Playing Xiangqi – A Review of Poorly Made in China
Chinese manufacturing begins with a paradox. Importers come to China seeking a manufacturer capable of not only making their products but also scaling that production as business grows. Yet, that same Chinese manufacturer will not necessarily have such an operation in place until it receives an order from the importer. This paradox leads, ultimately, to artificially low rates.
So begins Paul Midler’s book, Poorly Made in China: An Insider’s Account of the China Production Game. An American fluent in Chinese, Midler has spent most of his career in China, including his current role as a manufacturing consulting, which he began in 2001, having returned to China from business school. It was in this capacity that Midler witnessed the explosion of the Chinese economy, driven by its manufacturing industry.
Because the manufacturers are now bound to the initial low rates they used to attract the importer, their next step becomes finding savings through cuts in production costs that go directly back to the factory’s bottom line. This process is what Midler describes as Quality Fade.
Throughout the book, Midler traces the narrative of his first client, the American importer Johnson Morgan, and its Chinese manufacturer, King Chemical. King Chemical creates health and beauty products for Johnson Morgan, which then sells those products to major pharmacies, grocery stores, and wholesalers in the United States. Quality Fade plays a major role in the Johnson Morgan and King Chemical relationship.
At points throughout the book, King Chemical delivers bottles that are too thin, shampoo that becomes gelatinous at cold temperatures and different bath soaps that have the same scent. In each instance King Chemical unilaterally made product decisions, without any regard for quality control, because they saved money on production costs. Johnson Morgan was unable to move to a new manufacturer because it could not risk the disruption in its supply chain and was thus forced into covering the costs of the Quality Fade.
Realizing this, King Chemical continued to follow the process of Quality Fade, while also raising prices in the process. As time went on, the initial low manufacturing rate was proving more expensive and more painful than Johnson Morgan had anticipated. The problem, Midler says, is that while the Chinese are playing a game of chess, United States importers are playing checkers. It could be argued that the gap is even wider and instead of playing western chess, the Chinese are actually playing their own version, Xiangqi.
A second paradox of Chinese manufacturers is that while they are extremely effective at taking an importer’s sample product, deconstructing it, and recreating it at reduced costs, those same samples are, in turn, being used against the importers.
While in most forms of manufacturing, a large portion of cost is determined by the quantity ordered, in China prices are not lower for larger importers than smaller ones because of bulk. Rather, they are lower because the larger importers give the manufacturers new products.
Domestically, an importer in the United States is protected by intellectual property laws. Yet, abroad, that protection may not be guaranteed, meaning that manufacturers have the incentive and opportunity to sell an importer’s products to an entirely different market.
Even more troublesome for an importer is that manufacturers also claim intellectual property rights on the way in which they copied the original sample, meaning that if a relationship were to ever dissolve, the manufacturer would have no reservations about creating the exact same product for another importer, or even the importer’s customers.
This issue also encourages importers to remain with one factory, giving the manufacturer additional incentive to cut costs through Quality Fade. Even if an importer refused to sell a defective product to its customers, the factory could sell that extra inventory in a developing market, while continuing to drive up prices on the importer.
While manufacturer and importer relationships begin as partnerships, and sometimes even as joint ventures, Midler describes them increasingly becoming something akin to hostage situations.
On the surface, the book addresses some of the major issues of Chinese manufacturing. At a deeper level, however, it offers the reader a better understanding of Chinese culture and its shrewdness. Midler states that the book attempts to illustrate the manufacturer-importer relationship, “as an allegory for the future relations between the United States and China”.
During one enlightening passage, Midler describes an episode when Johnson Morgan asked King Chemical to create a deodorant stick. The factory was given a sample and came back with what, at first glance, seemed like an exact copy. The packaging looked and worked like a deodorant stick, yet the actual deodorant was nowhere near the appropriate consistency. King Chemical assumed that if it created something that looked like the correct product from the outside, it could figure out how to manufacture the actual deodorant once it received the order.
