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.

Comments

And this is surprising?

[Jhon]

From the article's author:

In CM's defense, this is the most complex PCA they have manufactured to date. It pushes the limits of their capabilities. The main PCA contains three BGAs and several high pin density surface mount devices. The bulk of CM's output is fairly simple mice and game controllers. CM top management wants to work with WiLife because it forces their factory to enhance their capabilities.

The author himself says they went with a firm that had never worked on anything more complicated than mice or game controllers. Of course they were going to encounter problems. And it looks like they were OK with that with the deal they were getting...

Re:And this is surprising?

[seanadams.com]

Exactly. There are precisely two kinds of contract manufacturers in the world:

i) Extremely good ones
ii) Extremely bad ones

I have worked with both, both domestically and in Asia.

To get a good CM to build your product you will have to choose them really carefully, and you will also need to have enough volume to make it interesting for them. They will gladly work for razor thin margins as long as you are building enough. However, even if your product is a big-ticket item, it is very hard to get any electronics manufactured in small volumes unless you can buy 100% of the parts from Digikey.

With some excedptions, a good Asian manufacturer can get electronics built cheaper, faster, and with much better quality than any American shop. It's not just their lower labor cost but also that all your upstream suppliers will be geographically close to the factory, which not only drasstically lowers shipping and handling costs, but also allows the buyers to work with them directly instead of you haveing to go through at least one layer of incompetent middlemen.

This guy had a bad experience. Shit happens. It is not indicative of what is possible with proper planning and a good business arrangement.

the operative word

[User 956]

In the end WiLife seemed happy enough with their outsourced manufacturing.

The key word: "happy enough". Meaning, not entirely happy, but they saved enough money that it doesn't matter if everything was stellar. It doesn't matter if the products have an operational life of 13 months. As long as they chug along for a while, and break outside of warranty.

I'll keep paying a premium for german engineered and manufactured goods, thanks.

China

[TheRecklessWanderer]

We test stuff from China. Most of it we don't buy because the quality isn't there. It isn't that much cheaper than the stuff that comes from Taiwan. The Korean stuff isn't bad, better than China, but is hit and miss sometimes. Doing business with China is hard because you really can't return stuff to them. Some of the more advanced companies have "depots" in Hong Kong, but not many yet. Look at Japan 30 years ago, or Taiwan/Korea 10 to 15 years ago, and they were in the same state that China is in now. Today, Japanese product comes at a premium, and is superior to most product (IMHO) that is manufactured here in North America (vehicles immediately spring to mind). Once the Chinese people get their head around the different methodology of doing business in North America, they will come in full force and North America will have some serious issues to deal with.

Reminds me of this summer

[Marxist Hacker 42]

This reminds me of a hand-generated flashlight we purchased this summer. The brand was the same as every other shake-and-get-light flashlight I had seen, but they had recently moved production to China. Sure enough, I couldn't get the flashlight to work when I needed it. Come daylight, I took a close look at the clear plastic case. Sure enough, the uninsulated wires on the coil that the permanent magnet passed through, were twisted together. The flashlight was completely sealed- no way to repair it except to take it back for exchange.

Re:Apparently "Measure Twice, Cut Once" is absent.

[regular_gonzalez]

With all the extra time, you might as well send the work to a country that is a bit closer to the US/Western EU and get the job done right the first time. While worker-friendly countries also make mistakes; there is a better chance of getting it right with well-paid, US/Western EU workers than some country that treats its own Rust Belt worse than anything you would see done to the Appalachians or steel workers.

I'm a bit befuddled by your reply, considering your sig. Without knowing the marginal cost of a move to a country with higher skilled workers would be, it is impossible to make any kind of judgement. Perhaps it is still significantly cheaper to stay in China, manufacturing problems notwithstanding. In fact, I'd wager that it is, otherwise they would already have beat a hasty retreat.

Re:Globalists would trade with Nazi Germany

[JordanL]

I was going to retort on how you clearly are trying to use an excess of morals to make up for a deficincy of economics... then I noticed your sig... "Libertarian Wingnuts".... why don't you leave economics policies to the big kids.

what are you really saying?

