Manufacturing discontent

BOOK REVIEW: The darker side of China's rise as the factory to the world

Manufacturing discontent

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Poorly Made in China: An Insider's Account of the Tactics Behind China's Production Game

by Paul Midler;

John Wiley and Sons; US$24.95

In August 2007, accounts of massive recalls of China-made products by toy manufacturer Mattel created headlines across the world. While Mattel's chief problem was lead paint coating toy soldiers and cars, the outcry over product quality didn't stop there: Concerns were raised about everything from pet food to car tires to Independence Day fireworks.

As Paul Midler notes in Poorly Made in China, this sobering tale of outsourcing and its perils had been in the cards for many years.

If for no other reason than putting you off using any toiletry or cosmetic product made in China, Poorly Made in China will change your life. A Mandarin speaker and former resident of export hotbed Guangzhou, Midler was well equipped to connect foreign sourcers with local manufacturers.

His tale is typical of the middle man. Already estranged from his US roots, he never feels fully accepted in China. Most of the time he finds himself a bemused bystander as the sourcers and manufacturers battle for the final cent.  Far from being the classic "win-win"formula the Chinese government loves to proclaim, at the end of the book it looks perilously close to "lose-lose."

Relocation, relocation, relocation

At the heart of Poorly Made in China is the sheer speed with which so much manufacturing capacity has been transplanted from Europe and North America to plants throughout China. It is enough to disorient anyone.

In the opening pages, Midler  stands with a Chinese factory manager looking over a landscape full of manufacturing plants from which emanates a powerful, unpleasant, yet undefinable aroma. "What the hell does that smell of?"Midler asks. "Money,"the manager barks back. "That smells to me of one thing, money!"

Foreign importers being taken around phantom factories full of "employed"workers who vanish when the importers have gone is only one trick he sees. Another is to slowly lull clients into a position where they are wholly dependent on capricious manufacturers who then jack up their prices, cut corners on the goods they make, or simply work to new specifications that no one else has seen. The name of the game is deceit and ruthlessness, with large parts of any story either side tells concealed or simply made up, and people often forced into second guessing or working from instinct.

Balanced approach

Midler's is not an account which lambastes the Chinese factory owners - it is more nuanced and therefore more interesting.

He is amazed at the narrow mindedness of some US companies, and their refusal to admit that the rules of the game in their trade have fundamentally changed. How, he asks, did the US kid itself that it was wise to put this much manufacturing capacity, and transfer this much technology, to partners both unknown and untried, for family savings of US$300 a year? And it didn't happen even over a generation. It happened in just a few years.

Chinese workers in the factories Midler visits are not the silent, oppressed masses of some other accounts, but rather working their hands off in order to build a better life. He compares this to the cynical lethargy he meets back home.

One businessman he takes around a factory prides himself on haggling an old woman selling contraband watches by the side of the road down to a few cents each. She has the last laugh, though - the watches fall apart in a few hours. This symbolizes the false economy on which so much of China's great manufacturing game is built.

With the slowdown in manufacturing since 2008, perhaps people on both sides now have the chance to stand back and think through what is happening. Midler's conclusion is that things have happened too fast, and for the wrong reason: "This decision to fling open wide the doors of trade with China, before we were ready, before China was ready, before we understood what we were getting into, an action motivated by our own greed - this decision more than anything else was the one thing related to China that was truly poorly made."

You couldn't put it more succinctly or passionately than that, and Midler's book offers plenty of sobering tales along the way to prove this was not quite what either the outside world, or China, was aiming for when reforms started 30 years ago. 

KERRY BROWN

Senior fellow in Asian research at Chatham House