too good to be true and have it fall apart in your hands. Or if you’ve ever just wondered what it might be like to deal with a Chinese factory.

I’m sure most readers of my blog know that MD and I founded a startup company about eight years ago, which I will shamelessly promote here by providing a link to our website. We now sell this product in over thirty countries and have built what we like to think is the most recognized brand out there. But it hasn’t been without a lot of hassle, and much of the hassle is a consequence of dealing with–and trying to consistently get quality goods out of–a Chinese factory.

The first thing you learn when you start dealing with a factory in China is that you absolutely have to have someone not affiliated with the factory, a third party, riding herd on the factory or you are in for a screwing. It can be someone from your own company or, more commonly, someone you hire. There are no end of outfits out there that will be your eyes and ears in the factory for a price. Sometimes these folks will screw you worse than the factory, so you’ve got to be careful. If you go it alone without the third party, you’re guaranteed to get screwed. If you use a third party you may get screwed. The odds aren’t in your favor.

The author of Poorly Made in China (which, by the way, was an Economist Book of the Year a few years ago) is an American guy who learned to speak Chinese in college and went to China to work as a QC person looking out for American companies manufacturing there. He improved his language skills over a number of years working there, then came back and got an MBA at Wharton. Then went back to China and has lived and worked there for many, many years. His book details his experiences there. I wish I had read it in 2008 instead of this past month – I could have profited greatly from it.

One of the main themes of the book is the cultural difference between Americans and Chinese, at least the Chinese who run factories. The differences are vast and lead to what is called “quality fade” in the business. You have always got to be diligent to keep your product up to snuff.

When you first go into business with a Chinese factory, you think you’ve died and gone to heaven. They are so accommodating. And the prices they offer are terrific. They wine you and dine you. In our case, when we went to visit the factory for the first time, we were met with a giant sign welcoming us, and it only got better from there. As I’ve discovered from other people and had confirmed by this book, our treatment is pretty typical.

The Chinese can replicate anything, but they don’t seem to be able to create or invent anything. Not since gunpowder, at least. If you create a unique product that sells, there will be a dozen, if not more, Chinese factories making a version of it within a year. They are great at disassembling a product and figuring out how to gear up to make it or make something very close. We were advised by someone very smart to get our designs patented in all the countries where they’re sold and in China as well. It was advice that has paid off in spades.

When a Chinese factory makes your first run of product, the product comes off the line looking fabulous. You can’t believe it looks so good. Your QC firm tells you that they have pulled a bunch of units at random to test according to the QC standards you’ve agreed to with the factory and they have all passed with flying colors. The units work like a charm, and you’re deliriously happy. Then, if you don’t watch like a hawk, the next container that gets made has a slight component substitution. Some little part that had certain specs was replaced by another that probably cost the factory two cents less. And it might not be quite as good as the component it replaced, but still the units function perfectly. The next manufacturing run may end up having another new component replacing the one originally called for. If so, it doubtless cost the factory less. If this goes on over time the quality of the entire machine deteriorates, which is the definition of quality fade.

Problem is, the factory makes these substitutions without your knowledge. It would be one thing if they called you and said, ‘Hey, we’ve found a component that will work as well as the one we’re already using, but it costs ten cents less. We can substitute it and everything will work the same, but you’ll save a little more, and we’ll make a little more.’ But that’s not how it works. The whole savings goes into the pocket of the guy who owns the factory, and your product quality deteriorates, i.e., fades, just a little as a consequence.

The book discusses how this happened to bottles of hand creme being made in a Chinese factory and sold at a big box store in the US. These were big bottles with pumps, and the folks doing the inspections for the company selling to the big box stores were on top of the QC for the hand creme, making sure all the ingredients were included and in the proper amounts. Then, all of a sudden, end users began to complain and return product that had collapsed when they pushed the pump. Turns out the factory had been shaving the thickness of the plastic used to make the bottles by a tiny increment with each product run until the walls of the bottles were finally so thin they collapsed when people pushed the pump. The factory got a little bit more margin with each order, and no one was the wiser until there was a catastrophe. And how does the factory respond when something like this happens? It’s not our fault. Your inspectors approved it – it’s your problem, not ours.

I’ve just touched on a tiny fraction of all the stuff that can go wrong. This absolutely fascinating and well written book goes into more disasters in more detail. After reading it, all I could say was Thank God we’ve had a good crew doing our inspecting and have had no serious problems. But it’s only because of eternal vigilance. And a lot of brain damage like I’ve been going through this month to stay on top of it.

Our factory did once rebrand an entire container of our product for a German big box store notorious for cheap ripoffs. This company had met with us numerous times, and our European reps had gone to company headquarters. They never ordered from us, however. Then one day our customer service department gets an email from a European customer with a screenshot of a website selling what appeared to be our product with a different brand on it. The guy asked if this was really our product or was it just a cheap ripoff. We jumped all over it and discovered this big box store was selling our actual product in the stores and online. We hired a German law firm, got them to purchase and send a unit to us to confirm they were really ours – and they were – and we threatened to sue the company for patent violations because we have multiple patents in Germany. The company immediately capitulated and offered a settlement. Then our factory contacted us begging us to help them out. Turns out our own factory made the product for the German company and indemnified them against any patent claims. So the German company simply passed the settlement costs back onto the factory. We came out of it okay and our factory was chastened, so I doubt they will pull that stunt again.