The same sort of situation can be seen in the broader context of intellectual property. Many developed countries have strictly enforced intellectual property laws. China’s, on the other hand, have been developed under the assumption that the right look is all they need to appease markets like the United States. This is largely cultural. Midler explains that the ability to copy something to the extent that it becomes nearly impossible to tell the difference between the original and the replica is encouraged throughout China. The sooner foreign political leaders realize this, the sooner they will be able to work effectively with China.
By taking a glance at media stories, it is easy to see that Americans think of China as a far off, abstract, frightening force. Yet, while the book references many of China’s strengths often portrayed in that news, it also showcases a number of its weaknesses. Throughout the book, the reader gets the sense that China is a train picking up speed as it rolls down a hill. The question Midler poses is if the conductor can keep the train on the track.
The Chinese economy has grown exponentially for more than twenty years. Yet, Midler references issues ranging from Chinese who cannot grasp the concept of an elevator, to a complete lack of quality control, and ultimately a lack of innovation. What remains to be seen is if China can address this cultural and economic gap, as it continues to develop economically, culturally, technologically, and socially.
After completing the book, I looked at the “Made in” line printed on my own bath and beauty products, including shampoo, soap, and toothpaste. I will probably pay more attention to this as time goes on and I have Paul Midler to thank. However, as discussed, the book offers more than merely an insider’s perspective of Chinese manufacturing.
Poorly Made in China raises a number of questions about not just China’s future, but also about how the United States chooses to engage it. While Midler does not offer many answers, the book is a valuable resource for Foreign Service officers, diplomats, and political advisors, who will have to work with China’s complex culture, as well as the businesses and their executives that ultimately, like the Chinese manufacturers, themselves, want to sell products in the Chinese market.
Work Reviewed
Midler, Paul. Poorly Made in China: An Insider’s Account of the China Production Game. Hoboken, New Jersey: John Wiley & Sons, 2011. Print.
Why You Should Question Your Culture – Ron Ashkenas
Why You Should Question Your Culture – Ron Ashkenas
Or, take GMU’s PUBP 503 course.
Financial Times: Don’t be blind to Erdogan’s flaws
Financial Times: Don’t be blind to Erdogan’s flaws
Some interesting research coming out about the importance of Turkey’s accession into the EU to combat the slide toward autocracy and a more Islamic state in Turkey.
Critical Readings on Culture, Organization and Technology and How They Apply to the Columbia Space Shuttle Disaster
This was an assignment for my Culture, Organization and Technology course in the ICP SPP program at GMU. All the works cited are worth the read.
Critical Reading: Shein, Edgar. Organizational Culture and Leadership. San Francisco: Jossey-Bass, 1997. 7-33.
Shein believes that culture is inherently an “abstraction” (7). Therefore, if one is to understand what a group’s culture is, it becomes essential to examine and understand a “wide range of observable events and underlying forces” (14). Furthermore, Shein argues that in order for a culture to exist, it must have structural stability, depth, breadth, and patterning or integration (16-17), ultimately defining culture as:
A pattern of shared basic assumptions learned by a group as it solved its problems of external adaptation and internal integration, which has worked enough to be considered valid and, therefore, to be taught to new members as the correct way to perceive, think, and feel in relation to those problems (18).
Within a culture itself, Shein believes there to be three distinct levels, noting that his use of “level” means “the degree to which cultural phenomenon is visible to the observer” (28).
The first level he identifies, artifacts, are observable elements a culture creates and does. They include such things as organizational structure, architecture, music, language, and behavior. While all artifacts are, by their nature, observable, they do little to explain their cultural meaning on their own (23-24).
His second level, espoused beliefs and values, “are congruent with the underlying assumptions that guide performance, those that are part of the ideology or philosophy of the organization, and those that are rationalizations or only aspirations for the future” (27). He notes that these beliefs and values may often contradict with one another, using a company equally putting its customers, employees, and stockholders first, as an example (25-27).
