Fellow Techies Firstly, may I wish everyone a very Happy, Healthy and
Prosperous 2003.
Given the recent exchanges (well, OK last year! :-) ) on the issue of
³Exported Manufacturing², I received this from a friend and thought I would
share it with you You might even wish to pass it on to your Senior
management.
I don¹t believe this will be the only example we will encounter!
Chinese suppliers give U.S. firms fits
By Gabriel Kahn
The Wall Street Journal
December 26, 2002
At a sneaker factory in Yangjiang City in southern China, George Arnold
tugged at insoles and inspected the stitching on a pair of New Balance
shoes. Satisfied they were the real thing, he told factory managers he would
wire $120,000 the next day for 6,500 pairs.
It was a sting. Arnold wasn't the North Carolina shoe buyer he claimed to
be, but a private detective hired by New Balance Athletic Shoe Inc. to
unmask a costly problem: deeply discounted New Balance-branded shoes showing
up in stores from England to Australia.
For years, global brands have been fighting counterfeit operations in China
that churn out cheap copies of everything from Gucci bags to automobile
parts.
But the sneaker maker Arnold visited in September was no fly-by-night
counterfeiter. It was run by Horace Chang, a Taiwanese businessman who was
one of New Balance's top suppliers.
The rush to manufacture in China is backfiring on many U.S. clothing brands
in an insidious new way: Their own suppliers are flooding the market with
their goods, stealing sales and damaging their brands' cachet.
When shoes made by Chang suddenly began appearing in cut-rate shops for as
little as $20, it enraged New Balance's legitimate retailers, which were
trying to sell the same shoes for as much as $60.
New Balance, which had been trying to polish its image to compete with the
likes of Adidas and Reebok, was being relegated to the bargain bin. Chang
declined to be interviewed, but said in an e-mail that he still had a
legitimate license to make New Balance products and that the firm "lied" to
Chinese authorities when it argued otherwise.
As more companies move to take advantage of China's low-cost labor and
high-quality manufacturing, many are finding they pay a steep price for
doing so.
"Ten years ago, it was just knockoffs," says Stephen Vickers, a former Hong
Kong police officer and now president of International Risk Ltd., a firm
that does background checks on companies in China. Now, he says, "the No. 1
problem is collusion between your own staff and the manufacturer."
The problem is spreading to other big brand names. Unilever PLC recently
discovered one of its suppliers in Shanghai had been manufacturing excess
cases of soap and selling them directly to retailers.
Companies and governments have become more vocal in their objections to
China's inability to curb the problem, which encompasses an ever-widening
array of products, and lawsuits brought by foreign companies against
counterfeit or unauthorized Chinese manufacturers are piling up in Chinese
courts.
--
Regards, Graham Naisbitt
[log in to unmask]
Mobile: +44 (0)79 6858 2121
Concoat Limited - Engineering Electronics Reliability
Web: www.concoat.co.uk AND www.concoatsystems.com
NOTE: NEW ADDRESS :NOTE
Sales:
Millfield House, Fleet Road
Fleet, Hampshire GU51 3QF UK
Phone: +44 (0)1252 813706
Fax: +44 (0)1252 813709
Manufacturing and Head Office:
Alasan House, Albany Park
Camberley, Surrey GU16 7PH UK
Phone: +44 (0)1276 691100
Fax: +44 (0)1276 691227
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