Anyway, you tell these stories to other people who have dealt with Chinese factories, and they nod sagely and have their own nightmare tales to tell.

Which makes anyone not familiar with the situation ask, Why on earth would you get anything made in China if you have to go through all of this? The answer is simple. Price. It would cost twice as much or more to get it made in the US, and the price to the end customer would be too high. Especially if you’re competing with other companies getting all their stuff made in China.

If you’ve listened to Donald Trump talk about how he would put a 45 percent tariff on goods coming from China and think that’s a good idea, just realize you’ll be paying 45 percent more for most of the stuff you buy. If most of the stuff you buy now were made in the US, you would be paying about half again what you’re paying now. Most of the goods sold in Walmart, K-Mart and other discount stores where many low-income people shop would go screaming up in price should a 45 percent tariff go into effect.  Strangely, the people who shop in these stores are the very ones who are the strongest Trump supporters.  Go figure.

I would love to have our product made in the US or in Europe, but it’s cost prohibitive. You might think that people will pay more for stuff made in America, but it’s not true. Maybe a tiny bit more, but not two times more.

I know this from my own behavior. As all of you know, I read a lot. And I haunt bookstores every chance I get. But I almost never buy books from them because I can get them for half the price through Amazon. I hate the whole notion of bookstores going the way of the Dodo bird because there’s almost nothing I would rather do than spend an hour or two roaming through a good bookstore. But I’m not willing to do my part to keep them going by paying twice as much for a book from one of them as I would pay for it from Amazon. So I know that having the Made in America sticker on the label would never overcome the extra couple of hundred dollars people would have to pay.

I didn’t intend this rant, so I’ve got to move on. But do yourself a favor and read Poorly Made in China. If nothing else, it will really make you read labels a lot more closely.

Smarter Faster Better: The Secrets of Being Productive in Life and Business by Charles Duhigg is a lot better book than I had been led to believe. I read his earlier one on changing habits and thought it was terrific, so I was bummed when I read a pretty lukewarm review of this one. Then I read an excerpt of the book somewhere (can’t recall exactly where right now) and immediately bought it.

The so so review said the book was immensely interesting because it was filled with fascinating stories, but that it didn’t really provide any specific advice on how to become smarter, faster and better. I don’t agree with that assessment unless you’re one of those people who can’t learn from example. The author describes certain cognitive problems, then provides engrossing examples where these problems created sometimes life and death situations and people either succumbed to them or overcame them.

Once such problem was the crash of Air France flight 447 in which the plane bound from Rio de Janeiro to Paris went down in the Atlantic. I hadn’t realized the transcripts of this catastrophe had been released, but they clearly show that one of the junior pilots, the one actually flying the plane, got sucked into a situation called cognitive tunneling, which I had never heard of, and ended up flying a perfectly functional plane into the water. Another one of the stories that had a much better ending was about how the captain of a giant Quantas Airbus 380 that suffered a catastrophic, one in a million, engine failure was able to land it safely. He did so by staying ahead of the game and working with his crew.

Valuable lessons are to be learned from all of the anecdotes that make up most of this book. But if you want to be spoon fed how to use it, that’s all there in the epilogue. I guess the first reviewer I read never made it that far.

Cutter and Bone by Newton Thornburg is a sort of mystery novel that I struggled along with. Took me forever to get it read, and it isn’t all that long. I’m a sucker for lists of favorite books by famous people. In this case, I ran across a list of James Patterson’s (whose books I have yet to read one of) favorite mystery novels. Cutter and Bone was near the top, so I grabbed it. Once I started reading it, I realized it was set in Santa Barbara where I live part of the time, which spurred my interest a bit. But I could just never get into it – I didn’t really like or identify with any of the characters. In fact, they are the kinds of people I would cross the street to avoid. For whatever reason, though, I stayed with it, which is unusual for me because if I don’t like a book, I’ll usually ditch it in a heartbeat – there are too many good books out there to waste time on crappy ones. But I didn’t read it at my usual breakneck speed. It was a few pages here and a few pages there. Until I got to the last quarter of the book. Then it was like the author was on speed and it spilled over onto me. The last quarter redeemed the first three quarters. It took me the better part of the month to read the first couple of hundred pages, but I read the last quarter of it at one sitting.

I recommend it because maybe you would like to get into the minds of a couple of grifters who mooch off whomever they can in Santa Barbara until they decide to go to the Missouri Ozarks, where I was born and raised, to try to run a scam on a giant factory hog farmer. If that doesn’t get you to read it, nothing will. If you want to find out more specifics as to the plot, read some of the reviews on Amazon.