Basic underlying assumptions are the deepest level of a culture. They are solutions or beliefs that become so ingrained within the culture that they become nearly impossible to change, sometimes to the point where groups would rather create alternate realities about the world around them, than believe that an underlying assumption was not true. These underlying assumptions are such an integral part culture that they operate on both an individual and a group level (27-29).
Critical Reading: Scott, W. Richard. “The Subject Is Organizations.” Organizations: Rational, Natural and Open Systems. Upper Saddle River: Prentice Hall, 1998. 3-29.
Scott argues that while organizations are “ubiquitous with modern society, their development has been sufficiently gradual and uncontroversial that they have emerged during the past few centuries almost unnoticed” (4).
Their emergence began during the industrial revolution, transforming from their original structures that focused on more personal bonds to “contractual arrangements among individuals having no ties other than a willingness to pursue shared interests or ends” (Scott 4).
Introducing a thesis by Marshall McLuhan, “The medium is the message” (5), Scott suggests that the term applies even more appropriately to organizations as a whole, rather than simply the mass media. He notes that while the organization can achieve far greater goals than any individual, they have become the “mechanisms…by which those goals are pursued” (5).
Even more so than simply a means to an end, these organizations are now “actors in their own right, as collective actors” ( Scott 5), and that by studying the actions and behavior of organizations, it is possible to also understand the basic underlying actions and behavior of the social system behind them (Scott 7-8).
Scott identifies the common acceptance among analysts that organizations are “social structures created by individuals to support the collaborative pursuit of specified goals” (10), and, while diverse in size and structure, given these assumptions, all organizations face a common set of problems (defining objectives, resource allocation, workforce development, etc.). More importantly, they all must address a “common curse” of having to devote resources not just to obtaining the organization’s goal, but also to maintain the existence of the organization itself (Scott 10).
Additionally, Scott identifies five elements that shape organizations: social structures, participants and social actors, goals, technology, and the environment. He notes very specifically that while the first four are internal elements, the environment plays an important role on shaping those first four and, in turn, the organization influences the environment in which it exists (17-23).
Lastly, Scott goes through a process of defining organizations using three distinct models: a rational system, a natural system, and an open system.
Critical Reading: La Porte, Todd. “Technologies in/and Culture, Organizations, and Politics.” (2002): 1-3.
Todd La Porte introduces technologies as “physical artifacts, technical systems, and methods” (1). He quickly stresses that while most view technology as merely “things” they “are also organizational, political, and social phenomena,” adding that often technologies create systems that commit society to a particular world view or on a particular path that can only be changed “with great difficulty” (1).
La Porte identifies the importance that technology is not only a “what” but, also, a “who” (1). People make decisions on the design of technology based on the influence of “social, cultural, and political values,” citing that technologies, “are inherently social phenomena” (1).
Additionally, he notes, that while technology is often the subject of political debate, technologies are by their very nature political, as “they represent the outcome of struggles between competing interests” (2), referencing a potential internal struggle between engineering and marketing, for example, in the development of a certain technology (2).
La Porte identifies the fact that seemingly mundane design decisions that actually can impact not only users, but also an organization or society (2). Because of this potential impact, it is essential for decision makers to understand that “early deployments of technologies fix later choices that can be made regarding heir uses and configuration” (La Porte 2-3).
Lastly, La Porte recognizes that all technologies have groups of people who can either win or lose depending on if their technology is chosen (3). This, again, raises the question of “who” is the technology, alongside the often simpler, “what” the technology is (La Porte 3).
Question: How can the Columbia accident be analyzed in terms of these perspectives? Is it a “tame or “wicked” problem?