[davebs]

Yes, it's true, an engineer in China is typically much less productive than an engineer in the united states. After all, you often get what you pay for. However, I really think all these anti globalization types need to take an econ 101 class. There are problems with what is happening now, but I think the world needs to figure out some way to get along, and protectionism really isn't the answer. Don't people in other countries have just as much right to a job as people in rich countries? I think they do. If companies were somehow penalized for "outsourcing" jobs (or, in other words, giving the job to the guy who they *think* can do it best and cheapest), it would be adding unneeded bloat and cost to products. The consumer ends up paying in the end and weak firms are allowed to continue operating. I'm sorry, but engineers (and all kinds of other white collar & blue collar jobs) are just not as valuable as they used to be to the market place because there are countries like india and china that are willing to do it much cheaper. But seriously, everybody talks about equality in the world and freedom until other countries are allowed to compete with you for your job, and then you're all about giving unfair advantages to rich, fat countries. A bit hipocritical i think.

Re:Globalists would trade with Nazi Germany

[s20451]

The irony is that China, fearing foreign influence, placed heavy restrictions on trade starting in the 18th century. As a direct result, they eventually fell so far behind the West that the British were able to capture Hong Kong by 1842, and had opened trading routes by force by the 1860s.

If the USA closes its borders to trade, China's size and emerging economic power will mean that America will be fucked eventually anway. You've got the choice of being a barista now, or a serf later.

Engineered in America

[bill_kress]

Perhaps we need a campaign like "Look for the Union Label"...

From what I've seen, products engineered 100% in the US should have significantly better quality, why not point that out?

I'm not really against Chinese outsourcing, but if there IS a quality difference in the end product, then that information could be vital to consumers.

Not that we have the best engineering consistently, but I've never seen a product made in the US released with such poor quality as some of the imports I've seen.

Re:Same experience different country

[LindseyJ]

Wow. If I am reading your comment right, you are trying to say that Americans are not good workers, based on your experience with American consultants. Consultants.

Also, this point: "* Think they know better than you".

Well, yes. I should hope you are hireing consultants that know more than your employees. What is the purpose of spending money on their consulting if you could just ask Joe down in Marketing and get a similarly educated answer?

Re:Globalists would trade with Nazi Germany

[Vicissidude]

Let's see, China is still far more "protectionist" than the US, but our current balance of trade greatly favors them. In fact, the US and it's "free" market runs a negative trade imbalance with most of our trading partners, and has done so for each of the last 30 years during the time of the "free" market fad. On the other hand, China and it's "protectionist" market has become the world's manufacturer of choice. While China effectively hands us our ass economically, people like you continue to falsely espouse all the benefits of a "free" market.

With China currently raking in the dough by selling to a completely open US, they have absolutely no incentive to reduce their "protectionism". If the economic leaders in the US were truly smart, they would not continue to lecture China for what they "should" do and actually learn to do what the Chinese are doing.

The theories of the "free" market as they have been implemented in the US are an abject failure when applied to the real world.

A Newbie Goes to China

[StateOfTheUnion]

If this guy's engineering and contracting skills are anything like his travel advice, it's no wonder that he wasn't well prepared for the challenges. He gives some silly travel advice . . . I have been to China, Taiwan, Indonesia and a host of other countries executing projects. I can say from experience that: Western style hotels purify their water. It is safe to drink. Silverware that has been washed properly doesn not need to be "sanitized with tea." Fruits and vegetables that have rinds or peels can be eaten uncooked if they are peeled first (e.g. bananas). You don't need a GPS to survive in a foreign country. Westerners have traveled to foreign countries and returned safely since well before the first GPS satellite was launched. In fact if your in a bad area of town a GPS may be just the thing to attract a snatch and grab thief. Same holds for mobile phones. Nice to have, but people have been going to China since well before mobile phones. Though some of the advice given is good, some of it is plain rubbish. China is offically atheist, but expressions of religion are tolerated. And overstaying your visa is not a courtesy issue, its a legal issue. This kind of stuff sounds like the writings of someone that read an outdated travel guide for the xenophobic. I can only imagine that some of the problems this guy had with his contract manufacturer were because he know what he was getting into either travel wise of contract manufacturing wise . . . For example, how come he didn't have another copy of his design drawings for the plastic case with him? That was poor preparation. Not having a spare copy can cost thousands of dollars when you're overseas. And did he really think that the CM woudln't want to redesign the case? Their engineers often try to redesign things to save costs of improve performance. It sounds to me like this guy's bread and butter is components in cameras . . . not plastics injection molding. Advice from the plastics company was probably good helpful advice. Why would he discount such advice? Why would he not put enough float in his schedule so that the manufacturers engineers could review his designs . . . after all, they are the manufacturing experts. I think that this article would be better titled "A Newbie Goes to China" From the linked article:

