Rough Guide to Outsourcing In China
zentec writes, "An article in Design News chronicles WiLife's outsourcing project to China (they make consumer surveillance cameras). It's a tale of a language barrier, misplaced EEPROMS, backyard engineering, incorrectly assembled parts, sloppy engineering, and flaring tempers. That, and an initial defect rate of nearly 80%." In the end WiLife seemed happy enough with their outsourced manufacturing. This is a nitty-gritty account of life under globalization.
The third shift is slang for when the CM continues to manufacture more of your product without being asked about it. The goal, of course, is to shunt this product to a separate market and undercut your production (after all, they don't have marketing, R&D, etc to pay for). Since these CMs often handle inventory for you, they can order extra parts without you knowing.
Or they take your design, modify it, and manufacture their own (possibly inferior) version. They have everything they need - board layouts (schematic can be derived), binary object code (for FPGAs, flash memory, etc), parts lists, etc.
Just a hazard of outsourced production.