As the Columbia Accident Investigation Board notes on numerous occasions within their report, the root causes of the Columbia accident can be traced back to NASA’s inception in the late 1950s during the Cold War (101). Created in response to the launch of the Soviet satellite, Sputnik, the agency was tasked with the seemingly impossible: get to the moon before the end of the 1960s, and, with what nearly unlimited resources, it did. Thus, a “can-do” attitude became an integral part of NASA’s culture (Board 101-102).
Based on the readings, it could be said that the “can-do” attitude became a “basic underlying assumption” (Shein 27) at NASA. Getting the job done became “nonconfrontable and nondebateable” (Shein 28). In terms of safety that basic underlying assumption forced “the engineers…of having to prove that the situation was unsafe – a reversal of the usual requirement to prove that a situation is safe” (Board 169).
What’s more important, however, is realizing how that attitude became a basic underlying assumption that precluded even safety. The accident board reviews the history of the space shuttle program, particularly budget cuts, changes to the organization structure when new leadership was dropped in from outside the agency, and added scheduling pressures from outside the organization to complete the International Space Station on time ultimately arose. The broader environment of the United States Government and Congress, as well as international space relations, influenced NASA’s organizational structure, which, in turn, influenced its culture (Board Chapter 5).
This can best be understood through Scott’s Open System Definition:
Organizations are systems of interdependent activities linking shifting coalitions or participants; the systems are embedded in-dependent on continuing exchanges with and constituted by – the environments in which they operate (Scott 28).
Interestingly, while Shein states, leaders create a culture and, in turn, once that culture is established, it creates the criteria for selecting new leaders (22), NASA is in a unique position where its top leader is selected by the President and its budget is driven by Congress. The Columbia Accident Investigation Board recognizes this, saying that if culture is to ultimately change within NASA:
Top administrators must take responsibility for risk, failure, and safety by remaining alert to the effects their decisions have on the system…The past decisions of national leaders – the White House, Congress, and NASA Headquarters – set the Columbia accident in motion by creating resource and schedule strains that compromised the principles of a high-risk technology organization (203).
Underlying all of this is the concept of technology. The space shuttle was a technological marvel, capable of ferrying humans into space and home again in – general – safety. However, as the Columbia Accident Investigation Board discusses on numerous occasions, when that technology worked time and time again, culture would shift from safety first to mission accomplished first, even as added schedule and budget pressures were placed on the agency (199).
Additionally, outside of NASA, the same sense of complacency happened. In the fiscal year 2001 budget, NASA requested funds for multiple safety upgrades, but would not receive most of what was requested; delaying and deferring proposed safety upgrades (Board 188) Congress saw a working space shuttle, budgetary pressures, and made the decision to maintain the status quo.
La Porte wrote that technologies are the “products of human choice and design and embody social, cultural, and political values” (1). In the case of the space shuttle program and its technology, an aging system came under scheduling pressures as a result of political leaders making the choice that it could do more with less.
In conclusion, was the Columbia accident a “wicked” problem (Conklin and Weil 1)? The answer is a most certainly, “yes.” According to Conklin and Weil, a “wicked” problem is “an evolving set of interlocking issues and constraints” with many stakeholders, changing constraints over time, and no truly defined solution (3).
This is clearly the case not only in relation to the Columbia accident, but also throughout NASA, as a whole.
Works Cited
- Board, Columbia Accident Investigation. NASA Report on the Columbia Disaster. Washington, D.C.: National Aeronautics and Space Administration and the Government Printing Office, 2003.
- Conklin, E. Jeffery and William Weil. Wicked Problems: Naming the Pain in Organizations. 1997.
- La Porte, Todd. “Technologies in/and Culture, Organizations, and Politics.” (2002): 1-3.
- Scott, W. Richard. “The Subject Is Organizations.” Organizations: Rational, Natural and Open Systems. Upper Saddle River: Prentice Hall, 1998. 3-29.
- Shein, Edgar. Organizational Culture and Leadership. San Francisco: Jossey-Bass, 1997. 7-33.