Al Mudrow's Tips For Traveling in China: 1. Plan a trip to China the same way you would plan an extended backpacking trip into the wilderness. Start with a backpacking checklist. Leave off the obvious items of tent, sleeping bag and sleeping pad. Pretty much everything else on your list is useful. 2. China is a cash-based economy. Credit cards can be used in high-end western hotels but nowhere else. You can get cash through your hotel, banks or "grey-market" foreign exchange shops. 3. China is mostly BYOTP (bring your own toilet paper). Always carry tissue paper with you when you venture out of the hotel. 4. Don't drink the tap water, no matter how fancy or western your hotel. Use provided bottled water. I carry water purification tablets if I want additional water. 5. Be very aware of traffic as you are walking around. Cars and motorcycles come in all directions. Motorcycles especially seem to obey no traffic rules. Vehicles commonly travel on sidewalks as well. Be especially careful of trucks made from converted farm roto-tillers. They don't have brakes. 6. Take a GPS receiver with you. Mark the important waypoints like your hotel, your CM factory and vendor locations. You can use it guide your way when your CM forgets to pick you up, or when guiding your taxi driver, who will inevitably get lost. 7. Always carry a mobile phone with you. Find out before you leave if your mobile phone will work in China. 8. Get a Skype account and purchase Skype-out minutes. Phone calls back to the U.S. and within China are about 3 cents a minute. Quality is better than both mobile phones and even local telephones. 9. In restaurants, use the tea they pour you to sanitize your eating utensils and dinnerware. Only eat food

underemployment

[Travoltus]

That means, a lot of college degreed CIS/CS/MIS grads who are working at Wal Mart or other lower paying jobs because their degrees that they got after 1995, with tons of student loan debt, are worth little if anything because of offshoring.

Let me repeat: they have jobs, ergo they're not unemployed. But they have jobs that are different, and far, far lower paying, than what they were trained for. Which is why the middle class is shrinking. But don't believe me. Read this. http://www.factcheck.org/article249.html

BTW the United States goes by a U3 style of unemployment measurement which puts us at 4.7%; if we go by Europe's U6 standard, the BLS says we're closer to the 9% level. That is very close to Europe's horrible unemployment rate which you hear so much about on Fox News.

Re:Globalists would trade with Nazi Germany

[p0tat03]

Disclaimer: I am a Chinese Canadian.

I really have to object against the use of the word "genocide" in your post. The Japanese in WW2 were known to be especially brutal to the Chinese civilian populace, but what went on was classic pillage & rape, it's a long way from genocide. Don't use that word just to sound dramatic. I'ts like accusing a rapist of being a serial killer. They may both be terrible crimes, but they are not synonymous.

And might I add that your evidence is entirely anecdotal? The presence of one (or even many) families with no killed/culled/harvested members is not proof that such systems do not exist. I myself know many Chinese who have lost at least one relative to the political purges, or otherwise perished in the ensuing mayhem. I make no attempt to justify Comatose's numbers, since I honestly do not know the bodycount off the top of my head (a bit morbid for idle trivia, no?), but honestly, this shit does happen.

That said, I also object to the notion that China is in every possibly way worse than Nazi Germany. Honestly, there's a pretty wide gap between collateral civilian death from brutal political revolution... and systematic extermination via concentration camps and gas chambers. Genocide is, in my books anyway, a whole lot worse than your standard vanilla repression.

Re:Outsourcing doesnt differ from any other busine

[walt-sjc]

Let's be VERY clear here: the ONLY reason globalization and outsourcing is expanding is because LABOR costs in India and China are significantly lower. If we only paid our people $1,200 / year like they do in China, then we would blow the chineese away. Product quality of outsourced manufacturing is also typically lower mainly due to the huge turnover rate in chineese companies - they have increasing competition for qualified workers and pay bottom dollar for them.

The FACT is that US productivity continues to rise due to the FACT that people are working harder, longer, and developing new business systems and technologies. Check the Bureau of Labor Statistics web site for the data.