Speaking of detestable people…

True Story: Murder, Memoir, Mea Culpa by Michael Finkel has to be one of the strangest books I’ve ever read.  Or, I guess, it would be better to say one of the strangest stories I’ve ever read about.  And it’s all true.  Michael Finkel was a respected investigative journalist for the New York Times when he fudged a story a bit and got caught.  I didn’t think the fudging was all that bad, but the powers that be at the New York Times came unglued.  Finkel got sacked on the spot and sought refuge in his home in Montana.  He was in the process of figuring out how he was going to deal with the impending fallout when the announcement hit the news the next day.  His plan was to basically go into hiding in his house, not answer his phone, not read a paper, and simply lay low for a few weeks until something else became hot news.

The night before it all was to begin, he gets a phone call from a newspaper in Oregon.  He can’t figure out how they got the news before it had been released, so his curiosity got the better of him, and he took the call.  He was expecting to be asked about his fall from grace, but instead the reporter asked him how he felt about Chris Longo taking his name.  Say what?

Turns out a man who had apparently killed his wife and three young kids in Oregon then fled to Mexico had been passing himself off as Michael Finkel, writer for the New York Times.  Chris Longo had been captured in Mexico and returned to Oregon where he was being held in jail awaiting trial.

Despite Finkel’s angst about his impeding public humiliation, his curiosity got the better of him, and he decided to reach out to Longo to find out why he had selected his (Finkel’s) name and persona to adopt while he was on the run.  After multiple attempts to reach him, Longo finally calls Finkel collect and puts him through a test to determine that he is the real Michael Finkel and not some other reporter trying to get to him for a story.  Many had been trying to interview Longo, but he had spoken to no one from the press.

The book is about the developing relationship between Finkel and Longo as Longo’s trial approaches.  And what happens at the trial and after.

I learned a ton from this book.  Finkel spills his guts as to why he fudged his story and how.  The story was about young men allegedly being sold into slavery on cocoa plantations in Africa.  I learned all about that situation, which I know nothing about.  And I learned that major newspapers such as the New York Times have fact checkers upon fact checkers.  And even fact checkers checking the fact checkers.  Made me realize the value of large entities like the Times that have the budgets to do that kind of due diligence on their investigative pieces.  And makes me kind of sad to thinking of them passing because of the economic situation and being replaced by the Huffington Post and Salon.

I learned a lot about Jehovah’s Witnesses, about which I knew nothing.  Chris Longo and family and wife’s family were Jehovah’s Witnesses of the deepest dye.

And I learned about the thought processes of a psychopath.  Chris Longo not only called Finkel weekly, he wrote him 4o and 50 and 60 plus page letters, from which Finkel quotes copiously.

The title of this book says it all.  There was indeed a murder, four, in fact.  And they were horrific.  It is a memoir; it tells the tale of Finkel’s rise and fall and then his miraculous gift (as a reporter) to have one of the most famous murderers of the time use his name and ultimately be his confidant.  And it is a mea culpa in that Finkel tries to expiate his reportorial sin by admitting to it publicly, saying he was wrong, and being scrupulously honest in writing the once in a lifetime story that fell into his lap.

To top it all off, right now the book is available on Kindle for $1.99

Small Data: The Tiny Clues That Uncover Huge Trends by Martin Lindstrom and Chip Heath is a book by marketing geniuses, who snuffle up clues that large corporations can use to get you to buy their stuff. Martin Lindstrom is a Dane who has spent his career traveling the world at the behest of giant corporations to ferret out the tiny bits of data identifying burgeoning trends that said giant corporations can get ahead of. And it is amazing what kinds of nondescript things he notices that do herald the beginnings of trends. He doesn’t just waltz in, make a few observations, write a report and demand a large check. He actually lives in the places he visits, often staying with ordinary citizens, watching them go about their days. As he writes, “No matter how insignificant it may first appear, everything in life tells a story.” It takes a lot of effort to do what he does, and it’s fascinating to learn how he does it.

Lindstrom is definitely a different kind of guy. When he was 12 years old he got a diagnosis that kept him in a hospital for many months. He was bored to the max, so he started passing time by observing his fellow patients and noticing all their little quirks and habits, which he then began to analyze. During this time, his parents brought him a LEGO set, which he became obsessed with. He then spent his time in surveillance of the patients, doctors and nurses and constructing things with LEGOs. Once he got out of the hospital, he was so taken with LEGOs that he decided to build a miniature replica of LEGOLAND in his parent’s backyard. Word got out, and soon he was paid a visit by a couple of LEGO patent attorneys who came to see what he was up to. Instead of threatening to sue him for creating a facsimile of the real LEGOLAND, the company decided to hire him as a sort of consultant. Later on, his skills ended up saving LEGO’s bacon.

This one is a fun and eye-opening read. All the way through, all I could think of were the signs of trends that must be right under my own nose that I’m not able to pick up on. This book has made me at least try to see them.

As I say, there aren’t a lot of books on the list this month. I’ve read a few others, but not any I would recommend. Having written or co-written some ten or so books in my life, I know how much effort goes into writing one. And I can’t bring myself to criticize someone who has put that kind of time in. I would rather just not mention them. I have started a ton of new books, but because of my day job dealing with Chinese factories, I haven’t gotten far enough along to make recommendations one way or another. I’ll write about the ones that turned out to be worthwhile next month.

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Reading recommendations

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